At 7:43 a.m. ET, S&P futures were down more than 3%, and Nasdaq futures were more than 2% lower. Dow futures were 3% lower.

World markets are sharply lower

The UK’s FTSE 100 index fell 5.18% in afternoon trade, France’s Cac 40 index shed 5.3% and Germany’s Dax lost 4.1%.

In Asia, the key Australian share index ended down 1.8%, and in Singapore the STI dropped 3.3% to hit a two-year low.

In Taiwan, the benchmark share index closed down 4%, and in India share prices fell by more than 3.35%.

Art Hogan, chief market strategist for Jefferies & Co., said the magnitude of the financial industry fallout is unprecedented, and could only be compared to the Great Depression of the 1930s or the railroad bankruptcies of the 1800s.

“We’ve never witnessed this before,” said Hogan. “There’s no road map for this.”

He said that over the course of the week, investors will be closely watching AIG, Washington Mutual and other banks to see who will be the next to get “embraced by a white knight.”