One theory on the origin of the phrase is that derives from the use of handbaskets in the guillotining method of capital punishment. And it seems that theory is pretty accurate from other accounts. Read more about it here . The phrase means something is rapidly deteriorating and/or is on course for disaster.

This phrase is often attributed to Miguel Cervantes, the contemporary of Shakespeare and author (in 1605) of the world-famous “Don Quixote.” However, in fact Cervantes’ original Spanish doesn’t use this phrase; various English translators have used it to convey his meaning. Historians note its first recorded use is in a 1660 text, where it is clearly already a well known proverb. After this it appears frequently, always with the same meaning of “Don’t put all your resources (money, time, energy) into the same project, in case that project fails.” ( source )