Jim Rogers was recently interviewed by The Economic Times. Among the topics covered include the recent rally in stocks, the widening deficit and his recent comments on Sri Lanka. In this interview, Jim Rogers touches on a couple of commodities that he believes will do well in this economy. As investors push oil and gold, Jim Rogers is looking at other commodities such as Silver, Cotton and Natural Gas.

You recently said that you would invest in China and Sri Lanka but not in India. Arent you betting on the new government in India?

Lets pick on China for a minute. If you sell to Wal-Mart in the US and if you are a Chinese supplier you know there is a problem. And you are going to be suffering. Any company that deals with the West is going to have problems. On the other hand, companies that are in the water-treatment business in Asia will care less if the West disappears. They are too busy making money, too busy going to work everyday.

Throughout history, if you go to a place after the war ends you usually find everything as very cheap, everyone is demoralised, people are just depressed and there are enormous opportunities if you have energy.

In my view, investing in Sri Lanka in May 2009 is probably a better bet than Pakistan, Bangladesh, India or some of the other countries nearby. Lets hope the new Indian government does something. I have heard wonderful things from Indian politicians for 40 years.

The American bond market is already beginning to go down dramatically as people realise that the American government has to sell huge amount of bonds, and secondly, there is going to be inflation, serious inflation, as it was always in the past when you had governments printing huge amounts of money.

In the 1930s, we had a huge stock market bubble which popped. And then politicians started making many mistakes. They became protectionist. They made solvent banks take over insolvent banks and then both banks failed in the end.

At one stage we were inundated with gloomy forecasts, which were further reinforced by the IMF and World Bank. And then suddenly stocks surged ” something most were not prepared for. How risky is the market today?

In the 1930s, we had a huge stock market bubble which popped. And then politicians started making many mistakes. They became protectionist. They made solvent banks take over insolvent banks and then both banks failed in the end.

They are doing many of the same mistakes now. Whats different this time is that we are printing huge amounts of money which they did not print at that time. So, we are going to have inflation this time.

Stocks are rising even as fiscal deficit is widening. Somewhere it has to snap

You recently said that you would invest in China and Sri Lanka but not in India. Arent you betting on the new government in India?

In the 1930s, we had a huge stock market bubble which popped. And then politicians started making many mistakes. They became protectionist. They made solvent banks take over insolvent banks and then both banks failed in the end.

Throughout history, if you go to a place after the war ends you usually find everything as very cheap, everyone is demoralised, people are just depressed and there are enormous opportunities if you have energy.

What do you do? No politically-elected government can afford so much pain, unemployment and hardships

Throughout history, if you go to a place after the war ends you usually find everything as very cheap, everyone is demoralised, people are just depressed and there are enormous opportunities if you have energy.

If US unemployment touches the 10%-mark, it would further impact retail sales. How bad could this be for Asia?

And rarely do they produce. Its not the first time that the Congress party has been in the power. If they mean it, Indias going to be one of the greatest development stories in the next 20 years. But I dont know if they mean it.