As a bearish stock market investor during most of 1999, I moved 100% into cash in August 1999. I was surprised–to say the least–when the market tracked directly upward right through the Y2K non-event. By February, no one was talking about “bubbles” anymore and I got back into the market. A quick read of news and editorials from those early months of 2000 shows a mix of opinions, but mostly a sort of defensive optimism: http://www.businessweek.com/bwdaily/dnflash/jan00arc.htm

It seems to me that the “chatter” surrounding the housing bubble peaked this fall, and since then it has been eerily quiet–exactly like early 2000. There are a few signals which spawn opinion articles, but no solid evidence to swing defectors from one side to another. It is precisely at these times, like a crystal-clear blue September morning, when no one is paying attention, that big things happen. And I for one am scared.

The bubble has grown to size where it is hard to imagine the impact crater not decimating anything nearby—jobs, newly-minted neighborhoods, retirements, and the rest of the economy. I am shelving my landed-poor ideals that perhaps I could afford a depreciated home. Housing would need to drop 50% on the coasts to become reasonable again, and this sort of impact on the economy is unimaginable. I fear for the future.