Kevin Drum admitted he didn't fully understand what was going on in the financial markets. The commenters on his post tried to explain, and several did a very good job. I was particularly impressed by martin, Ethan Stock James S. MacLean and the very long one by The New York City Math Teacher.
To paraphrase some character in Dickens (Micawber, maybe?): 21 house buyers and 20 houses--result is housing boom and prosperity for all; 19 house buyers and 20 houses--result is housing crash and recession.
So, a modest proposal (tip of hat to Dean Swift). Congress passes legislation granting green cards to everyone currently in the country. That permits a bunch more people to buy houses, which revives the housing market and relieves most of the pressure on financial markets.
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