This quote partially overlaps with Jerome's quote in his top-level comment.

Bloomberg.com: Corporate Default Risk Soars to Record on Ambac Ratings Cut (21 January 2008)

Ambac was stripped of its top AAA grade by Fitch Ratings on Jan. 18 after the New York-based company abandoned plans to raise new equity. Moody's Investors Service and Standard & Poor's are reviewing Ambac and MBIA, throwing doubt on the ratings of the $2.4 trillion of debt guaranteed by bond insurers and threatening forced sales by investors that are restricted to holding the highest-grade bonds.

I'll hazard a guess that the downgrading of Ambac happened after the close of trading on US markets on Friday, knowing that the US market would be closed for a holiday on Monday. Tomorrow's market open in New York should be interesting. This may have influenced the Asian markets, which were still open and has definitely hit the European markets today as well as, again, the Asian and Australian markets this morning. The following piece doesn't mention the downgrading of bond insurers, concentrating instead on the reation to Bush's announced economic stimulus package:
International Herald Tribune: European and Asian markets plunge on U.S. recession fears

Global stock markets plunged Monday as fears spread that the contagion in U.S. mortgage markets was spreading. Indexes in Europe fell as much as 7 percent after a massive sell-off in Asia.

...

Investors in Asia have been in a state of denial about the possibility of a U.S. recession, said Adrian Mowat, chief strategist for JPMorgan in Asia. But now, he said, "there's no debate about it."

Now, this is very interesting:

There may be more downturns in store for Asia, particularly as banks report the impact from their investments in the U.S. mortgage market. Companies "have not announced their year-end numbers yet," said Schuller, the Moody's credit officer, and if they are holding subprime assets, they may need to write-off their value. "They are going to be taking these 25 to 30 percent haircuts we're seeing on Wall Street," she said. "I think it is going to shock people."

We have met the enemy, and he is us — Pogo

If I understand it right -- and I'm an economist, not a trader, so maybe I don't -- this is the doomsday scenario, the one that puts the banking system at risk.

The "Send lawyers, guns and money" one.

WHEEEEEEEEEEEEEEEEEEEEE!