"By neglecting the critical role that housing plays in U.S.
recessions, our Federal Reserve has let our recessions be more frequent
and more severe then they need to be," said Leamer. "In particular, the
subprime mortgage crisis is a direct consequence of short-term interest
rates held too low for too long by the Fed."

Leamer examines statistics back to World War II to highlight how
weaknesses in housing and consumer durables make significant
contributions to economic recessions.

More from his paper: "The historical record strongly suggests that
in 2003 and 2004 we poured the foundation for a recession in 2007 or
2008 led by a collapse in housing we are currently experiencing. Only
twice have we had this kind of housing collapse without a recession, in
1951 and in 1967, and both times the Department of Defense came to the
rescue, because of the Korean War and the Vietnam War. We don’t want
that kind of rescue this time, do we?"

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