Challenges to US democracy

The political impact of Trump’s new indictment and Fitch’s credit downgrade [View in browser]( [Bloomberg]( The explosive news dropped as US President Joe Biden and the First Lady were in full holiday mode: a dinner and a movie (which happened to be “Oppenheimer” the biopic about the father of the atomic bomb). The first disclosure was widely expected — Donald Trump was indicted for trying to overturn the 2020 presidential election he lost to Biden. The other — coming less than an hour later — caught Washington and the markets by surprise. Fitch, one of the three global credit rating agencies, stripped the world’s largest economy of its top-tier AAA rating, citing an “erosion of governance.” That decision drew immediate criticism, with Treasury Secretary Janet Yellen calling it “arbitrary” and “outdated” and Harvard University professor Larry Summers, a high-profile critic of the administration’s economic policy, describing it as “bizarre and inept.” Key Reading: [Trump Indicted on Federal Charges in 2020 Election Probe]( [Here Are the 78 Charges Trump Now Faces, and All the Prison Time]( [What Trump’s Indictments Mean for His 2024 Presidential Run]( [US Credit Downgrade by Fitch Attacked as Baseless by Biden Officials]( [Trump’s Influence Visible in 2024 GOP Field’s Economic Ideas]( The charges against Trump included three criminal conspiracies to change the election outcome, defraud the US and obstruct the peaceful transition of power. It was the latest in a long list of cases that include charges he mishandled classified documents and falsified business records, and a jury ruling that found him liable for sexually abusing a woman decades ago. This latest prosecution will fuel the claim by Trump and his supporters that he’s being targeted for political reasons, a line of attack that resonates with many GOP voters and has boosted his campaign fundraising. Yet while he continues to dominate the field for the 2024 Republican presidential nomination, the cases confront the former president with a real risk of prison time. Still, the timing of the Fitch downgrade is an undeniable gift to Republicans that they will try to use to divert attention from Trump’s ever-growing list of legal troubles. More than two years after a violent mob of Trump supporters stormed the US Capitol to disrupt the certification of the election results, American democracy is still facing an extraordinary challenge. — [Flavia Krause-Jackson]( Police clash with Trump supporters who breached security and entered the Capitol building on Jan. 6, 2021. Photographer: Mostafa Bassim/Anadolu Agency/Getty Images Listen to our [Twitter Space discussion]( at 8am ET (2pm CET) today on the signs in China of a significant economic slowdown after decades of supercharged growth. And if you are enjoying this newsletter, sign up [here](. Global Headlines Russian drones struck the Ukrainian port of Izmail, driving global wheat and corn prices higher as Moscow [continues its campaign](to cripple Kyiv’s ability to export food. The Kremlin has stepped up attacks since it pulled out of a deal that allowed Kyiv to export grain through a safe corridor on the Black Sea, with the Danube River terminals increasingly important to Ukraine’s efforts to circumvent the Russian blockade. - A top Polish official called for [isolating]( neighboring Belarus to punish President Alexander Lukashenko for provocations at its border. China’s powerful spy agency called on social media for citizens to join [its anti-espionage drive](, underscoring heightened concerns over national security in the world’s second-largest economy. “The entire society must mobilize against espionage!” the Ministry of State Security said yesterday in its first post on Tencent’s WeChat. - Taiwan launched an inquiry into several officers suspected of [leaking military secrets]( to China, which claims the democratically ruled island as its territory. Biden’s path to victory in Georgia, a key battleground in his reelection bid, is imperiled by lukewarm support from Black voters — the [bloc that was crucial]( to his narrow triumph in the state in 2020. The tepid sentiment is a vulnerability for the president in a contest that will likely hinge on voter turnout in a handful of swing states, with the risk that uninspired Black voters stay home or look to third-party alternatives. The European Union and Turkey are discussing an update of their customs union as part of the country’s [process of re-engagement]( to regain the trust of European partners and investors. EU foreign ministers signaled their readiness to work for closer ties with Turkey last month, with the bloc noting that Turkish President Recep Tayyip Erdogan had given the green light to Swedish membership of the NATO military alliance. - A [gunman attacked]( Sweden’s honorary consulate in the Turkish city of Izmir yesterday, wounding an employee of the diplomatic outpost. Best of Bloomberg Opinion - [Putin and Wagner Are Still Gunning for Africa: James Stavridis]( - [Mexico and US Are Divided By Guns and Fentanyl: Eduardo Porter]( - [Sunak Becomes the Wrong Kind of Climate Radical: Lara Williams]( Singapore Prime Minister Lee Hsien Loong vowed to protect the integrity of governance, following a [series of scandals]( that have sent shockwaves through the country at a time when he is seeking to step aside after almost two decades in office. He told parliament the government will do what’s required in accordance with the law even if it is politically embarrassing. Explainers You Can Use - [How Myanmar’s Military Has Hung On Despite Sanctions]( - [To Catch a Trader: How Banks Got Raided in Hunt for Tax Cheats]( - [How the Nuclear Missile Threat from North Korea Keeps Growing]( President Bola Tinubu has barely been in power for two months, yet his radical reforms are already [trying the patience]( of Nigerians. While the measures have been celebrated by foreign investors, the World Bank and the International Monetary Fund, surging gasoline prices and rampant inflation following the abolition of fuel subsidies and exchange-rate reform are hammering the poor in Africa’s most populous nation. A street market in Lagos on July 17. Photographer: Benson Ibeabuchi/Bloomberg Tune in to Bloomberg TV’s Balance of Power at 5pm to 6pm ET weekdays with Washington correspondents [Annmarie Hordern]( and [Joe Mathieu](. You can watch and listen on Bloomberg channels and online [here](. News to Note - Iran’s Islamic Revolutionary Guard Corps [started naval drills]( around Persian Gulf islands whose sovereignty is disputed by the United Arab Emirates. - Pheu Thai, a party linked to former Premier Thaksin Shinawatra, said it’s cobbling together a [new coalition to form a government]( in Thailand and will nominate property tycoon Srettha Thavisin to be prime minister. - A cyberattack on Norway’s government ministries uncovered last week exploited a vulnerability linked to mobile-device management and [lasted at least four months](, Norwegian and US cybersecurity agencies say. - Chilean President Gabriel Boric outlined a [new push to raise taxes](, ditching a prior plan to reform the system, as his administration seeks funding for its social agenda. And finally ... Mired in its worst economic plight in years, Egypt is now reckoning with another challenge it hasn’t seen for a decade: [sporadic power cuts]( in the midst of a sweltering summer. Authorities blame unprecedented pressure on the grid and unforeseen shortages of the fuel needed to generate electricity for Egypt’s more than 104 million people. But the cuts are also a stark comedown for a country that not long ago boasted a power surplus it suggested could be sent to Europe. Cairo residents have complained of being trapped in darkened elevators during power outages. Photographer: Khaled Desouki/Getty Images More from Bloomberg - [Washington Edition]( for exclusive coverage on how the worlds of money and politics intersect in the US capital - [Economics Daily]( for what the changing landscape means for policy makers, investors and you - [Supply Lines]( for daily insights into supply chains and globe trade - [Bw Daily]( for unique perspectives, original reporting and insightful analysis from Businessweek’s renowned journalists - [Green Daily]( for the latest in climate news, zero-emission tech and green finance Explore more newsletters at [Bloomberg.com](. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](