Yen and Bear It

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NEW YORK: The economy is still strong; inflation is still dead. Alan Greenspan has absolutely no plans to raise interest rates. So why do the markets -- such as the Dow, down nearly 200 points in the last two days -- have the blues?

"It's Asia again," says TIME Wall Street columnist Daniel Kadlec. "Not that the problem ever went away. But the catalyst today was the yen dropping to its lowest level in eight years. It's a reminder." It was also a reminder for Treasury Secretary Robert Rubin, who resumed complaining Thursday about the "substantial adverse impact" on the rest of Asia that Japan is causing with its failure to boost its own economy.

A weak yen makes Japan's exports cheaper than its neighbors'; that keeps the other Asian economies struggling, and makes the whole of Asia a poor market for U.S. goods. "If Asia really comes around to hurt the U.S. economy, this is how it will happen -- a downward spiral that starts with the weak yen," says Kadlec. "Another round of U.S. corporate earnings is due in July. And investors are getting very worried."