As markets braced themselves for another turbulent day Tuesday, one economist warned that the real danger of a double-dip recession is protectionism.
"The real threat is protectionism. This debt thing is unimportant," Roger Nightingale, economist and strategist at RDN Associates, told CNBC Tuesday.
"Don't worry about debt, worry about GDP, worry about the economy.
"The economy is looking at a serious recession, possibly a major 1930s-style depression, in the near future," he added.
"If you look at the situation now, we don't know what growth in the third or even second quarter is going to be."
He predicted that third-quarter growth would be around zero or slightly negative in the developed world, and that China will suffer as consumers in the US and Europe cut down on their spending on Chinese-made consumer goods.
A more optimistic view came from Peter Cardillo, chief market economist, Rockwell Global Capital, who told CNBC that there is still the possibility of a "silver lining," despite well-documented problems in the euro zone and increasing worries about the U.S. economy after a downgrade of its credit rating by Standard & Poor's.
"You're probably looking at muted growth but still growth," he said, predicting around 3.5 to 4 percent growth for the global economy this year.
Markets are awaiting the Federal Open Market Committee's regular meeting later today. Any remarks afterwards from Fed chairman Ben Bernanke will be followed closely.
"They will have some sort of next stimulus," according to Cardillo.
While he ruled out a third round of quantitative easing, he thinks that other measures, such as lowering interest rates on reserves, might be considered.
The Dow plunged 634 points or 5.6 percent to 10,809, its worst daysince the depths of the financial crisis in December, 2008, Monday, while the S&P 500 lost 6.66 percent to 1119, a point below a key support level.
Investors fled risky markets such as oil , which lost 6.4 percent to $81.31 a barrel and was falling into the upper $70s. Gold hit yet another record price of $1,710.20 per ounce as investors looked for safe havens.
"This is very serious and it’s going to be awful. That's why we sell equities and buy bonds," said Nightingale.
The market fall was due to "investors getting into hard assets and hedge funds having to sell to raise cash," Cardillo said.