So a few years back I read a really good book -- Asquith by Roy Jenkins. It's a biography of the British Prime Minister who basically killed the Liberal Party of England. Whether is was Asquith's failures or those around him is an interesting argument for another time, but after reading it in 2005 and watching the manifold failures of the Liberal Party of Canada since then, I've been struck by the odd similarities between the fate of the parties. Asquith and the early 20th-century Liberals of England found themselves with a collapsing electoral coalition as the growing labour movement stripped them of votes in places like Scotland on the one hand, and Asquith's attempt to placate Irish Nationalism drove people to the Tories on the other end. One of Asquith's last acts was to hold the balance of power in a Liberal-Labour coalition, the first time Labour held the Prime Minister's office. The paralells aren't exact, but you can find them if you look. Something that seems really relevant is the way Asquith and the Liberals lurched from one crisis/scandal to another, until eventually the party split between Lloyd George and Asquith. The party never, ever recovered and Labour became the new alternative to the Conservatives.
Now, there's no global war for the Liberals to bollocks up, and the point isn't that Dion is a new Asquith -- if nothing else, Asquith won several majorities in his own right before the disappointing end of his career. The point is that the Liberals need to find some way to vault a lot of structural problems that are currently conspiring to weaken them. And this crisis really started over a symptom of the Liberal decline: the issue of public funding wouldn't matter if the Liberals had a large motivated base of donors. (The same is of course true for the other two opposition parties.) And that's just the beginning of the Liberals' organizational problems, but critics within the party are better suited than I to talk about that.
Some of the problems the Liberals face actually are probably the fault of mediocre leaders such as Martin and Dion. But the current crop consists of two guys who lost to Dion and one guy who nobody thinks will win. Or to put it another way, a party that is serious about solving its problems produces a better crop of leaders than this.
It's not the whole of the affair, but consider that much of the success of the Democratic Party has come since leaders like Gephart, Daschle, and (yes) both Clintons have been eclipsed. If the Liberal Party thinks it can succeed without really disposing with the past and going with someone new, someone who actually inspires the party to change, then I think they're going to stay screwed.