In yet another episode of “Black Tuesday� on Wall Street, the NYSE lost more than 500 points in a matter of minutes. The exchange actually registered its largest one-minute fluctuation, falling more than 200 points in a span of sixty seconds. After all was said and done, the market was down 415 points for the day, its biggest loss since September 11th.

But New York was not the only exchange that was taking a nose dive. The BRIC heavyweights also took a spill: Russia, India, and Brazil were all notably lower. Russia’s RTS finished down 3.3%; India’s Bombay Sensex dropped 1.3%; Brazil’s Bovespa ended down 6.6%; and Argentina’s MerVal index shot down 7.5%. And here, our beloved IBEX registered its first percentage loss since May 2006.

In Europe, the fire was burning with all its fury: London’s FTSE was the exception, losing only 0.509%, but the EuroStoxx lost 2.18%, the German Dax, 1.89% and the French CAC 1.6%. The biggest losses were in the banking industry (-3.81%) and oil industry (-3.3%), followed by technology (-3.27%) and telecoms (-3.16%).

Anyone looking from the outside in was simply baffled by the flurry of sell-offs around the world. Could this be another Great Depression?

The answer was and is NO. The great Chinese dragon was spewing fire to celebrate their new year by tightening credit controls to slow down the growth of their economy. This drove European, American and Asian markets into a selling frenzy. But that wasn’t the only news item for the day.

In the US, the ex-chairman of the Board of the Federal Reserve Bank (FED), Alan Greenspan, was talking about the fact that he believed recession was not “probable�, but “possible�. This coupled with a bit of bad economic news sent the NYSE into a panic. The good news though, is that the NYSE has already rebounded and gained back 127 points the following day (Wednesday), when Bernanke, the current Chairman calmed fears of recession in the US.

So many of you may be asking… what is the connection between the American, European and Asian Markets? Well, this is a rather intricate framework or spider web. But it is safe to say that American money is invested big time in China and the emerging markets of Brazil, Russia and India. So when these markets shot down, the reaction was similar across the globe. That’s the simple answer. The more complex version would involve the relationship between China, Chinese currency and Chinese trade around the world and its effect on local economies. Though complex, undoubtedly a substantial influence to be reckoned with.

If Chinese investors are forced to pay higher interest payments on loans, they will likely reduce spending and investments in their multinationals abroad: higher costs mean layoffs for companies trying to save money. As businesses struggle to meet the costs of manufacturing, they tend to increase the price of manufactured and finished goods to retailers, which means inflation for consumers at the local level. Though this piece of news may not alarm some, a savvy financial analyst pointed out that this sell-off did not include a “flight� or “recourse� to gold or commodities (meaning investors did not take their money out of the stock market and invest in more viable, long-term investments). This is bad news, because it indicates that the downward trend in the stock market has only just begun. Get ready for the rollercoaster ride!