I have said a number of times that the Liberals are going to lose this election because they failed to present themselves as a meaningful alternative to the Conservatives.
But there are, I think, other significant reasons that they have failed to make any traction with the electorate. One is that, just like they did with Dion, the Liberals let the Conservatives define Ignatieff's image from the beginning. I think it is pretty clear that it was blindly foolish for the Liberals not to immediately fight back on the question of Ignatieff's image. I suspect that the Liberals were doomed from the start just as they were when the Dion didn't call the Conservatives out at the beginning of his tenure as leader. Ignatieff then spent a couple of years telling us how bad the Conservatives were and how he was going to put a stop to them but he kept acquiescing. No one likes someone who claims that they are going to stand up to a bully and then walks away at the last minute.
Another big issue was, I believe, that the Liberals party seems to be totally oblivious to the issues of personal image. Ignatieff lacks charisma, for sure, but he also presents people with a rather harsh and difficult appearance. I guess the LPC didn't have money put aside in their budget for a personal image consultant. Because if they had they could have trimmed his eyebrows, put glasses on him and made him gain a little bit of weight. Etc. This kind of thing may be meaningless in some senses but it is simply a reality in a world of TV and Sound-bytes.
Finally, I think the Liberals would have faired much better if they had been more open to cooperation with the NDP. They should really have presented this election as a sort of national emergency similar to WWII, in which cooperation is temporarily necessary to save the nation. They could have created an entire narrative about the dangers of Harper and Baird actively undermining the constitution etc. In this way the Liberals could actually have stolen the narrative of fear from the Conservatives and Harper would have had a hard time getting it back. It is not the most classy way to win an election but I bet it would have worked.
Having said all of this, I think talk of the demise of the Liberals Party has been greatly exaggerated. They won't win this election, but there are a number of scenarios that could easily bring them back. The biggest problem they have is that Harper has managed to steal the centre (if only in people's perception) and has worked to bring the country to the right slowly and by stealth. This is what he said he wanted to do in a number of speeches in the 1990s. The Liberals simply have not found a way to react to this. But if Harper were to win a majority and shift farther right on important issues, the Liberals could easily rebound by default of regaining the centre.