Stock exchanges around the world have dived, with the FTSE 100 falling as much as 10%.
This is despite a co-ordinated global cut in interest rates and massive cash injections by central banks earlier in the week. So what is the big bad news that has sent share prices plunging?
Why are European markets down so far?
To an extent it is a game of global follow-my-leader.
New York's Dow Jones Industrial Average closed down 7.3% on Thursday, taking the index below 9,000 for the first time for five years.
More worryingly, the Dow has now fallen 20.9% in seven days.
The baton passed onto Asia, where the Nikkei in Tokyo closed almost 10% down and the Hang Seng in Hong Kong dropped 7.2%.
And then European shares did the same.
What is worrying all these investors?
Every now and then in recent weeks, there have been signs of optimism on the markets, especially when the $700bn (£414bn) bank bail-out package in the US was passed.
The trouble is that banks have still not started lending money to each other.
"Despite the huge fire fighting efforts of central banks worldwide we still haven't seen any thawing of interbank lending - that is going to be causing the most concern now," said CMC Markets dealer Matt Buckland.
"US and European tax payers have collectively tried to dig the financial sector out of one almighty hole but the response certainly hasn't been as planned," he added.
There are real worries that if the promise of $700bn is not enough to sort out the problem, then we really are in trouble.
How much further down can the markets go?
Spotting when markets have reached the bottom is a tricky and risky process.
Many traders believe in the idea of capitulation, which broadly means a market surrender.
This is when investors are prepared to get out of the market at any price because they have given up all hope of making money from their shares.
It is often marked by panic-selling and very high volumes of transactions.
The idea is that after capitulation you reach a point at which the last investor who is desperate to get out of shares and move into supposedly less risky assets has sold out.
Once there is a widespread belief that the bottom has been reached, bargain-hunters pile in and the market recovers.
Have we reached the bottom of the market then?
It is really difficult to say.
Some people think we're nearly there.
"We have got to the capitulation stage where people are taking the combination of the perfect storm of a banking system in crisis and a global economy that is slowing quite dramatically," said Justin Urquhart-Stewart at Seven Investment Management.
The trouble is, some people reckoned we'd reached that point earlier this week.
Some declared the market was at the bottom last week.
There were those who declared capitulation had been reached on 15 September when the Dow fell 504 points in a day.
Capitulation is easy to spot in retrospect but the people who recognise it accurately at the time get very rich.
So once we reach the bottom there will be a total recovery on the FTSE then?
It is difficult to say. The falls are not just about the perilous state of the banking system, although there are plenty of banks in the FTSE 100 index and they have been dragging it down.
The falls also reflect the view that many of the world's biggest economies are going into recession.
The oil price has fallen below $80 a barrel because it is thought that as economies slow there will be less oil used and the same argument goes for copper or coal.
That means that there is likely to be less demand for the products of the big global commodities companies that dominate the index.