What do we need to do to save our economy?

What do we need to do to save our economy? First of all, Mr. President, Mr. Geithner, You need to come out and give the public some reassurance. That's all the market wants right now; Lie to us if you have to but tell us its all going to be alright. This is not the time to be honest, for god's sake you people are politicians...you should know better!
But seriously the major problem with our economy is that home prices have fallen through the floor and there is no bottom in sight. There need to be a bottom in the housing market before any recovery can take place, plain and simple. OK so now you dropped the ball on the $15,000 tax credit for first time home buyers, not too bright, but at least you are trying with this new mortgage subsidy plan. I am unsure how this plan is going to work properly, why would people who are current on the mortgages continue to pay? Where is there incentive?
Look politicians you have 2 options, neither of which are attractive:
1. Nationalise the banks and eat the losses from foolish bets by greedy men. This seems like a good idea at first glance because it would keep people in their homes, however, we would have a revolution in this country if it actually took place. Nationalisation is the first step towards communism. Its a slippery slope that ends up with the goevernments hands in everything that we do. I find it hard to believe that, even though this may be the lesser of two evils, would actually happen.
2. Let capitalism run its course, let the foolish banks who gave loans to people who could never in a million years repay them, go under. Wipe out all the shareholders, hold them just as much accountable for not doing research in the bank which with they were investing. And let many Americans get evicted from their homes and have their credit rating destroyed. It is not a pretty choice but if we believe in capitalism, it is the choice that the government must make. Social Darwinism at its finest.
I don't, realistically, see any other option here. Nothing else seems to make sense. Barring some sort of miracle I see the American economy to be in big trouble for the forseeable future. I wish it weren't so but we dug ourselves into one heck of a hole and it will take some time to get out of it.