The worst financial crisis in 80 years hit emerging markets hard on Wednesday, leading to emergency central bank actions and calls for international assistance to prevent investors from pulling out. In the United States, Wachovia Corp, a struggling bank set to be acquired by Wells Fargo & Co, reported a record $23.9 billion loss in the third quarter. Emerging market stocks, sovereign debt, and currencies all faced significant pressure as investors sold off positions due to concerns about the weakening global economy. Despite efforts by authorities worldwide to strengthen the financial system, fears of a global recession loomed large. Hungary raised interest rates by three percentage points in an attempt to protect its currency, the forint. Belarus's central bank has requested credit from the International Monetary Fund, while Ukrainian Prime Minister Yulia Tymoshenko anticipates substantial financial aid from the IMF for her country next week. The IMF is also prepared to assist Pakistan and Iceland, which are facing financial challenges. Neil Dougall, chief emerging markets economist at Dresdner Kleinwort, believes that capital is shifting from emerging markets back to developed markets, despite the fundamentals remaining unchanged. This raises questions about optimism in emerging markets. Various officials have expressed optimism about the financial crisis despite ongoing problems, with billions of dollars in rescue and liquidity packages being implemented by governments worldwide. U.S. Treasury Undersecretary David McCormick stated that while the U.S. economy faces challenges in the coming quarters, it could begin to recover by late next year. Bringing confidence back to the financial market is crucial, according to McCormick. Bank of England Governor Mervyn King, who is involved in discussions with Group of Seven nations on the crisis, mentioned that the worst may be over for the financial system. However, he emphasized that there is still a long way to go before stability is fully restored. The strategy to strengthen the banking system, domestically and internationally, is expected to be recognized as the pivotal point in overcoming the recent banking crisis. This sentiment was reinforced by the decrease in U.S. dollar funding costs in London and Asia, indicating that banks are starting to rebuild trust in one another. Russia, a rising economic force, also reported progress in bank lending, with interbank transactions returning to normal and interest rates gradually decreasing. Banks have begun lending to sectors once again, but First Deputy Prime Minister Igor Shuvalov stated that it will take two to three weeks for the situation to show improvement, according to the Financial Times. Despite efforts to combat financial collapse, the main concern is the worsening global economic conditions. The Bank of England's recent meeting minutes indicated a significant decline in the UK economy, with Governor King suggesting that the country may be facing its first recession in 16 years. These concerns have caused turmoil in financial markets. Wall Street appeared to be heading for a rough start, with Dow Jones industrial average futures dropping 259 points, or nearly 3 percent. European shares were down over 4.4 percent, while Japan's Nikkei average closed down 6.8 percent. In emerging markets, MSCI's sector index hit its lowest level since June 2005, and sovereign debt spreads widened by more than 700 basis points over Treasury yields for the first time since early 2003. Currencies, except for the forint, were also struggling, with the Turkish lira reaching its lowest point in over two years and South Africa's rand hitting a more than 6-year low against the dollar. Sanjay Mathur, an economist at the Royal Bank of Scotland in Singapore, commented that the economy will likely face significant challenges due to a downturn in the business cycle. A variety of US companies reported their results on Wednesday, providing an overview of the state of different industries and sectors in the largest global economy. Philip Morris International and Reynolds American Inc, along with McDonald's Corp, exceeded analysts' expectations with their quarterly profits, standing out among the overall negative outlook.