By Stan Rosenzweig

Once again, friends, we're facing a funk where some market sectors will take a beating, providing you with a profit opportunity. No, I don't have a crystal ball, but I have something better: common sense.

US household savings, in the last reported quarter, is a measly one cent per family. ONE CENT. And the only reason the savings rate isn't a big fat negative is because, instead of borrowing more on our MasterCards, we're pulling out and spending away all the paper gains in our houses by refinancing what seem like every other Tuesday. Hey, if the government doesn't care about deficits, why should we, right?

What's the downside?

1. Inflation.
2. A big bubble waiting for a mean spirited kid with a pin to come along.

With rising inflation the Fed will not stop its relentless raising of interest rates. Can you see the connection between the Fed's prime rate and the abrupt end of your 5% adjustable mortgage? If you don't recall 12% mortgages and 21% business loans from the '70's, I do, and I see déjà vu all over again.

Yes, it's been painful since a tank of gasoline went from $15 to $40. That took more pounds off my wallet than Atkins ever took off the butt my wallet rests against. But it's chump change to pay 40 bucks a week to drive to the Dunkin Donuts and back. It's way bigger to pay three or four thousand a month more to keep the home you drive back to.

History says the next time you refinance your five year adjustable, your payments could triple, which certainly would drop your resale value a tad.

Think about the link from higher oil prices, to higher other things, to high inflation, to more Greenspan rate hikes, to higher mortgages, to lower housing prices, to eroding home wealth. If history is right, this will not only burst the housing bubble, but will take a few mortgage banks along with it, especially banks who hold credit card portfolios along with mortgages.

Those who've mortgaged to the hilt and spent like there's no tomorrows, will be broke. They'll have to stop buying and everyone they buy from will become poorer, too. Banks will foreclose on overpriced McMansions, causing an inventory overhang that begs for pennies on the dollar.

To benefit, start socking away some cash, so you'll be able to pick up bargains all over the place, not to mention that you'll still be in business.

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