Crisis, Turmoil, Paralysis and Vacuum

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I wonder if

Bill Clinton

can feel my pain. I have no doubt he feels plenty of his own.

Mine centers on seeing the Oval Office reduced to the setting for a bedroom farce -- and an X-rated one at that. (I won't dwell for long on how I feel about all this, because you've got your own feelings and don't need mine -- but just a little venting before I get to the point.)

Sure, its occupants have all been corporeal human beings with a full range of bodily functions. Yeah, I believe a citizen has a right and a duty to learn a great deal about the person to whom he or she delegates presidential power. But I don't want someone else's bodily functions overlain on my civic duties. I'm angry about it -- mad at everyone involved in this farce, really, and pretty grouchy right now even at some who aren't.

I'm most angry with Bill Clinton. I was -- am -- was one of that 60% to 70% of Americans who generally approved of his job performance. The "character issue" produced less favorable polling numbers, but I had always presumed he was about as imperfect a human being as most of the rest of us -- and anyway, my job description and

St. Peter's

don't overlap.

But now the character issue has become the job performance. The graphic, or pornographic, details of l'affaire

Lewinsky

are likely so to reinforce his enemies and so to distress his supporters that the odds of impeachment, or resignation, must surely have tilted. It had seemed to me that, distasteful as the allegations have been and the

Starr

report disclosure was likely to confirm, impeachment was an unlikely outcome. I'd guess it's a lot closer prospect now. I'd say it's self-evident that one who is being considered for removal from office can't be doing a good job.

The world needs good job performance from the U.S. president right now. Surf the sites and you will see phrases such as Asian crisis, Russian chaos, Latin turmoil and Japanese paralysis. Leadership vacuums everywhere. The markets, like nature, abhor a vacuum. In our world, in our time, it has been the duty and the privilege of the United States to lead. And U.S. leadership centers on the occupant of the Oval Office -- if he can't lead, then what good is he doing in there?

Bob Rubin

stepped out on the White House lawn to meet the media after the Cabinet meeting at which Clinton had apologized and asked for forgiveness. Rubin, classy as always, told the assembled media ghouls that Clinton had his forgiveness and retained his friendship and his admiration. Clinton, he averred, is the one world leader who understands the globe's current problems and who is, therefore, indispensable. The Treasury secretary provides a fine example which, in time, I may be able to emulate.

So now the process moves on to Judiciary Committee hearings, with media ghouls in solemn vulturine attendance on every word and gesture. Then on perhaps to a bill of impeachment and trial in the Senate, or a merciful resignation. It looks at the moment to be a lengthy process. The world needs leadership, and in a big hurry, while Washington drills itself into the ground. I'm really grumpy about the whole prospect, and all the more furious at Bill Clinton.

Up until now I had been furious at the

LDP

. There they sat, those smug mandarins, bargaining and scratching each others' backs in an exaggerated Japanese ritual of consensus-building while the world's economy bogs down under the weight of their inaction. There is needless suffering in Asia, Russia and Latin America because Japan cannot break its political deadlock and take up the role appropriate to a great economic power. So parochial, so self-absorbed, they seem unable to comprehend that their leadership has become a stain upon a great nation's honor. I have not understood this behavior, but Japanese culture is in any case unlikely to be transparent to a gaijin such as myself.

But with the Starr report and the looming Judiciary committee process, I have a new appreciation for Japanese politics. Viewed from outside the culture, American fascination with the sex life and the "moral turpitude" of the president may seem inscrutable. The same frustrations that I have felt toward Japan's leaders may soon be directed by others toward our own -- perhaps with no greater effect. "Can't you see that your cultural self-absorption is having a severely negative effect upon the rest of the world?" Yeah, I can see it, and so I'm very angry -- at everyone involved, in general, and at Bill Clinton in particular.

Enough of that. For much of the past two years, the U.S. equity market has been a war zone between two forces. Valuation, in the red corner, was extreme; it was a vector working to push prices down. Liquidity, in the blue corner, was the firehose flow that propelled prices higher. Liquidity dominated until very recently -- until July to judge by the big-cap charts anyway.

But with the vicious August-September selloff, it has flipped around. Now valuation is has become a force for market support: large-caps are no longer overvalued, and small-caps, international and REITs look like exceptional bargains. But liquidity in many markets overseas has dried up completely, and many sectors of the U.S. market seem unable to benefit from these tempting new valuations.

It's amazing what political paralysis and leadership vacuums can do to markets, is it not? Uncertainty is rampant. What sort of future, on what sort of time frame, should we be discounting in the marketplace?

This column's beat is supposed to be about markets and economics, but I see I've used my time (and perhaps your patience) by going on about subjects normally outside the purview of this space. I said I'd take only a moment to vent my feelings -- but I've filled the column. I guess I lied. I didn't mean to, but I did. I'm sorry. Please forgive me.

There is likely to be a lot of that going around before this sorry episode is done.

Jim Griffin is the chief strategist at Aeltus Investment Management in Hartford, Conn. His commentary on the financial markets is based upon information thought to be reliable and is not meant as investment advice. Aeltus manages institutional investment accounts and acts as adviser to the Aetna Mutual Funds. He welcomes your

feedback.