Stock prices have taken a hammering in the past two weeks. Why?

Various factors have come into play here, but by far the most significant is the belief among some - but by no means all - Wall Street investors that the markets have underestimated the effect of the Far East economic crises on American companies' earnings.

Basically, there is a view that cash-strapped Japanese and Malaysian companies will cut their cloth and stop buying American products. That will feed quickly through to the bottom line. Wall Street seems to be finally accepting that Far Eastern countries are going to buy much less product from the US and that this will hit corporate earnings.

Is this view shared by everybody?

No. In every market there are the bulls and the bears the bulls who think the glass is half full and the bears who think the glass is half empty.

In the half-full camp is Abby Cohen of Goldman Sachs. When Ms Cohen speaks, the rest of Wall Street sits up and listens. After the 300-point fall in the Dow last Tuesday, Ms Cohen was quick to reassure her clients that the slump in the Dow was not accompanied by any fundamental weakness.

In the other camp, however, was Ralph Acampora of Prudential Securities who shifted his position from being a raging bull to a roaring bear, forecasting that the Dow could fall 20 per cent off its 9,300 high and that the bull market is over, at least until the autumn.

It all depends on who you believe.

So what has all this got to do with Irish share prices?

The Irish stock market might seem pretty big with a value of nearly £50 billion, but in world terms it's a minnow. There is an old saying: "When Wall Street sneezes, London gets a cold, smaller markets get pneumonia." It hasn't reached that stage yet, but small peripheral markets like Dublin can't operate in a vacuum - the Irish market and Irish share prices will move in line (and often fare worse) than the big markets when shares fall. If the prices of US companies are pulled back to reflect lower profit expectations, then Irish shares will follow suit.

So, it's all down to the Far East and America

Not quite. The British stock market has been hit hard for other reasons as well - particularly the strength of sterling which has had British exporters clamouring for cuts in interest rates and a weakening of the value of sterling.

Apart from a general fall in the markets, are there any Irish companies directly exposed to the Far East's economic problems?

A small number of companies, but they are all big ones.

Smurfit's operations in the US sell a lot of cardboard boxes to Far Eastern manufacturers and its share price has nearly halved in the space of four months as share prices of US packaging firms have taken a beating. If the Far Eastern manufacturers scale down production, it will hit US linerboard prices the key influence on Smurfit's fortunes.

Likewise, Tony O'Reilly has reason to be concerned about the Far East. Currencies in Australia and New Zealand major trading partners with countries such as Japan and Malaysia have been hit hard by the crisis and the profits from Independent Newspapers' operations in these countries will be worth much less when converted into Irish pounds. Independent's share price is now 34 per cent off its high.

Waterford Wedgwood sells lots of Wedgwood china into Japan, in particular. If cash-strapped Tokyo housewives stop buying their Wedgwood, sales will obviously suffer. The Waterford Wedgwood share price is now 30 per cent off its high.

Time to panic and put my money in the Post Office?

Bit soon for that. Even the most negative observer believes that, at worst, share prices will fall back another 10 per cent, or so before they recover. At least, that's the theory.