We are at the end of the third quarter whereby strategists and investors are beginning to prep their clients and portfolios for the chance that the whole globe slides into recession at the same time. The worst uncertain news in the major economies including Europe, USA and China where the quarter began with renewed optimism is that they can’t find much to do about the situation now. Investors are of the opinion that a more sinister scenario could also unfold, namely a ‘global synchronous recession’, where deflation becomes more visible to the eye than before.

The equities markets continued plummeting southwards with S&P 500 continuing to tread dangerously near the 2011 lows. European benchmarks zigzagged as member countries reportedly remain conflicted about increasing the size of the Greece bailout fund. China’s equity benchmarks fell to a new low for the year on Wednesday.

Investors have opined that this time it could be very well be worser than the two prior recessions of 2001 and 2008 since the global economies have more interdependence than before.  In the 2001 and 2008 recessions, earnings dropped by more than 50 percent in one year and one can argue that those were primarily US-driven pullbacks and not a ‘global synchronous recession’. One wonders how the economies will churn out if the recession were to take a full toll on the negative sides. The fourth quarter will continue to be dominated by geopolitical uncertainty on three continents led by the European sovereign debt crisis, ongoing budget negotiations in Washington DC, risk of a US recession and slowing pace of economic activity in China. Economists highlighted the issue many investors are facing: there’s no place to hide. With so many problems to deal with, investors have thrown fundamentals out the window for the moment.

The job of stopping this ‘global synchronous recession’ falls (some say ‘unfortunately’) on the hands of policymakers around the world. All eyes are on Germany’s parliament today as the vote is on for the Greece bailout fund. China must orchestrate a ‘soft landing’ in their economy. The market is also staring to focus on whether the Obama Administration would support a Senate bill that would threaten economic sanctions if the Treasury Department finds a trading partner’s policies causing its currency to be misaligned. The US has been careful not to label China a currency manipulator. In US, Congress must cut the deficit while still fostering growth. The clock is ticking and the race is on to save the global economies from another recession.