Jewish World Review Sept. 17, 2002 / 11 Tishrei, 5762

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Wall Street's reality check | President Bush told the United Nations this week that it had to confront Saddam Hussein and force him to comply with the U.N. resolutions he's defied for more than a decade.

At almost exactly the same time, Federal Reserve Chairman Alan Greenspan warned Congress of the dangers to the economy posed by rising budget deficits.

President Bush has been consistent with his message - Saddam Hussein must go. The United Nations - if it is to be at all relevant - must enforce not only its resolutions, but its very charter.

The Fed chairman has not been so consistent. Greenspan's warning this week that rising deficits could lead to higher interest rates and damage the economy is at odds with what he said only a year and a half ago. Then, Greenspan was warning of the dangers of rising budget surpluses. The warnings of both President Bush to Iraq and Greenspan to Congress combined in the minds of some investors to create further uncertainty about the direction of our economy.

But their anxiety was misplaced and, in fact, we should have all been considerably reassured by both warnings. Bush has been consistent in his desire to overthrow Saddam Hussein's government. But this week, he stepped forward in the world community not only as our president, but as a leader of the world community.

For some, prospects of a war against Iraq may be alarming, but how alarmed would those same people be if this administration and the U.N. failed to act in the face of credible threats posed by Saddam Hussein? One has only to recall the partisan criticism and media barrage against the administration and our law enforcement and intelligence agencies for failing to act wisely and decisively last year to forestall the attacks of Sept. 11.

There are risks of military action against Iraq. There will be heightened global tensions, instability in the Middle East and an increased risk of terrorist attacks.

Prospects of higher oil and gas prices - if sustained - could badly damage our economy - and the world's. But there would also be horrific political, economic and human tolls should Saddam Hussein use weapons of mass destruction.

Greenspan's warning that gave such unease to some investors was a healthy return to reality by the Fed chairman.

Yes, we will spend tens of billions of dollars waging war against radical Islamists, and the price may well go higher if the war drags on. But it is vital that the nation's lead central banker tot up a prospective war's cost to our economy.

That would help us as citizens and help our leaders who must chart the course through these uncertain times. But it is also important to focus on the whole range of the Fed chairman's statements.

All but overlooked by investors and the media were Greenspan's encouraging comments about the resilience of our economy. We have withstood the collapse of the technology and telecom bubble, weak business investment and, of course, the terrorist attacks of Sept. 11. Productivity continues to gain, consumers continue to spend, and our economy continues to grow, if modestly.

Greenspan did warn of deficit dangers, but he put them in context of our still strong economy. President Bush has now made it clear that the United States is once again prepared to lead military action against Iraq, and he put into context the risk to the U.N. should it fail to act.

Both Bush and Greenspan gave us confidence this week that we can meet the challenges ahead.

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Lou Dobbs is the anchor and managing editor of CNN's "Lou Dobbs Moneyline." Comment by clicking here.

09/12/02: There's no better time for leaders to show resolve


© 2002, TMS