Stock market in panic after Greece austerity bill passes; Update: Trading error? Update: Confirmed

I don’t recommend watching the ticker on cable. I had it on at around 2:45 as the Dow dropped from -400 to just under -1,000 in the span of about five minutes, which left me actually shaking a bit afterwards at the prospect of a bona fide freefall crash. The market closes at 4 p.m. so expect more volatility in the next 40 minutes as panicky investors bail out before the bell rings. (Tomorrow should be fun, too, since people won’t want to be caught long over the weekend.) If you’re thinking that they’ll halt trading in case the bottom drops out, think again: After 2:30 p.m., there are no curbs until -2,150. Time to revisit that rule, perhaps.

If you’re feeling a sense of deja vu here, there’s a good reason.

One trader, on the condition of anonymity, said he heard fixed income desks in Europe shut down early because there was no liquidity — basically European banks are halting lending right now.

“This is similar to what took place pre-Lehman Brothers,” the trader said.

Meanwhile in Greece, the socialist-dominated parliament passed the austerity package 172-121, sending thousands of people into the streets in angry protest of, er, fiscal reality. No one’s been killed today — yet — but the air is filled with rocks and tear gas. Here’s your thread to hold hands and hope for the best. Stand by for updates.

Update: A fascinating tip from reader David M.:

There was a bad print (trade) in Proctor and Gamble (PG) It went from the low $60 to $40′s for no reason. I worked on the NYSE for 10 years now daytrade and this is what set off the stampede. The market was primed for any reason for a sell off, the spill in the gulf and Greece, so it was the straw that broke the camels back. When something like that happens it sets off machine generated sell orders adding a pile on effect. Not good, but the recent bull market has been based on unicorns and fairy dust, it will be a very interesting summer.

PG did indeed see the bottom drop out this afternoon, but I can’t tell if it instigated the market freefall or was simply dragged along with it.

Update: Needless to say, the Euro is FUBAR.

The euro fell further against the dollar, hitting a new 14-month low. The euro has tumbled against the dollar since last fall as faith in Europe’s shared currency dwindles. Greece’s debt crunch is widely seen as a test of Europe’s ability to restore fiscal discipline to the weak economies in its union and keep the decade-old currency viable.

“It’s going to drop further,” Tim Speiss, chairman of the personal wealth advisers practice at Eisner LLP in New York, said of the euro.

Update: Looks like that PG tip is panning out. From Becky Quick at CNBC, you’ve got to be kidding:

Human error was expected to have triggered intraday selloff. Somebody may have typed “billion” stedda “million”

More:

P&G calling its intraday plunge an issue with electronic exchanges. Didn’t fall below $56 on nyse trading.

Update: Unbelievable.

According to multiple sources, a trader entered a “b” for billion instead of an “m” for million in a trade possibly involving Procter & Gamble, a component in the Dow. (CNBC’s Jim Cramer noted suspicious price movement in P&G stock on air during the height of the market selloff.

Via Business Insider, here’s the Cramer clip. Consider this an odd counterpart to the other big story of the week: In today’s world, one moron can do a lot of damage.

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