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Yes, we can end present economic crisis if we try to solve it with something more than what I would call a Keynesian prayer.
Let me start with a cryptic, if slightly inaccurate, anatomy of the crisis:
Many banks made loans to sub-prime borrowers and expected to be repaid from rising housing prices. When prices failed to rise and even fell, they incurred huge losses. Banks foreclosed properties but presently there are no buyers.
Moreover, the banks had created a massive superstructure of varieties of CDOs and CDSs over the initial loan assets. When the loans failed, the entire superstructure increased the losses manifold. These losses were judged unaffordable and government stepped in to help the financial institutions hoping that once the economy gathers momentum, the aid given to these institutions would be repaid. As of now this hope is not likely to be fulfilled. And, not only the ability of the governments to continue supporting financial institutions in distress is greatly diminished, but ability of the governments to remain solvent has been questioned.
The crux of the problem remains the losses of the banks over sub-prime loans. If they recover the monies lent, entire superstructure of derivatives would regain much of its value and the government would regain the funds lent to the these institutions. How this can be achieved?
Presently the size of our markets are limited to affordability and willingness of the buyers to make a purchase. Foreclosed houses have no such eligible buyers at present.
However, if we allow a kind of lottery and encourage people to lose a small sum to `win' foreclosed property instead of `buying' it, there could possibly be sufficient number of punters for many of the properties. When foreclosed properties are sold, banks recover their losses. To the extent banks are able to recover their losses, the value of derivatives would be regained and losses on superstructure would also be reduced. If losses of the banks are sizeably reduced, there would be no need for government support. Economy can start functioning normally within, say, 2-3 years.