Dear Mr. Berko: I think I would like to buy 1,000 shares of Delta Air Lines as a quality value play. I know the company is in trouble, but with the recent concessions, it looks as if Delta will be a strong survivor. Please advise on this.

I’m in the process of buying some land on which to build three houses, which I would contract out to have built on a “spec” basis. Do you think we will have a housing bubble and if so, when do you think it might begin? I need about nine months from start to finish. If there is going to be a bubble, do you think I have time to get in one more lick before it bursts?

S.R., Guthrie, Okla.

Dear S.R.:

When that housing bubble bursts, it’s going to be the “pop heard ’round the world.” And it’s beginning to happen in merry old England, as five quarter-point hikes in interest rates have pushed borrowing costs to a three-year high. The air is leaving the English bubble at a quick pace, as the economy has recently begun to slow quite sharply.

As Federal Reserve Chairman Alan Greenspan continues to raise our rates (also in quarter-point intervals), higher home-borrowing costs could severely dampen a buyer’s ability to purchase a new residence. The difference between a $200,000 loan at 5.5 percent vs. 6.5 percent is $166 a month, and that difference is a significant deterrent to most home buyers. As rates climb, homeowners with ridiculously low-rate adjustable-rate mortgages and similar financing schemes will scream a blood-curdling “Uncle.”

The rates on many of those funny mortgages might explode from 2.5 percent to 7.5 percent, and on a $200,000 mortgage that’s an $833 increase in monthly payments. It’s not here yet, and we don’t want to admit it could happen, but most of us know it’s coming sooner than later.

The five-year housing boom in England, during which many homes more than doubled in price, is over. The huge increase in home equity loans has left households with $2 trillion in debt, which is equivalent to 95 percent of Britain’s gross domestic product.

The boom in U.S. housing prices is almost over, too. The jump in U.S. home equity loans has increased consumer debt to $9 trillion, which is almost 75 percent of our GDP. The rise in home prices is slowing and could come to an abrupt halt by the end of this year.

As Greenspan continues to raise rates (remember the disastrous effect his rate increases had on the stock market), his increases could force hundreds of thousands of buyers out of their homes because they lack the income to pay the higher rates. There might be myriad thousands of homes overhanging the market with mortgages exceeding their resale values.

When Greenspan pricks the housing bubble, the result could be a catastrophe that will make the last collapse of the Dow and the Nasdaq look like a school picnic. How many families do you know who have purchased a $200,000 home at a low rate of 2.5 percent or 4.5 percent and might have to rent a tent when Greenspan forces those rates to 6.5 percent or 7 percent? I’ll wager a shilling to a hush puppy that you know a few.

As for your stock question: Delta Air Lines Inc. (DAL-$4.70) is not a “quality value play.” Merck & Co. Inc. (MRK-$30.95) might be a quality value play, Newell Rubbermaid Inc. (NWL-$22.73) could be a quality value play, and Tupperware Corp. (TUP-$19.91) might also be a value play. But Delta?

DAL is so top-heavy with debt than even a mild wind could shear its wings and rudder, and all the concessions in the world will not be able to put Delta back together again. Meanwhile, DAL’s debt and pension obligation have all the characteristics of a potential avalanche and I doubt that the company can generate enough cash to stay alive.

DAL has lost more than $5 billion in the last four years, and its $14 billion of debt represents 135 percent of capitalization. I doubt that the company can compete with low-cost carriers. Southwest, JetBlue, Independence Air, Frontier and Midwest have far lower costs than DAL, superior balance sheets and are infinitely better managed. Oh, Delta might have some sympathy points remaining in the price, but as a quality value investment, it sucks.

Airlines with huge fixed costs and large capital structures, such as DAL, United Airlines and American Airlines, are out-of-date companies from another era.

And once-proud names such as Eastern Airlines, Braniff, TWA and Pan American should serve as a reminder of Delta’s potential fate. There’s no quality and little value remaining in Delta.

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