Dear Mr. Berko: I have $72,000 to invest. I know the U.S. stock market is the pits and was thinking of putting this money in the stock markets of the Australia the Pacific Rim countries that seem to be unaffected by the trials and tribulations of our economy. I have a friend who works for Merrill Lynch in Australia and he says: "Come on down." What do you think? - D.L., Fort Walton, Beach, Fla.

Dear D.L.: I like Australians and I think Australia is a groovy country. However, as an Aussie might say: "I think you're a few kangaroos loose in the top paddock." By "any tick of the clock," I'm convinced that the Australian economy is going to head into a recession. Therefore, I'm willing to wager a rare roo egg to any amber fluid that the entire economy of the Pacific Rim will soon "chuck a U ey!"

The U.S. financial system — banks, insurers and brokerages — is so tightly coupled with financial systems worldwide that a breakdown in Ohio can cause a shock in Adelaide. We currently have a debt crisis that is so complex — the largest participant is the U.S. — that no one seems able to unravel the myriad pieces of mortgage-related securities. In fact, the issuance of credit default swaps and other derivatives, according to Jim Sinclair, exceeds $1.2 quadrillion, more than 600 times the amount of the bonded debt of the free world.

In other words, speculators were buying certificates of deposit on bonds they didn't own intending to collect their blood money when a bond went belly-up. Think of this like a thousand investors with who wouldn't know you from turnip buying insurance on your life so when you die each of those insurance companies have a liability and an obligation to pay the policyholder. Sweet isn't it?

As for that, you can thank the fancy Wall Street MBAs with Ivy League diplomas. The speculative fervor became an international feeding frenzy and the ensuing complexity is causing a global crisis of confidence. That's the risk of a One World Economy.

The pain will be felt in Brazil and Belgium, Thailand and Turkey, Italy and Ireland, China and Chile and everywhere there is a Citicorp, a Merrill Lynch, a Bank of America, a JP Morgan Chase, a Goldman Sachs, a Lehman Bros and an AIG. Until this derivative mess is solved — they should all be canceled so the only losses will be the premiums paid by the buyers - I'd keep that money under a solid mattress.

However there could be two funds, other than funds that sell short, that could shine as the crisis reaches containment. Look at Hussman Strategic Growth (HSGFX-$15.05) and Hussman Strategic Total Return (HSTRX-$11.36). HSTRX is plus-4.3 percent and HSGFX is plus-4.2 percent this year. They are run by one of the most brilliant economists and thinkers I've read. Neither of these no-load funds has ever had a down year. Each has outperformed the DOW since their inception.

John P. Hussman is a PhD who wears a tie and a friendly smile. If you click on www.hussman.com you will be treated to his weekly comments with timely and well written articles like Spot the Pigeon, Rip Van Winkle, Ripe Fruit, Foxes Minding the Henhouse, Goldilocks' Wake-Up Call, Monkey Logic plus his thoughts on various stocks. Get acquainted with this guy and enjoy his pithy musings. But it might not be the time to plunge into his funds because the crisis is far from containment.

However, if you want some action, consider the Rydex Inverse 2x Sector Financial (RFN-$69.92). This New York Stock Exchange-traded fund makes its money by shorting securities in the Standard & Poor's Financial Index by using leveraged derivatives such as equity index swaps, futures, contracts and options.

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

COPYRIGHT 2008 CREATORS SYNDICATE, INC.

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