The lack of confidence was clear in the economists' grades for Treasury Secretary Henry Paulson, whose marks fell to a 60, the lowest level during his tenure. More than half of respondents gave the Treasury secretary a grade equivalent to a D or F. Federal Reserve Chairman Ben Bernanke's average grade rose slightly to a 72, but 26% gave him the equivalent of a D or F. More than half of economists put his grade in the A or B range.

On average, economists expect the downturn to conclude in June 2009. Last week, the National Bureau of Economic Research dated the start of recession in December 2007. That puts the downturn at 18 months, the longest period of decline since the Great Depression. The recessions of 1973-75 and 1981-82 both lasted 16 months.

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This recession has centered not on businesses but consumers, who are being hit by dwindling home prices and job losses. The economists on average said the unemployment rate will peak at 8.4% in response to this recession. While that actual rate was surpassed in both the 1970s and 1980s, it would mark a four-percentage-point increase from the low of 4.4% in March 2007. Only the 1973-75 recession, with a 4.1-percentage-point increase, had a larger jump in the postwar period.

Adding to consumers' pain is that the end of the recession isn't likely to mark the end of job losses. In past recessions, labor-market contraction continued for months after a downturn's official end. So, while economists, on average, expect the unemployment rate to top out at 8.4%, they forecast an 8.1% rate for December 2009 as job cuts continue into 2010.

BEIJING – China’s exports fell for the first time in seven years in November while imports plunged, showing that the nation is being buffeted by weakness in both external and domestic demand that worsened severely in just the last few weeks.

China’s customs agency said Wednesday that November’s exports dropped 2.2% from a year earlier to $114.99 billion. That marks the first decline in the dollar value of exports since June 2001, and a sharp reversal from the 19.2% gain recorded in October. The export performance was far worse than economists had forecast, although Chinese officials had indicated Tuesday that a decline could be in the offing.

Imports suffered an even more dramatic reversal in November, falling 17.9% from last year to $74.99 billion, after having risen 15.6% in October, in the first decline since February 2002. The import drop is a worrying signal of the health of domestic demand in one of the few major economies that is still expanding. China is the third-largest export market for the U.S., and also a major purchaser of commodities.

The November decline in imports was so much greater than that in exports that China’s trade surplus soared to a fresh monthly record, of $40.09 billion.

“The whole world including China is experiencing the biggest demand shock in many years,” Ting Lu, an economist for Merrill Lynch, wrote in a research note. The financial crisis likely amplified the trade impact of declining demand in the U.S. and other major nations. “A majority of that shock could be due to the collapse of [the] global financial system which provides liquidity and credit to international trade.”

The rapid decline in imports also suggests that export orders for coming months are also very weak, since a large portion of China’s imports are parts and components that go into exported goods.

“As demand for China’s exports wane, China’s call on the Asian supply chain also wanes,” said Glenn Maguire, Asia economist for Société Générale. Regional suppliers such as Taiwan and South Korea have already reported sharp falls in their exports to China.

Chen Yubin, a manager at the China operations of Catcher Technology Co., a Taiwanese maker of parts for consumer electronics, said his business dropped sharply in the first days of December. The company, which has three factories in Suzhou, north of Shanghai, now expects sales this year to be flat or down slightly after years of double-digit growth. Next year could be even worse.

“Manufacturers all have very bad forecasts,” Mr. Chen said. “Everybody is suddenly going into austerity mode.”

China’s weakening demand is also taking a toll on big commodities producers. Its imports of iron ore fell 7.9% in November, while crude oil imports were down 1.8%.

China’s government is already engaged in an all-out effort to stimulate the economy, having slashed interest rates and announced a four trillion yuan ($584 billion) investment package. On Wednesday, top leaders were also wrapping up an annual economic-policy conference, though new measures were immediately announced.

The stimulus can’t directly aid exporters, who depend on demand in foreign countries, and it will inevitably take more for the new money to show up in the real economy. Still, China’s ability to support such massive expenditures sets it apart from neighboring countries whose stimulus efforts are more constrained.

“Imports for domestic consumption will increase very substantially as a result of the stimulus package,” said Vikram Nehru, the World Bank’s chief economist for Asia, at a briefing Wednesday. “For many other countries the fiscal packages will not be enough.”

Bob Annibale's corner office, high up in one of London's few real skyscrapers, overlooks the Thames and the Millennium Dome from one window, Greenwich Park and the Royal Observatory from another. It is the kind of enviable perch you'd expect Citigroup's senior treasury risk manager to enjoy. But that is the job Annibale left three years ago; now he is Citi's "global director of microfinance".

Microfinance, the system of providing tiny loans and savings accounts to the poor, seems an unlikely and somewhat ironic candidate for Citigroup's attention. It was because banks weren't interested in serving the poor that the pioneers of microfinance saw a gap to be filled, back in the 1970s.

The most celebrated microfinance institution, the Grameen Bank, was born in Bangladesh in 1976 after Muhammad Yunus, a young economics professor, found that craftswomen were struggling to deal with the high costs of borrowing in order to buy raw materials. Village moneylenders charged up to 10 per cent interest per day. At such rates, a debt of a single cent would balloon to the size of the US economy in just over a year.

Yunus began lending – originally, less than a dollar each to a group of 42 families – and found that the poor were capable of investing the money, lifting themselves out of poverty and paying back the loans with near-perfect reliability. "All people are entrepreneurs," he proclaimed.

From small beginnings, a global microfinance movement has developed, with perhaps $25bn of loans outstanding and 125m to 150m customers. It has been blessed by the United Nations, which declared 2005 the International Year of Microcredit, and by the Nobel committee, which awarded the Nobel Peace Prize to Yunus and Grameen Bank in 2006.

Now multinational banks at last see microfinance as a profit opportunity. "Colleagues asked me if was giving up a business role," says Annibale, who became Citi's first microfinance chief in 2005. "I'd say, 'No, I'm taking up a new one'." He plans to make money for Citigroup by providing technology, advice and investment banking services to microfinance lenders. His division has so far been unaffected by this year's market turmoil.

The Citigroups of the world are not the only commercial players to get involved in what was once a purely philanthropic endeavour. Sequoia Capital, the venture capital fund that backed Google, Apple and Cisco, has taken an $11m stake in SKS Microfinance, a large Indian lender. Private equity groups such as Helios Capital are making similar moves. Pierre Omidyar, founder of eBay, gave $100m to Tufts University in 2005 with the stipulation that the donation be used to create a fund seeking its returns only through investments in microfinance. The fund's director, Tryfan Evans, recently predicted that it would be fully invested by the end of this year.

Most surprising and controversial are those microfinance institutions that have been transformed from charities to profitable companies through hugely successful initial public offerings. The most notorious, Mexico's Compartamos ("Let's Share"), used a $6m investment to turn itself into a billion-dollar company in less than a decade, expanding rapidly while charging very high rates to borrowers. What was once an idealistic movement is now a fast-growing industry – one that is rapidly losing its innocence.

The commercialisation of microfinance has sparked a fierce debate between profit advocates such as Carlos Danel and Carlos Labarthe, the founders of Compartamos, and traditionalists such as Yunus, who see microfinance lenders like Compartamos as indistinguishable from the moneylenders he set out to replace in 1976. Between these two poles lie the majority of microfinance practitioners, eager to gain access to capital and commercial expertise but concerned that competitive market forces may not help the poorest.

Commercialisation is a huge opportunity to lift people out of poverty. Despite the credit crisis, most of us take for granted the ability to save, to borrow for emergencies or to buy assets, to move money around and to insure ourselves. But several billion people lack these basic, life-improving services. The microfinance industry today serves fewer than one in 10 of them. Few people believe microfinance can grow quickly enough without adopting a more commercial model.

It is not just that commercialisation would provide plentiful access to foreign capital – although that is likely – but also that expertise from commercial players might allow microfinance lenders to move beyond simple loans. If lenders could take deposits, they should easily be able to fund their own loans: many poor people are would-be savers who lack a safe place to put their money. But as the credit crisis has made clear, deposit-taking is a difficult business requiring regulatory supervision even in rich countries. Commercial expertise is therefore indispensable for a deposit-taking bank.

Yet this is also a dangerous moment. Microfinance harnesses market forces to bring basic financial services to the poor, but many microfinance institutions do much more than that. Using donor funds or reinvested profits, coupled with their reach into remote villages, they provide subsidised education and healthcare. There is a risk that commercial logic could threaten these subsidised services by repelling donors or poaching the best customers. There is also the risk that competition misfires, leaving the poor paying higher rates rather than lower ones.

More than 500 years before the birth of modern microfinance, Franciscan monks in Perugia, Italy, developed their own method of social finance. They would lend money to the poor in times of crisis; as collateral, they would hold some precious item and charge a fee for its safekeeping to cover their operating costs. The idea was endorsed by the Pope and widely emulated. The monks called the fund a "Monte di Pieta", a Fund of Mercy. Today, we would call it a pawnshop.

This cautionary tale – told by Larry Reed of the Boulder Institute of Microfinance – resonates in a social movement that is sharply divided over commercialisation.

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