Here are two articles by Jim Rickards on politics and the economy in this election year. — Enjoy.
Addison Wiggin presents
The Daily Reckoning
Are They Going to Impeach Trump Again?
By Jim Rickards
Portsmouth, New Hampshire
February 20, 2020
The Democratic candidates held another debate last night. Michael Bloomberg took a lot of heat from the others, and he did not handle it well. He showed real weakness for the first time.
Joe Biden, meanwhile, put in a strong performance last night. We’ll have to see if he can generate any momentum from it. After Iowa and New Hampshire, his campaign is in serious trouble.
Speaking of Iowa, they still haven’t resolved that mess…
The Iowa caucus was officially over on Feb. 3. But it’s not over yet and may never be over.
The conduct of the caucus was one of the biggest fiascos in modern political history and the repercussions are still being felt. You probably know the story by now.
A caucus is not a primary election. It’s a physical gathering of voters at about 1,600 precinct locations such as school gyms and similar venues around the state.
That’s a limiting factor right away because many voters don’t have the flexibility to show up at an appointed time and place. Voters organize in groups backing a certain candidate.
An initial count of support for each candidate is taken. Candidates’ groups who have less than 15% of the total are then told they can either go home or switch sides (with less than 15% support you get zero delegates).
Voters then reorganize — for example, a Biden supporter can switch to Liz Warren — and a second count is taken.
That second count is then used in a mathematical formula to assign delegates for the Democratic convention.
The number of delegates for each candidate is not proportional to votes in the second count because some precincts are overweighted. Got it?
Don’t worry; neither does anyone else. That system is nuts. But it gets worse…
A new mobile phone app was created to send in results. The app had never been used in actual voting and it crashed.
Precinct organizers were told to phone in results. The phone lines were jammed and organizers couldn’t get through. That didn’t matter because party officials in the central locations were told to leave their mobile phones outside.
Others could not get online. Some did not know how to use spreadsheets. TV network anchor desks were on the air with nothing to report.
Candidates were robbed of bragging rights, both on caucus night and in the days leading up to the New Hampshire primary on Feb. 11. Iowa results dribbled out over days in a way that seemed intentionally designed to hurt Bernie Sanders.
Finally, the chair of the Iowa Democratic Party resigned in disgrace.
As of now, it is reported that Bernie Sanders won the most votes in the first and second alignments, but Pete Buttigieg got the most delegates because of the quirky math formula.
But even that reported result is not final because a “re-canvass” recount is underway.
The biggest loser was not among the candidates. The biggest loser was the Democratic Party itself.
Commentators were quick to ask how Democrats can run the economy if they can’t even count votes in Iowa. Good question.
But could they be so dumb as to actually try to impeach Trump again?
If the Democrat effort to impeach Trump was grounded in political hatred rather than constitutional law, why would the Democrats not do it again?
The answer is that the impeachment efforts are not stopping.
House Democrats are already planning hearings on Trump’s reassignment of Lt. Col. Alexander Vindman and his firing of Ambassador Gordon Sondland, both of whom provided anti-Trump (but incompetent, irrelevant and immaterial) testimony during Adam Schiff’s unconstitutional impeachment show trial.
Trump also reassigned Vindman’s twin brother, Yevgeny, for subversive activities in the National Security Council.
Other avenues of anti-Trump inquiry include an expected appeals court ruling that may require testimony from former Trump White House counsel Don McGahn, further inquiry into Russian collusion allegations (the hoax that won’t die), possible violations of the Emoluments Clause (despite court rulings dismissing partisan lawsuits against Trump) and pursuit of testimony from John Bolton that was not part of the Senate trial.
In short, there is no shortage of fake allegations on which to base a new impeachment.
We can’t be certain there will be another impeachment this year, but it cannot be ruled out. Impeachment hearings could begin again this spring ahead of a new impeachment vote this summer and a trial in August just in time for the Republican convention.
Another possibility is Trump wins a second term (likely, in my view) and the Democrats keep control of the House, in which case another impeachment in 2021 is a high probability.
This is bad for the country and is actually bad for Democrats, as shown in the polls. Yet the Democrats seem to be the last to know.
Below, I show you how further impeachment attempts may proceed and what you can expect from markets the rest of the year. Read on.
for The Daily Reckoning
2020 Forecast for Markets & Elections
By Jim Rickards
Just because impeachment is almost over and it’s an election year does not mean that Congress won’t be the scene of anti-Trump activity. Congress is set to keep up the pressure on Trump on a daily basis, and the attacks will continue.
Investors should not be shocked if the House impeaches Trump a second time.
There’s no legal limit on the number of times a president can be impeached or the number of articles of impeachment that can move forward. The House impeached Trump in 2019 on bogus claims that aren’t even crimes. If they did it once, they can do it again.
Some of the new charges being floated include whether it was legal for Trump to order the killing of mastermind terrorist Maj. Gen. Qasem Soleimani. The killing was clearly legal since Soleimani had officially been declared a “terrorist” under the Authorization for Use of Military Force Act (AUMF) and Iran had been declared a state sponsor of terrorism.
Both designations allowed the U.S. legally to kill a terrorist on foreign soil who was planning terrorist acts against the U.S. Obama had used the same legal rationale to kill hundreds of terrorists in Pakistan, Afghanistan and Yemen.
Still, Democrats are claiming that this was an “assassination,” which is illegal under U.S. law. You can expect congressional hearings and possible impeachment charges along these lines this spring.
Another potential impeachable offensive consists of violations of the Emoluments Clause of the U.S. Constitution alleging that Trump profits when foreign diplomats stay in his hotels. He doesn’t; Trump returns any revenues to the U.S. Treasury.
The House of Representatives can also be expected to hold hearings on alleged Trump “money laundering” in connection with property development in Russia. There’s no evidence of this, but that won’t stop Democrats from making the allegation.
Trump’s relationship with Deutsche Bank and its financing of his hotels and other properties including the identities of third-party investors will also come under scrutiny.
Other anti-Trump efforts will include hearings to get testimony from Secretary of State Mike Pompeo related to the Soleimani killing and testimony from former National Security Adviser John Bolton related to the Ukrainian military aid that triggered the first impeachment.
New matters related to Ukraine are also emerging in connection with reported Russian hacking of Burisma, the Ukrainian company that paid Hunter Biden (Joe Biden’s son) millions of dollars for a no-show job for which he was unqualified.
Somehow Democrat critics of Trump can’t get enough of the Russian collusion allegations, even though the Mueller investigation showed no connection at all between Russia and Trump.
All of these matters (Soleimani, property finance, Ukraine and War Powers in Iran) may form the basis for new articles of impeachment against Trump.
This could play out over the course of the spring and summer just as the campaign season is heating up. This may be designed to stir up the Democrat base, but it will probably have the opposite effect of increasing turnout of Trump supporters.
With or without new articles of impeachment, the congressional hearings, bogus claims and anti-Trump rhetoric will continue without relief. Trump will stay on track, but markets may weary of the uncertainty and be worn down by the hyperbolic rhetoric.
Alongside the drama of impeachment and the scandals yet to be revealed, we still have the economy and stock market for investors to focus on. And right now they’re looking good for Trump.
There is almost zero risk of a recession in the next three months and less than a 20% chance of a recession before November. That’s good news for Trump because a recession (or lack of one) is the single strongest indicator of whether an incumbent president will be reelected.
The probability of Trump’s reelection is roughly the inverse of the probability of a recession before the election. If recession odds are 20%, then Trump’s reelection odds are roughly 80% (with adjustment for various factors).
Each month that goes by reduces the odds of a preelection recession even further, which means that Trump’s reelection odds go up. Trump should have a 90% chance of winning by Election Day absent extreme and unexpected economic shocks in the next nine months.
Trump’s chances are also helped by the weakness of his opponents. Americans have shown no appetite for the kind of socialism being touted by Bernie Sanders and Elizabeth Warren. Pete Buttigieg lacks African-American support, which is indispensable for a Democrat. Joe Biden lacks energy and is exhibiting some cognitive problems that will raise serious doubts among voters and hurt his debate performance.
What about the Fed?
The Fed will cut interest rates at least once before the election. This rate cut will not happen at the March or April FOMC meetings because that’s too soon after the Fed told markets it was hitting the “pause” button last December.
The rate cut will not happen in the July or September FOMC meetings because that’s too close to the election and the Fed does not want to appear to be tipping the scales in favor of one party or the other. The Fed will be on hold from July until after the election.
Through a simple process of elimination, the Fed will cut rates in June.
The Fed’s reasons for the rate cut (which markets do not expect) will not be explicitly to help Trump’s reelection (although that will be one consequence). The reason will be to provide an insurance policy against disinflation and recession. The Fed knows its hands will be tied until December, so it will provide a rate cut just to be on the safe side.
A June rate cut will give another boost to stocks, which should continue to perform well. As the election approaches and Trump’s victory becomes more apparent, stocks will gather momentum in expectation of four more years of lower taxes, less regulation and a pro-business environment.
Gold will also get a boost from another rate cut. This comes on top of continued strong buying from Russia, China and Iran and flat output by miners. Geopolitics play a big role in gold prices as a “flight to quality” trend emerges during each overseas crisis. The coronavirus has been a major factor that has taken gold past $1,600 an ounce. The next crisis will send gold even further.
But how might this November’s election affect the political balance in Congress?
As things stand today, not only will Trump be reelected but Republicans should hang onto control of the Senate and possibly retake the House of Representatives. Control of the White House and the Senate alone gives Republicans control of judicial appointments (including one or two more Supreme Court Justice seats) and control of treaties.
Retaking the House will be more difficult but not at all impossible. Presidents typically lose seats in the House in their first midterm election after winning the White House. Trump’s losses in 2018 were actually fewer than Clinton’s in 1994 (when Newt Gingrich led Republicans to the majority for the first time since 1955) and Obama’s in 2010 (when the tea party arose to reject Obama’s policies).
There were 31 Democrats elected in 2018 in districts that Trump had won by five or more points in 2016. All but two of those Democrats voted in favor of impeachment. One of those two has since switched to the Republican Party.
Today, the Republican Party holds 197 seats in the House. Control of the House requires 218 seats. The Republicans need a net gain of 21 seats to take control of the House. With 30 highly vulnerable Democrats (because of impeachment) and demonstrated coattails on the part of President Trump, picking up 21 of those 30 seats (while holding all existing seats) seems well within reach.
A Republican clean sweep of the White House, the Senate and the House with ongoing control of the Supreme Court and other judicial appointments is the most likely outcome for November 2020.
But, there will be a lot of land mines exploding between now and then. Call it another year of living dangerously.
for The Daily Reckoning
James G. Rickards is the editor of Strategic Intelligence. He is an American lawyer, economist,
and investment banker with 35 years of experience working in capital markets on Wall Street.
He is the author of The New York Times bestsellers Currency Wars and The Death of Money.
Thanks to Paradigm Press LLC, publisher of The Daily Reckoning, for permission to reprint it here.