The recent events made many economists more vocal of their views. And here are some of them:

Economists Komileva says the answer isn't to expand the government role in the economy, but to set up incentives for private lenders to start making loans again. One way to do so, she said, is for governments to offer tiered loan guarantees to lenders in a bid to cover what she calls the "excess risk" that borrowers will default. A plan of this nature could encourage lenders to make loans in spite of the enormous uncertainty now afflicting practically every economic sector. "The key is to get market structures working again and restart private capital flows," Komileva said.

Gary Townsend, bank analyst of Townsend Hill Capital in Chevy Chase, Md., advocates suspending the mark-to-market accounting rules that he thinks are responsible for many of the write downs that have sapped bank capital. Because of these rules, banks have to report what the fair value of their investments were if they were to sell them now -- and the value of many of those investments, especially mortgage-backed securities, have plunged in the wake of the credit crunch.

While the latest collapse in stock prices reinforces the fact that banks need capital, Townsend doesn't believe rescues like the one the government just unveiled for Bank of America will become commonplace. He said banks that have either failed or need help fall into three categories: thrifts that lent aggressively such as Washington Mutual, banks that made too many acquisitions such as BofA, and investment banks that levered up too much such as Lehman Brothers." The government needs to be careful that it doesn't make itself the only source of capital," Townsend said.

Most of the money so far has actually gone to recapitalize banks - that is, the banks get money, and the government gets preferred shares in the banks. The idea is that this will encourage lending. But so far it seems that banks are hanging on to a lot of the money. Much of what's happening now is really about confidence: Why lend when you see the economy headed for a deeper recession and there are still mortgages blowing up? In addition to pumping money into the financial system, Obama will have to do some first-class FDR-style confidence building. The economy probably shed at least 2 million jobs in 2008. About a million of those vanished in just the last three months of the year. The unemployment rate is more than 7%, and some analysts forecast that it will reach 9%. The layoffs started in home building and finance but they're spreading fast. "It's across industries and occupations and in almost every corner of the country. That makes it scarier than past downturns because if you become unemployed, there's no obvious place to go.

Obama wants to direct another $100 billion to keep state governments from having to slash essential programs, such as Medicaid, or raise taxes. He's also likely to extend unemployment benefits and distribute more food stamps. The point of such moves isn't merely to help the beneficiaries but to prop up overall demand in the economy. Unlike tax cuts, which may be saved by higher-income people, benefits for low- and middle-income families translate fairly quickly into consumer spending. That said it looks like tax cuts for families earning below $250,000 are still on the agenda.

People familiar with the thinking of Obama's team said it was considering setting up a government-run bank, or possibly banks, to acquire bad assets clogging the financial system and which are blocking new lending.

Let's imagine that all of Obama's plans to revive the economy actually work. There's still the matter of the bill. The TARP is $700 billion, though some of that may come back. Obama's stimulus proposal will probably be another $850 billion. (For perspective: The entire Defense Department costs about $700 billion a year.) And this comes after years of deficit spending. Can we really afford to do all of this? Few economists think that this is the moment for America to suddenly get religion about the deficit.

"No question, we should be concerned about the deficit; it has huge long-run implications," says Harvard's Rogoff. "But we're now facing a once-in-a-century crisis and we have to pay to get out of it."