Year of the Dragon

Thoughts on a goodish week for Europe, a great year for China and an outstanding year for the Trump family. Plus marketing God - lessons from the success of the Alpha Course

This will be the last newsletter of what has been a tumultuous year. My huge thanks to everyone who has read, commented on, liked and shared posts and been in touch with feedback and suggestions. And of course particular thanks to the generous paid subscribers who have made this worthwhile. I have published a newsletter every week this year other than two week off over the summer and if you have found them at all interesting and helpful, I hope you will consider becoming a paid subscriber too - or perhaps sending someone a gift subscription. As always, I look forward as always to your comments and feedback. And of course, I wish you all a very happy Christmas and look forward to trying to make sense of what is sure to every bit as tumultuous a year in 2026.

• Europe’s Goodish Week: Forged in Crisis

• China Wins 2025: Year of the Dragon

• Trump Family First: Coining it

• Marketing God: Seeking Alpha

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1. Europe’s Goodish Week

A few thoughts on the EU’s decision to provide Ukraine with a €90 billion interest free loan backed by the EU budget rather than the frozen Russian assets:

1. Those hostile to the European Union have been swift to cast the failure to agree on a reparation loan as a great defeat for the European Union and a humiliation for the Commission, while even some pro-Europeans are unhappy with the result. Hugo Dixon, one of the architects of the reparation loan plan, has given the summit a score of 6 out of 10 on the basis that the solution arrived at by the EU Council is far from perfect. I think this is too negative. Ukraine will get the same amount of money from the EU that it was promised which will keep Kyiv funded for the next two years and it will only have to repay the loan if and when Russia pays reparations. So from Ukraine’s perspective, the outcome is exactly the same. It is now in a stronger position to resist American pressure to capitulate to Russian demands.

2. Equally importantly, Russia’s assets will now remain frozen until a qualified majority of EU member states votes to unfreeze them. That could come after Russia agrees to pay reparations to Ukraine, or it could happen as part of a US-brokered peace deal. The important point is that the EU - and thus Ukraine - now has additional leverage in that peace process given that the new Washington-Moscow axis has its own plans to use those funds for joint US-Russia projects. Now they will need European buy-in. The real value of the frozen assets was always in their use as a bargaining chip. That value was limited when Moscow-friendly governments in Hungary, Slovakia and now Czechia could unfreeze them at any time. That risk has now been lifted.

3. In many respects, the loan that has been agreed is a better way of funding Kyiv than the reparation loan. While Brussels was confident its proposal was legally robust, no one could say with 100 percent certainty that the scheme was legally watertight. That is why Belgium was demanding guarantees to cover any liability if Euroclear, the Belgian-based depositary, was ordered by a competent international court to repay the assets - and why member states were unable to satisfy them. The solution that the EU has arrived at - a loan and the indefinite freezing of assets - removes legal, reputational and financial risk, while leaving the option of seizing the assets at some future date very much on the table. Indeed, this was the outcome that some member states, including France and Italy, had favoured from the outset. It was also one of the options identified by Commission president Ursula von der Leyen in a letter to EU leaders. It was opposed by Germany and some other northern European states that rejected any increase in common borrowing.

4. Meanwhile the machinations that enabled the EU to get to this point have established a number of precedents that bode well for the security of Europe long-term. The first was the invoking of emergency powers to enable the Russian assets to be indefinitely frozen by qualified majority vote, thereby circumventing a Hungarian and Slovakian veto. For too long, Europe has been hamstrung by the attempt to seek consensus, particularly in areas of foreign and security policy, rendering the EU impotent as a geopolitical actor. This innovation makes it harder for the Kremlin - or indeed the White House - to hack the European system, enabling the EU better to defend its interests.

5. Another important innovation was the mechanism by which the loan was agreed. The 27 member states unanimously agreed that a subset of 24 member states could use the enhanced cooperation facility in the EU treaty to extend a loan to Ukraine backed by the EU budget, while exempting the three refuseniks - Hungary, Slovakia and Czechia - from bearing the additional interest costs. That sets an important precedent both in terms of the use of enhanced cooperation and the EU budget which again opens up new possibilities to respond to crises. It also helps to further break down the taboo on common EU borrowing, which is vital both to support common European projects, of which securing a sovereign and viable Ukraine is clearly one, as well as to provide a stream of common European safe assets needed to underpin the euro’s global role. Of course, the resort to common borrowing is a defeat for Germany, but that doesn’t make it a bad outcome.

6. That said, there were aspects of last week’s deal-making that are less positive. The fact that the EU allowed expectations to build around the reparations loan plan only to fail to deliver is clearly optically bad. It has allowed the EU’s enemies, including Moscow and on the European far right, to present the bloc as weak and the summit as a failure. The switch to an EU loan also creates some difficulties for Britain and other Ukrainian allies who had planned to seize Russian frozen assets in their own financial systems to hand to Kyiv. The UK government has already said it will not now be seizing the £10 billion of funds it had been expected to loan to Ukraine without saying where any new money will come from. The danger is therefore that Kyiv will end up with less money pledged than it had initially expected.

7. More worrying is that the Belgian prime minister Bart De Weber openly admitted that fear of Russian retribution, including against him personally, was a factor in his decision-making. That highlights Europe’s vulnerability to high pressure tactics against its smaller states. Equally concerning was the last minute opposition from countries including Italy, Bulgaria and Malta. It is possible, likely even, that this reflected pressure from Washington as much as Moscow. The danger is that these fissures will only deepen as both Moscow and Washington pressure European governments to drop their support for Kyiv - or indeed pressure them on pretty much anything (see Europe Under Attack). Ominously, the Italian government said last week that it will mostly shift to humanitarian rather than military aid next year.

8. Perhaps most alarming of all is that there are now EU member states that are now more or less openly in the Russian camp regarding Ukraine. How Hungary, Slovakia and now Czechia, which had their own experiences of Russian occupation, have come to such a position is genuinely puzzling. While the Baltic States, which suffered decades of Russian occupation, regard any forced capitulation of Ukraine as an existential threat to their own and Europe’s security, these three former Warsaw Pact countries appear to have few qualms about abandoning Kyiv to an unjust peace. That is despite the fact that Russia has shown no sign of abandoning its original war aims which include the complete subjugation of Ukraine and the rolling back of Nato to its 1997 borders. Perhaps readers will be able to help explain this puzzle.

9. Meanwhile all this is playing out against a backdrop of growing evidence that America is checking out of its decades-long role as a guarantor of security on the continent. In an interview last week, Marco Rubio insisted that the conflict in Ukraine is “not our war, it’s not our continent”, which will have come as a surprise to Nato allies who came to America’s aid after 9/11, not to mention Ukrainians who were persuaded by America to give up their nuclear weapons in 1994 in return for US security guarantees. Similarly Tulsi Gabbard, the director of National Intelligence, reacted to a leaked report that US agencies had assessed that Putin’s goal was still to annex the whole of Ukraine by accusing “Nato and the EU” of trying to pull the US into a war with Russia, as if the US no longer considers itself a core member of the alliance. The message would appear to be that Nato’s Article 5 is no longer to be taken seriously - a message that Putin last week gloatingly received.

10. That suggests that while Europe continues to be forged in crisis, having taken some significant steps forward last week in rising to the existential challenge facing the continent, many more steps will be needed next year if it is to emerge as a credible geopolitical actor capable of providing for its own security in the new world of great power competition. And it must do so against a backdrop of increasing domestic division, active subversion by both erstwhile allies and anniversaries, and a fragmenting global order. It will require a quality of leadership that has been all too absent in Europe this year.

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2. Year of the Dragon

This year has been dominated by Donald Trump. Ever since he returned to the White House in January promising a new “Golden Age” for America, the world has hung on his every word, waiting to see what convention he would overturn next, what shibboleth he would destroy, what sacred cow he would slaughter. In the City of London, traders monitored his social media account though the night in case he said anything that moved markets. Those stressed by the endless newsflow were said to be suffering from “overwhelm”.

Yet the big winner of 2025 was not Trump but Xi Jinping. If any country appears on the cusp of a new golden age as a result of Trump’s actions over the past year, it is China. Beijing has reaped the benefits of having prepared assiduously for his return to the US presidency, having learned the lessons of his first term.

When Trump launched his global trade war in April, Beijing not only retaliated with tit-for-tat tariff hikes, it cut the supply of rare earths, threatening to cripple Western production lines. Within weeks, Trump had folded, agreeing to a mutual tariff reduction of 145 percentage points, spawning jokes about the TACO trade (Trump Always Chickens Out).

Beijing continued to wield the rare earth weapon all year, securing further concessions from the US president at a summit meeting with Xi in October. How the Trump administration walked into this well-laid trap, which Beijing had been openly preparing for years, is a mystery (see How the West was Lost). Beijing’s control of rare earths guarantees that it will retain “escalation dominance” for years to come, not least at the Trump-Xi summit planned for next year.

Beijing may not even need to play hardball to get what it wants. Earlier this month, Trump gave Nvidia permission to export its H200 chips to China, granting one of Beijing’s core demands without getting anything in return. For years, the US has denied China access to cutting-edge technologies in an attempt to slow its progress in AI. It has been clear since the DeepSeek moment in January that China was catching up fast. Now it may make even faster progress.

Trump’s erratic policymaking has gifted China a second advantage in the AI race. The data centres needed to drive the AI revolution require vast quantities of electricity. Yet Trump’s ban on new renewables projects and scrapping of clean energy incentives risk leaving America short of power. Electricity prices are already rising as demand outstrips supply. Meanwhile, China installed twice as much solar power as the rest of the world put together this year and is on its way to becoming the world’s first electrostate (see Electric Shock and Chinese Power).

In fact, China’s most consequential victory is one that it could not possibly have foreseen. Trump’s decision to allies with tariffs, call into question security cooperation and threaten to interfere in their national politics has destabilised America’s network of alliances that have for decades been a vital source of US power. At the same time, China’s own ally Russia stands to gain from Trump’s attempt to impose a one-sided peace deal on Ukraine, while much of the Global South, not least India, is seeking closer ties with Beijing.

Of course, Beijing may overplay its hand. Its vast trade surplus, which grew to an astonishing $1 trillion last year despite Trump’s trade wars, is a source of growing alarm in many countries. Its dominance of global manufacturing threatens to hollow out the industrial bases of countries such as Germany and Italy with whom it is now directly competing. Unless China helps reduce imbalances, others may put up protectionist barriers of their own (see Chinese Siege).

At the same time, China faces growing domestic challenges. On top of the ongoing fall-out from the collapse of its housing bubble, it is now grappling with the consequences of massive over-investment in industrial capacity and cut-throat competition between companies, which is leading to rising bad debts and high unemployment, particularly among the young (see Peak China).

So another year of the dragon in 2026 is hardly assured. But with so much assistance from Donald Trump, who would bet against it?

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3. Trump Family First

How did you fare financially in 2025? Perhaps you brought into European equities at the start of the year when everyone except Wealth of Nations was extremely bearish, in which case well done! Or perhaps you played the dollar debasement trade by selling dollars and buying gold. In which case also well done. Or maybe you have already called peak stocks, in which case I remind you that nothing in Wealth of Nations should be construed as investment advice.

Either way, it is unlikely you did as well this year as the Trump family. As a remarkable Wall Street Journal investigation shows, the US president’s second term has brought a major expansion of that empire, with forays into cryptocurrency, communications, financial products and, as of last week, a fusion-power deal. Ventures launched since Trump’s re-election generated at least $4 billion in proceeds and paper wealth for the family as of December.

The recent expansion has made the Trumps a major player in the crypto world, as the president pushes to relax regulations on the industry. They have launched a host of new ventures and products, from memecoins to data centres. The WSJ:

• The biggest crypto venture is World Liberty Financial. It has sold about $1.4 billion worth of WLFI tokens, a digital asset it created, The Wall Street Journal has reported. The firm also has launched USD1, a “stablecoin” whose value is pegged to the dollar and which generates significant interest income.

• The Trumps have a major stake in this business. World Liberty’s site says it is 38% owned by an entity called DT Marks Defi LLC…

• ... which is ultimately controlled by Trump and his family members through a complex ownership structure. The president has about 70% ownership of the stake through his trust, disclosures show.

• The Trumps receive 75% of net proceeds when World Liberty sells tokens, plus a cut of stablecoin returns. That revenue share would translate into about $1 billion in proceeds so far for the Trumps. The Trumps’ unsold tokens were worth about $3 billion as of December.

• Meantime, merchandise including sneakers, guitars and Trump-endorsed Bibles added about $11 million in 2024 royalties, disclosures show. A company called CIC Ventures manages publishing and licensing deals for those products, according to the president’s filings, sending proceeds to the Trump trust.

It goes without saying, that it is unprecedented for a president to have such far-reaching business interests while in office, including in areas his administration regulates. But before anyone cries corruption, it is important to note that the White House insists this is all above board:

“Neither the President nor his family have ever engaged, or will ever engage, in conflicts of interest,” White House press secretary Karoline Leavitt said in a statement, adding that Trump is committed to making the U.S. the “crypto capital of the world.”

It should also come as no surprise that while 2025 may have been a Golden Age for the Trumps, it has been less so for anyone foolish enough to buy what the first family is selling. The Trump meme coin that reached a peak of $45.60 on January 19, the day before his inauguration day, now languishes at just $5.60, a fall of 88 percent. Meanwhile the Melania coin launched the same day has fallen from a peak of $9.68 the same day to just 11 cents, a loss of 99 percent.

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4. Marketing God

One of my greatest pleasures in life is my daily morning swim in the Serpentine, the beautiful lake that runs through London’s Hyde Park. One of the things that makes it so enjoyable is the company of the merry band of regulars who, particularly at this time of year, sit around in our small changing room sipping tea as we warm up. And one of the regulars whose company I most enjoy is the Rev Nicky Gumbel, the pioneer of the global phenomenon that is the Alpha Course - an evangelical introduction to the Christian faith.

It is a mark of Nicky’s modesty that although I had heard of him and the Alpha Course, it wasn’t until I heard him being interviewed last year for the Money Maze podcast, whose normal subjects are business and finance chiefs rather than religious leaders, that I understood the scale of his achievement. Today more than 30 million people worldwide have attended what started out as an informal supper club at his Holy Trinity Brompton parish in London, it is active in more than 80 countries and has been adopted by almost every Christian denomination.

Not surprisingly Money Maze has reposted this terrific interview again this Christmas, and I highly recommend it. Not only is Nicky’s own personal journey from the atheist son of a German jewish emigre who practised as a barrister for a decade to becoming one of the world’s most influential Christians fascinating. It is also, as Simon Brewer of Money Maze points out, a remarkable business story. Through his charisma and infectious enthusiasm, Nicky has built an extraordinary global brand that has transformed the lives of millions.

Leaving aside any religious dimension, the interview is an interesting exploration of the nature of leadership and human desires. Nicky’s central insight is that all of us want three things: love, purpose and belonging. At a time when the world that seems to be full of hucksters and charlatans seeking to fulfil those needs by sowing anger and division, the podcast is a reminder that other ways are possible. In these dark times, that is the kind of good news we all need to hear. Enjoy!