Rabobank: Is Pelosi Aiming To Drag Impeachment In Hopes Republicans Flip The Senate

Submitted by Michael Every of Rabobank

First, an apology. Yesterday’s Daily noted that Donald Trump had just become the third US president to be impeached after Nixon and Clinton. This was of course wrong. Nixon resigned before he could be impeached, and it was Andrew Johnson in 1868 was impeached for “High Crimes and Misdemeanours” – which in his case was firing the Secretary of War and attempting to replace him with someone he liked more. His trial went to the Senate, where he was acquitted. His trial laid down the constitutional principle, later backed by the Supreme Court, that Congress should not remove the president from office simply because its members disagreed with him over policy, style, and the administration of his office. Which is of course what Trump’s supporters claim is happening today when not shouting “Witch Hunt!” Anyway, an end-of-year lapse in mental acuity was to blame for that slip (though Wakanda really was listed on the USDA website, honest!).

The latest impeachment twist is that House leader Nancy Pelosi has decided not to send the two just-passed articles of impeachment to the Senate yet: she is claiming she will not do so until she can be assured of a “fair” trial in a Congressional body over which she has no constitutional role. Admittedly Senate Republicans have made clear they will throw out the charges against Trump ASAP, as was the case with Johnson back in 1868.

Is Pelosi aiming to drag this all out into election year in the hope it wins more votes? Or that Republicans will flip in the Senate? Or are the articles to be held in abeyance like a loaded gun in the hope that post-November, a re-elected President Trump may find a more Democratic Senate to immediately push him out of office again? That’s probably not really a constitutional journey the stability-loving markets would hope the US is undertaking; regardless, the total lack of reaction to this political theatre so far suggest that it is…all political theatre.

Far more important is that the House of Representatives just passed the USMCA, giving NAFTA 2.0 the green light. Off to the Senate it goes for a “fair” examination – and then, like it or not, it’s a foreign policy win for Trump. On which note, Treasury Secretary Mnuchin says that the US-China trade deal is all agreed and is being “scrubbed” for a January signing. When I hear that word with this deal, why do I get a flashback to the nasty but necessary treatment with brushes those exposed to radiation get from people in hazmat suits? Anyway, that just means we will all find out soon enough what China has or hasn’t signed up to, and hence if it can or can’t or will or won’t stick to it. Need I add that markets loved it regardless, and we are at fresh record highs in US stocks?

But back to political theatre. The other Johnson in the Daily, Boris, gave his second Queen’s Speech in quick succession yesterday and promised a constitutional revolution and a harder Brexit. The latter bill, whose first reading will be today, has removed parliament’s say on the future arrangements agreed with the EU, and sets end-2020 as a cliff edge. No sign at all of a pivot towards a softer Brexit here – unless one ignores the fact that Boris has only got to where he is today by repeatedly tearing the steering wheel out of the vehicle, a negotiating tactic his critics seem to keep failing to recognise.

On the broader socio-economic front Bojo has pledged a new Constitution, Democracy, and Rights Commission to examine “how our democracy operates” (or how Russia allows it to operate, in the eyes of some). There will be an end to free movement, of course, and an Australia-style points-based immigration policy (which has not stopped major net immigration there); there are suggestions we might see the politicization of judicial appointments, as in the US, but Downing Street say this is not the case; the Fixed Term Parliament Act is to go, so no more repeats of the pre-election mess; a new law will fund the NHS; new anti-terrorism legislation will be seen, and new “espionage legislation” to update the Official Secrets Act, along with talk of “hostile states” (Russia? China? France?), and possibly introducing a register of foreign agents operating in the UK, again as in the US; tougher jail sentences; and anti-BDS legislation. Overall, the measures look suitably populist–dare one say Trumpian?–for the global zeitgeist, and have “Get Brexit Done” stamped on them in red ink for BoJo’s new working-class electorate. (And, his critics allege, “I don’t know much about art, but I know what I like”.)

Just as significant, on the back of the BOE meeting yesterday–see here for more on that from Stefan Koopman–we are to also get a new Governor. Mark Carney will be replaced by Andrew Bailey, a three-decade BOE insider who has come under the spotlight over questions of how he handled financial misconduct under his supervision. That’s just as, coincidentally, there is a scandal breaking over hedge funds having potentially gained market advantage via getting faster audio transmissions from outgoing governor Carney after a third-party supplier gained access to the BOE’’s backup audio feed. Naturally, this is an outrage. Not appointing Bailey – hedge funds rigging the markets. Anyway, GBP really hasn’t enjoyed this last little populist ride, and is now around 1.30 again.