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To: Bobby Yellin who wrote (18577)	9/12/1998 1:57:00 PM
From: Alex	Respond to of 116790

Money, not sex, may finally kill the President Date: 12/09/98 By KNUT ENGELMANN in Washington Worries over President Bill Clinton's political future hurt global financial markets on Thursday amid growing fears the scandal could undermine one of his Administration's key legacies: the solid US economy. Analysts widely agreed that wobbly political leadership in Washington was a sure recipe for shaky markets everywhere. And combined with the uncertainty over the outlook for emerging markets around the world, the domestic upheaval could damage confidence and demand in the world's top economy, they warned. "Markets cannot live with a wounded president facing the risk of impeachment for months and months to come," said Mr David Hale, chief economist at Scudder Kemper Investments in Chicago. "If the stock market falls [drastically], you depress consumer confidence and spending. It's a negative, but it's hard to quantify yet." Stock and currency prices around the world took a nosedive on Thursday as the threat of impeachment proceedings against Mr Clinton loomed large. The Dow Jones industrial average index of key US stocks was down more than 3 per cent in afternoon trading, and the dollar weakened against other key currencies. "We may be about to enter a period when the prospect of a political crisis could become a serious negative," Mr Thomas Gallagher, political economist at Lehman Brothers, told clients in a research note this week. Mr Clinton's troubles have put the spotlight on his Treasury Secretary, Mr Robert Rubin, and the Federal Reserve chairman, Mr Alan Greenspan, the two men most widely credited with having laid the foundations for the current US boom - solid fiscal and monetary policies that have helped to keep inflation down. Mr Rubin pointedly avoided contact with reporters on Thursday and instead left through a back door after addressing a closed meeting of the Democratic Business Council. The 60-year old former Wall Street executive has been rumoured time and again to have become tired of Washington's hurly-burly world of politics. A staunch Democrat and one of Mr Clinton's most trusted aides, he is widely believed to be sick of the scandal that has engulfed the presidency. "I'm sure he's disgusted, but he doesn't want to play a visible role until he really has to," Mr Hale said. Mr Rubin himself has consistently denied rumours of his imminent departure. In an interview with Fortune Magazine, published on Thursday, he said: "I'm going to be here until I leave ... I plan to be here for quite some time." The ever-reticent Mr Greenspan, a Republican originally appointed to the helm of the central bank by President Ronald Reagan in 1987 but reappointed by Mr Clinton in 1996, not surprisingly has avoided any public comment on the issue. Instead, last week he warned that the current turmoil in global financial markets could have a much more serious impact on the still-booming US economy than many observers have forecast, going so far as to open the door for a cut in key interest rates to help contain the potential damage. The expected slowdown in the US economy - which most economists say is almost inevitable now - could well be the biggest blow for Mr Clinton, regardless of what may happen to him as a consequence of the Monica Lewinsky affair. "As soon as the economy starts to slow down, he will lose enormous support," said Mr James Glassman, a fellow at the American Enterprise Institute. "It's all he can point to." As far as financial markets are concerned, analysts said a quick resolution of the affair - no matter what the outcome - would be the least disruptive and most desirable prospect. "What the market would really like is to have this resolved as quickly as possible," said Mr Hale, adding that most investors could probably live with Mr Al Gore as president should the current Vice-President succeed Mr Clinton - as long as Mr Rubin and Mr Greenspan stay. - Reuters smh.com.au