An enormous sinkhole swallowed a 3 story building whole in May of this year. This image was posted by the Guatemalan Government after a series of torrential rains and busted sewer pipes caused this hole to form.
Not Photoshop, sadly: these happen from time to time during major storms in part because of unstable geology, and in part, bad urban engineering... A break in the over-stressed sewage pipes after the storm was the cause for this one. There are rumors of other sinkholes now forming nearby.
This has happened before.
Photo - Gobierno de Guatemala | Via BoingBoing
http://www.cbsnews.com/stories/2007/02/23/world/main2508879.shtml
I expect to see a giant worm poking its head out of it any min now.
"Why is it perfectly circular?"
Because giant worms make perfectly circular holes.
(sheeeesh)
(isn't perfectly circular redundant)