While writing on the impending bailouts of the GSEs he notes that:

The reality is that the U.S. has invested too much – especially in the last eight years – in building its stock of wasteful housing capital (whose effect on the productivity of labor is zero) and has not invested enough in the accumulation of productive physical capital (equipment, machinery, etc.) that leads to an increase in the productivity of labor and increases long run economic growth.

This is exactly the problem.

In fact the problem is more general. Our economy is no longer producing goods and service of value as a means of activity. Instead it is moving towards arbitrage, and at some point, there will be too many balls in the air for it to continue.

For all I know, it may already have happened.