Yesterday the financial markets plunged into the "correction," the euphemism for sharp decline in stock prices after the former Fed Chairman Alan Greenspan made a statement at a business conference in Hong Kong.
Greenspan is reported to have said, "When you get this far away from a recession, invariably forces build up for the next recession."
Greenspan who left the Federal Reserve over a year back also said it was possible the U.S. market could slip into recession toward the end of this year. His remarks hit markets in Asia.
The Wall Street still takes notice of Greenspan, after having got used to taking economic cue by dissecting his words over 20 years.
The Dow Jones industrial index fell more than 416 points, or 3.29 percent, in trading Tuesday. The tech-heavy Nasdaq composite was off by 3.86 percent, and the S&P 500 was off by 3.47 percent.
It was the largest one-day drop for markets since Sept. 17, 2001, the first day trading resumed after the Sept. 11 terror attacks
Tuesday's drops mirrored a global decline in stock markets as the investor mood turned bearish. Investors, who have been murmuring about a coming "correction" for weeks, are concerned that the U.S. and Chinese economies may be entering a period of cooling.
The former Fed chief's recession comment came just weeks after Ben Bernanke, the current Fed chairman, gave Congress a mostly upbeat assessment of the economy's prospects.
Economists who give Bernanke good marks for his handling of the economy thus far don't believe Greenspan's recession remark undermines the new chairman's credibility.