Dear Mr. Berko:

Way back in 1992, I bought a Swiss annuity that you wrote about. It has done better than any stock or mutual fund I’ve owned since. Should I put more in this annuity? I’m 55, my wife is 55, and we have $476,000 in investments and savings. Our home is debt-free and we have no credit card debts.

We’re both very nervous about the future of the U.S. economy (national debt, consumer debt, etc.) and are thinking of selling our house, worth $235,000, and adding that to our assets. We would then have $711,000 and are thinking of moving to Switzerland. Do you think our economy will go to “hell in a handbasket” as some naysayers tell us it will?

R.T., Fort Walton Beach, Fla.

Dear R.T.:

An economist friend of mine, Denby Oxenbridge-Slythe, tells me he’s moving to Helvetia soon, and if you post me your e-mail address, I will ask him if he’d like to answer your questions. I think his pessimism is overdone, but he believes our economic benchmarks are so overloaded that the economy must collapse.

I don’t think your $711,000 will cut it in Switzerland, unless you’re willing to dine on Alpo and live in an Alpine cave. A cup of coffee in Switzerland costs $8 and add $5 for toast — and butter is extra. May I suggest Mexico or Costa Rica? You can live like a minor potentate on $711,000, and those countries are much closer to home when you decide to return, as most expatriates do.

Early last year, Denby became a slobbering pessimist. He is so concerned about the national debt, consumer debt, the rate of personal savings and the potential fall in housing prices that he is converting most of his assets into Swiss francs. By summer’s end, he and his insanely flighty but sweet wife intend to move stock, lock and barrel to Switzerland.

Denby blames former Federal Reserve Chairman Alan Greenspan for allowing the national debt to reach nearly $9 trillion by the end of 2006. He says the debt, which was $7 trillion two years ago, seems to grow by bounds, jumps, leaps and hurdles. He says this number does not include off-budget items, guarantees and myriad promises made by Congress. Meanwhile, according to Denby, the national debt continues to grow by $2.5 billion a day and could upset the tenuous balance of the U.S. Treasury market.

Denby also blames the past Fed chief for using the lure of record-low interest rates that encouraged American consumers to dangerously incur more than $12 trillion in personal debts: home mortgages, credit cards, auto loans, etc. Denby strongly believes that the American consumer does not have the earnings power or the financial smarts to repay that borrowed money.

Denby places the onus on Greenspan for the negative rate of personal savings. Last year, Denby says that personal savings was a minus one-half of 1 percent. The only other time personal savings was in the red was during the Great Depression, when no one had any money to save. As if that weren’t enough, Denby also points to a recent Federal Reserve report indicating that the average family income (between 2001 and 2004), after adjusting for inflation, fell by 2.3 percent.

Finally, Denby also blames “the Mumbler” for what he believes could soon be a serious fall in home prices. Record low interest rates, he says, “made it possible for Americans with median family incomes of $45,000 to buy a dream home. But now, rising interest rates are making it impossible for Americans with a median family income of $45,000 to continue owning that dream home.”

I think you and Denby are overreacting, but I won’t disabuse either of you of your enjoyed hysteria. From experience I can tell you with the highest form of certainty that nothing is ever as bad as it seems and, conversely, that nothing is ever as good as it seems. And I can tell you with the highest degree of certainty that we will work through those problems and that the work-through process should make our economy even stronger than before. We’ve faced much more serious economic problems in the past and smartly marched ahead.

Meanwhile, I am comfortable suggesting that you put a few more thousand in that Swiss annuity. It’s kind of like owning gold ingots that pay dividends.

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