'Who's next?' The question as billions lost in market chaos

It is becoming clear that there is more bad news in the Wall Street pipeline despite the US Government's bail-out of giant insurer American International Group.Wall Street was looking grim from the outset overnight but it took a very heavy tumble in the final minutes of trade as the frightening new reality set in that some big dominoes are stacked up, waiting to fall.With three of Wall Street's top five banks gone, the focus is on the remaining two and whether they have come clean with any bad news.So investors have run for the exits.Goldman Sachs and Morgan Stanley fell by record amounts after reporting profits yesterday, the former losing as much as 26 per cent, the latter as much as 44 per cent.If you look at Wall Street itself, around half the gains of the bull market that began in 2002 has been erased.And it is a flight to safety as credit markets freeze up in fear and suspicion.For example, gold - the haven in turbulent times such as war - jumped nearly $US85 overnight. Oil was up $US6.And investors are jumping into the safety of US treasury bills. As a result, yields on three-year notes have fallen to their lowest levels since World War II.Fallout to spreadBut no one should think this is just a problem for the wealthy.The fallout is showing signs of spreading from Wall Street to Main Street, according to financial analyst Jeff Kleintop, speaking on Bloomberg."A lot of what's been going on here has really been a Wall Street problem, but obviously when you start to question the solvency of money markets, that hits the man in the street and so you've started to see some of that, you've started to see money move very much into the safest securities," Mr Kleitop said."The [US Federal Reserve] has been on top of that in recent days but clearly needs to put a lot of money to work very short term in this market to ensure there isn't a seize up among banks as investors really question their money market funds, and where the safest place to put their money is in these turbulent times."For some perspective on the scale of the situation, the ratings agency Standard and Poor's says AIG and a dozen other US companies have collectivity lost the equivalent of Switzerland's stock market value so far this year.Their combined market value tumbled by about $US1 trillion by yesterday, exceeding the $US998 billion value of the Swiss market, which is the tenth biggest in the world.And this is just the beginning of the fallout, with economists saying they've experienced nothing like this.The only comparison is with the Great Depression.US regulators are certain to intervene again to restore calm to protect banks as customers worry about their deposits.