Early last year, when the United States' economy was getting overheated and signs of recession were showing, investing legend Jim Rogers did the unthinkable: He sold his Manhattan home, bought a house in upmarket Singapore and settled there with his family. Yes, when you have lots of money, you have the options of settling down anywhere you want, agrees Rogers, who became a Wall Street legend when he and George Soros founded the Quantum Fund.

During the next 10 years, the portfolio gained 4200%, making him the best known commodities investor in the world. In 1998, he launched the Rogers International Commodity Index, a composite, US dollar-based, total return index, designed to meet the need for consistent investing in a broad-based international vehicle. The Index represents the value of a basket of commodities consumed in the global economy, ranging from agricultural to energy to metal products.

These days Rogers, an avid watcher of global economy, is mixing work with relaxation in Singapore. “I am keenly watching countries like China and India, where there are great opportunities. This is going to be Asia's century. But I must tell you China's growth will be the most fascinating. I am just upset with India because the government there wants to ban commodity Futures trading. It is crazy,” he says. Rogers settles for an exclusive interview with Commodity Online Group Editorial Director George Iype.

Excerpts from the interview:

Let us start with your favourite subject, commodities. You have always been bullish on commodities. What is happening with commodities these days?
• Well, commodities are in a boom market these days. The bull market in commodities has a long way to go. Some commodities are consolidating right now, in anticipation for the next move up. Some like crude oil are in all time high. You know in commodities market, some go up and some come down. But I tell you the boom market in commodities is a long way to go.

How long?
• I don't know; it could be 10 to 20 years. But I tell you it is going to be exciting years ahead for commodities because of several reasons. Lots of lands are getting cultivated across the world. People are getting serious about the opportunities in the agricultural market. Something good is going to happen in the boom market. And the boom market will end some day. But that some day is a long way from now. If there is a world-wide economic breakdown, it will affect the markets. But even then commodities are going to be a better place to be in than stocks and bonds.

Where is crude oil going these days?
• Oh, crude oil is going crazy high. You know if somebody discovers some new crude oil fields, that would be good for the world. But the crude oil price is going to go very high, and will remain high for the next few years until new supplies come in. The fact is that there is no new crude oil in the world now.

You mean to say crude oil price is going up thanks to shortage of supply. Or is it because of speculation?
• If it is because of speculation, then when the oil price is too high, the people with oil will drown the speculators. You know it is just a stupid accusation. If people have oil, do you think speculators could have driven the prices too high like this? No. People are spreading all kinds of speculative stories that oil price is going up thanks to speculation. The truth of the matter is that there is so much shortage of oil in the world. The shortage of oil in physical market is higher than in the Futures market.

That is the reason for the high crude oil prices. Those who blame speculators for high oil prices, I would like to remind them that in Futures market every time somebody buys the oil, every time the speculators buy oil, the speculators also sell the oil. The US government data says that there are more speculators on the sell side than on the buy side in crude oil these days.

Speculators are getting killed these days; they are losing money heavily these days. They are selling in panic these days. But they are right in selling because there is no oil to hold on. I wish someone saves the speculators who are selling. The fact is that there is no oil for delivery and speculators know that they are not sitting on oil.

What is your take on the global economy? US is under recession spell and the global financial markets are in jitters these days.
• The US has been in recession for some time now. You know this is the worst recession that we have had may be since the World War II. And it is going to continue for sometime now. Recession has already affected some parts of global economy. It will continue to affect more parts of global economy. America is in a mess. American government keeps making mistakes. The US Federal Reserve has been printing money, and has been committing serious mistakes. This is going to make the spell of recession more longer. And this is going to the longest recession that we ever had.

High oil prices, inflation, food prices etc have hit countries like India very hard. How should counties like India tackle the situation?
• Inflation affects everyone. Not just India. We pay the same price for copper. Copper price is the same in Australia, Germany and the US and India. India is not getting any worse than other countries. Except for the fact that the Indian government spends periodically more money in controlling inflation. The problem with India is that your politicians are worse than American politicians. You know Indian politicians believe and argue that the cause for inflation is commodities trading. How absurd is that.

Recently India banned Futures trading in some commodities like rice, wheat, rubber, potato etc to control price rise and inflation.
• It is the same tactic that politicians have done for hundreds of years everywhere in the world. Politicians would blame for anything wrong on three groups of people. They blame financiers/financial types. They blame foreigners: It is always good to blame foreigners. And they blame the Press. They blame you guys for commodity inflation in India. If the Press is not writing about inflation, we would not have a problem, politicians would say. It is absolutely insanity.

India banned Futures trading in some commodities without any logic or reasoning and study. And it has not done anything good for commodities in India or in the rest of the world. The commodity prices are still up and up. India needs to understand that there is no easy solution to high prices. As prices go up, people use less of anything and people would continue to produce more and that has always been there in the boom market. I read that India produces lots of foodgrains and do not have storage facilities and tonnes of rice and wheat are destroyed in public sector storage facilities.

How sad it is. It is terrible thing to happen. So let India do things to protect commodities rather than ban Futures trading in them. By banning commodities in boom market, the Indian government is making things worse. Look at China. The Chinese instituted price controls. Price controls have been around for thousands of years. They always make things worse. If you tell somebody that rice is only Rs 2, you have no other ways.

If you tell a farmer that you can sell rice only for Rs 2, he will tell I am not going to produce any more rice. Farming is hard work. I cannot make any money with price controls by producing and selling rice for Rs 2. So then you have less rice and shortage of rice. Even Romans had price controls, it never worked. So the Indian government is making things worse for India. It has been making things worse for the people in the last 50 or 60 years.

Some politicians in India blame commodity Futures trading as the reason for price rise; inflation is a big political issue in India.
•By banning commodity Futures, food prices would not go down. Because people sell in any prices they want to in Futures. So banning Futures is a senseless decision. In commodities market, we know what the price of wheat is. There is a public price for wheat according to demand and supply world over. So India banning Futures does not have any effect on wheat market. Indian government instead of being transparent and serious is creating lots of black market by banning Futures trading. It is going to make lots of people desperate. Politicians have been doing the same thing for many years, all over the world. Not just in India. It is worst for all of us.

What is the reason for the global food crisis now?
• The number of hectares of global wheat farming has declined over the years. The inventories of food are in the lowers ebb now in the last 50-60 years. In the last 30 years, farming has been in a terrible state. There is a terrible shortage of farmers now across the world. Young people do not go for farming. They study computers and get jobs. All the farmers in the world are old now. They are all men. Young people do not go to farms these days because farming is a hard physical job.

Seeds, fertilizers, tractors…there is a shortage for these stuff. We have a shortage of even tractor tyres now. That is the reason why we have shortage of food and there is a food crisis. It is not again speculators who have created the food shortage. Speculators take delivery of wheat. They don't hoard wheat; it is the government that is hoarding wheat. It is the governments that are making the prices higher. Argentina says you cannot export wheat. A lot of counties say you cannot export wheat. The governments should call farmers to produce more and invite more people to farming by offering incentives.

When farming is coming down, governments like in India are trying to introduce price control mechanisms and bring down prices, and ban Futures. So things are getting worse. Things will be bad if it goes like this way. The food crisis will get worse, if countries act like this way. There will come a time when people will not get enough food. They are going to starve. The world is going through several weather problems. There will be droughts. So things are getting worse for farmers. I promise politicians who rule us are not going to go to the fields and cultivate. Do you think your politicians will go to the fields and work hard till evening to raise more rice? No way.

US President George Bush recently commented that it is the large population in countries like India and China that are causing the food shortage and crisis.
• I don't agree. Look how things are blown out of proportion by politicians. Why can't the people in Asia eat and live happily? Is it the prerogative of the US that only they should eat? There are three billion people in Asia. Thirty yeas ago Mao Tse-Tung was still running China. Thirty years ago Indira Gandhi was running India. Vietnam was destroyed.

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