Goodbye 2025, hello 2026 – hopefully a much better year for democracy in th e US and Europe

I’ll start this year-end post with my favorite protest song of 2025, “The F-Word.” (1)

I won’t try to make predictions for 2026. So I’ll settle for speculating on what news themes I’m likely to be following most.

The US economy is facing big risks. The Trump 2.0 slash-and-burn approach to government regulation all but guarantees that preventable problems will not be prevented. And problems that could be constructively managed will be managed irresponsibly.

David Cay Johnston just reported on some potentially serious dangers signs in the banking system:

Ominous signs that at least one of America’s “Too Big to Fail” banks is yet again seriously short of cash emerged this weekend in documents examined by James Henry, DCReport’s economics correspondent.

For the past two months the Federal Reserve has been silently injecting tens of billions of dollars of cash into banks. No one announced this. Henry found the evidence in public records that few, if any, Wall Street journalists consult, but that we routinely review at DCReport.

The Federal Reserve Bank of New York (NYFed), acting like a financial Santa Claus to recklessly naughty bankers, delivered $17 billion in cash to an unknown bank or banks at 8 AM the morning after Christmas.

The sudden demands for cash to cover shortfalls began on Halloween. That day the NYFed injected more than $50 Billion into one or more unnamed banks. Since then, it has injected tens of billions into banks 14 times, delivering greenbacks galore roughly every third business day. [my emphasis] (2)

As he describes and illustrates with a dramatic chart, these are not routine transactions, and the amounts are far beyond what has been more since mid-2020. He discusses the report with Mark Thompson: (3)

Meanwhile, much of the positive economic growth in the US in 2025 has been driven by the speculative financial bubble around AI and much of the real investment has been coming from the monster data centers companies are building to support the enormous power demands that AI and cryptocurrency require. Kyle Bradley discussed this in an analysis last March for a journal from the University of Pennsylvania’s Program on Regulation:

Cryptocurrency mining requires enormous amounts of electricity. An oversight group estimates that Bitcoin—the original and most popular cryptocurrency—has a global annualized energy that matches Poland’s annual power consumption. One Bitcoin transaction uses as much energy as hundreds of thousands of credit card transactions.

Cryptocurrency, a digital and encrypted medium of exchange, has become popular partly because it offers a decentralized alternative to traditional currency. Although cryptocurrency can be used to buy goods and services, it is primarily treated as an investment asset. [my emphasis] (4)

He could have added that crypto also provides a valuable vehicle for financial scams, bribery, and other types of illegal transactions.

The drastic reduction of federal spending that produces direct and relatively immediate stimulation of the economy has been accompanied by a chaotic and foolish tariff policy.

As Paul Krugman has been reminding us for years on end, things don’t have to be this way. With an economic policy aimed primarily at improving opportunities and conditions for the vast majority instead of a policy aimed at catering to the proverbial One Percent, that is: “[I]n going from the Biden Administration to the Trump Administration, we have traded an economy that disproportionately benefited low-income workers to one that disproportionately benefits the well-off (particularly those who own a lot of stocks).” (5)

And he observes that far too much of the economic commentary we’re getting remains stuck in the fantasy world of the One Percenters and supply-side economics voodoo:

[T]oo much of the commentary is marred by a sort of lazy cynicism. Too many of these commentaries rely on the casual assumption that it has always been thus. Or at least, that it was as true during the Biden years as it is now. But that’s not true. David Autor, Arindrajit Dube and Annie McGrew have documented that the Biden era post-pandemic economic recovery was the opposite of what we are experiencing now. In fact, during the Biden recovery wage gains for low-paid workers were much larger than for those further up the income scale. In fact, the pro-low-income worker tilt of wage gains during the Biden recovery was something we haven’t seen since the “Great Compression” of the 1940s. And that narrowing of wage gaps was due to special factors, including wartime wage policy and a rapid expansion of unions. [my emphasis]

Europe in the new year

The shift in European power alignments now has Britain, the EU members, plus Switzerland - i.e., all of Europe except Russia and Russian-dominated countries like Georgia and Belarus – adjusting politically, economically, and militarily to the situation in which the Trump 2.0 is explicitly aligning with Russia to weaken European cohesion and, in particular, to undermine liberal democracy in Europe

This is going to be a complicated process in which the militaries of Britain, France, Germany, Poland, Spain, and Italy in particular will need to push for new coordination structures outside of the NATO umbrella. It’s probably not often enough mentioned that the collective defense capabilities of Europe in the case of a hypothetical military attack by Russia are organized under NATO command structures dominated by the US. And European intelligence capabilities including satellite resources are also heavily dependent on US resources and structure, including Elon Musk’s Starlink. No country should be dependent on the whims of Elon Musk for its intelligence capabilities.

Europe is pushing for Musk-independent intelligence with an arrangement called IRIS², “a multibillion-euro secure connectivity constellation pitched in 2022 and designed to rival Elon Musk’s Starlink system.” (6)

And Timothy Garten Ash recently characterized the message that the US is sending to the European democracies, including explicitly with the official 2025 National Security Strategy:

When it says, for example, that within a few decades at the latest certain NATO members—i.e., in Europe—will become majority non-European, that is very clearly code for non-white. That is a pretty startling statement to find in a national security strategy of the United States. When it says “cultivating resistance to Europe’s current trajectory within European nations,” that is a declaration of political war against the European Union.

Particularly, … if what has been reported elsewhere is true—that an earlier version of this suggested that four EU member states, Austria, Hungary, Poland and Italy, should be wooed away from the current European Union. It is a frontal declaration of political war against the European Union.

In historical context, I think it is interesting because, as you know very well, Yascha, for a large part of its history the United States was indifferent to Europe, wanted to stand apart from it, pulled away from its isolationism. Since 1945, we have had a United States that has supported a more liberal, more united Europe. This is the first time ever in history we have had a United States explicitly supporting an anti-liberal, xenophobic, nationalist, populist Europe. In a way, it is playing our own worst reactionary past in Europe back to us. [my emphasis] (7)

Elsewhere, we can expect based on the outgoing year that the Trump 2.0 Peace Administration will continue to foment, support, and engage directly in more armed conflict in the Middle East and the Western Hemisphere.

New Year’s Wish

2026 is a midterm election year in the US. The Democrats have a very good chance of doing well in it. It will require them to take getting out the vote and protecting against Republican voter-suppression measures very seriously. If I have just one New Year’s wish, it would be that no Democratic Member of Congress and especially no one in party leadership would use the word “bipartisan” at all this year, in any context. If some Republicans decide to peel off from the Trump Cult momentarily and work with the Democrats in Congress or in the states to support democracy and the rule of law, then call that “democracy-ship,” or “Spirit-of-the-American-Revolution-ship,” or whatever. 2026 is the 250th anniversary year of the American Revolution.

It doesn’t much matter if it sounds dorky. The Democrats need to remind voters constantly that they are the party of democracy, rule of law, and resistance to Trump and to the Trump Cult which the Republican Party faithfully supports. Please, no fantasizing about how “the fever will break,” or “no Red America-no-Blue-America,” or “when they go low, we go high.” The Democratic message needs to be, “We go democracy, the Trump Cult goes fascist.”

Finally, one thing that we’ve seen in American politics this year, is that when the public actively protest and demand that our representatives favor democracy and human rights, it works. The Republican Party may be so hopelessly welded to the Trump Cult that no actual grassroots pressure will have much effect on the leaders. Of course, as we saw with the infamous “Tea Party” movement during the Obama years, Republicans billionaires can be pretty good at putting on a astroturf version of grass-roots pressure.

But with American politics cursed by Big Money in campaigns, no one should expect the public of activists and grassroots Democrats can affords to “go back to brunch” if the Democrats take one or both Houses of Congress. They won’t accomplish the kinds of things they need to accomplish if they don’t get continuous pressure from the party base, issues groups, and NGOs.

Notes:

(1) The F-Word - Folk Protest Song Against Trump, MAGA, and Fascism. The Resistance YouTube channel 09/20/2025. <https://youtu.be/yJnvKkFcCzU?si=O2nkPxbFcNTouBWc> (Accessed: 31-12-2025).

(2) Johnston. David Cay (2025): Big Banks Enjoy Stealth Bailouts. DC Report 12/29/2025. <https://www.dcreport.org/2025/12/29/ny-fed-unlimited-cash-infusions-bank-crisis/> (Accessed: 31-12-2025).

(3) Big Banks Are Short of Cash: Another Bailout and Recession to Come, Prof. David Cay Johnston. The Mark Thompson YouTube channel 12/31/2025. <https://youtu.be/c3uepHkwm3Y?si=IfjrDlw7cT1RYqFW> (Accessed: 31-12-2025).

(4) Bradley, Kyle (2025): The Energy Costs of Cryptocurrency. The Regulatory Review 03/19/2025. <https://www.theregreview.org/2025/03/19/bradley-the-energy-costs-of-cryptocurrency/> (Accessed: 31-12-2025).

(5) Krugman Paul (2025): A New K in America. Paul Krugman Substack 12/23/2025. <https://paulkrugman.substack.com/p/a-new-k-in-america> (Accessed: 31-12-2025).

(6) Roussi, Antoaneta (2025): Hacking space: Europe ramps up security of satellites. Politico EU 12/30/2025. <https://www.politico.eu/article/space-hacks-europe-ramps-up-security-satellites/> (Accessed: 31-12-2025).

(7) Ash, Timothy Garton (2025): Fighting Europe's good fight II.. History of the Present 12/16/2025. <https://timothygartonash.substack.com/p/fighting-europes-good-fight-ii> (Accessed: 31-12-2025).