The blood-letting in international stock markets continues. The U.S. Nasdaq index plunged below the 2,000 level for the first time in 27 months. The S&P 500 lopped 20 percent of its peak, officially becoming a "bear market." The U.S. free fall triggered a domino effect, pushing Asian and European markets into similar tailspins. Here, the Nikkei Index closed beneath the 12,000 mark for the first time since February 1985. Investors are taking big losses, but it is important not to lose perspective. Most economies are stronger than market gyrations suggest.

The stock market losses have been most spectacular in the United States; but then, they had the eye-popping gains. After an historic economic expansion, reality has returned with a vengeance. The Nasdaq is down 62 percent from its peak last year. Businesses that used stratospheric stock prices to finance expansion are cutting back. Investors accustomed to 25 percent annual gains are fleeing. U.S. consumers are worried about the future and the prospect that the real economy will soon suffer.

While the U.S. economy has slowed, and the paper losses are huge -- nearly $4 trillion -- Main Street has thus far been spared much of the pain. The Nasdaq is heavy in technology stocks, and its slide is a return to what some call sane valuations. The air is being let out of the "New Economy bubble."