"House Prices Seen Slowing," says the LA Times.

And more news from Contra Costa, also in the Golden State:

Christopher Thornberg, senior economist with the UCLA Anderson Forecast, told a business group that he believes a drastic deceleration in home sales is coming. "You are starting to see a slowdown in housing market activity, and that says loud and clear that things are starting to break," Thornberg said.

Thornberg believes house prices are about 30 percent to 40 percent overvalued. But a return to normal is not an easy matter, he explained. "If you have a big decline in unit sales, you'll have mortgage brokers and real estate agents and construction workers all losing jobs. And what's driving the California job market right now? Construction, finance and real estate jobs. Those will go away...all that wonderful money is going to disappear. Suddenly, the house isn't going to be able to pay for the kids' education, it's not going to pay for your retirement in Bermuda and it's not going to pay for that face-lift at age 74."

Thornberg adds, "...we have peaked. And beyond that is a downhill run."

We have wondered about that. Everywhere we look, there is so much "wonderful money." On our street in London there is a Ferrari dealer and a Lamborghini dealer. It seems as though every other car is a Porsche or a Mercedes. And, looking around this past weekend, we saw an ordinary house for sale - three bedrooms, three baths, parking space. It was ordinary in every sense but one: it is priced at about $9 million. A pretty far run downhill for someone.

Also in yesterday's news, Bloomberg reports that Wall Street will hand out $21.5 billion in bonuses. All that wonderful money! Where does it come from? What does Wall Street do to earn it? The masters of the universe on Wall Street tell us that they "allocate capital efficiently." They must be doing a heckuva job allocating capital. We're surprised that there is so much money to be made in "allocating capital." But we're suspicious. We don't even know what allocating capital is. How is it different from helping the fool part company with his money? Is it what you do when you entice speculators into Google at 117 times sales and 350 times earnings?

Well, get it while you can. And enjoy it as long as it lasts. These bonuses will probably disappear, too, along with all that other wonderful money from the housing bubble.

Meanwhile, our old friend, Marc Faber tells Bloomberg that the best place for your money now is in Asian property: "When you look at asset classes, given the demographics in Asia and urbanization in the long run, I'm quite sure property prices will rise." The Bloomberg Asia Pacific Real Estate Index, which includes stocks of homebuilders from Japan to Singapore, rose 26 percent in 2005. That's compared with a 35 percent gain in the Bloomberg U.S. Real Estate Index.

"There is a speculative element to everything in the present time. We live in a world of inflated assets."

Yes, we do. Realtors in California, stockbrokers in New York, car dealers in London - a lot of very nice people have made their fortunes as assets took on air. Shame it has to disappear some day.

People who have been walking on water are going to have to learn to swim.

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

*** Argentina is the world's second-largest corn exporter after the United States, and the third-largest soybean exporter. And if Argentina stays in this drought pattern they have been in, explains our commodities expert, Kevin Kerr, a rally in the grains is likely, just on fear.

"Rains may have been insufficient to prevent South American crops from being severely affected," continues Kevin. "Some experts estimate that the growing regions in Argentina received only about a quarter of normal rainfall over the previous three months."

"Argentina is forecast to produce 17.3 million metric tons of corn this marketing year. That's down 11%, according to a report from Bloomberg.

"My sources in the pits in Chicago are turning more and more bullish. And they say hedge fund managers and large speculators have become more bullish on corn, too. As I have mentioned many times before to my Resource Trader Alert subscribers, one factor that is fairly new on the scene for demand is corn-based ethanol. Corn-based ethanol futures on the Chicago Board of Trade have risen 69% since their launch in March.

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