The Never-ending Rollercoaster

De-leveraging at warp speed.

Today, the Dow swung in a range of almost 900 points, or over 10%, a new one day record for volatility, marking the end of the single worst weekly performance in the 120 year history of the index.

Markets in Russia, Ukraine, Iceland, Indonesia, Austria and Brazil were either temporarily halted or closed altogether in an effort to stop the cascade of selling.

The Group of Seven (G7) finance leaders will meet in Washington over the weekend to discuss plans to prevent further deterioration of the world financial markets.

Earlier in the day, Bloomberg reported that according to Italian Prime Minister Silvio Berlusconi, political leaders are discussing the idea of closing the world's financial markets while they "rewrite the rules of international finance. The idea of suspending the markets for the time it takes to rewrite the rules is being discussed." Berlusconi went on to say that the solution to the financial crisis "can't just be for one country, or even just for Europe, but global."

Later, Bloomberg removed the original article and replaced it with a new one, reporting that the U.S. has no plans to close its financial markets. According to White House spokesman Tony Fratto, "There are absolutely no plans or discussions to interfere with the functioning of markets in the United States."

Fratto was responding to comments today from Italian Prime Minister Silvio Berlusconi, who said that governments may shut financial markets as the credit freeze pummels stocks and threatens a global recession.

Either way, the seeds of a new financial system are being sown. Will the Euro survive? Will new currencies be created? Fixed exchange rates? Will currencies return to a new, revised gold standard? The Bretton Woods Agreements lasted for 64 years.

Apparently, it's time for some new rules.

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Russian President Dmitry Medvedev proposed that European countries work with Russia to form a new transatlantic organization in which the U.S. was no longer the dominant power. At a conference in France he said, "A desire by the United States to consolidate its global domination led to it missing an historical chance after Sept. 11 attacks to build a truly democratic world order."

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Lehman Brothers credit default swaps were auctioned today for 8.5 cents on the dollar. Something is better than nothing.