“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.
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
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.
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.