With markets rebounding from the Oct. 27 Asian shock, it's only natural to wonder what all the fuss was about. Was it, after all, simply a wild overre-action? Don't bet on it. Even if the markets remain calm, the crisis in Asia that spurred the sell-off signals a deep change in how the global economy works. Thanks to a building binge throughout Asia, continuing economic expansion in the U. S., and recovering economies in Europe, production everywhere is running ahead of consumption. That's even true in the U. S., where consumer demand remains strong (chart, page 58). Today, for the first time in years, there is worldwide overcapacity in industries, from semiconductors to autos. And the excess supply will get even worse as Asia tries to export its way out of trouble.
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