“It’s now tantamount to a civil war…”

 

Submitted by Larry White:

This week it appears that the political heat is seriously ramping up in Washington DC. I wanted to alert readers to this because this is the type of situation that could spill over into markets and the financial system. We have these news stories coming out all related to the ongoing Trump/Russia/Comey/Coats/FBI/NSA saga. Here are the links:

Washington Post – Top Intelligence Official Says Trump Asked Him to Intervene With Comey 


Washington Post – Trump Furious, Gears up to Punch Back at Comey


Circa News – FBI Suit Alleges Unmasking and Spying on 20 Million Americans



Each article alone contains bits of information that has the potential be somewhat explosive as things play out here before Congress. Taken altogether, they imply the potential for an even uglier open civil war within the US government with seemingly pro Trump and anti Trump factions within the intelligence agencies going at each other in public now.


Obviously, if anything like this happens, the potential to impact the confidence of the general public in the stability of our government is present. And the potential to spill over into markets is also present. 


Added note: I have run this situation by Jim Rickards to get his thoughts on it. Below is the main part of our email exchange which Jim gave permission to use here:


Me to Jim:


My questions are (if you have any thoughts on this):
 
1- Is the Coats/Comey testimony this week going to put Trump in a potentially serious legal situation (potential obstruction of justice?)
 
2- If Trump really launches a direct attack on Twitter on Comey during testimony will this add fuel to an already potentially explosive situation? It sounds like he is going to ignore his own lawyers advice on that.
 
3-If the news out tonight that a former contractor is suing the FBI for spying illegally on 20 million Americans turns out to be correct, does this inflame things even more?  Will the public start to lose confidence at what seems like open warfare within our own intelligence services between pro Trump and anti Trump factions?
 
I am trying to figure out if the combination of all this could actually turn into a genuine crisis of confidence situation that could then spill over into the markets? If so, I feel I should alert readers to watch all this carefully in that regard.
 
On the other hand, if all this is just more political theater and nothing truly significant is going to come of it, then of course I should just ignore it.
 
Jim’s reply:
 
1. Trump’s problems are more political than legal, but in Washington that amounts to the same thing.

2. Yes, this will continue and will get worse. The dysfunction will kill the Trump agenda. It’s now tantamount to a civil war.
 
3. Meanwhile international crises from North Korea, China, Syria, Venezuela, and Iran will begin to intrude. This could be Trump’s political salvation because the Commander-in-Chief has complete freedom of action in these realms and Mattis, Tillerson and McMaster are driving the bus. This could push the domestic agenda off the headlines, but it could also result in something that starts to look like World War III.      —–    James Rickards


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I think Jim’s comments here speak for themselves and are a big reason why I decided to post this as a news alert. Jim knows what he is talking about on issues like this and should be listened to. We don’t know if this will turn into a serious problem or not and it will take some time to find out. However, these events clearly should be monitored for any possible spill over impact on the markets since we do try to watch for that here. 
 
I want to thank Jim for giving permission to share his thoughts on this situation. He always takes time to listen to questions I have and provide answers based on his direct knowledge and experience gained fromworking with highly respected sources during his career. Readers here benefit from his willingness to share his thoughts from time to time. In my view, his thoughts on this situation are very valuable.
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Additional added notes @ 1:50pm cst::
 
NY Post Article on this situation (quote):
 

“For Trump, of course, the stakes are monumental. The day (Thursday) is shaping up to be the most important event of his presidency.”

It should be noted in that in the first round of Senate questioning today, former Sen. Dan Coats did not confirm the Washington Post article saying Trump asked him to intervene with Comey (DailyCaller, CNN,FoxNews). 


So, the Comey testimony on Thursday will be the key to see if anything will come of this for now. There is speculation ahead of his testimony based on a release of his opening statement that Comey will not directly accuse the President of obstruction of justice, but will imply he thinks Trump tried to influence him (CNN, FoxNews, see written statement here). So far all markets are acting as if nothing substantial will come from these Senate hearings. 


Per Jim Rickards analysis above, we should expect the ongoing political wars involving President Trump to continue regardless of what happens this week. Keep an eye on the three signs we mentioned in our monthly Crisis Watch update for any indication that the situation is getting more serious.

  1. Tell the fake news to repent Trump needs to run the country not peddle about with he said she said ,he has people under his command to deal with snowflakes that are money mongers ,socialit’s!  The Church of God better wake up! They had no problem taking the people’s money sitting in Judas Iscariot’s seat did they care  for the poor and needy? There still suffering being starved for the truth while the vilest of men are destroying our country. God help the true in heart now and not the vile. And this day may our population stand up for the President of the USA.

  2. “The dysfunction will kill the Trump agenda.”

    False.

    “[D]ysfunction” will delay the Trump agenda but not “kill” it. In time, we will see a wall between the U.S. and Mexico, tax reform, a new health care plan and employee turnover in the “deep state”. Acts of terrorism will return to U.S. soil, prompting a new uncontested presidential executive order vetting foreign residents.

    There will be a substantial global stock market correction, real estate price declines will follow, interest rates will plunge, unemployment will rise and Trump’s 1.2 trillion dollar infrastructure plan will be implemented but fail to stimulate the economy which will go deeper into debt. Gold and silver prices will go much higher. Bitcoin will trade at Clif High predicted levels ($9000/bitcoin) before collapsing.  Surprisingly, there will be no conventional world war, but a continuation of numerous protracted middle-east conflicts. Domestic protest and violence will become an everyday occurrence, but law enforcement will be trained to effectively control it (like at airports). Individual liberties cherished by “free” Americans will be curtailed. The aforementioned developments are only part of stage-one of world developments.

  3. Well they just dumped $400 billion of gold, but I’m sure rinse & repeat cycle will bring it back to $1290 again and make us feel good about it, I’m sure Harvey will have come out with a huge load standing for delivery which will drive it to the moon!

    • I believe its just a matter of time now that the crypto’s went supernova.  My guess is a lot of these people are non-traditional investors.  They will eventually want shiny metals, high value collectables and a nice house.

    • Yes, that is exactly what this is… which is why any incoming president should fire every one of the hold-overs from the previous administration.  All presidents get to choose their own assistants.  A few fail to win confirmation but it is traditional that the winner of a national election will choose his cabinet, department directors, US attorneys, etc.  These people will tend to share the president’s view of things and also the direction he wants the country to go.  If they do not, then they will cause more trouble than they are worth.  Who knows?  They might even admit to leaking stuff to the press after swearing before the US Senate under oath that they have never leaked anything.  If charges are not pending, perhaps they should be.

       

  4. Markets are clearly indicating no concerns about the Comey testimony or that the Senate hearings will amount to much. Not surprising, but it is still important to monitor events for possible triggers that could lead to systemic instability. That is why I asked JR for his thoughts on this. He can usually separate out what is just “noise” from what are the true issues to keep an eye on, especially on things like this where he has some pretty good sources/contacts.

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