Today, we weep!

Yes…pity the poor rich. Or those who thought they were rich. They’re losing their houses.

The New York Times reports that the rich are defaulting on their mortgage loans faster than the poor:

The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.

“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.

Ruthless? They are just coming to the obvious conclusion faster than their poorer brethren. And it makes sense that they should. They have more money at stake.

The obvious conclusion: this is no normal ‘recovery.’ If prices aren’t coming back, why pay off a mortgage loan when you don’t have to?

We continue to live in a gray zone.

It is not as black as the Great Depression.

But it’s certainly not as bright as the go-go Bubble Era, either.

What is it, exactly?

Is it a correction?

What is it correcting?

We don’t know. Not exactly.

When will it be over?

We don’t know that either.

What will happen next?

Wish we could tell you.

Let’s keep it simple: will prices go up or down?

Hey, stop asking so many questions!

Look, we’re way ahead of most people. Most people – including most economists – think we are in a period of ‘fragile recovery.’ They think we had a recession. Now the economy is in recovery. If the recovery doesn’t seem much like other recoveries in the Post-War era, it doesn’t trouble them particularly.

Besides, they know what to do – keep money flowing!

Here at The Daily Reckoning we are coming to a growing awareness of what bumblers and self-absorbed preeners our fellow economists are. But we’ll come back to that.

Let’s push ahead with what we think we know about what it going on.

So far, the economy gives no sign of normal ‘recovery.’ We’d be deeply concerned if it did. Because what it had before the crisis of ’07-’09 was not something to have again. It had the bubble heebie-jeebies, if you know what we mean.

Now, the economy gives every sign of being in a Great Correction…

…unemployment is not recovering. In fact, it seems to be getting worse. It would not be at all surprising to see the official unemployment rate go up to 12% in the next leg down…

…housing is not recovering. It has stabilized…but only tentatively. There is still a huge overhang of inventory and underwater mortgages to be resolved. And the latest figures show they’re not moving. Under these circumstances, you’d have to be one heckuva optimist to think prices would ‘recover’ anytime soon…

…credit is not recovering. Instead, it is shrinking… Last week’s figures show more contraction.

These things do not point to the end of the world. They point to the end of the credit expansion that ballooned up the economy from the first Reagan administration through the last administration of George W. Bush.

That expansion is over. Kaput. Finished. What’s coming next? We’ll see…

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