Could this time have been different? - The Washington Post
The stimulus was a bet that we could get out of this recession through the one path everyone can agree on: growth. The bet was pretty much all-in, and it failed. Reinhart and Rogoff are not particularly surprised. It’s hard to get through a debt-driven crisis without doing anything about, well, debt.
In our crisis, the “debt” in question is housing debt...
In late 2008, when the economy was cratering, Holtz-Eakin convinced McCain that the way out of a housing crisis was to tackle housing debt directly. “What we proposed at the time was to buy up the troubled mortgages, pay them off and let people refinance at the lower rates,” he recalls. “That would have filled up the negative equity and healed bank balance sheets.”
But of course the politics of that proposal--the one that probably would have prevented the long-term catastrophe were are now living through--were "hideous." If you have time, read this. Ezra Klein has written the best single piece on why the economy is still in the ditch, despite everything the Obama administration has done, that has been published to date.