How deep and long will the current economic malaise be? How malignant is the stress in the financial system (aka the credit crunch) and how does it interact with the macro-economy?

Even as economists and investors debate these questions, markets seem to be deciding, often in conflicting ways. For example, the rates market is implying a quick recovery, with the Fed beginning to hike by early 2009, while credit markets are implying continuing stress, with Libor settings not normalising until two years from now.