It has become fashionable to rail against government intervention in the economy, and the FHA is a favorite example by those trying to show the government's overreach. In reality, the FHA shows how government action during the Great Recession forestalled a much worse economic fate.

The FHA's success provides strong evidence that government can and should play a role in the nation's mortgage finance system. It also demonstrates that although government intervention in the economy during the Great Recession was messy, things would have been a lot messier without it.

Past experience with fiscal austerity at home and overseas strongly suggests that it is best for the economy's long-run performance to restrain government spending rather than raise taxes.

The key to house prices is the share of foreclosure or short sales in the total housing market. When that share rises, house prices will fall, because distressed properties sell for significantly less - currently around 25 percent below non-distressed houses.

It is hard to be enthusiastic about the economy's prospects when house prices are falling: Households spend less, small business owners can't use homes as collateral for loans and local governments are forced to cut jobs and programs as property-tax revenue disappears.

They called me the sexiest economist in America, and that was years ago, when I had hair and body mass and my teeth were shiny.

The Tea Party was born out of the disgust many Americans felt early in the financial crisis upon learning that the federal government was even contemplating reducing the principal on some troubled mortgages.