Asia and the global bear market

The global bear market has started. It will knock the stock markets of the mature economies back 20% off their peaks, and emerging-market debt and equity by much more.

Contagion is the current buzzword. There's nothing wrong with buzzwords if they describe accurately what's afoot. A decade ago, Asia "going under" would have been a small gash in the hull of global markets. The water-tight doors of capital controls and protected markets in the rich world would have avoided sinking the ship - not so today.

Sure, if you compare exports and bank lending to Asia with the GDP of rich countries, they're a drop in the ocean, and pretty insignificant even in the case of Japan - the most exposed country in the region. But we are all conditioned like Pavlov's dogs to watch the "real" economy for events that will affect financial markets. This time around it will be...

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