If you're wondering what is going on in the turbulent capital markets and whether "the coming recession" will be as severe as everyone says, you should read PFF board member John Rutledge's explanations here, here, and here. Rutledge's key point:
What is happening in today's asset markets is not a GDP event; it is not the result of late mortgage payments. It is a profound reduction in the willingness of wealth-holders to own the existing stock of assets. It will not be fixed by giving checks for $12.50 to every man, woman and child. The fix must restore confidence in the underlying assets.
Another crucially important article you should read comes from Bill Wilby, whose take on the U.S. dollar is key to understanding the asset price shocks highlighted by Rutledge.