Sell everything. Now.
That seems to be the watchword of pretty much every financial market in the world Monday after what wags dubbed "The Great Fall of China".
Shanghai's stockmarket fell by 8.5%, its worst day since 2007, as fears about the authorities' ability to guarantee a 'soft landing' for the economy grew.
There are few assets that are immune to both the threat of a weaker China and the other specter haunting global markets, the Federal Reserve's widely-expected first interest rate hike since 2006. Emerging market currencies, commodities and equities around the globe have all headed south Monday at varying speeds.
Crude oil futures hit a new six-and-a-half-year low of $38.09, while Europe's major stockmarkets fell by 4% or more in a morning of unmitigated carnage, extending their losses as U.S. investors joined the fray.
Former Treasury Secretary Lawrence Summers wrote in an op-ed in the Financial Times that the Fed would be making a "dangerous mistake" if it raises interest rates against a backdrop of such instability. Whereas a rate hike might have made sense six months ago to stop markets getting over-exuberant, "that debate is now moot," Summers wrote.
Summers' mood got even darker after the Dow Jones Industrial Average shed 1,000 points on opening.
Minutes released last week suggested that the Fed was still on course to raise rates this week, although perhaps not as early as September, as many had started to fear.
The scale of the rout over the last week appears to have persuaded an increasing number in global markets that the fall in commodity prices over the last few months is less a benign transfer of wealth from producer countries to consumer ones, than a symptom of the world economy's inability to generate enough demand to absorb everything that's being produced.
Big emerging markets such as Brazil, Russia and South Africa were supposed to be able to take the burgeoning output from all the factories that China had built in the last decade, but that idea is losing credibility as the purchasing power of those consumers crumbles in the currency markets.
The Brazilian real has lost 30% against the dollar this year, the rand has been withering for the last four years, and the ruble hit a new 17-year low against the dollar Monday, as oil--the Russian economy's biggest export--extended its longest losing streak since the breakup of the USSR.
Capital is flooding out of most emerging markets right now, back to where it came from. That's pushing up the dollar, the euro and the yen. The effect is particularly strong on the euro at present: it rose above $1.15 for the first time since January earlier Monday on the unwinding of 'carry trades' (where people borrow low-yielding currencies to invest in higher-yielding ones) and on people pushing back their expectations for the Fed's first move.
More than once in the last two years, the Fed has backed down from tightening monetary policy in response to market fears (or 'tantrums') about the consequences for global growth. Analysts at Credit Suisse argued in a note to clients late last week that "the Federal Reserve has never raised interest rates when global risk appetite was near panic."
On Friday, when vice-president Stanley Fischer chairs a keynote panel at the Fed's annual symposium, the world may know whether it's going to do the same again this time. In the meantime, it looks like being a long week.
UPDATE: This article has been updated to include Larry Summers' tweet and update market movements.