I spent the earlier part of this week in Sunny Isles, Florida. If you are not familiar with Sunny Isles, it is a small town on the Atlantic Ocean about half an hour’s drive north of Miami Beach.

Half of the homes and condos in Sunny Isles are vacation properties. A decent condo on the beach starts at $1.0 million. Sunny Isles exemplifies the boom and bust real estate years of the mid-to-late 2000s. After the bust hit in 2007, buildings that were under construction were frozen. The now bankrupt Lehman Brothers financed some new construction. Of course, those buildings were put on hold.

But construction is happening in Sunny Isles again. Halted construction is a thing of the past; new construction is the present. There are several new buildings going up, including Chateau Beach Residences, Mansions at Acqualina, Regalia, and Porsche Tower (where an elevator takes your car up to your condo unit). A decent condo in any of these buildings starts at $3.0 million.

Sunny Isles is marketed to the nouveau riche of Russia as the “French Riviera of America.” It’s a small community of about 20,000 and a favorite vacation spot of the well-to-do. The skyline is full of ultra-modern buildings. It can literally be looked at as a playground for the rich.

On Wednesday morning, while riding our bikes to the local Starbucks, my wife and I saw a person running away from the coffee shop amid yelling and screaming. A homeless person had struck an employee of Starbucks in the head. For what reason (food, money), we were not told. The police were called. A report was made. I saw the redness on the upper part of the Starbucks employee’s face from the hit.

When I went to the cashier to place and pay for our order, I casually said to the cashier, “Eventful morning at Starbucks. I’ve never seen that happen here before in Sunny Isles.” The cashier replied, “It never used to happen; now it’s almost a weekly event…these poor homeless people.”

Wherever I travel in the U.S. these days, I see this more and more: the rich getting richer, the poor getting poorer, the middle class eroding. Eighty-five percent of middle-class Americans say it is now more difficult than a decade ago to maintain their standard of living (see: “U.S. Middle Class on Verge of Collapse?”). A near-record 46.5 million people are on food stamps (see: “Not a Good Sign: Poverty in the U.S. Reaches a 50-year High”). About half of retired people in America will die with less than $10,000 in the bank (see: “What We’ve Come to: About Half of Retired People in the U.S. Die with Less Than $10,000 in Financial Assets”).

These are desperate times for much of America. And the politicians are doing very little for them. We are moving closer and closer to “EuroAmerica.” In major European cities, there is a huge gap between the rich and the poor, with the middle class extinct unless they are lucky enough to work for the government. I see the U.S. going down the same, sad path.

Where the Market Stands; Where it’s Headed:

Down for the month of August? Yes, it’s true. Despite all that talk about the stock market making a run for a new 52-week, if today isn’t a big day for the Dow Jones Industrial Average, we will leave August 2012 a point lower for the stock market than when the month started!

Time is passing. All eyes are on the Fed for more quantitative easing, because that is all there really is for the market to move on. Corporate revenue growth in the third quarter might be negative, earnings growth has stalled. Let’s be realistic. Sustained stock market advances happen when the companies that trade in the market are experiencing both revenue and earnings growth—things that now elude us. Beware the market rally. Its lifespan is very limited.

What He Said:

“Starting two years ago, I was writing how the housing boom would go bust and cause the U.S. economy to suffer sharply. That’s exactly what is happening today. From what I see happening in the U.S. economy, I’m keeping with the prediction I made earlier this year: By late 2007/early 2008, the U.S. will be in a homemade recession. Hence, I expect housing prices to continue declining, soft auto sales, soft consumer spending, and a lower stock market.” Michael Lombardi in Profit Confidential, August 15, 2007. You would have been hard-pressed to find another analyst predicting a U.S. recession in the summer of 2007. At the time, the stock market was roaring, with the Dow Jones Industrial Average hitting its all-time high of 14,164 in October of 2007.