: I don't think that that is quite the case. When the dwarves fought at Moria Dain saw the Balrog so it was known that there was one there. The Valar didn't interfere with Sauron why should they interfere with one Balrog? The elves hated Moria and would go nowhere near it if they could help it so it didn't have to worry about that. It seems to me that if an orc can set up his own kingdom then it should be easy for a Maia to do so. IT might have feared Sauron, true but I think that it could have established a kingdom in secret because Sauron doesn't seem to care about Moria.

This is all granted. And so, that leaves the question: Why didn't the Balrog set up a kingdom?

There are only two possible answers: It was unable to set up a kingdom. It was unwilling to set up a kingdom.

If it was unable it may have been because it was so bent on fighting that it couldn't wrap its mind around the idea of a heirarchy ehough to create one of its own.

It it was unwilling, then it shows that the Balrog had no desire to build a kingdom.

The choice at this point would be yours on which you believe. But the crux of the position is that no Balrog Kingdom was created.

-RR