Passage 1 In a breath-taking turn of events, Asia’s economies have gone from miracle to meltdown in a matter of weeks. Many forecasters who recently predicted GDP growth of 6% in South Korea and southeast Asia for 1998 are suddenly projecting zero or even negative growth. In tine often short-sighted world of international finance, a new conventional wisdom is quickly forming: that inept policy-making is dragging down Asian economies, and that only the tough austerity medicine of the International Monetary Fund, plus a good stiff recession, will bring the region’s economies back to track. In recent years, foreign and domestic investors in East Asia got a touch of what U.S. Federal Reserve Chairman Alan Greenspan has famously termed irrational exuberance. Spurred by years of high economic growth in Asia, these investors poured billions of dollars of loans into the region, financing many worthwhile investments but also an unsustainable real estate boom. This over-investment need not have caused a crisis. A healthy reaction would involve a gradual cutback in foreign lending, a gradual weakening of Asia’s overvalued currencies and gradual shift of investments from over-inflated property sectors back to longterm export-oriented projects. Most short-term booms are brought down to earth without extreme crisis, and such an adjustment was the most likely scenario until the summer in 1997. In the event, Asia experienced a financial meltdown. A gradual withdrawal of funds from Thailand suddenly became a stampede. Thailand’s government dallied in responding to the overheating long after it had become apparent, and as a result squandered Thailand’s foreign exchange reserves in a misguided attempt to defend the overvalued bat. The stampede came when foreign creditors realized that Thailand had more short-term foreign debts than the remaining short-term foreign reserves. A "rational" panic began. Each investor started to dump assets simply to get out of Thailand ahead of other investors. The chain reaction of nervous withdrawals led to a meltdown that now includes most of East Asia. Confidence has been so drained that Asia’s positive "fundamentals"--historically high rates of growth, savings and exports--are being overlooked. Economies rely on confidence, and what they most need to fear is, indeed, fear itself. According to the author, in normal cases, over-investment ______.

A. can be reduced by a quick slash in foreign lending
B. does not necessarily lead to a critical stage
C. may be solved by an abrupt depreciation of currencies
D. should be shifted to boom-town real estate speculations