Bull and bear statues outside the Frankfurt Stock Exchange. The city is sometimes called "Bankfurt" after its main industry.
Bull and bear statues outside the Frankfurt Stock Exchange. The city is sometimes called "Bankfurt" after its main industry. - 
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Today the big question was would the American exchanges officially enter a "bear market?" The official yes would come once the S&P 500 dropped 20 percent from its previous peak. The S&P entered that territory more than once today. But the numbers don't mean that much at this point - the markets have been in a bearlike state of mind for some time.

Gary Schilling is a noted economist, who believes markets are driven primarily by psychology. He says that when it comes to a bear market, 20 percent is just a number "people picked out of the air". But even though 20 percent may not mean much, Schilling says we are still in trouble. He says that all three pillars of the global economy are showing cracks right now. In the US the cracks are uncertainty and the consequent lack of consumer spending. In Europe they're the sovereign debt crisis and whether, as Schilling says, the "Teutonic North" continues to bail out the "Club Med South". But Schilling also sees cracks appearing in the third pillar, China. He believes that China's attempts to cool its economy will result in a "hard landing", meaning China will spend less and thus import fewer commodities.

So bear market or not, Schilling that he sees recession on the horizon.

We asked Schilling about the worst-case scenarios, the so-called "black swan events." These are named after the idea that black swans don't exist, and therefore are unlikely ever to be seen - until they are. A report in the Financial Times today said investors are planning for the worst. They're building black swan investment vehicles designed to succeed after, say, the collapse of the Eurozone. Schilling says this could be a lot of noise signifying nothing, but he also says he's heard of folks who are withdrawing currency from banks and sticking it in a safe at home, just in case. This may sound a bit overcautious, but when the world is in this kind of turmoil, anything can happen. Schilling says there's an enormously disruptive process unfolding right now. Globally, consumers and financial institutions have to draw down the debt they built up during the years of economic growth. He says that this de-leveraging is simply a matter of restoring equilibrium in the economy by marking down the value of myriad assets. Schilling says this is an enormously painful process, and is a hard pill to swallow for those who really just want to return to the good old days of the economic boom before the big bust.

Also on the show, We know people are gambling more in this down economy - but cheating more too? The Las Vegas Sun quotes security officials at gaming firms saying cheats have used everything from hidden cameras to marked cards to scam more than $24 million this year. That news is making the Marketplace Daily Pulsefeel a little weak today.

Follow David Brancaccio at @DavidBrancaccio