Companies increased their production to meet the demand. Some commentators argued that the boom in the US could go on forever. But the stock market cannot escape from fundamental problems at the heart of the economy. A boom means firms rush to make as much profit as possible. Each is fighting for their product to be bought as opposed to their rivals'.
Intense competition means some firms go bust.
Workers are thrown on the dole and factories close, leaving workers with less money to buy the goods that pile up unsold. Leading firms scale back production. Ericsson, the third biggest mobile phone maker, announced recently it was likely to make a loss, not break even as it had assured investors. Vodafone, the leading mobile phone company, admits it overestimated how many people would want to buy a phone by up to 10 percent. Motorola, the second biggest mobile phone maker, plans to axe 7,000 jobs, and Cable and Wireless is cutting 4,000 jobs to save money.