Blain’s Morning Porridge Feb 11th, 2026 – The Munich Conference and Global Threats
“What do you worry about?” … “Events, dear boy, events.”
There are times when the course of history takes on a momentum of its own, most often in periods of conflict around hegemonic change – as exist today. This year’s Munich Security Conference will address stressed and fractured global alliances – while markets should be figuring out how conflict risks have risen and potential outcomes worsened.
Wolfgang Ischinger, chairman of the Munich Security Conference (which opens later this week) is a former German Ambassador to the USA. He doesn’t pull any punches in its 2026 report; “Under Destruction”. (Use the link to read it – it’s blunt, to-the-point and highly informative.)
The report defines how “wrecking-ball politics” have favoured the destruction of current institutions and alliances, and trampled opportunities for reform. It pulls no punches blaming Donald Trump’s new America for the destabilisation of long-term alliances. In many ways it’s a response to JD Vance’s arrogance at last year’s conference where he slammed Europe as anti-democratic while failing to call out Russia’s aggression in Ukraine.
In the space of just over a year the World has utterly changed. Confidence in NATO, the transatlantic economy, and global order have been overturned. Apologists for Trump – and there will be plenty of wealthy American businessmen, financiers and technologists in attendance who have nailed their colours to his mast – will say Trump has achieved great things by forcing Europe to take responsibility for its own defence, and rumours of the death of the alliance are over exaggerated.
They are not.
These apologists have less to say about the long-term consequences for the global economy and markets from Trump’s disregard for the rules of law, his threats to allies, his autocratic bent and his appeasement of Putin. In 12 months, he has destroyed (I was going to write undermined but why pull punches) the previous faith and confidence Europe had in America.
While many Americans believe Trump is a strong and stable leader – that is not a view widely held across Europe, where he is widely suspected of being a Russian intelligence asset. 81% of Brits actively distrust Trump according to polls. Canadian Premier Mark Carney’s comments in Davos about “rupture, not a transition” most clearly define the way Europe now considers its future.
Not all American’s support Trump – we will see that clearly in the November Mid-terms (if they happen). While Trump may yet prove a short-term political aberration (as previous anti-European isolationists in the 1930s were), he has fatally broken the closeness of the Transatlantic economy. Even if a new American president were to profusely apologise and re-extend the hand of friendship, it could take decades to restore the trust that once underlay the power behind the success of Capitalism.
And that’s the lost opportunity that is going to define the 2020s – the decade when America threw it all away.
The future is what matters. Disengagement with America leaves Europe and the other Middle Nation as free agents able to play the new global economy. It’s not about the demographic decline or the dearth of manufacturing in mature “Western Societies”, but the markets stemming from the rising wealth of the middle classes in Southeast Asia, the growth economies of the former Warsaw Pact, improving health, wealth and prosperity in Latin America, and the evolving economies of Africa.
That future will be accompanied by massive challenges in terms of Climate Change – which Trump has successfully blanked in the USA by closing down the science. It’s real and it’s insidious – here in Blighty it’s rained every day this year, fields are flooded and it simply due to a warmer atmosphere and oceans meaning more rain. Simple as. Rising temperatures will trigger more wildfires, and mass migration from the poor global south toward the rich north – that’s simple fact.
Alongside challenge there will be opportunity – in terms of productivity from AI, Quantum, New Energies, Space, Health and things yet unimagined.
These things will happen in the long run.
The immediate threat to the global economy is collateral damage from the hegemonic struggle for dominance that is now clear between the China and the USA.
There is a cracking Bloomberg report this morning: The $10 Trillion Fight: Modelling a US-China War over Taiwan. It lays out in detail the risks to the global economy from various conflict scenarios around Taiwan – the flux point between the USA and China. The potential damage to the global economy and supply chains (particularly in Chips) is huge. It would make Covid look a mere stumble. Just imagine the effect on AI expectations if Taiwan’s Fabs are destroyed or closed….
Will it happen? Our view at Spitfire Strategic Capital, the hybrid-defence fund, is assume it could and sooner than we think. The need for the swift and effective rearmament of the Middle Nations and “strategic deterrence” has never been more urgent.
At present there is plenty of posturing and testosterone on display:
In the Red Corner is China. Its economy has staged dramatic growth to become the leading manufacturing nation and is now competing head-to-head in tech and consumer goods. Xi has built up China’s military capabilities in many cases on par with America, sought control of critical supply chains (rare earths), focused on building economic links, and seeks dominance through economic dominance and military capability (which it has never demonstrated.) Its economy is now slowing, facing demographic crisis, and presenting Xi a stark “strategic compression” moment – use it or lose it.
In the Blue Corner is the USA. Still a strong and innovative economy, but riven by increasingly polarised politics driven by income, wealth and opportunity inequality (which fuelled MAGA populism), burgeoning debt and costs. Its militarily strength was once unparalleled and supported by the strongest alliances the world has seen; NATO, Five-Eyes, SEATO, enabling to be the Global Hegemonic power for 80 years. Today the USA’s capabilities are thinner and less obviously paramount.
Trump has chosen to dispense with the alliances that enabled the American century, believing his brand of rambling threats, the “Donroe Doctrine”, bluff, bluster, transactional diplomacy, grift and appeasement will prove more successful at empowering America than the previous 9 decades of carefully nurtured relationships, global soft power (from Hollywood culture, sports, the space race and the global reach of names like McDonalds and Levis) achieved.
Trump now fears America will stand alone in a global conflict – he rambled on about it in Davos. That is Trump thinking like Trump. He doesn’t understand the way other nations act. Were America to be attacked today by a first strike designed to keep it out of the South China Seas, the UK and I suspect most of the J-CAKE Middle Nations would still rush to its aid – as they did following 9/11. And they would bear the economic consequences of a Taiwan war.
This year’s Munich Conference is unlikely to achieve much except make points Trump and his supporters will be unwilling to hear. But it occurs at a critically important point for the Global Economy.
Where will we go from here…
Out of time, and back to the day job. No Morning Porridge tomorrow (early flight) and maybe not till Monday. (Up in Edinburgh for the Rugby this weekend.)
Bill Blain
Author of the Morning Porridge
Advisor – Spitfire Strategic Capital
One Comment
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Dear Bill,
I think the following is a very interesting read but you might not agree given who wrote it.
However, sticking with “it’s the economy, stupid” I feel that the point in the attached is well made.
Put all the moral hand wringing and performative outrage to one side for a moment.
Europe has exchanged Russian energy at price X for American energy at price 2X.
That is stupid. I’m sure leaders have been guillotined for less…
https://ronpaulinstitute.org/anchorage-was-the-receipt-europe-is-paying-the-price-and-knows-it/