Blain’s Morning Porridge Dec 9^th, 2025 – What does new US Security Strategy mean for Markets and Outlook?

“For he on honey-dew hath fed, and drunk the milk of Paradise.”

The new US National Security Strategy (NSS) revealed last week confirms just how much the world has changed. It was a kick in the teeth for Europe and leaves the door ajar on Taiwan. It’s unlikely to foster stability. It increases the pressure on Europe to swiftly rearm, and unify its defence and deterrence capabilities. For America – it raises fundamental questions about its declining power, strength, might and economic outlook.

Link to Podcast

A number of Porridge Readers asked yesterday why I hadn’t commented on President Trump’s new US National Security Strategy (NSS) yesterday. The Strategy was released last Thursday, but given my close involvement with Spitfire Strategic Capital, the hybrid PE/Defence Fund, I held off till I’d discussed it with the Fund Principals.(For the record: The comments below are entirely my own, and don’t represent the views of the Fund.)

The US NSS puts the recent launch of the Spitfire Fund into an even more urgent context. As others have commented, “it could have been authored by Putin.” Europe now has even less time to rebuild its defensive capabilities and prepare itself for decades of crisis. The only way it will survive is through deterrence and being prepared against multiple threats – Russia is the immediately obvious one. Others will be coming.

Sadly, I am utterly unconvinced European governments collectively appreciate the urgency and scale of the threat facing them. They are still failing to prioritise the urgency of new defence spending.

The UK is a case in point. Commentor Allegra Stratton pointed it out on Bberg yesterday:

• The UK’s addiction to welfare means 1 in 5 children are now classed as having special needs. The budget for special needs is increasing at a faster rate than defence spending. (Special needs is a gold mine for the private equity firms that own the special needs schools.) From zero a few decades ago the special and high needs funding requirement is rising 13% per annum and will hit £15 bln in the next 18 months – it has risen 140% in the past decade.

The UK spends £60 bln on defence per annum – which has been falling in real terms for decades. Efforts to increase defence spending are stalling as Welfare and the sacred cow of the NHS are prioritised to placate Labour backbenchers. The choice is brutal: there will be no special needs provision, or any other kind of welfare spending, if the UK does not immediately take steps to defend itself. At present, most vividly demonstrated in the Wargame Podcast, the UK is essentially defenceless and will be beaten in a conflict with Russia.

The new NSS

There is nothing in the NSS that hasn’t already featured as likely US policy in the Morning Porridge in recent months. The NSS is just another strategy paper, but what it confirms is the world has changed. From the end of WW1 – when it became clear the British Empire was in decline – we’ve been in the era of American global hegemony although The USA only “stepped up to the plate” as the Arsenal of Democracy in the 1940s. That worked wonderfully well for 80 years.

The NSS confirms that era is over. Governments, businesses and Markets have to adjust to the new reality. These include:

• Unfettered America First policies,
• The diminished importance (almost marginal) of the NATO Alliance to US policy,
• Demands South Korea and Japan take greater responsibility for defence of the first island chain,
• The Trump Corollary to the “Monroe Doctrine” is blunt about the creation of an American Hemisphere (hence is aggression towards Venezuela, and demands being made of Canada and Greenland), and
• The naked monetisation of US military might to support US commercial interests.

That’s the new reality – and its one the Morning Porridge has been describing for months. No point being angry, feeling betrayed, or shocked… Trump and his fellow travellers have been transparent and out in the open about it. It will mean the basis of global trade and markets will have to adjust. It will accelerate the end of the dollar era, and that will have massive negative consequences for the USA in terms of who funds the deficit and thus the economy.

It comes at a very bad time for Europe. Yesterday’s meeting with Zelensky in Downing Street, where the UK, France and Germany stood with him, looked a kind of desperate plea for attention as Russia and Trump work out the details of their carve-up of Ukraine. I am 100% sure Jared Kushner had fruitful discussions on US investments into new Russian Donbas rare earths mines as part of the hidden agenda.

Europe is being excluded from the determination of its own future – much as Czechoslovakia was in 1938. So much for the pageantry of the State Visit and the grovelling sycophancy of European heads of state towards America’s Great Leader.

Trump is doing a deal with Russia because it’s the simplest way to disentangle America from a Europe which Trump and his ilk perceive as finished, about to be swept away by tidal waves of immigrants, where free speech is censored, where minarets replace steeples, and White People become a minority, second class citizens facing Sharia Courts. That is how Vance, the NSS and MAGA perceive Europe – they call it “civilizational erasure”, and see support for ultra-right populist anti-immigrant parties as the only answer.

The NSS assumes some kind of regional equivalency between Russia and the USA in Europe. Yet, Trump and his Security Strategy does not seem to understand is that Russia is no longer a power in its own right. It is sustained economically and militarily by China. Allowing Russia to destabilise Europe, and break NATO, is a massive policy win for China. Who now will trust an alliance with the untrustworthy Americans? While Europe can deal with Russia – if they get their act together – rising threats from climate change, mass migration, and an increasingly chaotic Africa (autocracy and climate) could prove more challenenging.

Another very real issue global investors should consider is what will Trump’s dramatic finish to American Era mean for the US economy? Trump believes he is demonstrating Great Leadership, Economic Strength, Military Might and Geopolitical Power.

But, what if it’s all for show… the last days of Rome? Let’s face it – Trump is not admired globally (whatever Americans think). US economic strength is not a given – especially if the AI bubble proves the next thing the US loses the development race on. The mighty US aircraft carriers are vulnerable to hypersonics, and the Pakistanis demonstrated the efficacy of Chinese standoff AA missiles earlier this year against India. As for US hegemony over its hemisphere – Canada has never been more Canadian and united according to my Canadian chums. Ask any Mexican what he/she thinks of Trump and America…

Trump’s aim is to Make America Great Again. We get that. There is some sensible stuff in the NSS including a “Golden Dome” missile defence, and on defending the nation. It talks about revitalised industrial base and manufacturing to sustain wartime production. It emphasises energy, science and intellectual property. But… much of that is closing the stable door after the horse has gone….

But a foreign policy based on this NSS is delusional, according to my friend (and colleague on Spitfire) David Murrin. It fails to connect the need for strong defence, energy and supply chain resilience, technological dominance, and alliances. (If anyone would like to read David’s take on the NSS – which is brutally open and transparent – send me an email and I’ll forward it too him.)

The bottom line is we knew the world was likely to change. The new American security strategy confirms it has, so its time to deal with the inevitable consequences. I suspect Europe will struggle, but ultimately it will be Americans who pay the price.

Out of time and back to the day job…

Bill Blain

CEO – Windshift Capital

Author – The Morning Porridge

Partner – Shard Capital

Special Advisor – Spitfire Strategic Capital