Lehman Brothers is dead. Merrill Lynch is adopted, even though temporarily. AIG is half in the grave. More seems to be in the pipeline. Just how bad is it out there right now?
Here is a table from Afraid to Trade, that puts S&P500's yesterday performance in the context.
It shows that Monday's performance has been 14th worst since 1950.
Now see below FTSE100's worst daily performances since 1984.
It shows yesterday's performance was 21th worst since 1984.
Not bad in either case bearing in mind the severity of writedowns and systemic importance of some of these failing financial firms. However, a question begs itself whether a single day index performance can be a good indicator of problems in the broader system. Not necessarily. For comparison sake, the market crash on 19 October 1987 was a black swan event and can not be considered in the same context to what we are experiencing now. In addition, despite being excessively leveraged, the markets are now much more flexible compared to even 10 years ago.
Here is an indicator that I think is more reflective of the severity of current crisis - it is a graph of a 3 month US t-bill yield over a historic period:
Today, the yield on the t-bill touched 0.3%, the lowest since January 1941. It just shows the magnitude of anxiety in the world markets and the resulting flow of money into arguably the safest investment.
We have already seen a sequence of events within such a short period of time, unseen since the Great Depression. More seems to be coming.