The Clueless Dimwit Chronicles
The Mogambo Guru: " There are some people who are starting to discern that the bubble in housing may be petering out. Good. Already in this country a third of the people contribute more than half their incomes to housing, and the run-up in prices is going to make that lugubrious statistic worse. And now there are more people who have been priced out of housing altogether, which makes homelessness worse. Plus the people who used the appreciation in the market value of their homes to borrow will realize that all they did was to go farther into debt, so they will be worse off, too. And the governments that received ramped-up revenues got bigger and more expensive, so that cancerous drain on the national weal is now worse. 

And if the mortgage market has truly burst, then a lot of investors will suffer losses, so that is worse. And banks. And mortgage companies.

And since everyone will be paying more and more for houses as the results of this bubble persist for awhile, everyone will have less disposable income with which to buy all the other things in life that make up GDP and final sales for businesses, so the retail industry will be worse off, too. 

In short, the damnable Fed and the damnable GSE's have perpetuated a housing bubble in which everyone and nation as a whole will be a net loser in the long run, although there were lots of winners in the short run."

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Where Mr. Solow's ridiculous argument really falls off the tracks is when you include realized wages in the mix. So even though you lost your $30/hour job making widgets, because now that widgets made in China are so cheap that there is an increased demand for them, you can still get a job selling these cheap widgets at the Wal Mart!

And in the Great Depression, there was an up-tick in the number of itinerant farm laborers, as unemployed guys took farm implements and traveled the country looking for farm work, often getting paid in food. So while there was no high-paying work in the factories, there were lots of gardening jobs that still needed to be done, since nobody could afford to buy food anymore and people were forced to grow their own. And there were guys who sold apples and pencils from street corners, and so there were jobs to be had in the burgeoning apple and pencil vending business. And there was an upswing in the number of full-time beggars, and so there were jobs created in the begging industry. And employment in the criminal class experienced a surge, and it should certainly make Mr. Solow's heart jump with joy when he thinks about all those new soup-kitchen worker positions.