There’s little doubt that the impeachment of Donald Trump would be a huge moment — and that the reaction would be felt the world over.
The 45th President of the United States has attracted unprecedented levels of coverage in every corner of the globe. Love him or loathe him, he’s almost impossible to ignore.
Yet the present incumbent of the White House recently sought fit to warn of the dangers of removing him of office. After a dramatic day — and news from the courtrooms in cases involving his former lawyer Michael Cohen and ex-campaign chairman Paul Manafort — Trump addressed mounting speculation that his term in office was threatened.
Mr Trump told Fox & Friends:
‘I don’t know how you can impeach somebody who’s done a great job’.
‘I tell you what, if I ever got impeached, I think the market would crash, I think everybody would be very poor’.
But is he right? While it’s clear that impeachment — and it’s important to realise that this alone doesn’t equate to being removed from office — would be dramatic, would it really cause a crash?
Trump showing signs of pressure
Not according to Chief Currency strategist John Kicklighter of Forex experts DailyFX, who have researched the impact of Trump’s words and actions on the forex market.
‘It is perhaps a sign that pressure is starting to increase to dangerous levels for the Trump administration that the President even addressed the possibility of an impeachment Thursday.There was significantly less confidence from the leader of the US in his unassailability during the Fox & Friends interview than virtually any other time during his presidency.
‘As to his claims on the state of the economy and financial markets should this unusual political development come to pass, the market sees it as perhaps attributed more to hyperbolic self-promotion than normal. He has frequently taken credit following strong economic releases in the past — from business confidence surveys to NFPs. And, while it can be argued his policies may not have dampened these trends, they can’t exactly claim primary responsibility to a recovery a decade-long at this point’.
Chances of impeachment now higher
It’s tough to know how likely an impeachment now is. UK bookmaker Paddy Power, not one to shirk controversy, is offering odds of 6/4 that Trump will be impeached before the end of his term (meaning a 40 per cent chance).
The chances might well rest on the upcoming midterm elections. If the Democrats can gain control of the House of Representatives, they could well initiate impeachment proceedings. It would, however, be tougher to get this through the Senate, where a two-thirds majority is required. Bill Clinton’s impeachment was acquitted at this stage in the late 1990s.
However, The Globe and Mail’s Lawrence Martin noted that even this hurdle might be overcome. He wrote:
‘If Mr. Trump is engulfed in scandal and sinking in public esteem, that might not be such a tall order. Many in the party could be dead set against running under his banner in 2020. As was the case with Richard Nixon, they could send a signal to Mr. Trump that he would not survive an impeachment vote, that his days are numbered.
‘Given the events of this week, there’s a good chance they are’.
‘Preposterous nonsensical predictions’
For John Kicklighter, however, the suggestion that an impeachment could cause a crash is ‘preposterous’ — though he did say that there are signs of ‘disrepair’ in the markets that are putting investors on guard.
‘As for Trump’s assessment that the “market would crash” and “everybody would be very poor” should he be impeached, those are preposterous, nonsensical predictions. The factors that have fuelled growth since the Great Financial Crisis have included speculative opportunism, extreme accommodation by global central banks, persistent (if moderate) economic growth and global trade. Tax cuts may have offered a modest boost to GDP forecasts via business spending, but few other policies have taken the reins for the next leg of a mature bull trend or leg of growth.
‘This said, the markets in the US and across the world have shown signs of age and fundamental disrepair. The pressure of trade wars, sanctions and central bank normalization has global investors increasingly on guard. If we add political instability to the mix, it could certainly tip the scales. If President Trump’s warning is to say the markets can’t handle another fundamental burden without finally being driven to rebalance, he may be right’.
USA Today noted how the economy was booming in the late ’90s, when an impeachment process was launched against President Clinton. It stressed that the stock market actually rose almost 30 per cent in the 14-month period of the Monica Lewinsky sex scandal and legal matters surrounding the impeachment.
Chris Rupkey, Chief Financial Economist at global bank MUFG, said:
‘The lesson from the ’90s is that impeachment is not something that causes the economy to skip a heartbeat’.
It’s far from clear as to whether or not Donald Trump will be impeached but, if that were to occur, experts seem to be very sceptical about the chances of a crash. If a crash is to happen, it would need more than just political turmoil to spark it but the conditions for a downturn might well be gathering regardless.