Originally created 09/12/98

Clinton woes affect markets



WASHINGTON -- If recessions in one-third of the world's economies and the crumbling Russian ruble weren't enough, a worried Wall Street now fears for President Clinton's future.

Investors are counting on two men to keep the U.S. economy humming -- and Treasury Secretary Robert Rubin, like Alan Greenspan before him, is signaling he'll be there.

Mr. Rubin showed up on the White House lawn after an emotional Cabinet meeting with the president Thursday night, assuring the world via television that Mr. Clinton's troubles wouldn't divert his attention from the financial firestorm raging out of Asia.

"We have been totally focused" on the economic crisis, Mr. Rubin said.

The underlying message: Mr. Rubin, the savvy Wall Street veteran and architect of much of Mr. Clinton's economic success, has his eye on the ball and, most importantly, isn't going anywhere, despite widespread rumors that he would soon leave the Cabinet.

Last week Mr. Greenspan, the Federal Reserve chairman, signaled that the central bank stood ready to lower interest rates to keep the U.S. economy out of recession.

Those words were enough to power Wall Street to its biggest one-day point gain in history Tuesday, a rise of 380 points for the Dow Jones industrial index. But the market's extreme nervousness was underscored by the following two trading sessions, when the Dow slumped by 400 points.

That drop was triggered by the announcement that Independent Counsel Kenneth Starr's report was being released.

The potential government crisis is affecting the markets "because a beleaguered presidency could mean the inability to deal with risky world situations ranging from terrorism to economic turmoil," said Allen Sinai, chief economist at Primark Decision Economics.

After those two down days, Wall Street rallied Friday, in part bolstered by Mr. Rubin's appearance and by rising hopes that Mr. Greenspan will follow up last week's hint with an actual cut in interest rates, possibly as early as the Fed's session Sept. 29.

To underscore that the administration and the Fed are keeping in close touch, both Mr. Rubin and Mr. Greenspan will testify on the international economic difficulties Wednesday on Capitol Hill.