First, I have to say this very clearly.

We are going to face a massive recession, maybe even a depression.

Here are some things that make me believe this and the solutions.

Consumer Spending and Private Investment are falling (minus the rebate check).  Just like they were in 1929.  The government only solved the problem in 1939 when they started spending massive amounts on armaments.

• Deficit spending on no-return programs.  Mainly the War in Iraq.  Modern military production is not like that of WWII, manufacturing is done mostly by a handful of people benifiting long investors not people who will spend on the economy.
  • Withdrawal Treaty (Sorry, I mean Defense Treaty) must include a trade deal.  We leave, give them free tech and support, and give them preference on non-oil exports from Iraq for guaranteed buying of American products.  Or something to that effect.
• Misunderstanding the problem.  People's homes are losing value, people are not paying their mortgages, and losing their homes.  This hurts everyone, the homeowners, banks, and the whole country because the domino effect of tightening credit supply and less demand for credit.  The government is pretending it's a liquidity problem.  The bailouts are reminicent of Hoovers failed RFC, where they lent money to failing businesses. 
  • Stop the bull shit.  Refinance homes, not big companies.  If the company is still failing after all the buyouts, let it fail.  But once the bad debt is bought, they won't fail.  Give the homeowners a 2-3 year period not to make payments, and then collect them like student loans.  If they don't pay for a few months, start taking from the paycheck.
• Job Creation, the government is going to try and throw money at the problem.  Create jobs.  Finance Emergency and Education programs around the country to hire more police, fire, and teachers.  Pay them more.
• Infrastructure must be fixed. More local train services, buses, schools, wind mills, etc. etc. etc. Immediately.  Put the construction force to work on things we need anyway.
• Increase student loan availability.  So people out of work and existing students can leave work force and live off their loans.  This will make workers more competitive and get some money to promising people to spend.

How will this be paid for?

Raise taxes on all people above poverty(~18k/yr) but increase the standard deduction so people on the lower end will be paying the same.

Offer tax write offs for good investment. (This is how the middle and upper class will save on taxes)  This will include U.S. bonds set up specifically to front the money for the mortgage buy back and student loans.

Allow immigrants to work legally.  They don't make enough to pay significant taxes, but now they will be able to deposit into banks, add liquidity and they will be paying into SS/FICA and many will never cash in by choice because of short stays.

They have to act fast.  If we hit 10%+ unemployment all business and workers will start feeling it and it will grow very fast from there.

Oh, and raise the GD interest rate. No body is borrowing or landing anyway. An extra 1% isn't going to save anyone's home on an adjustable rate mortgage.

This will allow banks to see some money they need right now from people who are paying and will pay.

BTW, I don't feel it is totally the homeowners' faults. The President, the Fed Chief, and their bankers were all encouraging people to borrow more, put down less, and take adjustable rates.

People look to these people for advice. They did not get honest or good advice.

Although the New Deal was popular, there are many who believe that the government involvement in the ecconomy was one of the reasons why the American ecconomy took so much longer to recover from the Great Depression than other countries (many of which were harder hit) around the world.

The fact is that the only thing that will fix this problem is time ... In some regions house prices can still fall further because of how expensive housing (really) is, but in most parts of the US housing has hit a level of affordability that opens up the possibility of home ownership to people who have been locked out for over a decade; this means that in most regions we have seen (or soon will see) the bottom, and as the inventory of homes gets worked through we should see an end to the housing crysis.

Those people would be wrong because Roosevelts economic polices brought about one of the best times in American economy.  And yes, Germany and the Soviet Union did better during the Great Depression, but Germany was a fascist war industry and the Soviet Union's command economy wasn't even touched by the market.

Alberta and Saskatchewan were the two hardest hit regions in North America, and they (along with the rest of the Canadian ecconomy) recovered faster than the United States did. It was only after World War II began, and the war was funded through the sale of war bonds, that the American ecconomy really entered into being a highly productive ecconomy.

That's because the U.S. (even with the New Deal) was the most conservative democracy not to turn fascist.  BTW, economy.

Edit: and if you read the OP, you will see where I say the GD ended with the production for WWII in 1939.

To say the war ended the Great Depression is ill-founded. It reminds me of the broken glass theory. In fact, government spending on the war effort actually made life worse for Americans. It led to a shortage in many resources. No, it was the end of the war that brought about the end of the Depression. The end to rationing and the influx of cheap labor, amongst other things, gave rise to conditions that were ripe for an economic boom.

I would also disagree that the New Deal ended the Great Depression. I would say that it prolonged the Depression. If you truly think there will be a depression, the last thing you should advocate is to copy the policies of Hoover and Roosevelt. The cause of our current economic turbulence is the same thing that caused the Great Depression...the inflationary monetary policies of the Federal Reserve.

You are not the only one who thinks like that.  There are people who say the GD really ended at the end of the War.  Because Supply finally met Demand again.

Most economist don't think like that; they would say that a shortage is better than the deflation of the GD. (U.S. at home in WWII, I use healthy very loosely.  It was hard on people.) 

The attitude changed after the attack on pearl harbor.  Instead of the fear that the fragile economic gains might be lost, there was a fear of attack and an uplifted mood as unity and patriotism replaced the bickering over economics and foreign policy from before.

I cannot prove or disprove whether or not the war provided a psychological boost or not. I am sure it did. But from an economic standpoint, WWII did not end the Depression.

Do you have some link of a scholar or economic statistic saying that?

http://www.econ.ubc.ca/paterson/econ532/11recovery/vernon.pdf

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=226730 (this one you can probably get through a college database if you have access.)

Smiley, Gene, "Recent Unemployment Rate Estimates for the 1920s and 1930s," Journal of Economic History, June 1983, 43, 487-93.

National Employment

http://upload.wikimedia.org/wikipedia/commons/a/a1/US_Employment_Graph_-_1920_to_1940.svg