Trump’s latest 'bankruptcy' will have 'horrifying' outcome: Nobel economist

U.S. President Donald Trump speaks to the media as he departs the White House in Washington, DC, US, October 13, 2026. REUTERS/Kevin Lamarque

With his agenda going down in flames and major midterm losses looming for his party, President Donald Trump has spiraled into a level of “political bankruptcy” that Nobel Prize-winning economist Paul Krugman warns could have “horrifying” consequences. Increasingly, with nothing left to lose and no need to keep up the appearances of governance, wrote Krugman on Monday, the president is preparing to “pursue his true desires” and “wreak havoc.”

As an example, Krugman points to recent reports and analysis regarding Trump’s war with Iran. While some outlets say the president may resume bombing after the midterms, Krugman notes that a prominent analyst has made a convincing argument that the president will ramp up violence ahead of the elections. That assessment could be accurate, warns Krugman, as this “analysis of Trump’s political position is something I recognize from financial economics. You see, it’s a well-understood proposition that the owners of businesses that are on the verge of going bust often engage in destructive behavior. And Trump is about to go bankrupt — not financially (he’s made billions through corruption) but politically. So he, like a failing businessman, has strong incentives to wreak havoc.”

According to Krugman, Trump is preparing to do something desperate to turn around his fortunes, taking an approach often called “gambling for resurrection.” As the famed economist explains, “When a company is on the edge of failure, it makes sense for the company’s owner to make highly speculative, even crazy investments that are highly likely to fail but might, just might, make enough money to pull the company back from the brink. After all, for the owner it’s heads he wins, tails his creditors lose. In Trump’s case, all indications are that his party is heading for defeat in the midterms. And while a normal president might be able to live with a Congress controlled by the opposing party, there has been so much corruption and malfeasance over the past two years that Democratic control of Congress, and the subpoena and investigative power that will bring, will have catastrophic consequences for Trump and everyone around him. So Trump has an incentive to do something, anything, that might shake up this election.” While renewing attacks on Iran would likely hurt more than help GOP midterm chances, Trump is so focused on “saving his own political skin” that he just might roll the dice.

But in Krugman’s estimation, “Trump’s impending political bankruptcy will have even worse consequences” than restarting the war, with implications that go far beyond the midterms. “What may be about to happen — indeed, is already happening — is what we might call policy looting: Trump using his remaining power to take actions that are both deeply unpatriotic and deeply unpopular but fit his own preferences and prejudices,” writes Krugman. “Once the midterms are over, Trump, with nothing left to lose, will be free to be his worst self — a malignant narcissist who instinctively supports authoritarians and is preoccupied with revenge against anything and anyone that threatens his fragile grandiosity.”

Krumgan points to the example of Trump’s shifting public stance regarding Ukraine and Russia, writing, “It has long been obvious that Trump loves dictators and despises democracy, and that he has special affection for Vladimir Putin and hatred for Volodymyr Zelenskyy. However, as long as there was some chance of limiting the damage in the midterm elections, Trump was cautious about explicitly taking Putin’s side. Over the past few weeks, however, Trump has grown ever more open about supporting Putin’s attempted war of conquest — buying Russian diesel, canceling sanctions, and most recently by attempting to sabotage Ukraine’s defenses by degrading its access to Starlink.” Domestically, says Krugman, you can see the change in the fact that “Trump has increasingly stopped pretending that he cares about illegal immigration or immigrant crime, and is veering into flat, open racism — so far specifically directed against Somalis, but it won’t stop there.”

With all this in mind, concludes Krugman, “Anyone who believes that Trump will become more cautious, more moderate in the aftermath of midterm defeat just doesn’t understand the new political reality. The truth is that political bankruptcy will free Trump to pursue his true desires. And those desires are horrifying.”

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