Ford Motor Capital Trust and the Economy by Malcolm Berko on Creators.com

Recently

Stolen Wallet Leads to a Huge Headache Dear Mr. Berko: My wallet was stolen a year ago, and most folks have no idea what a job it has been to get my life back in order. The credit agencies have me listed as a bum, even though I pay all my real bills, and I still get calls from vendors …Read more. Kick That Broker to the Curb Dear Mr. Berko: We are 74 and 76. We've used the same broker since early 2002, and our account, which was worth $765,000 back then, is barely worth $705,000 today. Our mutual funds haven't done well, and we've lost money in various unit trusts. Our …Read more. Would the Real Malcolm Berko Please Stand up? Dear Mr. Berko: What stock exchange firm do you work for? Is it true that you accumulate a big holding of a stock for all of your clients and then write good things about that stock in your newspaper column so that millions of investors will read …Read more. Natural Gas Firm Looking Like a ‘Buy' Dear Mr. Berko: A long-time friend of mine (name omitted) who says he knows you well has had some good successes in the market during the past six years buying oil and gas limited partnerships, high-yielding convertibles and preferreds. He just …Read more.

Ford Motor Capital Trust and the Economy

Dear Mr. Berko: I own 5,000 shares of Ford at $3 a share and because the economy looks like it's going back to prosperity and better times, would you recommend that I buy more Ford stock? As you know, Ford recently recorded a $2.3 billion profit so it looks like the economy is really on the road to recovery and the stock market could really take off back to, I hope, its old high of 14,500 perhaps by next year. I bought Ford because I owned Lincolns for 12 years and they are great autos and I just knew the company would survive. — G.L., Troy, Mich.

Dear G.L.: You and millions of other patsies, along with the green-shoots idiots, the president's gung-ho policy makers, the ignorant media and the pandering politicians are confusing the beginning of the end of the recession with an imminent robust recovery. It's an egregious mistake to assume; because the economy has stopped its free fall that it has turned the corner and we are on the road to recovery. That assumption is far, far, far and far from the truth. However, Obama's administration continues to glad-hand the consumer; the politicos continue to pander for votes; and the media, that wouldn't know a phlebotomist from an economist, jumps on the bandwagon, all enthusiastically singing, "Good times are here again." There are lots of speed bumps on the yellow brick road to recovery, which are conveniently ignored because they don't fit the program, because they're politically incorrect and the average consumer has the economic IQ of a titmouse.

The bubble in the commercial real estate market is still bursting. Vacancy signs are sprouting like green shoots and the commercial mortgage market has turned from lust to dust. Record state deficits (California, New York, Ohio, Illinois, etc.) are competing for money with federal programs, state employees are losing their jobs and state government purchasing departments are significantly reducing their 2009 and 2010 expenditures.

Many Americans are losing their unemployment benefits, which reduces spending, which reduces demand and increases the personal and business bankruptcy rate. Our trading partners — Canada, France, the United Kingdom, Japan, etc. — are importing less from us, demand is weak and their economies are also floundering. And our enormously huge national debt precariously teeters on the edge of a precipice "waiting for Godot."

There are two classes of Americans that are not affected by the recession: the wealthy and the poor. The wealthy may lose 30 percent of their fortunes, but if one is worth $300 million and is now worth $210 million, that drop in wealth won't affect their lifestyle. The wife and mistress can still buy sable coats, drive a Bentley, vacation on the Riviera, slather beluga caviar and buy uncut coke. And the very poor are also unaffected because their standard of living is so low that it can't get any worse.

But congratulations on your purchase of 5,000 Ford (F-$8.38) at $3 a share. You've got a sweet $25,000 profit, but you don't have an exit strategy. It was Bernard Baruch, who, when asked for the secret of his stock market genius, exclaimed, "I sell too soon." Don't add any more Ford common stock to your portfolio. However, I would have zero objections if you sold 4,000 shares of your common stock and bought 1,000 shares of Ford Motor capital trust 11, 6.5 percent, cumulative, convertible trust certificates (F-S-$29.25) that pay a lovely $3.25 dividend with an 11.1 percent current return. This convertible preferred has $50 par value, matures on Nov. 15, 2032, and is convertible any time into 2.83 shares of Ford common stock. It's a piece of junk, but if Ford survives, that junk can turn into treasure.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.