Rogers: It was worse than irrational exuberance. It was a mania, it was a bubble. And it still could turn into a bubble. I don't want to sell China because it's got a great future, but if it keeps going up the way it's been going up, I'll have to sell.

Bloomberg: I think there was a lot of confusion about what the Chinese government did, limiting the ability of taxi drivers to be able to buy stocks on borrowed money. How big of an impact do you think this might have on the overall equity market?

Rogers: Well, if you look at the Chinese stock market, it's gone straight up. It's nearly tripled in the last 18 months and that's never good for a market, even though it had been going down a few years before that. And the government said, "Hey, we're not going to let people ..." We have margin requirements in the U.S. - you're not supposed to buy shares on your credit card, so it's the same thing we have here. There's nothing unusual about it and once you take that extra money out of a market that's been going straight up, it's going to have an effect. The government also raised reserve requirements for the banks - they have to put more money aside so they cannot lend so much. They're trying to cool off an overheated economy and certainly an overheated stock market.

On the Chinese economy, commodities, the U.S. stock market, recessions, and the market prognostications by Alan Greenspan.

Bloomberg: If the government is concerned about curbing investment, does it make you question any of your own assumptions about Chinese growth and its impact on some of the other markets, like the commodity market?

Rogers: No, none whatsoever. We're talking about the stock market, we're not talking about the economy. Even if the Chinese economy's growth slows down by half, then it would still be growing at five percent a year. Most countries in the world would give anything to grow at five percent a year. And if it grows at five percent a year, that's a lot more rubber tires, that's a lot more eggs that somebody has to produce.

Bloomberg: Why do you think then that the fallout from what is a very illiquid market, pretty small in terms of market cap, stock market decline hurt so many emerging market economies and even commodity markets?

Rogers: No, no. I don't think that the markets went down because of what happened in China. As you've pointed out, China's a very isolated market. Foreigners cannot invest in China and do not invest in China. The (U.S.) market is going down because it's time for it to go down. We're probably in a recession in the U.S., if not we will be before long. I know housing is in worse than a recession. I know that automobile manufacturing is in worse than a recession. I know that there's an inverted yield curve. I know margin debt is at an all time high. I mean there are lots of reasons why it's time for the market to go down. Whenever you have a market decline it usually starts with a marginal country or a marginal sector. That's just the way markets work.

Bloomberg: So basically, with what the Chinese government said about slowing down or curbing some investment, you don't see any decline in appetite for raw materials?

Rogers: It could slow down. The rate of growth could slow down certainly. And if the U.S. is in a recession or goes into a recession, that's going to have an effect, but on the other hand, you've got three billion people in Asia who are continuing to expand and, as I've said, suppose their growth rate gets cut in half, that's still the growth rate. But we always have corrections in every market. You know that.

Bloomberg: And I think what really hasn't really gotten enough attention was something that was said to Hong Kong two days ago by former Federal Reserve Chairman Alan Greenspan, saying the U.S. economy could, anything could happen I guess, end this year in a recession. You've said the same thing yourself. You've said this could exacerbate that.