"How can we be out of money? We still have checks."

So it is with the Great American Buying Spree. Stocks are weak, but so what?  Home prices keep roaring onward and upward.  This means homeowners have more collateral to borrow against. So let's party.

Today, your home isn't your castle. It's your margin account.

At the end of the first quarter, according to the National Association of Realtors, the median existing home resale price rose 4.7 percent over the previous year. That means home prices beat inflation and incomes.

What the broad figure doesn't tell you is the stunning advances that are occurring in some areas. Some examples: Boston, up 13.9 percent to $345, 100; Denver, up 14.9 percent to $210,000; Fort Myers/Cape Coral, Florida, up 14.4 percent to $111,100; Los Angeles, up 11.5% to $225,200; Sacramento, up 22.9% to $163,400. Only a handful of areas showed declines.

Basically, homeowner collateral and borrowing power is increasing faster than our ability to pay the money back.

That's worrisome.

But the bothersome fact is that home mortgage borrowing is becoming a handy finance tool, the equivalent of your personal IPO.  In recent Senate testimony (July 24th) Federal Reserve Chairman Alan Greenspan commented,

  "… I think one of the things that's occurring in this country is the evolution of housing into a very sophisticated, complex industry, in the sense that we not only have got standard home building aspects of homeownership-related activities, but we're also beginning to find that as homeownership rises and as the market value of homes continues to rise, even in a period when stock prices are falling, we're observing a rather remarkable employment of that so-called home equity wealth in all sorts of household decisions."

Stated with unusual clarity for an established Fed chairman--- a Flesch-kincaid grade reading level of only 12.0--- Mr. Greenspan ought to know.

Long before he became Chairman of the Federal Reserve, Mr. Greenspan was an economic consultant. His research answered a nagging question that followed the second oil price shock in 1979.

  The question: If stock prices were sinking and inflation was raging, what was keeping the economy going?

His answer: home refinancings.

We were refinancing existing home mortgages to get lower rates, longer terms, and a nice big check. We were taking cash out for day-to-day spending.

We still are, particularly now.

In 1980 we collectively owned homes worth $2,944.8 billion and mortgaged them for $934.5 billion. That means we only owed 32 percent of the homes' market value and had 68 percent equity. Today, according to the most recent Flow of Funds statement, our homes are worth $11.1 trillion and are financed for $5.0 trillion. We've now borrowed 45 percent and have reduced our equity to 55 percent. That's a home equity decline of 13 percentage points, representing additional borrowing of $1.44 trillion, with attached monthly payments.

In the same period, home equity lending grew from infancy to ubiquity. These loans, which barely existed in 1980, totaled $420 billion in 1997 and were growing fast. Whatever the figure is today (it's not regularly tabulated), we're owing more and owning less.

Or are we?

Like most statistics, the big aggregate numbers hide how things are distributed.

An impressive 38 percent of all homeowners have no mortgage debt.

Yes, you read that right. Thirty-eight percent of all homeowners own their houses free and clear. The other 62 percent are carrying all the debt--- and some of those owe a lot less than others.

What does it all mean?

Simply this. Just as 30 percent of all credit card holders no longer carry a monthly balance, leaving the remaining 70 percent responsible for all credit card borrowing, homeowners are dividing into two distinct camps:

•   Those with little or no debt

•   Those who use their houses as extensions of their checking accounts.

Guess whose homes are at risk?