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Proof that M&A fell off a cliff in the first two weeks of September came from data provider Dealogic on Monday night.

So far in September, announced U.S. mergers have reached a total of $27.4 billion, down 55 percent from about $61.5 billion for the same period last year.

The rest of the world held up better this month, with $88.7 billion of announced global deals through September 17, down 26 percent from $120.4 billion over the same period in 2006.

As the credit crunch puts the squeeze on funding and debt financing for numerous deals, the numbers could get even worse as deals fall apart.

Some transactions appear to be hanging by a thread.

On Monday, mortgage and vehicle fleet company PHH Corp, which agreed in March to be bought by General Electric Co and Blackstone Group LP for $1.8 billion, said its takeover could collapse because Blackstone faces a shortfall of up to $750 million in debt financing.
And last Friday, Finish Line Inc said Swiss bank UBS warned it may terminate its agreement to finance Finish Line’s $1.5 billion purchase of shoe and hat retailer Genesco Inc.

So far, however, global M&A activity still trumps 2006, with announced global deals at $3.74 trillion, up 46 percent from last year’s $2.56 trillion.

But what about the United States? It actually trails the advance of the global trend this year, with $1.32 trillion of announced transactions, up 29 percent from last year’s $1.02 trillion at the same stage.