How much dirt is getting moved in the United States?

We get news this morning from Arizona and Connecticut. In both the West and the East less dirt is getting scooped up and moved.

Caterpillar, which people buy when they want to move dirt, warned that its earnings wouldnâ�,��"�t be as strong as investors had hoped.

The stock price tumbled.

We assume the fall in CATâ�,��"�s estimates is just another part of the squeeze in the housing industry. Developers are having a hard time moving their products; so they are buying fewer Caterpillar dirt-moving backhoes and loaders.

Not in Greenwich, though. Housing there has soared.

Greenwich is a nice little town in Connecticut. At least, it was nice until the hedge funds moved in. Now, it is a nice-looking little town with a lot of puffed-up, self-important, know-it-alls taking the parking places.

Hedge fund managers have a lot of money, thanks to the popularity of legalized gambling in the financial markets and thanks to their â�,�˜heads I win, tales you loseâ�,��"� fee structures. So, naturally, they spend a lot of money on housing.

And talk about moving dirt! Theyâ�,��"�re putting in palaces with vast, underground parking places...and wine cellars...and bomb-proof, computerized control rooms. But everything that has a beginning has an end...and now, even in Greenwich, diggers report that times are getting a little tougher. Recently, condo developers in the city have resorted to giving steep discounts â�,�“ as much as $100,000 on $1 million units â�,�“ to move the merchandise.

Meanwhile, the Arizona Republic reports that things are getting dry out in the desert:

â�,��"People aren't bragging about how much their home appreciated in a single month. There are no bidding wars for homes. No one is talking about how they're going to spend their equity.

â�,�No, homeowners today are watching every sale in their neighborhood, cringing if they see â�,�˜For Saleâ�,��"� signs lingering too long and losing their tempers when neighbors drop prices.â�,�

Included with the article is a photo of a street in Maricopa. What we see are a line of five houses, each with a â�,�˜For Saleâ�,��"� sign in front

"The Valley's housing market is going through a definite and obvious correction," said O'Campo de Castillo. "Homes are selling, but they have to be priced right. No one is paying last year's inflated prices."

Why not? Because there are 45,000 homes on the market across metro Phoenix now, compared to fewer than 20,000 last October. The median used-house fell to $256,900 last month, down from $263,000 in September 2005. It hit a record $267,000 in June.

But fear not, ye faithful homeowners.

"When the supply/demand scenario is corrected, home prices will start climbing again," said John Foltz, president of Phoenix-based Realty Executives.

Then, of course, the Caterpillar tractors will rev up their engines and begin moving dirt again.

But how does Mr. Foltz know that house prices will go up again? For almost 100 years, house prices didnâ�,��"�t go up at all; they just stayed even with inflation. Then, over the last ten years, they shot up at a rate 30% greater than inflation (or much more, depending on where you were.) But this is how we know we are near the top of a bubble...people have delusions of mediocrity; they think extraordinary house price increases are normal.

As the dirt moves, so moves the GDP. And when the GDP moves, economists think the economy is growing and the people are getting wealthier. Is it really so? Can people get wealthier by moving dirt?

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