Leering Through the Looking Glass

A smart US president apparently caught in a stupid move. A special prosecutor with stars in his eyes. A Speaker of the House uncharacteristically reluctant to mount his moral pedestal. An exchange of gossip that shakes the White House. Meanwhile, much of the world wrestles with the worst financial crisis since the Great Depression.

"Alice sighed and gave it up. 'It's exactly like a riddle with no answer!' she thought." ("Through the Looking Glass," by Lewis Carroll).

It's just too weird, this scandal involving the president, and difficult to divide the real from the surreal.

US financial markets reacted with befuddlement. Already rocked by the Asia crisis the events of the week seemed to leave investors dazed and confused.

James Tyson reports in more detail, about the impact of political crisis on financial markets.

But Friday, the stock market opened with a strong 40-point gain then high-tailed south. It spent most of the day off about 60 points on the Dow, and ended down about 30 points - certainly not a vote of confidence, but not one of despair either.

The bond market took a hit, though, as interest rates jumped and the dollar lost a lot of ground.

Foreign investors dumped their bonds and dollars. They may come back, but one analyst noted concern about "the character of the lender" - namely Uncle Sam a.k.a. Bill Clinton.

This ebb of confidence comes at a time when the president needs to marshal his credibility to address the crisis in Asia.

He is scheduled to ask Congress next month for $48 billion to bail out the International Monetary Fund (IMF), broke from bailing out Asian economies.

And it promises to be a tough battle. Much of Congress, and much of the American public - including free-market fans on Wall Street - reason, correctly, that the Asian governments got themselves in trouble and are now suffering nothing more than the discipline of capitalism.

Of course, those who will suffer most are not the bankers, industrialists, and politicians who cooked the books and fried the markets. But that's another column.

The argument President Clinton must make will summon the security of a global economy. Asia's economic ship is tied to ours, and if it goes down, we'll at least take on some water. That's true; it's already happened. And the problem in Indonesia, for example, is not Indonesia itself but what happens to Japanese banks and companies with ties there if the Indonesian economy disintegrates, as seems to be occurring.

Ties between Japan and the US are huge, and it's cheaper to rescue Indonesia and Korea now than patch up Japan later.

So is it "their" problem, there in the East, or is it "our" problem in the West?

For this question, a hobbled Mr. Clinton - if he lasts that long - will ask an already skeptical Republican Congress.

Lewis Carroll, again, seems to capture the appropriate perspective.

"If seven maids with seven mops

Swept it for half a year,

Do you suppose" the Walrus said,

"That they could get it clear?"

"I doubt it," said the Carpenter,

And shed a bitter tear.