Trump's Chaos Is Triggering Market Collapse - Richard Murphy

22nd January 2026

Andrew Bailey has warned MPs that substantial risks are building in global markets — and for once, I agree with him.

Trump's attacks on the Fed, the escalating threats around Greenland, and the weaponisation of tariffs are turning political instability into financial instability. That’s already showing up in equity sell-offs — and it won’t stop there.

In this video, I explain:

Why political risk is now systemic financial risk

Why equities fall first, and bond markets follow

How Keynes’s "animal spirits" and the paradox of thrift can trigger recession

Why AI is not protected from a downturn; it’s exposed

Why the UK is not insulated from risk

Why austerity would be catastrophic now, and why we need a politics of care instead

Poll below: Are we heading for a market crash? - • Post

TRANSCRIPT
A transcript for this video is available at: https://www.taxresearch.org.uk

00:00 - Is 2026 going to be brutal for financial markets?
00:45 – Andrew Bailey’s warning: UK exposed to global spillovers
01:40 – Trump risks: Fed independence, Greenland, tariffs, unpredictability
02:50 – First tremors: S&P 500 drops 2% in a day
03:45 – Why markets hate this: the US behaving like an unstable state
04:45 – How crises spread: equities fall first, bonds wobble next
05:40 – “Anti-US” allocation: risk aversion drives diversification
06:30 – No upside for US markets: disruption without a defence boom
07:20 – Allies rethink procurement: US defence stocks in the firing line
08:10 – “War with itself”: domestic repression and investor fear
09:10 – Higher risk premiums: weaker shares, higher US rates
10:00 – Keynes lens: collapsing “animal spirits”
10:45 – Paradox of thrift: saving rises → demand falls → recession risk
11:40 – AI bubble risk: confidence + cheap capital evaporate
12:35 – The tipping point: politics becomes the trigger for the crash
13:25 – Why the UK is vulnerable: pensions, banks, sterling volatility
14:20 – End of the neoliberal assumptions: rules breaking → instability
15:10 – UK response: don’t do austerity—build resilience and make wealth pay
16:05 – Closing warning: crisis closer than ever, plan for turmoil now