Financial advice guru Suze Orman answers questions

SAN FRANCISCO -- Financial guru Suze Orman's brand of tough love therapy for money matters takes on added resonance with the country mired in economic crisis.Orman, who has been called "the high priestess of personal finance," seems to be everywhere these days, appearing in ads for the Federal Deposit Insurance Corp. (at no charge) and the Got Milk? campaign, as well as on her weekly CNBC show.Orman talked from her San Francisco home, where she spends about two months a year. This has been edited for length and clarity.Q: How bad do you think the economy will get?A: First, the question really is how bad could it have gotten if they had not done (a government rescue). It could have been horrific. It is starting to loosen up; things are starting to get a little better.You're going to see a lot of unemployment; a lot of downward economic trends. People spending less money; retail is going down; automotive sales are in the toilet. We need to expect a serious, serious slowdown. Everybody needs to think about every penny they are spending. Overall, we are in for a rough year or so. Q: Unemployment is at 6.1 percent. Could it reach double digits?A: I think for sure you'll see it at 7 percent, possibly 8. When one looks at that, they have to wonder, am I one of those people who could be losing their job? Every single one of us is affected.Q: When might the housing market bottom out?A: I think it's going down another 10 percent, 20 percent, and I think you're looking to 2010.Q: How should the U.S. address the foreclosure crisis?A: You have to be very careful on this one. You already have had many people lose their homes. You have had many people who couldn't afford to buy a home to begin with and now we're going to spend all this money to help those who are in trouble. You have to ask: Is that fair?If (banks) had thought quickly a year and a half ago, and said, "Let's save the people who are going to lose their homes because it affects the people who won't lose their homes, it affects the bottoming of real estate." If banks had been seriously willing to work with people, we would not be in this situation today.Q: Whose fault is the foreclosure crisis?A: People wanted to believe they could have the American dream. When banks and mortgage companies were saying, "You can qualify for a loan, you don't have to come up with money down, you can pay $400 a month for a mortgage that would normally be $1,200," people wanted to believe it. You can't blame them for that.The real travesty is there was no regulation over banks, mortgage companies, mortgage brokers. No oversight over these people making fortunes off people who did not understand what was happening. No oversight over how those mortgages were bundled and sold off to Wall Street. No oversight over the ratings companies who said those were appropriate.Q: There are so many bargain foreclosures for sale, but home prices keep falling. For whom is it a good idea to buy a house?A: If you do not have 20 percent to put down, if you do not have a high (credit) score of 700 and above, if you cannot afford a 30-year fixed mortgage including property tax and insurance; if you don't have, on top of the down payment, an eight-months emergency fund, you should not buy a house.Q: What do you recommend about investing now?A: If you are young, this is without a shadow of a doubt the greatest opportunity of your lifetime. You should continue to invest month in and month out in your retirement account. Do not stop under any circumstances.Q: Since "Saturday Night Live" keeps doing skits about you, might you follow in Gov. Sarah Palin's footsteps and appear on the show?A: They have now spoofed me three or four times; one of those times I was in the audience. By all means, if they ever ask me to do so, it would be one of the greatest honors of my life.(E-mail Carolyn Said at csaid(at)sfchronicle.com)(Distributed by Scripps Howard News Service, www.scrippsnews.com.)