Mr. Denham, a Democrat who practiced law in California before coming to Salomon, suggests that if the public or the administration feel Wall Street is unfairly constraining the government's ability to act, it may be they're putting the blame inthe wrong place. "Wall Street is much more the messenger, or maybe the message center" than an actor in its own right, Mr. Denham says. The reality is that markets all over the world react to objective factors like the risk of inflation. Traders "just push a few buttons and they've voted, in effect," he says.
The traders say Mr. Clinton has demonstrated a remarkable sensitivity to the markets. "It seems that members of his administration are saying the things that the market wants to hear, at least until now," says James Rice, the president of Aubrey G. Lanston & Co., a Wall Street bond house that deals in government securities.
Some of that sensitivity no doubt has to do with the presence of two Wall Street veterans in Mr. Clinton's inner circle: Robert Rubin, former co-chairman of Goldman Sachs & Co., who heads Mr. Clinton's new National Economic Council; and Robert Altman, former partner in the Blackstone Group, an investment bank, who is deputy secretary of the Treasury.
Robert Hormats, vice chairman of Goldman Sachs, says Mr. Rubin came back from an early meeting with Mr. Clinton remarking on his understanding of Wall Street: "He was impressed with Clinton's knowledge of the financial markets and his ability to discuss things like yield curves."
Mr. Hormats, who has served in four administrations and was an active Mr. Clinton supporter, says he appreciates Mr. Clinton's concern about jobs but the president must put first things first. "Making tough decisions is the real essence of patriotism," he says.
"The average guy now knows that interest rates affect what he pays for a mortgage, for a car, for a refrigerator. He knows that those rates depend on the level of government borrowing. And he knows that this is a debt that he's leaving to his kids."