1. The implosion of credit/liquidity market lead to a loss of confidence among investors and consumers. It is hard for all the central banks to re-inflate the enormous credit market back to its original size, even though the central bankers are quite innovative, poor Ben. The question is whether the market economy can rebuilt after some payment chains have been broken and a fast deleveraging. I understand the rebuild need time and it won't be easy but I don't think the rebuilding process will be disastrous.
2. The wealth effect of the declining stock market and the loss of consumer confidence may actually kick the economy into a recession or deeper into a recession.