Blain’s Morning Porridge, August 6th, 2026 – US Politics is becoming an investment risk
“The nature of poverty is to disempower and distract…”
The tide of American Politics has turned dramatically extreme in recent days. The narrative is no longer about why Trump is haemorrhaging electoral support but has shifted to whether the Democrats can unite to win the Midterms in November and present a credible challenge to Trump’s MAGA successor in the 2028 presidential election. The coming gladiatorial contest between Right and Left populists will be watched closely by concerned global investors.
Key Takeaways
- US Mid-terms in November will be contentious and polarising, raising long-term doubts.
- MAGA will fight a scare campaign on basis “Progressive Socialist” Democrats are Radical Left Islamic/communist stooges.
- Progressives and Democrats will campaign based on Trump’s multiple failures.
- Global markets will become increasingly fearful of polarisation, populism and rising US political instability.
- Neither party will do much to stem the accelerating budget deficit, the decline in US hegemonic power, or the risk that the dollar’s status is diminished.
After a bitter “primary” between Left vs Right Democrats in the key swing state of Michigan, the victory of “Progressive Democrat” Abdul El-Sayed exposes a whole new series of fault lines in American politics. The political stability that once characterised the American Century has splintered into a Hard Right of MAGA authoritarians versus the Radical Left of Progressive Democrats. (Somewhere, forgotten in the middle, are moderate US citizens who just want a return to normality and the end of the political madness!)
MAGA Republicans think they’ve been thrown a lifeline, believing MAGA can now win the mid-term elections by characterising El-Sayed, and therefore all the “progressives” and thus all Democrats as “antisemitic, holocaust-denying, American-hating, police-defunding,” left-wing nut-jobs. An American chum yesterday wrote me that Democrat voters have to decide if they want to be “the party of Islamists and Communists”.
The right-wing will not pull its punches. “Adbulrahman Mohamed El-Sayed” is the most radical threat ever to America, says one campaign fund. Posters day “El-Sayed: dangerously radical.” He’s been accused of supporting 9/11, supporting Hamas, and of praising Osama Bin Laden. Critically, he has accused Israel of war crimes in Gaza – un unforgivable offence in the eyes of many MAGA supporters.
(For the record, El-Sayed is a Rhodes-Scholar, a doctor and would appear to be more Bill Clinton than Bernie Sanders. He has called ICE “corrupted at its soul.” He is pro-Ukraine yet said “Israel is committing human right abuses, genocide and apartheid”. He called for the US to stop funding blank checks to the Israeli military. He has labelled Hamas as “evil”.)
I am thinking of publishing a table showing as many of the really stupid things US politicians have said in recent years – MAGA, Republican and Democrats of all hues. Please email suggestions.
Left vs Right in US politics is going to dominate the news flow in coming months. It comes at a time when the USA is facing a hegemonic challenge from China in terms of trade and military power, the diminishing “exorbitant privilege of the dollar” is waning, and the budget deficit is about to break $40 trillion ($39.825 this morning). The increased polarisation of US politics has critical implications as to how global investors will view the US economy and the opportunities it presents.
The reasons are simple – political competency and stability is a critical leg of the Virtuous Sovereign Trinity: that democratic nations with a stable currency, a sustainable bond market and political competency will tend to do well. These factors are all under the cosh in the US as the instabilities mount. Global investors seek to put money to work in the places most likely to produce the highest returns – if polarisation and conflict across US politics continues to hot up, then returns will inevitably come under pressure.
In the past it was easy to invest in America. Tech exceptionalism, deep capital markets and stability were all ticks. The now extinct Republican party was perceived as pro businesses, anti-regulation, and unconcerned with “fripperies” such as diversity, inclusion and gender. Democrats were seen as more socially and fairness focused. Trump has boosted Tech and clearly aligned himself with growth, but that’s balanced by the perception that graft and sleaze is increasingly endemic – a factor likely to discourage future external investment.
Things have changed.
Perhaps we should not read too much into a “Progressive” winning the right to stand in a key state. US primaries – where party voters choose who will stand to represent them in state and national plebiscites – reflect the views of political aligned voters, not necessarily the views of the general electorate.
Donald Trump’s greatest success has been his absolute capture of the former Republican Party. He controls what is now MAGA – his approval is critical. In contrast, the Democrats lack any strong leadership except a broad agreement they are the alternative to Trump. Unless a strong leader who can unite the Progressive and Moderate Democrats emerges in the next few months – MAGA will win in Nov 28. Trump’s legacy will be an effective and authoritarian electoral machine.
The Mid-Terms in November will be fought as a scare campaign. MAGA will seek to retain the millions of swing US voters who voted for Trump in 2024 (because Biden and Harris were terrible choices) that voting for Democrats is now an even more dangerous choice. It will be nasty and further deepen the cracks in the façade of the USA. Any Democrat will be characterised as antisemitic, anti-American and anti-growth.
At the core of the coming US mid-terms will be Isreal – the American Israel Public Affairs Committee (AIPAC) spent over $60mm to support the right-wing Democrat candidate that stood against El-Sayed in Michigan. They now say they will lobby for the Republicans in the Mid-terms to stop “antisemitic”, “Hamas-hugging”, Isreal-hating progressive socialists and communists like El-Sayed! Israeli premier Netanyahu has gone into overdrive warning the election of Progressives will cause the USA to abandon Israel. Yet many Americans believe its Netanyahu who dragged the USA into the unwinnable Iran war.
Electoral interference?
The rise of the Progressive Democrats mirrors the rise of MAGA and Trump. Both are populist movements recognising the same thing – that America is a great and successful economy, but that voters get left behind and forgotten in the rush to growth and the growing inequalities that have occurred. Trump’s initial successes, and the reason some 30% of US voters will support him whatever he says or does, is their belief he will deliver on his promise to look after those left behind by restoring jobs, wealth, health and prosperity.
Democratic progressive socialists promise much the same thing – only they can build a fair and equitable state through radical solutions to growth and by taxing the rich. They lack the organisational power of Trump’s movement, and they lack the money. Billionaires are giving Trump their political cash in return for him protecting their wealth from socialist redistribution.
US Politics are going to get fruity ahead of the November Midterms.
Out of time and back to the day job…
Bill Blain
Author of the Morning Porridge
CEO Windshift Capital
Advisor – Spitfire Strategic Capital
Meanwhile, don’t forget about my new book:
You can read a review on the Society of Professional Economist’s website here.
The Battle for Hamble is a proper grown-up examination of how economies fail: a tale of Greedy Corporates, Bad Planning and Economic Illiteracy. It uses a wholly unnecessary Gravel Quarry in the middle of a prosperous village to illustrate the multiple failings and abdications of responsibility that have created Broken Britain. It’s about bureaucracy, money, exploitation and shareholders vs stakeholders. It’s about social injustice – asking why it’s ok to put 6000 jobs at risk so corporate bosses can reap bigger bonuses! Whether is the Hamble Quarry, HS2 or the abysmal state of UK armed forces due to bad procurement, read the book to understand how its broken process and bureaucratic indifference that is sinking Britain.
