This is what panic selling looks like. When everyone wants to sell and almost nobody wants to buy, prices suddenly stop having much to do with the underlying value of whatever it is that is being traded. As the expression goes on Wall Street, nobody wants to try to catch a falling knife.

But it’s even worse than that when most of these stocks, bonds and derivatives have been purchased with borrowed money. The wiseguys who now dominate the daily trading on Wall Street — the hedge funds and private equity funds — typically put down $1 or $2 of their own and their investors’ money for every $10 worth of the securities they purchase.

What that means is that when prices for these securities fall 10 percent or 20 percent, the bank or hedge fund or private equity firm that lent the money for the original trade, or took the other side of the derivative contract, has the right to demand additional cash. The only way to get that cash is to sell something. And in that way, selling begets more selling.