Welcome to Capital Account. US GDP rose by two percent in the third quarter, slightly above the 1.9 percent economists forecasted. According to the Bureau for Economic Analysis, the increase was driven by personal consumption and federal government spending. National defense spending, which contributed to the rise in federal expenditures, increased by thirteen percent in Q3 (as compared to a point-two percent defense spending decrease in the prior quarter). Is a recession no longer an immediate concern? We talk to Jim Rogers, author of the book “A Gift To My Children,” about what he thinks of the latest economic growth numbers, and his outlook for a recession after the 2012 elections. If there is a recession, could it lead to more political prosecutions, as we have seen recently in Italy? Silvio Berlusconi, the former Italian prime minister, has been sentenced to four years in prison for tax fraud. Although he may never serve the time, we ask Jim Rogers if we are likely to see arrests of government leaders or private sector executives in the US.
Plus, Japan remains mired in deflation according to recently released price data, and pressure is mounting on the Bank of Japan to pursue monetary easing to keep the country from recession. The Japanese Economics Minister told a news conference that “central banks around the world are easing monetary policy. The BOJ itself set a one percent inflation goal in February but that hasn’t been achieved.” According to Reuters, the Bank of Japan is expected to ease policy next week to reach its goal of one percent inflation. Japan began Quantitative Easing in 2001 and has managed to keep its zombie banks in a state of ‘suspended credit animation’ since the early 1990’s. We ask our guest Jim Rogers, author and investor, about how Japan’s experience fits in with forecasts of Western central bank induced inflation. We also ask him about his 2008 prediction for a “hyper-inflationary Holocaust” and the long term implications for investors and savers. Has he been surprised by the lack of severe inflation, and the performance of the US bond market? And what about emerging Asian economies? Chris Mayer was on our show recently talking about the virtues and potential of Myanmar (Burma), and it appears that Jim Rogers agrees! He says that if there were any country that he could invest in right now, it would be Myanmar, and maybe North Korea!
And what about the banking system? Jim Rogers is bearish on JP Morgan, and expresses doubt in the company’s commodities division, specifically the head of Global Commodities at the firm. We know that the blogosphere has been buzzing with talk of a large JP Morgan short position in the silver market, so what gives?