Rogers first mentioned the potential crash by saying, “I learned very early in my investing careers: I better not invest in what I want. I better invest in what’s happening in the world. Otherwise, I’ll be broke — dead broke. Well, what’s going to happen is it’s going to continue. Some stocks in America are turning into a bubble. The bubble’s gonna come. Then it’s going to collapse, and you should be very worried. But, Henry, this is good for you. Because someone has to report it. So you have job security. You’re a lucky soul.”
Where can we expect the warning signs of this crash? According to Rogers, it’s hard to say, and we can look to the 2008 recession as proof. “In 2007, Iceland went broke. People said, ‘Iceland? Is that a country? They have a market?’ And then Ireland went broke. And then Bear Stearns went broke. And Lehman Brothers went broke. They spiral like that. Always happens where we’re not looking.
I don’t know. It could be an American pension plan that goes broke, and many of them are broke, as you know. It could be some country we’re not watching. It could be all sorts of things. It could be war — unlikely to be war, but it’s going to be something. When you’re watching Business Insider and you see, “That’s so interesting. I didn’t know that company could go broke.” It goes broke. Send me an email, and then I’ll start watching,” he explains.
What could potentially make this crash so damaging? Rogers notes that it boils down to debt. “We’ve had financial problems in America — let’s use America — every four to seven years, since the beginning of the republic. Well, it’s been over eight since the last one.” In 2008, China spent the money they had saved, and now they had debt as well. The same applies stateside, with the federal reserves having a balance sheet five times larger since then. Rogers also notes that there will be major consequences for such a financial hardship.
“You’re going to see parties disappear. You’re going to see institutions that have been around for a long time — Lehman Brothers had been around over 150 years. Gone. Not even a memory for most people. You’re going to see a lot more of that next around, whether it’s museums or hospitals or universities or financial firms.”