To say that Hong Kong was responsible for Monday's decline on the New York Stock Exchange is grossly inaccurate. But the Hang Seng meltdown triggered the downfall, underscoring Wall Street's vulnerability to sharp ''corrective'' measures.
Markets may be exuberant from one day to the next, but they are not irrational over time. While there is little indication the U.S. economy is in trouble, investors fret that corporate profits, especially from companies with business tied to troubled Southeast Asia, are vulnerable.And so they are. That's why the United States has a strong interest in helping Southeast Asian governments restore stability and correct economic imbalances.
The Dow Jones' 554-point drop was a clear warning that, unless changes are made, the corrective decline will continue.