G7 nations are mulling suspending trading in bank shares or even suspending trading entirely, coinciding with the closure of the markets in the US and Japan today because of local holidays, as all bailouts announced by leading nations have failed to stem the collapse of the global stock markets, with major stock exchanges across the world suspended trading on Friday as Wall Street underwent its worst ever week, and European markets witnessed more than a fifth in market cap wiped-off in five days.

According to media reports, on Friday Italian Premier Silvio Berlusconi said that global leaders might consider suspending stock market operations in response to the financial meltdown.

Berlusconi said that finding solutions to the financial crisis will have to be "global and innovative."

The Italian pemier was quoted in the media as having said, "There is talk of suspending the markets while international financial rules are rewritten."

The White House, however, said that it did not subscribe to the idea.

The IMF has cautioned world leaders that global equities could fall by a further 20 per cent in the coming days unless governments got together and form a unified solution to deal with the crisis.

IMF managing director Dominique Strauss-Kahn said the global financial system was on the ''brink of systemic meltdown, intensifying solvency concerns about a number of the largest US-based and European financial institutions (that) have pushed the global financial system to the brink of systemic meltdown.''

Commentators say that if the IMF's analysis is right and shares of the banks take a further plunge of 20 per cent, then most governments will have no choice but to nationalise the entire banking industry.

In the US, there have been occasions when the stock exchanges have been shut down, for instance during the great depression in 1933 when when the NYSE was closed from 4 March to 14 March, and again after the terrorist attacks in the US in 2001, from 11 September to 17 September.

Markets collapse in tandem
As G7 met in Washington on Friday to address the global financial problem, stock markets around the world fell sharply with the Dow Jones industrial average falling by nearly 700 points in just 7 minutes of trading. At 7,900 points, the rate of decline was edging closer to the 10 per cent ''circuit-breaker'' threshold that would halt trading. The Dow's fall was its eighth straight day of losses and its loss for the week stood at 18.2 per cent, it's steepest since 1914.

European stocks fell 7.6 per cent, with Germany's DAX ended down by 7 per cent, while France's CAC-40 was down 7.7 per cent, the S&P 500 down by 5.8 per cent and the NASDAQ 4.8 per cent in early afternoon trade after Japan's Nikkei sank 9.6 per cent.

Indexes in Hong Kong, Singapore, the Philippines and India were all down about 8 per cent. South Korea's Kospi closed down 4.1 per cent, while the Shanghai composite index had a mild decline of 2.8 per cent.

The Russian exchange regulators suspended trading once again on Thursday and kept the markets closed on Friday as well in order to stop huge fluctuations in trading sessions.

Trading was suspended at various times in Austria, Iceland, Romania and Ukraine, while share dealings were suspended in nearly half of Milan's stocks because of excessive losses. Iceland has suspended trading in all companies on its small exchange while Brazil suspended trading on two occasions last week at its biggest stock exchange. Peru closed it stock market indefinitely.

The Libor swung to its widest level in more than 25 years, signifying that interbank lendings had bcome riskier than government debt. Rates for three-month interbank dollar rose again on Friday.

The US had come under stinging attacks from Britain's chancellor, Alistair Darling and Russian Premier Putin, for the global financial mess stretching from Wall Street to Iceland has seen $8 trillion evaporating in thin air due to falling stock values over the last 12 months. It put up a somber face at the G7 meet, with the former Wall Street financial wizard, Henry Paulson saying, ''We're going to do it as we can do it in a proper way that will be effective. Trust me, we're not wasting time, we're working around the clock.''

After The US passed its $700-billion bailout package (See: US Senate bails out markets – passes $700-billion package), the UK followed suit with its $906-billion bailout plan for banks. (See: Britain unveils $906-billion bailout plan for banks) Russia also unveiled a $105 billion financial bailout package on Friday with the central banks of Europe and Japan also pitching in. 

The combined forces of all these central banks have pumped in nearly $2 trillion into the money market to bring back confidence and prevent more bank failures.

The French government has also announced that it will soon come out with a rescue plan and the hesitant Germans said they would inject public funds into its banks. Germany was hesitant to come out with a bailout package so far amid fears that its rescue plan would ultimately bail foreign banks as well.

With Paulson's plan falling apart (See: The Paulson Plan crashes), the US confirmed on Friday that it would follow the UK in utilising the $700 billion bail-out fund to buy shares in troubled banks and financial institutions. In a desperate move to unlock bank lending, the US government is mulling guaranteeing billions of dollars in bank debt and temporarily insuring all US bank deposits, The Wall Street Journal reported.

Cutting interest rates
In addition to this, central banks around the world have also taken the unprecedented step of cutting interest rates in response to rising fears about the impact of the financial crisis on global economy.

The US Federal Reserve, the European Central Bank, the Bank of England, and the central banks of Canada, the United Arab Emirates, Switzerland, Sweden and Bahrain have all cut their main lending rates by 0.5 percentage points.

The crisis also claimed its first Japanese financial institution -Yamato Life Insurance Co., which had debts of $2.7 billion. (See: Japan's Yamato Life collapses with debts of $2.7 billion)

Commentators say that in spite of this massive unprecedented government intervention of bailouts for bank, liquidity injections and coordinated interest rate cuts, instead of calming down the global economy has not been able to sway the investor or banks who refuse to lend and desperately hold on to protect capital, clearly indicates that there is hidden fear underlying financial perils that is pushing the financial mess spiralling into an abyss.

They feel that the markets should be shut down till the G7 nations come up with a unified set of policies that would address the crisis in combination with the bailouts getting up and running. They also caution that if G-7 markets close, secondary markets would follow suit.

According to them the inaction of the politicians ids due to their views that helping banks that created this mess is morally wrong. As one commentator put it, ''When you see the Titanic sinking, you don't stop saving people because it is the shipbuilder's fault.''

One of the main reasons for this continued volatility in the stock market is that the bailout packages announced by different nation will take some time to get operational.

Nobel Prize winning economist Joseph Stiglitz recently commented, ''A unique combination of ideology, special interest pressure, populist politics, bad economics, and sheer incompetence has brought us to our present condition.''

G7 finance ministers and central bank governors who met in Washington, announced they would form a united front and activate all possible policy measures to overcome the global financial crisis.

This announcement has not been able to sooth frayed nerves as there was no concrete plan backing the announcement.

Bush said, ''The world is sending an unmistakable signal. We're in this together, and we'll come through this together.''

According to media reports, there is speculation that Bush may offer to use the Federal Deposit Insurance Corporation to insure 100 per cent of all bank deposits in the United States, so that confidence can be restored in the American banking system and could even bring in new funds.

Speaking on the recapitalisation plans, Darling said, ''This is not an optional extra. It is imperative that other countries get on with it. There is a very clear sense that governments need to act now. The reality is staring us starkly in the face. This is a necessary step towards stabilisation. The threat is blindingly obvious. You can't stabilise economies unless you have a stable banking system.''

The US stock market capitalisation has fallen by about 40 per cent. It wiped out almost $7.3 trillion in wealth which is equal to approx 53 per cent of its GDP and this has been its worst performance since 1937.

Some of its biggest and most powerful banks have collapsed. AIG, its biggest insurer required a bailout to save it from going bankrupt. About 3.6 million Americans have lost their homes since the sub-prime mortgage crisis began and more continue to do so.

Balance of financial power shifts from West to East
The US budget will face its highest deficit; which could be close to $2 trillion in 2009, or 12.5 per cent of its GDP.

The International Monetary Fund has predicted that foreign currency reserves of emerging markets would surge to $6.5 trillion by the end of 2009, up from $4.7 trillion last year.

As the balance of financial power shifts dramatically from West to East, the IMF has said that the three Asian giants, China, Russia and India hold foreign exchanges reserves around $1.8 trillion, $582 billion and $283 billion respectively.

The total reserves of these three countries represent 38 per cent of the world's total and 12 times the reserves of the European Union.

IMF also said that despite the economic turbulence, the Chinese economy will grow by 9.3 per cent, Russia's by 5.5 per cent and India's by 6.9 per cent.

The crisis also claimed its first Japanese financial institution -Yamato Life Insurance Co., which had $2.7 billion debts.

The IMF believes that up to 30 countries are at severe risk of facing a government budget crisis because of the combination of the credit crunch and volatile commodity prices.

(Also See: Financial crisis may affect fund flows to poor nations, say IMF and World Bank)