The Fed's Vice Chair Still Doesn't Know About the Housing Bubble

News apparently travels slowly in the nation's capital. The New York Times reported on a speech by Stanley Ficsher, the vice chair of the Fed, in which he expressed confusion over the causes of the weak recovery.

It would have been helpful to express the views of economists who could have expressed surprise over Fischer's confusion. When the housing bubble collapsed, there was a massive loss of demand. Spending on residential construction fell back by more than 4.0 percentage points of GDP. W...