I am standing at an intersection between two sandy Suffolk County roads. Before me is a strange growth, a positive thicket of “House for Sale” signs, several of which are showing evidence of substantial age.

“Uh-oh. Lass is doddering again. Doesn’t he know that there are ‘For Sale’ signs rotting all over the country? The real estate crisis? Collapsing banks? Etc., etc.?”

Sure I do. In fact, I’ve been warning folks about the real estate follies for what feels like years now. But even I get stunned every now and then, and right now, I am downright pole-axed.

First, a little backstory: When I was a kid growing up in “The City,” my grandmother had a vacation place in a little beach town, way out on Long Island, called Hampton Bays.

A passel of us kids would park ourselves out there for the summer, burning to a toasty brown while grown-ups came and went, commuting on the LIRR between work in town and the sea on weekends.

Sand got into everything you wore or ate, there was no heat at night, and only enough hot water for half a shower. Come August, the jellyfish would take over the water, rendering swimming an act of extreme bravery. Regardless, it was the nearest thing to heaven I can recall.

As I recall, Grandma bought the place for next to nothing -- $30K comes to mind, but I could be wrong. Maybe it was half that. I can tell you that there were never “For Sale” signs around. “For Rent” maybe, but what few houses that came available each year sold out all most instantly.

And that was before South Hampton swallowed us whole, annexing Hampton Bays (among other hamlets) in its inexorable climb to Valhalla-like status.

Yeah, yeah, that South Hampton. The famous one where billionaires hobnob with rock stars, literati and Hollywood directors, and Ferraris gum up their works prowling the sandy lanes.

Grandma sold her place a while back for seven figures. Seems the fun had gone out of the joint, and the offers were simply too much to resist. Can’t knock her for it, though. Her gains went a long way toward funding her retirement in a very nice place on Manhattan’s new Lower West Side.

I believe the new owners actually put in heat, before flipping it again a year later. After that, sadly, I lost track of the house.

In fact, it was the memory of idyllic days spent at that cottage that induced me to spend most all of a day driving out here from Maryland, boring the kids the whole way with nostalgic tales of sunburns, bee stings and my first kiss.

And now that I am here, it seems that some half the town is for sale. A quick stop into a local real estate office (“Ah geez, Dad, I thought we were going to the beach!”), and I find that the once mighty Hamptons have been done in by the great crash of 2008.

Back in “The City,” Wall Street has pink slipped some 76,000 rainmakers and apparatchiks. So it should come as no shock that sales on the east end of the island have dropped some 26%, while prices are off 12%, all in a town that hasn’t seen a rollback in decades.

A very excited agent tells me that the town has never been “more accessible,” a polite way of saying that the merely wealthy like myself are once again welcome here. Just yesterday, President Bush approved a real estate broker’s welfare package that (among its $30-$40 billion in various handouts, interest-free loans and tax breaks) will allow the FHA to insure loans as high as $625,000, the current tab for a nice enough place at the far end of town.

And who will pay for this largesse? Oh, you and I, as usual. One simply can’t print billions of dollar bills like this without expecting to pay an inflationary price. The dollar will continue to fall, groceries will continue to rise, as will electric bills, and more Americans will find the dream out of reach.

And what will be the fate of those embattled folks who this grand bailout claims to be helping? Will they actually pull out of the holes they dug when they bought houses they clearly couldn’t afford? Not really. HUD Secretary Steve Preston tells us that “roughly a third of the people who get this assistance will end up in foreclosure.”

“You should move back now,” the erstwhile real estate agent warbles. “You’d be welcome with open arms!”

But I’m not sure it’s such a good idea, at least not just yet. I suspect that this market is far, far away from a bottom. When I see all those “For Sale” signs waving in the breeze, I can’t help but wonder if I might soon be able to buy Grandma’s place back…

For that same $30K she paid. Or maybe less.

(Oh, and your “takeaway” here? Keep on shorting Real Estate and the Financials, of course!)

Sincerely yours,

Adam

P.S. Thanks for amazing responses to the new e-mail address. I have read every single one of them, and forwarded many on to the boss. (Okay, I didn’t send the one about the grilled cheese sandwich: That was just so wrong!)

Please keep in mind that I cannot dole out individual investment advice without incurring the wrath of mobs of hooded brokers armed with torches and pitchforks.

Seriously, both the law and common sense dictate that I can’t answer all of you one on one. But it is really exciting to hear from you all, and I look forward to incorporating your ideas into both my Taipan Daily and WaveStrength Options Weekly (WOW) columns.

Once again, that address is adam@taipandaily.com. Keep those cards and letters comin’!

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