Gasoline prices and home heating prices are going up, adjustable-rate mortgage payments may as well . . . how is the average Jane or Joe going to make ends meet? Home equity has stopped going up, limiting their ability to go borrow further against it. A hike in the minimum wage has been quashed by the Republicans yet again – there has been no cost-of-living adjustment in eight years.

The economic near term for most Americans, and for many of the businesses that depend on their custom, looks dodgy. (One bright spot: the rich, especially in Houston, are doing great.)

Meanwhile, the markets wait for special prosecutor Patrick Fitzgerald. The S.E.C. investigation of the Senate majority leader and the indictment of the House majority leader are footnotes compared with what we may see in the next few days concerning the White House.

It’s possible, of course, that Fitzgerald will just wrap up the investigation and say he couldn’t find out who blew Valerie Plame’s cover, or anything else worth indicting.

But as James Moore writes in the Huffington Post:

We know . . . based upon what we have read and seen and heard that someone created fake documents related to Niger and Iraq and used them as a false pretense to launch America into an invasion of Iraq. And when a former diplomat made an honest effort to find out the facts, a plan was hatched to both discredit and punish him by revealing the identity of his undercover CIA agent wife.

Patrick Fitzgerald has before him the most important criminal case in American history. Watergate, by comparison, was a random burglary in an age of innocence. The investigator’s prosecutorial authority in this present case is not constrained by any regulation. If he finds a thread connecting the leak to something greater, Fitzgerald has the legal power to follow it to the web in search of the spider. It seems unlikely, then, that he would simply go after the leakers and the people who sought to cover up the leak when it was merely a secondary consequence of the much greater crime of forging evidence to foment war. Fitzgerald did not earn his reputation as an Irish alligator by going after the little guy. . . .

We may stand witness to a definitive American moment of democracy. The son of a New York doorman probably has in his hands, in many ways, the fate of the republic. . . .

How will the markets react if things become uncertain here for a while? Markets don’t like uncertainty. Then again, markets anticipate, and so may already have discounted the uncertainty. (‘Buy on the rumor, sell on the news’ – or, in this case, sell on the rumor, buy on the news.) But my guess is that confidence has not yet bottomed out.

The markets want intelligent, sure leadership. The prospect of having to get through more than three more years of the Bush Administration, with its appointments like ‘Brownie’ at FEMA and Harriet Miers for the Supreme Court, and its disastrous mishandling of the war, cannot breed much confidence. (Over the weekend someone sug-jested that, to succeed Alan Greenspan, the President would nominate his personal accountant.)

Meanwhile, the alternative prospect, of a period of possible leadership turmoil – if it turns out the President knew all along who leaked Valerie Plame’s cover, and that there was a conspiracy to ‘fix the facts around the policy’ to mislead the nation into war – cannot breed much confidence either.

Timing the market is famously difficult. If you are truly in it for the long-term, don’t try. Especially if you are young, in the excellent habit of directing $300 a month into your index funds (say) – don’t break that habit. But if you have ignored advice only to risk in the market money you won’t need for many years, now would be a good time to remember that advice. Not because the market necessarily will go down, but because it might.


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