Joe Costello on Top Down Democracy; WGA Precious Metals Top 25
October 12, 2026 | In this edition of The Institutional Risk Analyst, we circle back with our friend Joe Costello, veteran political analyst and historian. We updated the WGA Precious Metals Top 25 over the weekend and discuss the results and several changes below for subscribers to our Premium Service. We also include an audio download of last week’s Quarterly Call with subscribers.
We first met Joe Costello through our common friendship with author and journalist William Greider. Joe publishes a must read blog appropriately entitled Life in the 21st Century. He has decades of experience in political campaigns, energy, environment, and communications. Joe is long a student of democracy, its demise, and possible revitalization. We spoke to him last week from his home on the South Side of Chicago about the upcoming midterm elections.
Joe Costello on Top Down Democracy
The IRA: Joe, thanks for taking the time. What have you been focused on as we near the midterm elections?
Costello: It's been interesting with this bond stuff, you know, and interest rates rising, all the alarm. They're dribbling up by one basis point at at time. It's a weird situation. I don't know. It's very weird. You remember Paul Volcker. He was raising rates a percentage point every month.
The IRA: Well, there's no tolerance for that today. There's no tolerance for that at all. With the Fed no longer buying bonds via “quantitative easing” or QE, yields and inflation must rise. In round numbers, the Fed bought $10 trillion in Treasury debt and MBS from 2008 through COVID.
William Greider
Costello: I started paying attention to markets and the economy politically because my first campaign in 1980, inflation and oil were the big issues. That's when I got in and I followed both of them for 45 years. But this is the first time I've seen a situation where there's a big chunk of people saying there's a bubble but interest rates are just crawling up. Everybody's freaking out because its not the Fed doing this. I don't know what it means yet.
The IRA: Markets are in a panic for reasons that we don't want to talk about. Nobody in Washington talks about the budget deficit. The FOMC met last month and nobody in the room, governors or staff, attributed the increase in bond yields to the fiscal situation. We just don't talk about it. We’ve had a series of Fed chairs who refuse to go up to Capitol Hill and pound the table about deficits because the Congress doesn't want to hear it.
Costello: I remember after 2016 election, when all the Democrats were freaking out about Trump, and rightfully so, but they created him. I said look, you guys can work with this guy. Trump doesn't give a shit about deficits. He'll spend, spend, spend. So you can get anything you ever wanted if you want to work with him. But of course, the Democrats didn't want to do that. The whole structure of politics has changed.
The IRA: How so? Neither party is particularly democratic, but Trump certainly took the GOP by storm in 2016.
Costello: Right. Right. It's all very crazy. For over 30 years, I’ve watched the American political process just fall apart. It’s amazing how centralized it has become. There's nothing from the bottom up anymore. It's all coming from the top-down, especially anything with Washington. The Democratic Party organizations – DNC, DCCC, DSCC – 30 years ago were not big organizations, but now they control everything and they control all the money. They control politics through the money. The body politic is like dead inert matter, which isn't good.
The IRA: Politics has gotten to be like a bad cartoon. We grew up watching the Republican side of the equation with Richard Nixon, Gerald Ford and Ronald Reagan. Tell us what you think is happening and what's going to happen in November.
Costello: If it was 30 years ago, November would just be a washout for the GOP. The Republicans would be killed. But I was just looking at the polls yesterday, both the parties are amazingly unpopular. Each one with a certain segment of the other’s base, especially unpopular, but then also, just generally very unpopular. So I don't know how that's going to play out. Since 1974, there's been three 50-seat House swings.
The IRA: The last time a political party lost 50 or more seats in the U.S. House of Representatives was in 2010, when the Democratic Party lost 64 seats during President Barack Obama's first midterm election. Is this what we’ll see in November?
Costello: I would say this could be very easily a 50 seat swing for the Democrats. The correlation between the House and the Senate is different, but it should be at least like six or seven seats for the Democrats in the Senate. I can't really say that for sure because, again, the Democrats are very unpopular. So, I don't know what, how that ultimately works out.
The IRA: President Trump is on the campaign trail, trying to get out the base. Is that a positive or negative for Republicans?
Costello: I think a lot of Republicans are going to sit at home. One thing I know for sure about American politics is that we should focus on the things that unite us. One of the things that unite us is Americans hate high gas prices. I mean, they hate it more than anything else. Is anything going to bring the price of gas down between now and election?
The IRA: No, the Trump/Netanyahu war with Iran will probably means higher energy prices for years to come, especially gasoline, diesel and other refined products and also food. Prices for fertilizer, for example, are up dramatically and will probably cause crop yields to fall in 2027. We’ve laid this scenario out in gruesome detail with our friend John Dizard. How does the issue of affordability impact the elections? Does the Republican advantage in cash matter?
Costello: Money has limited utility. In 2020, the Democrats spent $60 million trying to unseat Senator Susan Collins in Maine. They ultimately left $10 million on the table because they couldn't buy any more commission-based advertising. They left $10 million on the table and they lost. The Democrats got 350,000 votes with $60 million. Last cycle, in 2024, with Senator Jon Tester in Montana, the Democrats spent $100 million on that election, got 250,000 votes and lost to Republican Tim Sheehy.
The IRA: Those are two striking examples. Does money matter or is the decisive factor something else?
Costello: That's the system. In the 1980s, the fundraising people never had a lot of political clout. Just go raise the money, don't tell us your political stuff. But now everything's run by who raises the money. Look what happened in 2024, there was a donor-coup against Biden. I always told people that you just got to raise enough money to do what you need to do. You don't need to raise any more than that. More money doesn't matter. Attack ads have limited impact. People get overloaded with this stuff. So it's very hard to kind of crush someone just with a bunch of 30 second ads. It's kind of like air-bombing Iran. But if you don't have enough money to do what you need to do, then the money advantage is really going to kill you. It's always nice to have more money than the other guy, but you don't need it to win.
The IRA: Who do you think the Democratic Party comes up with in terms of a Presidential candidate? Do we see Rahm Emanuel? He’s one of the few centrist Democrats who might have a chance at the Presidency.
Costello: I don't think Rahm will run if JB Pritzker runs and I think Pritzker is going to run. That cuts into a lot of Rahm’s money it's a lot of his Illinois based money. Rahm and Pritzker are both products of money politics.
The IRA: Is Pritzker even viable? His chief accomplishment seems to be raising taxes and chasing the Chicago Bears to Indiana.
Costello: Pritzker thinks he's viable, he's going to have a lot of money. But I think the door is open for someone from the outside to run against the Democratic establishment. We've talked about this before. The Republicans turned against their establishment in the 1990s. It was kind of an outgrowth of Reagan. And Pat Buchanan did what he could in 1996. He’s the one who first became aware how much the Republican base hated the party establishment. He correctly noted the Republican base had not long before that all been Democrats!
The IRA: Reagan was a Democrat who switched to the GOP over taxes.
Costello: Trump ran against the Republican establishment in 2016, following the path of Ross Perot and Buchanan. He ran against the whole Republican establishment. If you go back to 2016, I had been working in Africa, Nigeria and Tanzania, for a year and half before and got back and started watching those primaries. I would watch Fox News especially, because every time Trump won, their faces would drop. Everyone forgets that Fox was not for Trump in the 2016 primaries. And he kept winning. Trump was the guy from the outside who took over the Republican Party.
The IRA: So is the opportunity on the Democratic side similar? We have a hard time seeing JB Pritzker as an insurgent.
Costello: Right, no. I just brought up Pritzker because I can’t see Rahm running if Pritzker gets in, though none outshine Rahm’s narcissism. I think the opportunity is there in spades for someone in the Democrat Party, someone who nobody knows, who comes from the outside and just goes against them all, they could win it.
The IRA: No, of course. The money comes from the same source. But Rahm is the only Democrat we can see with the potential to be a centrist and win the Presidency. Kamala Harris is a disaster. And then there is Bernie Sanders?
Costello: Bernie poses as being from the outside, like the quote unquote "socialists," yet all have a hard time really going against the Democratic establishment. Once they win, they want to pal back with DC, that’s why Bernie Sanders is just a ridiculous figure. He's one of the most ridiculous figures in American politics, which is saying something these days.
The IRA: But he's running against AI, you know? He wants to have a moratorium on AI to save our children and our jobs from AI, right?
Costello: Bernie and Trump actually have a lot in common. Both offering people money for votes. Bernie's an old New Deal liberal, that's where I came from, not quite as old. He has some probably red diaper thing about not letting go of the word socialism. Bernie’s done a real lot of harm with it, especially in constraining the thinking of too many young people, when its imperative they be politically creative. Then you get Bernie talking about AI. It's like, give me a break. Bernie knows nothing about technology. He shouldn't be saying anything about it. God knows who Bernie has telling him what to say. What he said about AI was just beyond meaningless.
The IRA: A lot of political candidates in both parties are running against AI.
Costello: Correct. One of my sisters has a house in southern Michigan, just above South Bend. The county went 70% for Trump in 2024. All of a sudden this rumor started going around, and it wasn't a rumor, that a data center was supposed to come. I helped my sister organize her community. I advised don’t be adversarial, go to the township and say, “You’re our elected representatives, we don’t want this.” Get a 100 people at this next township meeting and they did. They got 150 at the second one, and 250 at the third meeting, where a one year moratorium was unanimously passed in a process that took not much more than three and half weeks.
The IRA: That is impressive.
Costello: Truly, for an old hack like me it was incredible experience, inspiring really. Just like that the data center was killed by ordinary citizens of all stripes, in a county that's majority Republican far and away. If we have any hope of restoring and reforming democracy in America this is how it’s going to happen, from the bottom-up, really the only way its ever happened.
The IRA: So maybe affordability and data centers are the hot issues in November. Who do you think gets the Democratic nomination in 2028?
Costello: Yes, AI is just exploding politically and its only going to get bigger, really an issue like I’ve never seen. Then you have inflation, oil, and Iran, so we’re back to 1980, how did the incumbent party fair then? Honestly, I don’t know about 2028 president, either party. I think it’s as wide open as it’s ever been. I think the money people will be split, so it opens the door for someone from outside. I can tell you what the message is, “Come home America.” Power needs to devolve from DC, and out Reagan, Reagan. Power needs to go not back to the states, but to the local. People need to reclaim being citizens.
The IRA: Thanks for your time Joe.
The WGA Precious Metals Top 25
We updated our previous metals surveillance group over the weekend. The latest results are on The IRA website on the Top Rankings page. An audio file download for last week’s Quarterly Subscriber call is below.
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