Our biggest challenge is to eliminate the popular perception that economists don't have anything useful to say.

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.

The discussion in Washington has changed dramatically. I mean, it's no longer a question of should we address entitlements - it's no longer a question of do we need to reduce spending in the future.

There are different flavors of recession. You can get into some pretty dark scenarios pretty quickly.

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.

Lenders look at potential borrowers from many angles before extending credit: How much of its income will a household need to put into debt repayment? How large is the down payment? Does the borrower have a job with a stable income? What is the borrower's credit score?

The most important point is, in a time of crisis, there is no way out but for the government to be bold and aggressive.