The economics in the mirror

How bad/long would it be?

That's the most often question come out when people meet me after the crisis unfold and think I (am supposed to) know some economics.

Tim Hartford say it best:

"Consumers should cut back their spending if they believe that their earning power will fall for an extended period of time, but if they believe the hard times are temporary—say, a short period out of work—then they should "smooth" by borrowing in hard times and paying back when things pick up"

But what consumer belief affect their action and expectation of companies/banks while government trying to project both to come up with appropriate policies.

Since so much (but not all) of the problem is self-fullfilling and paradox then I'd suggest an (slightly altered- in italics) jadul song lyrics as big part of the answer

I'm starting with the economics in the mirror
I'm asking it to change its ways
And no message could have been any clearer
If you wanna make the world a better economics
Take a look at yourself, and then make a change