There are many ways to make money. The trouble is, many of them are demeaning, dull and dreary. Those mommas who guide their babies into the financial business might as well lay a mother's curse upon them. Yes, you can make money by shuffling cash, but what glory is there in that? You go to the right nursery school, the right private secondary school, the right university, the right business school, and you end up with a job at Morgan Stanley and a house in the Hamptons. There is no creativity in it...no adventure...no serendipity.

Mommas used to encourage their sons and daughters to become doctors, lawyers and such. There was the money, yes, but there was also the satisfaction of performing a heart operation, or suing the bejeesus out of the s.o.b. who performed one badly!

Nor is there any real satisfaction to be had in rising house prices. You can make a fortune; but there is something abnormal and ignoble about it. It is like being mistaken for a movie star. The good fortune comes to you under false pretenses. You can't really enjoy it. Always, in the back alleys of your own soul, there will be a mugger with a tire iron ready to take it away from you. And when he does, you won't even report it to the police, for it was never really yours in the first place.

House price inflation is only a real gain to dead people. Only when you shed your mortal coil can you also get rid of the roof over your head. Otherwise, your gain is largely an illusion, and an attractive nuisance. You can't take advantage of it without sleeping under a bridge. You can only use it to decrease your real net wealth - using the inflated value of your house to borrow money that you will eventually have to pay back.

The Bernanke-Snow team insists that there is no bubble in housing. But then...what's that hissing noise?

USAToday reports that median house prices fell 5.7% in the month of September...though they were still up 13.4% for the year. We're not sure which figure is more alarming - that prices are falling sharply, or that they are rising four times as fast as the CPI.

The median house price in San Francisco has reached $726,900. Is this too high? How much should a house in San Francisco sell for? We don't know. But we know that the typical resident of Northern California cannot afford to buy the typical house. Which makes us wonder who does buy them.

In Tempe, Arizona, six months ago it took about a week to sell a house. Now it takes a month. In Detroit, sellers find they have to reduce their prices two, three, and even four times before getting a sale. And even in Las Vegas's Mondo Condo madness, the market seems to be "softening," say the experts.

Real estate prices seem to be "leveling off" says one source. The market is "returning to normal," says another. No one seems very worried about it. But why should they be? What is wrong with "normal"?

Meanwhile, a study by PMI concluded that houses in L.A. are 33.7% too expensive. In central New Jersey, they are 25.6% overpriced. They are about the same in Las Vegas. And in Washington, DC, houses are nearly 20% higher than they should be.

There is nothing wrong with returning to "normal," except that many people can't afford it. They've gotten used to living on the inflated "equity" in their houses. They'll be more than disappointed when it disappears.

Bill Bonner, back in Paris with more deliberations...

*** From Addison:

"As you know, Bill has been laboring to establish the parameters of America's empire of debt for the past several months, including such nuggets as these:

Alan Greenspan took office on Aug. 11, 1987. Since then:

* Consumer Credit Outstanding has grown from $672.2 billion to $2,147.4 billion (a 219% jump)

* Household Credit Market Debt Outstanding has grown $2,711.54 billion to $10,764.54 billion (a 297% jump)

* Domestic Nonfinancial Business Debt shot from $1,974.1 billion to $5,269.4 billion (a 168% jump)

* The ISDA reports that international interest rate and currency derivatives outstanding shot from $865 billion in 1987 to $201.413 trillion in 2005.

* M3, the broadest measure of money, has soared from $3620.160 billion to $9976.729 billion (a 175% jump)

* The currency portion of the money stock has gone from $190 billion to $715 billion (a 276% jump)

* The trade deficit has gone from -150.7 to -756.8

* The total of foreign-owned U.S. assets has shot from $1.7 trillion to $11.5 trillion.

"We've collected all these observations, added a few more, fleshed out a few new ideas and added some nifty charts... pulled the whole mess together in a book we now call The Empire of Debt. The book, a sequel-of-sorts to our previous book Financial Reckoning Day, is in the process of being shipped to bookstores around the country.

"But here's an idea...tell me what you think...we're going to ship 567 copies of Empire of Debt to Washington...one earmarked for each and every Congressman, Senator - and a special package for Mr. Bush at 1600 Pennsylvania Avenue. We'll send another next door to the Federal Reserve for good measure.

"Why? Well, apart from the Honorable Ron Paul, it doesn't appear there's a simple soul inside the beltway who's aware of what's going on with the nation's balance sheet. Or if they are aware, they are incapable of doing anything about the increasing levels of spending going on. And as the government goes, so goes consumer behavior. As one real estate agent we know here in Baltimore stated this week, 'Hey, there's free money out there, why not grab some and spend it?!'

"Anyway, write in to DR@dailyreckoning.com and tell us what you think. Maybe we should send out the copies and arrange a day in the future to have all the readers of The Daily Reckoning call in to their Congressman's office and say: 'Hey, we sent you a book today. If nothing else you have to at least read the introduction.'"

*** Getting something for nothing is a hard habit to break. It is like a broken slot machine that pays off every time. Even after it has been fixed, people still pull the handle expecting another big win.

So, too, are people reluctant to believe that a housing boom is over. When prices go down, they buy, thinking they have just got a bargain. That is what seems to be holding up the London property market - where prices have been falling since the beginning of the year.

Steve Sjuggerud reports:

"London was a great reminder, just like the Nasdaq bust, that people continue to believe all the way down.

"A bear market 'sails down a river hope,' the old saying goes.

"A bull market 'climbs a wall of worry,' they say. No worries from my friend, because, even a year into the bust, he still believes - he hopes - that 'you can't go wrong in real estate.'

"If my trip to London was any indication, the real estate bubble in the United States will burst oh-so-slowly, just like in England. People will clamor to pick up 'bargains' on the way down, only to see that bargain price look expensive a few months down the road.

"It's what bear markets do; they suck in as many possible participants, thinking they're getting a great deal.

"Once everyone has finally given up on real estate, and thinks 'you'll never make money in real estate,' it'll be time to buy with all you've got, again. But we're the polar opposite from that now.

"You've got time to sell, but now's the time. Hey, maybe I'll pass your card on to a friend in London...he'll think U.S. prices are a steal."

*** Panic and spend...panic and spend. War...flood...now plague. The latest source of panic in the Bush Administration is an epizootic that doesn't even exist. Avian flu may kill 1.9 million Americans, says a headline. But bird flu will not pose a threat to humans until it makes a critical mutation, allowing it to pass from one human to another. George W. Bush said he is spending $7.16 billion of the public's money just in case.

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.