Since I'm an engineer and like it when truth can be discerned from numbers, check out this astounding graph of average home prices since 1890:

(Originally from Irrational Exuberance by Robert J. Shiller, 2006, printed in the NY Times Aug. 26, 2006)

That is consistent with a graph that I posted earlier, but the longer time horizon shows just how big the recent bubble was. (Do note that the vertical axis is cut off at 60 rather than 0, so it exaggerates somewhat the vertical scale, particularly the impact of the Great Depression.)

I'd also like to take a short look at a sometimes overlooked group of people who are possibly the most freaked out about the market convulsions that we've seen recently: the retired and soon-to-be-retired. I have years plenty to ride out the present crisis, but not everyone has this luxury. For most people, gone are the days of the fixed-payout pension that was based on years of service and pay grade. Now most people rely on market-based retirement plans like 401k's. Those who were well-set may have shifted their assests to less risky investments and may not be terribly affected by our recent economic woes, but those who were behind in their savings are more likely to have left their investments in higher-return funds in hopes of continuing growth—growth that has now turned to losses and an uncertain future.

Probably you know some people in this situation at your workplace. In my office, I have two coworkers whose retirement is in jeopardy. Both of them are around the retirement age and previously worked all their careers for large corporations. Both of them saw their pensions plans robbed out from under them by "restructuring" and "reorganization" in which they were also kicked to the curb. In the subsequent job search, they found out that most employers are really not interested in experienced engineers; they would rather have cheap engineers! Fortunately, after some time searching for jobs, they both landed at Peak Power and are doing all right, but a normal retirement is financially improbable for them. A conversation earlier this week with Bob, with whom I often cooperate on projects, reminded me of the situation of Willy Lowman from Death of a Salesman, a play I had to read in high school, though not nearly so depressing.