From UBS Art Cashin via Zero Hedge

Panic And Perspective On Wall Street - We’re going to adjust our usual format a bit to try and put yesterday in a little bit of perspective. Having done this over 50 years, I’ve seen a good deal of market history - the Cuban Missile Crisis, the Kennedy Assassination, the ’87 Crash, various wars, and much more - and perspective is essential to survival - at least financial survival.

If you were writing a textbook on the mechanics of finance and markets, you might have a chapter on volatility. If so, you might list a history on the normal volatility of each asset class.

Most volatile would likely be the stock market. Valuations are based on imperfect information and individual assumptions.

Next down the volatility scale might be commodities where conditions tend, overall, to change slowly with the occasional sudden surprise from weather or other natural events.

Next down the volatility scale, would likely be the bond market - much better information and a very large, very liquid marketplace.

In your textbook, the least volatile asset should be currencies. While they historically have had wide swings, as other assets have, but they tend to move incrementally - normally small intra-day moves.

Yesterday, the textbook was thrown out the window. All asset classes saw sudden and sharp moves far in excess of normal volatility patterns. To an old timer, that points to one conclusion. Liquidation. Wide-spread liquidation across asset classes. Currencies, bonds, commodities and stocks all moved swiftly and sharply in a direction that screamed - Seek safety! Raise cash! Get liquid!

I have been lucky enough to build a mildly successful career by seeing and relating the various causes and effects that move markets. Yesterday had many contributors. European banks tottered amid more rumors and, there was a sense that in the U.S. solutions were slipping away as political acrimony grows. Even the old reliable China growth story got dinged. Chinese manufacturing numbers hinted a slowdown if not recession. FedEx added to the China worries by noting a sharp drop-off in Asian technology shipments. There were also reports that folks were having a tough time getting paid by Chinese counterparties.

All of that had a quick and discernible negative impact on markets. But, the selling was far more pervasive and dramatic than simply a conscious adjustment of positions based upon new data. Thursday’s action screamed liquidation - and not all of it voluntary.

That, in turn, brought echoes of 2008. Who were today’s counterparties? Was there an AIG type in the new European crisis? Those are the kinds of unknowns that fuel liquidations. Everyone begins asking everyone else to put up more collateral. It becomes a feeding frenzy for the rumormongers. They can make anyone a victim. With counterparties unidentified, there is almost no way to counter wild rumors. We need a time out here.