Market Collapse Worst Since '08

Experts Fear Recession Could Be On the Way
Market Collapse Worst Since '08
Fears that the global economy is nearing yet another recession have led to nosedives for U.S. and European stocks. The Dow Jones Industrial Average fell nearly 513 points, or 4.3 percent, while the S&P fell 60 points, or 4.8 percent, and the NASDAQ dropped 137 points, or 5 percent.

All investment gains made in 2011 have been negated, experts say.

"We were starting to see credit loosen slightly, with credit card originations rising again in the first half of 2011 after 3 years of steady decline," says Aite financial-services and fraud analyst Julie McNelley. "However, in the face of the steady stream of bad news coming from the economic indicators, I think we will see a return to the same level of caution that marked 2009 and 2010, with respect to consumer credit. Americans are still concerned about the high rate of unemployment and have reduced their spending again in anticipation of another recession."

Thursday's stock plunge is the worst the Dow has seen since Sept. 29, 2008, when stocks dropped 778 points - two weeks after the fall of Lehman Brothers. It marked the largest single-day point-loss in history.

Market values estimated at being worth $1.2 trillion disappeared that day. From a percentage basis, the 2008 dip resulted in a 7 percent slide for the Dow and an 8.8 percent dip for the S&P 500. Those declines paled when compared with the market crash of Oct. 19, 1987, when the Dow dropped 508 points (22.6 percent), and international stocks suffered greater losses.

Impact on Fraud Prevention

Reduced consumer spending, "combined with the government's forced austerity" could push the global economy back into recession, McNelley adds. But during a time when cybercrime is growing at an ever-increasing rate, she doesn't expect investments in fraud prevention to be affected by the caving market.

"Fraud tends to be countercyclical, and the need for fraud-prevention tools increases during times of recession," McNelley says. "That doesn't mean that they'll necessarily see increased spend, but it does mean that they will not see the chopping block quite as quickly as some other types of spending initiatives."

About the Author

Tracy Kitten

Tracy Kitten

Former Director of Global Events Content and Executive Editor, BankInfoSecurity & CUInfoSecurity

Kitten was director of global events content and an executive editor at ISMG. A veteran journalist with more than 20 years of experience, she covered the financial sector for over 10 years. Before joining Information Security Media Group in 2010, she covered the financial self-service industry as the senior editor of ATMmarketplace, part of Networld Media. Kitten has been a regular speaker at domestic and international conferences, and was the keynote at ATMIA's U.S. and Canadian conferences in 2009. She has been quoted by, ABC News, and MSN Money.

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