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Dear Mr. Berko:

Dear Readers:

This is a real letter, and in the past three years, I have responded to each of R.S.’s previous letters. This is not an easy question. It took a lot more thinking than I’m accustomed to, and I’m sharing this with you because it saves me from writing a column today.

Dear R.S.: Here’s your list. You know that every negative opinion has an opposite spin. So what you read below is nothing more than a mode for developing a process to create a framework for a potential platform that determines the advocacy of non-peripheral data.

RISING INTEREST RATES: Ten-year Treasuries now yielding 3.8 percent could run up to the 4.3 percent level or a bit higher. This could happen soon, as the Treasury continues to pump and dump more money into the economy to finance the deficit. A 4.3 percent or higher yield could put speed bumps on the housing recovery and compete with common stock dividends.

ECONOMIC OUTLOOK: Higher taxes thanks to ObamaCare, a stubborn job market and new financial reform legislation translate to lower consumer confidence, possible reduction in business investments and a shallow domestic recovery.

RETAIL: Very cautious retail projections and inventory build-up indicate a slow second quarter.

ACROSS THE POND: Spain and Portugal are hurting badly; Greece will not be able to fix itself without help from Germany and France. Meanwhile, Germany and France would prefer to stay away from the fray.

NEITHER A BORROWER NOR A LENDER BE: Banks are not lending to consumers. States and municipal budgets are imploding and will be coming to the market to borrow huge amounts of money. Some states and municipalities are near bankruptcy, and almost all are being forced to reduce employment and services. This is where we will soon see huge layoffs and spending reductions. These forced austerity programs will inhibit needed economic growth. The rating agencies may be downgrading more municipal and state debt, which will also encourage rates to rise.

GOOD FENCES MAKE GOOD NEIGHBORS: Rising tensions in the world are affecting the market. There’s no Afghanistan solution; Iraq is floundering; the Israeli/Palestinian problem defies resolution; and Iran’s nuclear ambitions are destabilizing.

THE FED SAYS: We are slowly becoming hawkish. The talk seems dovish, but observers think the Fed will raise the discount rate twice more this year.

TAXES: Recent tax increases, plus new income tax increases to be imposed by Congress, will further dampen consumer confidence, consumer spending and business investment.

EUROPE’S BIG BANKS: Banks in Germany, France, the United Kingdom, etc., are pulling in their horns and closing their spigots. Europe may find itself in a credit crunch, which could put a damper on our exports and further limit our needed economic growth.

PROTECTIONISM/CURRENCY WARS: The Chinese yuan is out of sync with the U.S. dollar. Failure to devalue their currency may result in tariffs and trade wars and spill over into Europe.

HOMES/CONDOS: Ain’t good, no matter what the talking heads proclaim. New home sales are still falling, and this could be a signal of a weak recovery. But there has never been a recovery in which real estate was not the leading indicator.

CONSUMER SPENDING: Consumers splurged in the fourth quarter of 2009 and the first quarter of 2010. Cash for Clunkers and home purchases that spurred consumption are no longer stimulating the economy.

Anyhow, all this bearish talk makes me feel bullish and hungry.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, Fla. 33775 or e-mail him at mjberko@yahoo.com. © 2010 Creators.com