Ahead: Black Wednesday

In Japan, the stock market today had its worst crash in two decades, losing nearly over nine percent of its value amid panic selling. In the UK, the government announced a massive plan to rescue the collapsing banking sector, committing hundreds of billions of dollars to the scheme. The London bourse responded by falling five percent. PM Gordon Brown says that the "global financial market has ceased to function." And:

"There is no such thing as a safe bank now," said Willem H. Buiter, a political economist at the London School of Economics. "They are only as safe as the authorities make them."

Good lord.

Meanwhile, the entire island nation of Iceland is about to capsize in a sea of red ink. Excerpt:

The strategy gave Icelanders one of the world's highest per capita incomes. But now they are watching helplessly as their economy implodes -- their currency losing almost half its value, and their heavily exposed banks collapsing under the weight of debts incurred by lending in the boom times.

"Everything is closed. We couldn't sell our stock or take money from the bank," said Johann Sigurdsson as he left a branch of Landsbanki in downtown Reykjavik.
The government had earlier announced it had nationalized the bank under emergency laws enacted to deal with the crisis.

"We have been forced to take decisive action to save the country," Prime Minister Geir H. Haarde said of those sweeping new powers that allow the government to take over companies, limit the authority of boards, and call shareholder meetings.

A full-blown collapse of Iceland's financial system would send shock waves across Europe, given the heavy investment by Icelandic banks and companies across the continent.
[snip]
The speed of Iceland's downfall in the week since it announced it was nationalizing Glitnir bank, the country's third largest, caught many by surprise despite warnings that it was the "canary in the coal mine" of the global credit squeeze.

Icelanders are also beginning to question how a relative few were able to generate the disproportionate wealth -- and associated debt -- that Haarde has warned puts the entire country at risk of bankruptcy.

It seems that since this AP dispatch was filed, the Icelandic currency has collapsed. It's almost worthless now.

More to come today, I'm sure. Fasten your seat belts.