The worst financial crisis in 80 years had a severe impact on emerging markets, prompting emergency actions by central banks and a call for international assistance to control the flight of investors. 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 of the year. Emerging market assets faced significant pressure as investors unwound their positions due to concerns about the global economy. Despite efforts by authorities worldwide to strengthen the financial system, fears of a global recession prevailed. Hungary raised interest rates by three percentage points in order to protect its currency. 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 to developed markets, despite the fundamentals remaining unchanged. Various officials expressed optimism about the financial crisis despite ongoing problems, with billions of dollars being allocated for rescue and liquidity packages by governments worldwide. U.S. Treasury Undersecretary David McCormick, addressing the situation in Hong Kong, indicated that while the U.S. economy faces challenges in the coming quarters, there is potential for recovery by the end of next year. "The key objective is to restore confidence in the financial market," he emphasized. Mervyn King, governor of the Bank of England and a key figure in Group of Seven discussions on the crisis, suggested that the worst may be over for the financial system. "Although the path to stability is still long, we may have passed the worst of it," he stated on Tuesday. The strategy to strengthen our banking system, both domestically and internationally, is expected to be recognized as the turning point in the recent banking crisis. This sentiment was reinforced by a decrease in short-term funding costs for U.S. dollars in London and Asia, indicating that banks are starting to rebuild trust in each other. Russia, a rising economic force, also showed signs of progress in bank lending, with interbank lending beginning to function more smoothly and interest rates gradually decreasing. Banks are beginning to lend to sectors again, but it will take two or three weeks for the situation to improve, according to First Deputy Prime Minister Igor Shuvalov as reported by the Financial Times. The looming fear is the deteriorating global economic climate, despite progress in combating financial collapse. The Bank of England's recent meeting minutes indicated a substantial deterioration in the UK economy, with Governor King suggesting it may be entering its first recession in 16 years. These concerns have impacted financial markets. Wall Street was poised for a rough beginning as Dow Jones industrial average futures dropped by 259 points, which is almost 3 percent. European shares were also down by over 4.4 percent, while Japan's Nikkei average closed with a 6.8 percent decrease. In emerging markets, MSCI's sector index hit its lowest point since June 2005, and sovereign debt spreads widened to more than 700 basis points above Treasury yields for the first time since early 2003. Various currencies, excluding the forint, took a hit, with the Turkish lira dropping to its lowest level in over two years and South Africa's rand reaching a six-year low against the dollar. Sanjay Mathur, an economist at the Royal Bank of Scotland in Singapore, expressed concerns about the upcoming challenges due to a potential business cycle downturn, which he believes will be quite severe. Many US companies reported their quarterly results on Wednesday, providing an overview of various industries and sectors in the largest economy in the world. Philip Morris International and Reynolds American Inc, along with McDonald's Corp, exceeded analysts' expectations with their profits, offering a glimmer of positivity among a largely negative outlook.