Right up the street from me is the 52-room Hearst mansion which was just sold for $22 million at a foreclosure auction. You know it's bad out there when one of the priciest homes in the country went into foreclosure. The house was once owned by the late Randolph Hearst (if you're scoring at home, that's Patty's dad and William Randolph's son).

Hearst bought the mansion for $30 million just before he died in 2000. After his death, his wife started borrowing on the home to fuel her NYC lifestyle.

This is a classic example of how property values are being killed by property taxes. Florida cut property taxes a few percentage points, but now many towns are fighting for revenue so they do not have to layoff folks.

There are a few homes near me that aren't being kept up because the absentee owners have to pay $100,000 a year in property taxes. I think fire-sales on the ocean will continue for sometime.

It will take probably a year or more for the housing market to stabilize due to excess inventories. Even better-managed banks, like Wells Fargo, that have no significant exposure to CDOs or SIVs, will still post extraordinary write-downs for the next several quarters due to rising delinquencies. This means that the exodus out of interest-rate-sensitive financial stocks will persist for at least the next year.