A Double Political Disaster

A last-minute deal has averted a government “shutdown,” which would have taken place on Sept. 30.

But all it does is kick the proverbial can down the road. We’ll be back right where we started 45 days from now when this agreement expires, just before the holiday season. Then the same theatrics will begin again.

But for now, a shutdown has been averted.

Regardless, we could be looking at two catastrophes that strike at the same time going forward. And it could have serious implications for your financial portfolio.What kind of catastrophes? Let me explain…

The U.S. is currently being struck with two political catastrophes simultaneously. It’s like a hurricane and a wildfire aimed at your net worth.

Portfolio Catastrophe #1 – A Biden Impeachment

The first disaster is the impeachment of a president. The second disaster is the criminal trial of a former president. Both the president being impeached and the former president on trial are running for election to the highest office in the land.

Yet this double disaster won’t wait until Election Day in November 2024. It’s happening now.

Are you ready for another impeachment of a president? You should be, because one is definitely coming. The Republican-controlled House of Representatives will begin impeachment proceedings against Joe Biden in the next several months.

The proceedings will last for a month or more and then the House will vote to impeach Biden, probably in February 2024. The impeachment articles will then be delivered to the U.S. Senate, which will vote on whether to remove Biden from office. A two-thirds vote is required to remove a president who has been impeached.

It’s unlikely the Senate will have that many votes to remove Biden. But the possibility could be used as leverage by the Democrats to persuade Biden to resign or not run again for office.

Such a decision by Biden would then clear the way for California Gov. Gavin Newsom or others, including Michigan Gov. Gretchen Whitmer and Illinois Gov. Jay Pritzker, to run for the Democratic nomination for president.

Akin to the Nixon Impeachment

No, the mainstream media won’t tell you any of this. But it’s happening. Mounting evidence of Biden corruption indicates that the impeachment process must proceed.

This impeachment will not be like the two impeachments of Donald Trump in 2019 and 2021. Those were on flimsy charges. In fact, Trump was impeached for asking Ukrainian President Zelenskyy to investigate Biden crimes in Ukraine that we now know likely happened.

Instead, the impeachment of Biden will look more like the Nixon impeachment hearings of 1974. These hearings were sober, dignified and rigorous. Both parties had the opportunity to debate the issues pro and con. Ample evidence was provided.

In the end, Nixon was not impeached, but resigned once members of his own party explained that impeachment and removal from office were just a matter of time.

Something similar may happen this time. The House will prepare to impeach Biden, at which point Democratic members of the Senate may persuade Biden to resign. This suits their purposes, because they want to get rid of Biden anyway since he’s senile and might lose the 2024 election.

This impeachment scenario could play out in a number of different ways. I’ll be watching it closely. Meanwhile, investors should prepare for the uncertainty and volatility waiting right around the corner.

Portfolio Catastrophe #2 – A Trump Conviction

The Trump situation is even more volatile. The indictments are already handed up. Two federal cases, two state cases and over 100 felony charges are pending. Only one trial date has been announced (March 4, 2024, for the Jan. 6 charges in Washington, D.C.) but the pre-trial motions are in full swing.

Mark Meadows, the former Trump chief of staff, made a motion to move his case from state court in Georgia to the federal courts.

That’s a big deal because there are many defenses available in federal court that cannot be raised in a state racketeering case. Expect Trump’s legal team to take advantage of them.

On top of that, there’s an effort at the state level to remove Trump from any ballot under the “insurrection clause” (Section 3) of the 14th Amendment. Section 3 was enacted after the Civil War and was aimed at Confederate officials who wanted to run for U.S. federal offices after the war. It has rarely been used since the 1870s.

Section 3 isn’t a dead letter, but it does turn on the definition of “insurrection.” There is no clear definition, although it’s worth noting that Trump has not been charged with insurrection in any of the pending criminal cases.

Some lawyers have argued that Section 3 is “self-executing,” meaning any secretary of state can take it upon himself to remove Trump from the ballot in that state without any further legal proceedings.

That interpretation denies Trump due process of law.

Regardless of the interpretation of the insurrection clause, it’s likely one or more secretaries of state will actually apply it as Trump’s political enemies insist. In any event, that case will end up before the Supreme Court whether the court likes it or not.

Meanwhile, Trump’s poll ratings go up and the Republican race looks like a one-horse event with the rest just for show. That said, Trump is highly likely to be convicted for something because the trial jurisdictions were carefully selected by Democrat prosecutors to be 90% Democrat and a majority Black. So the jury pool will be out to hang Trump.

The Bottom Line

Trump could be in an orange jumpsuit behind bars in November 2024 and still be elected president. There’s no constitutional prohibition against that. Biden could be impeached, which would throw the election into turmoil.

Are you ready for these outcomes? Perhaps not, but they appear likely to me. You should not wait for all of this to unfold before taking steps to protect your portfolio.

Prudent moves at this stage include reducing exposure to stocks, increasing allocations to cash and perhaps buying gold if you do not already have our recommended 10% allocation.

The Daily Reckoning