Is it me or are we going deeper into the woods?...

The housing market was a dependable source of painless savings for so long, and I think at the microscopic level, many citizens built futures on the premise home prices would continue to escalate reliably. This plan is being reconsidered now.

But while the general economy has moved ahead without the housing sector, the jury is still out on whether we have hit the bottom of the housing cycle. One noted expert thinks not.

Robert Shiller is worried about your home's value, and that's not good. A finance and economics professor at Yale, Shiller proved he could see a crash coming with his book "Irrational Exuberance," which forecast the end of the 1990s stock bubble and hit bookstores in March 2000 - almost to the day the Nasdaq started to collapse.

Today, Shiller believes homes are roughly as overvalued as stocks were then and, once again, he's worth listening to.

His prediction? Brace yourself:

In fact, I'm inclined to think there's a good chance that the return on real estate will be negative, substantially negative, over the next 10 years because all booms reverse in the end. [More depressing reading]

On that happy note, let's consider some implications. Hardest hit in the current doldrums were housing "flippers" - amateurs working on limited capital turning properties rapidly. Since this is a risky activity in boom markets, it snowballs when prices dip even slightly. This is why investment property could be clobbered.

Then there are Boomers who decided their house would be their retirement plan a few years ago. Actually many of us would have been OK if we had cashed out in say, in 2005. But unless you're holding a condo in Manhattan, your retirement nest egg may not be what you had hoped. To be sure, if you have been in your house fro a considerable time, and the especially if the mortgage is paid, you still have a pile of equity - but maybe not the kajillions you hoped.

But the truly scary scenario is at the bottom of the home buyer pyramid. Subprime mortgages were another real-estate gimmick that seemed feasible as the tide was coming in. As these loans head south, the defaults have crimped earnings at several financial companies. They will survive, and don't need my tears.

But borrowers with less than perfect credit are now out of the market and also - more importantly, I think - out of the home-equity loan market. Notice how those ads are scarcer recently. Home equity loans fueled a significant portion of consumer spending growth, thus driving the economy as businesses held back on capital spending.

What do all these developments suggest? First, if Shiller is right, we may not be close to seeing the effect of lower home prices on the economy as a whole. More and more borrowers will be at least frozen in place instead of ratcheting up the equity ladder. You may be stuck with actually paying off your mortgage.

Labor will become slightly more fixed in place, as relocation costs for companies skyrocket and workers choose to stick it out in the old job. Retirees will recalculate their last day differently as well.

The upper end seems to be bulletproof so far - largely untouched by the loss of equity and shrinking pool of buyers. But interestingly one big loser could be Uncle Sam.

But there's a more alarming explanation for the surge in tax revenues. It could be that the orgy of speculation in recent years—in housing, stocks, investment instruments—has generated an unexpected gusher of the types of tax revenues derived from flipping assets and trading securities. And that suggests that with the housing boom over and the stock market moving sideways, tax-revenue growth could be slowing down, and soon. [More]

Of course, the current fad in DC is not fiscal restraint, so it may not get much play unless deficits approach the the gold standard of $450B or so. Still, it might become a slightly hotter talking point.

But what about farmland? Don't color me worried. And here is why - can you say "mandate"?

The measure would establish an overall goal of reducing future gasoline use by as much as 45 percent below what it otherwise is expected to be in 2030. That would happen through a combination of more biofuels, such as ethanol, and production of more gas-electric hybrid vehicles and other fuel-saving measures.

The centerpiece of the bill is replacing gasoline with ethanol. Ethanol currently is made from corn. Future sources include cellulosic feedstock such as switchgrass, a hardy prairie grass in great abundance, and wood chips and corn stems. [More]

Land prices are firmly in the grips the need for carbohydrates to make fuel.

This was an auction of 160 acres. The ground was flat, systematically tiled and nearly all tillable. Selling price: an eye-popping $6,731 an acre. A local farm family who were expanding their operation purchased the farm. {more detail from Mike Walsten's new farmland blog - subscription to PF required, but worth it]

Now this example is Hoosiers, of course, so we have no idea what real free-spenders might be paying. We won't even miss 1031 buyers, IMHO. In fact, farmers could start our re-ownership of agriculture in this window of opportunity.