Have you noticed more "For Sale�" signs in your neighborhood? If you have, you're perceptive, because there are more -- a lot more -- than there have been up for years. America has been experiencing a massive real estate boom, and now, as gravity commands, the bust is coming.

Nationally, there are about 4.2 million homes for sale, with another 500,000 brand new homes on the market. According to the National Association of Realtors, that’s a supply of almost nine months; five months is considered normal. And an index of 10 cities shows prices have been dropping for five months -- the worst run in 16 years.

While some places seem to be weathering the storm -- for now at least, prices are up over last year in Seattle and Portland -- others are watching prices fall as listings climb. In Las Vegas, one of the hottest real estate markets in recent years, they have a record number of homes on the market, and their average selling price dropped by $10,000 -- in one month (between June and July).

Despite what real estate types and financial reporters with rose-colored glasses say, the housing bubble is popping. The only question is how much air is going to go out of it.

So how did we get here? The short answer is that America started speculating in housing, just as we did with Internet stocks in the late 1990s and the Dutch did with tulip bulbs in the 17th century. Everyone from the house flipper, to the builder of subdivisions, to the army of mortgage brokers pushing deals, to the hedge funds that bought those mortgages as investments -- people all along the spectrum were speculating.

And it was a very contagious fever. People just looking for a place to call their own were stretching to get in the game before it was too late. And if they couldn’t quite afford it, the financial industry came up with more and more elaborate programs to allow you to hit that magic monthly payment -- adjustable rate mortgages, no down payment, and don't worry about documentation. The credit craze went all the way to the top, as even our leaders put an entire $450 billion war on America's credit card (payment due to the Bank of Communist China).

As long as housing prices kept going up, the whole arrangement worked fine. It's hard to default if your house is worth more than you bought it for -- you just keep refinancing or sell. But now, with prices leveling off (and dropping in many places), the music has stopped and a lot of people can't find a chair -- again, everybody from average homeowners to multinational banks. Of course the big money people want an S&L-style federal bailout -- and one may already be underway, as the Fed has started pumping money into the mortgage market. But should we bail out what was essentially an imaginary business model? If you hand out credit to anybody with a pulse, isn't widespread default a given? Shouldn't we let the market pass its harsh judgment?

Many pundits see it getting a lot worse. Americans made tons of money on their homes in recent years, which helped fuel consumer spending. And in this economy, in which we keep sending millions of jobs overseas and continue to watch the value of the dollar drop, consumer spending is how we make it all work. Now banks and others are tightening up their lending rules, and adding more fees to loans, so instead of having too much credit, now we may not have enough. And this "credit crunch" is spreading a panic to financial markets all over the world.

If consumer spending slows due to lack of access to money or a drop in confidence, the economy could easily contend with the war in Iraq as the top issue in next year's presidential election. And I would like to hear what the candidates have to say about these money messes we seem to get pushed into every generation or so.

Until then, I'll have to rely on the wisdom of the Founding Fathers, most of whom were skeptical of overly complex finance. As Thomas Jefferson put it, "If the American people ever allow private banks to control the issue of our currency, first by inflation, then by deflation, the banks and the corporations that will grow up will deprive the people of all property until their children wake up homeless on the continent their fathers conquered."

Chilling words, and eerily prescient, as more Americans will be waking up homeless in the coming years. Moody's now estimates that 2.5 million American homeowners will default on their loans by the end of 2008. Some market watchers say it could be more like 7 million. And most of those people who default will lose their homes as a result.

And that's what's different about this bust: Nobody needed to own stock in a company that had a sock puppet for a spokesman, but a lot of people need to own a home. Too much speculation means a lot of American homeowners are stuck way out on a limb, wondering if they'll get to keep their homes. As for those market wizards who led us all into this get-rich-quick scheme, don't worry -- they'll be fine. Any time now, Uncle Sam should ride in to their rescue.