.bodytext {float: left; } .floatimg-left-hort { float:left; margin-top:10px; margin-right: 10px; width:300px; clear:left;} .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} tr.d0 td { background-color: #ccccff; color: black; }
Dear Mr. Berko:

Dear W.B.:

My answer may severely traumatize you. Are you ready?

I believe that home prices could fall another 20 percent to 25 percent in the next two years. Even the very knowledgeable David Rosenberg, an economist for Merrill Lynch, agrees with me; and I’m “gabberflasted” that Merrill allowed David to go public with that number.

If home prices decline another 20 percent, that would reduce values to where they were in 2000, adjusted for inflation, of course. And www.zillow.com reckons if home prices decline another 20 percent, then 70 percent of the people who bought homes in 2007 would lose every penny of their equity and owe their banks more than their homes are worth. And my good buddy Alan Greenspan should get the credit for this biggest and baddest bubble.

“The Mumbler,” according to Fed Vice Chairman Alan Blinder, cut the benchmark rate to a 45-year low of 1 percent in June 2003, and held it there until mid-2004. Blinder believes Greenspan created the bubble by keeping rates so low for so long. Even economists John Taylor at Stanford, Alan Meltzer at Carnegie Mellon and Steve Checchetto at Brandeis agree.

Greenspan, whose expertise in economics was greatly exaggerated by his notoriety, social prominence and legions of sycophants, was cautioned on numerous occasions about the dangers of low rates. He paid no attention. Even Desmond Lachman, who was head of the International Monetary Fund, told Greenspan that there could be “a lot of trouble ahead.” Oh, well.

So, don’t blame Ben Bernanke for this housing bust. “Gentle Ben” inherited the problem and asking Greenspan to come back would be like inviting Katrina to revisit New Orleans. I’d like you to be mindful that Greenspan, who mumbled copiously through every congressional hearing and in every media interview, now answers the same questions with crisp logic and a sharp tongue. And I’d also like you to be mindful that while he was head of the Fed, there wasn’t an economist in the world who would criticize him. But today they’re squirming from the woodwork. Interesting, that, yes?

I’ve said it before and I’ll say it once more: Greenspan will go down as the worst Fed chairman in history.

Now please do not sell a single share of those six good issues. Southern is a fine company and should continue to give you excellent dividend income with periodic increases. Consolidated Edison is also a dandy and has increased its dividend every year since 1982. Keep Progress Energy, which has a long record of continuously rising dividends, and do not sell General Electric, Pfizer or Buckeye Partners, all of which have excellent dividend growth records, too.

What you should do is obtain a reverse annuity mortgage on your home. And you gotta do it quick as a bunny before your home valuation gets “de-bubbled” (falls). At age 70, with a home valued at $230,000 you can get $755 a month, tax-free, for as long as you live, even if you live to be 109 years old. If you wait too long and the value of your home falls to $215,000 you will only get $729 a month, and if it falls to $200,000, you’ll only get $675. As you can see, it makes good sense to do it now.

The monthly payments are tax-free, they can be used for anything you want and won’t affect your Social Security or Medicare benefits. The lender cannot come after you or your estate if the housing market continues to deflate or if the house is worth less than the amount you have received. Repayment is not required until the surviving borrower passes or until the home is sold. And if the home is sold for less than the amount you’ve been paid … well that’s the lender’s risk, not yours. So check with AARP or cozy up to one of the big banks in your neighborhood.

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