Read the below while keeping in mind that the "20 percent" was actually 10! Under FDR, the unemployment rate fell from about 25% to 10% before the US entered the war. It continued falling during the war, of course. It would have been lower pre-war had FDR not fallen for the deficit hawks' nonsense in what is called the 1939 Mistake. Following the hawks recommendations caused a second recessionary dip. As soon as FDR reversed course back to his New Deal Keynesianism, the economy started recovering again.
Also keep in mind that "state-sponsored housing bubble" is hardly accurate if one is speaking about other than crony capitalists in government. The biggest offenders causing the crash are those who set it up via deregulations. Before all of the deregulating, this last crash would not have happened. Anti-crony-capitalists on the left warned that undoing the Glass-Steagall Act would bring on exactly what happened.
Lastly, don't blame Keynesianism for the fact that there were no strings attached to the bankster bailouts. Don't blame Keynesianism for the fact that banksters were given loans by the Fed that turned around and paid those banksters an interest-earnings spread on those funds parked at the Fed. If there had been strings, there would have been loans and few if any foreclosures.
I'm not a Keynesian. Keynesianism is much to conservative for me.
There are great radical ideas available for fixing all of the current problems, but way too many people are just to stuck, cowardly, and unimaginative.
One of my readers called President Obama's "blueprint" for America a "redprint." Another labeled it a "black eye." Obama's only consolation is that FDR's New Deal did even worse than the American Recovery and Reinvestment Act, never bringing unemployment below 20 percent. It was Henry Morgenthau Jr., President Roosevelt's Treasury secretary and chief architect of the 1930s jobs bills, who admitted, "We are spending more than we have ever spent before and it does not work ... after eight years of this administration we have just as much unemployment as when we started. ... And an enormous debt to boot!"
Considering the pitiful performance of the United State's economy under the inept leadership of the White House and a gridlocked Congress plus the "quantitative easings" of the Fed, one wonders why any sane investor would still want to put his eggs in our basket. The truth behind the current low interest rates on our federal government's IOUs is not flattering: We are simply the least ugly girl at the ball. Having fooled Europe into buying the toxic assets from our state-sponsored housing bubble, we added insult to injury by setting a bad example of implementing Keynesian fixes for their already heavily indebted and over-regulated economies.