Matt Yglesias links to an interview Ezra Klein did with Carmen Reinhart. She wrote a book titled "This Time it's Different" with Kenneth Rogoff. In a recent Op-ed Obama's Treasury Secretary Tim Geithner linked to an editorial Rogoff published in the Financial Times.

Yglesias blogs:

EK: There’s a lot of the discussion about what Washington should do, but you seem to be saying that this is just going to take time.
CR: That is certainly my view. It’s not that governments are powerless. The government has been a key player in preventing a catastrophic global shock. We didn’t end in a depression. I can’t stress that enough. It’s played already a much larger role in placing a much higher bottom. But we built up this debt not overnight, but over years. And now we expect the resolution to be very rapid. This is not something that policymakers can undo quickly. If you look at the big, historic panaroma, deleveraging takes time. It’s not pretty. It’s not the answer people want to hear, but these debt cycles are lengthy.

To be clear, I don’t disagree with any of that. But the message seems to be-calm down. Be more patient. Be less critical. And I do disagree with that. The recession has already been a long one. If it takes us three more years to achieve full employment, that will be a long time. If it takes us six more years, that will also be a long time. But in terms of actual human beings’ lives, it makes a great deal of difference which one happens. So given that "it’s not that governments are powerless" it’s important to focus attention on the need to use those powers.

The Congress is about to pass legislation giving $23 billion in aid to the states. They should do more. As I somewhat understand it, the Fed had been following a somewhat contractionary policy regarding mortgages, but now they have stopped that and shifted into neutral. They should do more. Where I would differ from Reinhart is that she says a lot of debt developed over time, but in reality a lot of the debt was caused by the financial crisis and panicky aftermath. Some was caused by overleveraging which happened over time, but much of it happened quickly when unemployment shot up and state's tax revenue's dropped.