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Dear Mr. Berko:

Dear R.C.:

There’s a 92 percent probability that the United States will not emerge from its economic malaise when a new president is given his key to the executive washroom next January. The fiscal profligacy of Congress, a too-old Fed chairman plus a White House too self-centered to care, might have created an economic crisis so compelling and demanding of our nation’s resources that the winning candidate might later wish he had never sought the Oval Office.

To this fetid soup we must add the avarice of Wall Street’s investment banks and mix in the corrupt money center banks, then stir in the venality of the mortgage industry and you have the perfect recipe for overweening greed. Real estate prices soared into the stratosphere because mortgage companies processed loans for anyone who could put a signature on an application. Prices got so high that demand declined, manufacturing began to slow, workers were laid off and home prices began to fall. But money center banks still competed to make home-equity loans, mortgage companies jiffied contractors so borrowers could afford monthly payments and Wall Street investment banks collaterized this worthless paper, selling it to investors who thought it was triple-A rated.

Home prices began to collapse, and small businesses began to suffer and cut payrolls. Retailers started to close, and large manufacturing firms were hurting, forcing more payroll cuts. Then consumers couldn’t pay their debts, and credit card companies were starting to hurt. Banks had billions of troubled loans that they couldn’t sell, so they shut their credit windows and reduced payrolls.

Finally, large publicly traded companies began to report lower earnings, some reduced their dividends, others divested assets at bargain prices to obtain capital and the Dow Jones industrial average began its descent. But our nation seemed to enjoy a modicum of prosperity because we were exporting goods and services to Europe and Asia in record numbers, aided by a cheap dollar.

Well, guess what? The housing market in England is beginning to implode, Spain is saddled with enormous high debt, and Germany’s business sector is pessimistic.

In France the unemployment rate exceeds 12 percent. There’s talk of a recession in Korea, the Chinese economy is finally slowing, and Japan is wrestling with a worsening economy and dangerously high debt. Eastern Europe is in the dithers, too.

Many observers suggest that we might be entering a global recession that could run its course in three to four years. Well, that’s a long time in my book, and it may take two years for our economy to turn – certainly not by the time a new president commands the Oval Office.

In the meantime, I ask you, who can afford and who will purchase our exports?

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. © Copley News Service