That subprime fiasco, which is likely to mount losses between one-half and one trillion dollars, is just a small part of the true real estate problem which little by little is starting to take shape; a problem that Wall Street, politicians, economists, and the public at large have been unwilling to talk about, much less confront. And that is, the multi-trillion dollar excess valuation of real estate in the nation, in both residential and commercial markets; something which for the next 3 to 5 years, at a minimum, will have the US immersed in a recession, a modified version of the one experienced in Japan throughout the 90's and the first 2 years of the new millennium.

With that introduction, and my crystal ball over a table at center stage, I bring a vision that comes into focus as realities zoom in; a vision which could change drastically the way Americans will be looking at politics by mid-2008 with elections just four months away. By then, there will be two candidates in place running for the White House, with an overwhelming majority of Americans wishing there was somebody else they could vote for, someone able to get them out of a snowballing real estate mess, then starting to accelerate. Unfortunately, it will be too late, and we'll be stuck with two candidates from two parties that always get us into these predicaments that economists and politicians simply dismiss as economic cycles that clear our capitalist system of these so-called excesses, what some describe as accumulated economic debris.

Economic cycles perhaps... but very definitely predictable and largely avoidable. At least the government should advocate and adopt policies that can dampen, flatten that economic sine wave that dislocates not just capital, but people's lives. These cycles have less to do with the workings of a free market, and a lot more to do with lack of necessary governmental controls to curb irresponsible, illicit business conduct and also restrain greed out of control, as it's always the case with real estate, creating what some may consider punitive levels of taxation. But, of course, our love of predatory capitalism does not permit any tampering with the Wild West way of doing things.

Realtors throughout the country, in their ever present monopolistic ways and self-serving behavior ˆ holding a good part of the blame in our present state of affairs ˆ continue heralding their lies, forecasting that housing will buck up next year. Never mind that prices have nowhere to go but down, 20 to 30 percent depending on which metro area or region. They and those who suck from the same udder ˆ the local newspapers for one ˆ are inundating us with ridiculously optimistic articles and informational data skewed to tell us something they wish to be true, but that is not.

Polls tell us that most people feel that their houses are keeping their value. Of course, that will always be the case until they have a true, non-speculative, "need" to sell; home prices, more so than commercial properties, have always been sticky, sliding down slowly in contrast with the exuberance exhibited on the way up during those greedy and obscene "flipping days."

And now that we have reached the limits of affordability and have touched the ceiling, we simply have no room left to grow∑ just like the price of tulip bulbs in Holland almost four centuries ago. Has it occurred to Realtors, or anyone else for that matter, that when you talk about housing costs you have to go beyond the mortgage payments and include all other associated expenditures including those of maintenance and energy costs required to keep livable those 2,000-3,000 sq. ft. palacettes? Undoubtedly these things are known but kept in the hamper with all the other unmentionables, but laundry day has finally arrived.

This past weekend, Portland-Oregon, an area touted as one of four in the nation where residential real estate prices "presumably" remain steady, was home to the largest homes-auction on record, 240; all owned by one builder. There were 141 homes sold, all but 6 of them below the so-called "reserve price" which according to the builder, Pollock, represents "his cost"∑ which can mean just about anything ˆ believe me, I know; that's my field of expertise in an industry that I intimately know.

But I didn't have to attend the auction. I already knew that prices in this metro area have decreased from 10 to 15 percent of those a year ago, although Realtors and builders tell us a much different story, drawn from flawed or skewed data, to prove a senseless argument that they are sure to lose. And here in the Portland-Vancouver area we still have a long way to go, perhaps another 15 to 20 percent drop in prices... or more.

And with little or no equity in our homes, overnight we have become from "psyched rich" to "resisting poor"... with our ATM-homes unable to spit out any more funds, and our homes finally becoming what they always were: brick, mortar and a roof over our heads∑ and absolutely nothing else.

But these real estate ills are not all our wonderful Fed has bestowed on us in its desire to please the White House; as if that weren't enough, they have marched us into an era of stagflation.