Dear Mr. Berko:

I’m soon going to be 90 and have been reading your column since 1984, and you are truly a wise man. I have a $100,000 certificate of deposit coming due next week and thought there might be a good opportunity to make some big bucks by investing in companies that are cleaning up and rebuilding Louisiana and Texas.

My next question concerns Alan Greenspan, and I know he is not one of your favorite people. Do you have any idea how many jobs have been lost around the Gulf Coast because of these hurricanes? Can you give me an idea how the destruction of the Gulf Coast area will affect our economy? I didn’t expect Greenspan to raise rates in September, because I thought the problems on the Gulf Coast would slow our expansion, but Greenspan thought differently. Do you think Greenspan will continue to raise rates? Do you think he might overdo it, like he did in 1999 and 2000?

W.B., Fort Walton Beach, Fla.

Dear W.B.:

According to the Federal Emergency Management Agency — plus reliable and believable private sources — approximately 284,000 people have lost their jobs because of Hurricane Katrina. The same sources indicate that Hurricane Rita might increase those numbers by 30,000 to 50,000. Meanwhile, those lost jobs plus rocketing energy prices will likely smother U.S. economic growth for the second half of 2005. And there’s the lingering concern that additional spikes in oil prices are likely to prolong weak economic activity well into 2006 and 2007.

The Commerce Department reported that the economy grew at a respectable 3.3 percent annual rate for the April-June period, and its “advance estimate” for the July-September quarter is for 3.8 percent growth. However, in mid-September, the Federal Reserve Board, led by Chairman Alan Greenspan, raised the federal funds interest rate once again for the 11th time in 15 months. On Nov. 1, the Fed raised the rate once again.

Greenspan is terribly mulish. Sadly, he has a history of raising rates much too high much too soon. Six years ago, the economy had the resilience and strength to check itself against his full-throttle interest rate overdrive. But many observers feel that today’s economy, weakened by an enormously high personal and federal debt and unprecedented energy costs, record federal budgets and a certain housing bubble, may be too fragile to resist Greenspan’s onslaught of higher rates. That portends the “R” word (recession), and that worries me!

Three outstanding issues that may benefit from the tragedies caused by Katrina and Rita are Caterpillar Inc. (CAT-$54.25), Deere & Co. (DE-$63.07) and Halliburton Co. (HAL-$59.15).

CAT is the largest manufacturer of earth-moving equipment and is currently rerouting equipment to Louisiana that was promised to dealers and commercial clients. CAT is asking dealers, leasing companies and commercial businesses to accept a delay in deliveries so that equipment can be used in cleaning up and rebuilding the Gulf Coast. This surge in sales could add about $1.5 billion to CAT’s revenues and probably 55 cents per share in profit during the next two years.

Deere makes a broad range of industrial equipment used in the construction industry, as well as myriad tractors and outdoor power equipment used in the lawn and garden business. The destruction wrought by Katrina and Rita could positively increase DE’s revenues and earnings. The shares trade at nine times 2005 earnings, because many investors believe DE’s markets are at the top of the economic cycle.

Meanwhile, Halliburton certainly will be a primary beneficiary of the wrath of Katrina and Rita. HAL is making billions from the war in Iraq, and this multibillion-dollar revenue engineering and construction firm (once headed by Vice President Dick Cheney) is well positioned to generate additional billions of dollars of revenues and profits from the Gulf Coast in the next two years. It’s estimated that revenues and profits will soar again in the next couple of years. (They doubled after we invaded Iraq.)

There are various other candidates you might consider. But why would a soon-to-be nonagenarian want to play this niche market with $100,000? I think it’s too risky and too unsettled, but certainly there are going to be billions of dollars made by profiteering carpetbaggers down there, and the best way to make big money is to hop in your pickup with a bag of tools and pound nails with $400 hammers, install towel holders with $300 screwdrivers and replace $600 toilet seats.

Katrina and Rita are certain to create a multibillion-dollar boondoggle that might exceed the Teapot Dome scandal by orders of magnitude.

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