Stephen, you deserve a better answer.. this might help:
"Markets Watch Impeachment Closely
By Martin Crutsinger
AP Economics Writer
Tuesday, December 15, 1998; 5:11 p.m. EST
WASHINGTON (AP) -- As if the worst global economic crisis in a
half-century weren't enough, Wall Street now is beginning to worry about
the impeachment of a president.
Investors, who hate uncertainty, are concerned that impeaching President
Clinton could cripple the government's ability to respond to emergency
situations, such as another showdown with Iraq's Saddam Hussein or more
turbulence in world markets.
The Dow Jones industrial average did rally on Tuesday in response to a
better-than-expected earnings outlook from General Electric. But the gain
of 127.70 points followed five straight losing sessions that many analysts
tied to growing worries about impeachment.
''The problem is the potential paralysis of the government,'' said Allen Sinai,
chief global economist for Primark Decision Economics in New York.
Many observers believe there aren't enough votes in the Senate to convict
Clinton and remove him from office if the House votes to impeach him this
week.
But from the market's viewpoint, ''the worst thing we could have is four
months of debate and trial in the Senate ... because of the uncertainty it
would present,'' said Sung Won Sohn, chief economist at Wells Fargo & Co.
Not all analysts are so pessimistic. While agreeing that impeachment
concerns are having an impact, they said those jitters should settle down
once investors realize that even if Clinton were forced from office, U.S.
economic policies are not likely to change much if Vice President Al Gore
moved into the White House.
''If there is no change in economic advisers with a change from Clinton to
Gore, and it doesn't set us on a new economic course, I am not sure there is
much economic uncertainty there,'' said Robert Brusca, economist at Nikko
Securities in New York.
But Brusca said any possible removal of Clinton from office was likely to be
viewed with more alarm by foreign investors, who make up a significant
portion of both U.S. stock and bond markets.
The White House, hoping to persuade wavering House members to vote
against impeachment, has been stressing the uncertainty issue and its
potential threat to America's economic good times.
There's some indication those arguments could have an impact.
A long Senate trial ''would roil the capital markets and the stock market,''
said Rep. Frank Riggs of California, one of the moderate Republicans the
White House hopes will end up voting against impeachment.
To support the view that impeachment spells bad news for markets,
analysts point to developments during Watergate 25 years ago.
The situations are not exactly parallel. The Clinton fight is occurring during
a lengthy bull market. The Nixon battle occurred during two years when
stock prices took a beating as soaring global oil prices pushed the U.S.
economy into a recession.
But some analysts blame the oil price increase on Nixon's besieged
presidency. And they warn that something similar could occur this time
around.
''In the fall of 1973, when Mr. Nixon was starting to get into trouble, to me
it was no accident that OPEC chose that moment to quadruple oil prices,''
said Nicholas Perna, economist for Fleet Financial Group in Hartford, Conn.
''That is the kind of action that takes place when someone, somewhere,
thinks we are vulnerable.''
Even with the past week's stock tumble, stock prices are still up 10 percent
for the year. After suffering a huge sell-off in August triggered by the
collapse of the Russian economy, markets rallied once the Federal Reserve
began cutting interest rates.
But the global economic crisis is far from over. Japan is still struggling to
emerge from its worst recession in 50 years, and Brazil and other Latin
American countries could still fall victim.
Some analysts argue that even if Clinton is forced from office, financial
markets would quickly stabilize as long as two key policy-makers --
Treasury Secretary Robert Rubin and Federal Reserve Chairman Alan
Greenspan -- remain at their posts.
Rubin, who is held in high regard on Wall Street, has been rumored for
months to be leaving the administration. But last week he forcefully denied
a rumor that he would be gone by year's end, calling the report ''totally,
absolutely and 100 percent erroneous.''
Many saw that as a signal to markets not to worry that the man many view
as Wall Street's best friend is remaining at the helm.
© Copyright 1998 The Associated Press |
