By: Mary Mostert, Analyst, Original Sources (www.originalsources.com)
February 10, 1999
When Clinton testified before the grand jury is August 1998, that Dow Jones average had surpassed 9000 and, the market gurus warned, impeachment of the president, given past history, would cause a downward spiral in the Stock Market.
"The always shaky situation with Iraq, President Clinton's alleged sexual relations with former intern Monica Lewinsky," financial commentator Michael McCormack wrote last august, " and finally the precariousness of Asian markets all could trigger a downward spiral in the markets individually, and could spell disaster collectively."
Democrats promptly announced that impeachment of President Clinton would cause a run on the market that would have not only national, but international economic repercussions.
Almost every poll reflected the same thought. Throughout the summer and into the Fall of 1998, the state of the Nation's economy and the impeachment of Bill Clinton were linked. The Public, we were told repeatedly, opposed impeaching Clinton "as long as the economy was good."
"It's easy to have a high approval rating when the Dow is at 9,300. It might be harder when the market is at 8,400 and in the midst of a 10 percent correction," said Robert Froehlich, chief investment strategist at Scudder Kemper Investments the day after Clinton had testified to the federal grand jury investigating allegations he had a sexual affair with former White House intern Monica Lewinsky, then urged her to lie about it under oath.
However, the stock market didn't react as the Democrat spin-doctors predicted. The Market did not go down during Clinton's testimony. It closed up 1.71 percent.
Finally, yesterday, almost six months later, after it was authoritatively announced that William Jefferson Clinton could not be impeached, instead of rising to giddy new heights on the news of two years more of Clinton, the Stock Market fell sharply. Dow Jones industrials closed below their 1999 opening. In one day the market was down 158.08, or 1.7 percent, at 9,133.03. Declining issues outnumbered advancers by 2 to 1 on the New York Stock Exchange.
What, do you suppose, does THAT mean? There is absolutely no doubt in the minds of market watchers that, had the Dow Jones risen 1.7 percent yesterday, every Democrat in the country would be announcing that it had risen due to the relief the public felt on being assured the President would not be impeached.
But it didn't rise. If fell. While it is too early to tell if yesterday's dramatic drop in stock prices will continue, the fact it happened at all seems to indicate that the notion the media has pushed consistently for months, i.e. the good economy is linked to Bill Clinton being president, is just not the case. Overnight the Hong Kong markets dropped 237.73 to a 1999 low of 9,006.76.
It could be assumed, using standard media logic, that if Clinton is responsible for the market going up, as his supporters claimed last year, he is equally responsible for it going down. One might assume that the sharp drops world wide indicates that the specter of Clinton remaining in office another two years has upset the public so much they are pulling their money out of the stock market.
If it does not mean that, and Clinton's impeachment really doesn't affect the Stock Market negatively, then why would the Senators fear voting to convict? Why don't they just vote for what they know is the right thing to do when a political leader commits perjury and obstruction of justice?
There is no doubt that many members of Congress believe they are risking their political careers by voting to impeach or convict the President. Many of them feel that way because, of course, that is what the media has been hammering away at now for months.
But, is it true? If it is CLINTON that has brought about the prosperity we now enjoy, then news that he has won the impeachment trial should have given the Stock Market a boost. Yet, it experienced the third most severe drop in its history.
Either (1) Clinton is so weak that it just doesn't matter much one way or the other what he does, or the (2)media predictions of a Stock Market crash if Clinton were impeached were simple media hype.
Whichever is right, it appears to indicate that Bill Clinton will be little more than a figurehead during his last two years in office. I seriously doubt if ANY Clinton agenda will be passed between now and the year 2000 election.
If that is the case, it will take real talent for the Republicans to lose either the Congress or the White House. However, they have shown just that kind of talent in the past and may do the same thing again.
To comment: mmostert@originalsources.com