CHICAGO, March 23 (Reuters) – Having been a stock
market investor during the worst downturns over the past quarter
century, I’m naturally cautious about national economic shocks
like recessions, inflation, bubbles and wars.
None of those threats have disappeared from my radar screen.
But being a squeamish investor, as I’m watching the steady
ascent of the U.S. stock market this year, I have one question:
What should you be most afraid of?
I share the caution espoused by former Treasury Secretary
Robert Rubin, whom I heard speak at the Chicago Council on
Global Affairs on Thursday. “I’m an investor – a troubled
investor – with a very deep concern,” Rubin said. “If we (the
U.S.) don’t get on a sound fiscal trajectory, there will be a
severe crisis in the bond and currency markets.”
I also share Rubin’s other concern that markets could be
tripped up by a European debt default. That seems less likely
with the passage of time, although it’s certainly on the table.
Even though I have issues with Rubin’s role in overseeing
disastrous financial deregulation in the 1990s, he’s still a
keen observer of markets.
MORE CONCERNS LOOM
Will there be another U.S. debt-ceiling brouhaha? We have
about eight months before that might happen, and it could be
another grotesque event for the markets. There’s also the threat
of trouble with Iran leading to higher oil prices, although the
stock market hasn’t quite reacted to that yet. What about the
prospect that investors buying U.S. debt will demand higher
interest rates because of the increasing perils of investing in
an overleveraged country? That one is beginning to give