When the history books come to be written, September 15 stands some chance of going down as Black Monday.

London woke up to discover that, overnight, two of the biggest pillars of Wall Street had either collapsed or passed into new ownership, the world’s largest insurer was forced into an emergency restructuring, and 10 banks put together an emergency fund to lend to any other ailing banks.

One Australian strategist likened the continuing crisis to Lord Voldemort, the evil character in the Harry Potter novels who keeps returning from the dead.

The immediate consequence of Lehman Brothers' bankruptcy and the sale of Merrill Lynch will be thousands of bankers out on the street. One New York observer estimated that 40 per cent of Merrill’s workforce, or 24,000 people, could be out of a job. The situation at Lehman will inevitably be much worse.

As the London market opened this morning, the 100-point fall forecast by one strategist could be regarded as a relatively benign outcome. The news from New York will severely dent what little remains of confidence in the banking system.

The $70 billion lifebelt organised by the banks over the weekend is clearly designed to boost confidence, while the Federal Reserve has also tried to calm jitters by extending the sort of collateral that banks can use to obtain loans.

The question must be whether this will be enough to head off the inevitable panic once Wall Street opens. The omens are not good. This could be the second phase of a global crisis that started a year ago. London will inevitably not be immune.

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