No recession, yet..

Demand drop of 1% of GDP began over a year ago when home buying by subprime borrowers ceased..

And exports picked up the slack.
And with housing as low as it is, further reductions, if any, will have minimal macro effects.
Losses not that large so far, only about $100 billion in write offs have been announced and with at least some prospects of recovery.
Far less than the 1998 (inflation adjusted) losses, for example, when $100 billion was lost in just the first day when Russia defaulted August 17 with no prospects of recovery.
Financial sector looses are not direct reductions of aggregate demand, just the ‘rearranging of financial assets.’
Falling demand due to supply side credit issues and capital constraints are primarily fixed exchange rate phenomena and are rare and brief with floating exchange rate policy and a non convertible currency.
Even in Japan with a floating exchange rate, when most bank capital was lost, credit expansion was a function of demand, while with fixed exchange rates, supply side issues dominated – Argentina, Russia, Mexico, the US in the 30s (gold standard), and the panic of 1907 Governor Mishkin referenced in his speech.

Government spending has been ‘moved forward’ from 2007 to 2008. Friday reported up over 8% year over year (NOTE: graph not updated for this last data point.)
Alt minimum tax capped helps demand some in 2008.

Personal income and spending not falling.
No econometric evidence of a significant ‘wealth effect’ from asset prices on the way up or on the way down. Income is better correlated.
Government employees and pensioners got GPI pay increases. This ‘half’ of the demand side keeps growing at 5% + nominal rates so to go into recession, the other half has to go down more than that.