Case for/against impeachment of Trump

brusa flag
Flag of the Banana Republic of the United States

During Christmas my brother-in-law asked if I thought Trump would still be in office at the end of 2018.  What do you think?

The standard for impeachment is “Treason, Bribery, or other High Crimes and Misdemeanors.”  Let’s take those one at a time:

Treason – People may seriously think Trump’s policies are mistaken, but there is no plausible “motive” for the leader of the most powerful nation on earth, or a man already a multi-billionaire, to decrease the power of the nation he leads.

Bribery – in the ordinary sense of regulatory or judicial favors in exchange for money, this is equally implausible.  If you want to include the trade of foreign policy favors for fake news, you have to produce a conversation along the lines of “Would you like us to produce some fake news for you in exchange for lifting sanctions?  Yes, that would be nice, by all means do so.” The Russians pulled their shenanigans all around the world but did not engage with any other nation’s political party in this manner.  It is unlikely they did so here.  They did not need to ask or offer favors.  Trump stated during the campaign he wanted to have improved relations with Russia, strongly suggesting that meant lifting sanctions.  It was said in front of everyone.  Do you suppose in private someone told the Russians “If you don’t help us, we won’t be lifting sanctions?”  Highly improbable.

Other High Crimes – Trump is as likely as anyone to have committed unrelated high crimes in the past.  I assume they would have come out by now.  That leaves only the Nixonian crime of obstruction.  Where there is fire there must be smoke.  People are looking at the firing of Comey and thinking that is smoke.  I see that as Trump’s insistence on loyalty – an insistence of every strong leader in human history.  There is an ambiguity here.  The definition of obstruction is “corruptly or by threats or force, or by any threatening letter or communication, influences, obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice.”

Any threatening letter or communication would be out in the open by now.  Comey would have said so immediately.  Nixon paid hush money.  That leaves a trail.  There is no suspicion of hush money here.  The thing is, the obstruction has to be done “corruptly or by threats …”  It is not sufficient to qualify as obstruction of justice for an officer of the government to exercise legitimate discretionary authority over an investigation, making a trade off with broader goals, such as foreign policy.  Happens all the time.  I think it is likely that is all Trump did.  Did he attempt to impede (stop) the investigation?  Yes, plainly he has stated that he wishes it would go away, and plainly he asked Comey to drop it, but that was done openly, not corruptly (acting dishonestly in return for money or personal gain).  Anything that Trump is likely to have done he has already openly declared, and so not dishonest. If it were for personal gain, he would have blocked or fired the special prosecutor also.  (There is no issue of loyalty in regard to the special prosecutor, who is not appointed by Trump and does not work for Trump.)  If Trump fires Mueller, we can revisit this.  But if the Senate gets rid of him, there is no implication.

And Misdemeanors – If the president of the United States is removed for a misdemeanor, then we need to change our flag to the design at the top of this article.  It seems to have become the policy of the United States, both under Bush and Obama, to advocate the overthrow of any government we don’t like either by street protest or revolution or invasion rather an election.  Not one such government (Ukraine, Libya, Afthanistan, Iraq, Syria, etc.) is now stable.  This is what throwing the president out for a misdemeanor amounts to.  The US won’t be stable if we do that.  There has already been a special election that limits Republican control of the senate.  There is another coming up in just 10 months, and a presidential election in 34 months.  It isn’t clear Pence would be a better leader for anyone but die-hard republicans (anti-gay, walked out on anthem protesters, not one to be loved by the left).

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Interest Rates & Recessions

Fed Funds w Recessions
Fed Funds rates last 62 years from macrotrends.net with my annotations

After the longest “recovery” in over half a century (see yellow lines above), and the Fed finally confident to raise interest rates, and yield curves inverting, some people are beginning to ask if that forecasts a recession?  Look at the history above and see for yourself.  In 9 out of 12 cases following interest rate increase campaigns, recession has followed, though in three cases there were periods of level rates of 3 months to 18 months (only one case of the latter, most around 3-6 months) of stability.

It appears a rise of at least 2% is necessary to trigger a recession.  We haven’t got there yet, with rates rising only 1% in the last 7 years.  Most of that is recent, but even so, you can see it is the slowest, most cautious rate increase since the 1950s.  Therefore I do not expect a recession in 2018.  Since it is unlikely rates would rise another full percent in 2018, and even if so it is unlikely their effect would be felt as soon as 2019, I do not expect a recession in 2019 either, and probably not in 2020.  The soonest we might see a recession is 2021, which is also a post-election year in which a new administration might increase taxes or otherwise institute reforms that might pile on top of Fed policy to trigger recession in 2021 or 2022.

The economy will get some boost from the various corporate tax breaks just enacted.  However these might be canceled by aggressive Fed policy.  That, however, would only add up to “neutral” and would not trigger a recession, now or in the future.  In other words, we might be able to absorb an additional 1% Fed increase to around 2.25% without triggering recession.  Only one recession in this chart was triggered by such a mild increase, and that was long ago after a lengthy post-war boom which is before the start time of the chart.

Some new conflict in Korea or Ukraine seems likely.  Unless it is nuclear (not out of the question), it seems unlikely to have a big effect on the world economy.  Those places are insignificant in the world economy, and we already have a sanctions regime on North Korea and Russia.  Military damage to South Korea would trigger a boom from reconstruction aid.  Conflict in Ukraine, if the US continues and extends the new policy of providing offensive armament, might actually result in the lifting of sanctions on Russia, as part of a negotiated settlement to end hostilities.

Most likely the market will be driven by corporate profits, and moves will be less than 20% on the downside.  I won’t make any prediction about upside, but I think the pace of 2018 will be less, with perhaps modest gains in 2019.  The market is still more or less correlated with recovery in the oil industry, and the inability of the US to cooperate in restraining supply to maximize profits continues to threaten the global climate as well as limit market upside.  The US should adopt a temporary cooperative posture with OPEC, not reducing production but limiting upside and apportioning it among suppliers, like the Russians do.  However, this is not politically popular with our naive population and pseudo-populist politicians.