MG: Dan, we don't disagree with that. There's no question that the steep yield curve increases the margin on lending. But when you're not doing a whole lot of lending, having that margin there doesn't necessarily help you, because of the need for capital. They're concerned about their ratings, they're concerned about what's already on their books. So yes, that will help; it is helping, but it's going to take a long time to really pull through.

JB: One of the things that fascinates us is that usually Wall Street creates products and sells them to Main Street, and then Main Street has trouble dealing with them. In this case, Wall Street created the product and kept it all on their own books. It's kind of like me going out and getting somebody to fake a painting and then liking it so much I put it over my mantelpiece.

DW: So where do we come out on this thing?

JB: Time gets you out of it. It just takes a while, and the markets are having significant difficulty right now.

DW: Mark, you raised the "R" word awhile back. Are we going into a recession?

MG: I think we are in a recession, depending on what area of the market you want to talk about. Clearly housing, lending, we're there. Are we in a slowdown? Yes. Are earnings going down? Yes. Are we in a credit cycle? Yes. Is unemployment going to go up? Yes. All of these things are true, and I guess those are all consequences of a slowdown. Whether that means we actually have negative GDP growth for two quarters or not to me is irrelevant. It's just one of those things where it takes time to get through, and I think the market's gyrations right now are related to the fact that it's very difficult to figure out what inning we're in.

JB: Dan, you've been doing this a long time, and you know that in most cases you only know you're in a recession after you've been in it for a while. And what happens is they revise the numbers down two or three times and say, "You remember back in January? Well, we were in a recession then!" In 2009, if we're all still alive, we'll be talking about what happened in early 2008, and we'll know for sure then! At this point, we're still speculating. But it feels like there's a recession.

The reason we're seeing so much volatility and, for the moment, mainly losses in stocks can be attributed in large measure to the fact that investors appear to be simply giving up on risk. They're going for the safety, security and long-term lack of any appeal whatsoever of Treasury bonds–all of which make stocks, to my way of thinking, look a whole lot less risky than they did even a few months ago.

DW: OK, bottom-line-it for me: What happens this year?