An ocean of trouble for the US in the Pacific

Plus: Don't count the dollar out yet and more [Bloomberg]( This is Bloomberg Opinion Today, a bristling armada of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Must-Reads - Can Central Bankers [handle the truth]( - Don’t leave peacemaking to [governments](. - Fresh peril for [Bangladesh](. - How Israel can strike Iran with [impunity](. - Gaol is a [crowded place](. - Talk to [Turkey, please](. - Of thee [I sing, Britain](. The Pacific’s Not All That Pacific The US has been a power in the Pacific Ocean since the end of the 19th century — and it has been the overwhelming hegemon for the last 75 years or so. The last time it faced a serious challenge was with the rise of the militant Japanese empire, which American military power put down with brutal dispatch — and two atomic bombs. Since then, military strategists have referred to the ocean as an American lake; for decades, it was taken for granted that Washington could project its might with ease from a series of bases in Japan, Korea and Guam, the latter described as a permanent US aircraft carrier. Now, that status quo is facing a fresh challenge — from the People’s Republic of China. And it’s not just in the far western Pacific where Taiwan and the Philippines face down the ambitions of President Xi Jinping. The island chains in the mid-Pacific, to the southwest of Hawaii, are increasingly the focus of superpower rivalry. Andreas Kluth [examines]( how it’s the 21st century equivalent of the contest between the British and Russian empires for territory and influence in Central Asia. “Today’s Great Game,” he says, “ is a tug-of-war with the US and its allies — including Australia and New Zealand, both members of the Pacific Islands Forum — on one side, and China and its emerging ‘axis’ of Russia, North Korea and Iran on the other. The game board is the globe, from the conflict zones of Eurasia to the Arctic and Africa. But the Pacific is among the board’s most valuable real estate.” The various island nations in the region, however, will want their fair share of attention — and financial and infrastructure assistance. They face the ravages of climate change in a truly existential way as sea levels rise and weather patterns mutate. [Says]( David Fickling: “Each cyclone season leaves in its wake smashed houses, schools, churches and clinics. Cyclone Pam, a Category 5 storm that swept through Vanuatu and neighboring countries in 2015, left costs equivalent to nearly two-thirds of the tiny country’s gross domestic product.” It’s ironic that the two countries that can best help the island nations are the world’s greatest contributors to carbon emissions.  Meanwhile, All’s Not Quiet on the Monetary Front The US dollar isn’t in danger of ceding its primacy in the global financial system, [says]( Marcus Ashworth. But the recent 5% fall of the greenback versus other major currencies means something’s shifted. Marcus says there are earthshaking predictions going about. Stephen Jen came up with a smiling curve between fear and greed to explain the strength of the buck — uncertainty being the key to the dollar’s power as a safe haven. According to Marcus, Jen now “is predicting that an ‘avalanche’ of up to $1 trillion of US-based assets may be liquidated and repatriated by Chinese companies, leading to a 10% gain in the yuan to the dollar. A stampede of that nature would certainly turn the smile upside down, since it would imply global trade had effectively stopped.” Marcus doubts that is going to happen. What may weaken the dollar, he says, is “a sustained series of Fed cuts [that] should further erode the haven premium [the dollar] so richly enjoyed the past three years.” Hang on to your seats — if not your dollar bills. Telltale Charts “UK Prime Minister Keir Starmer says things will get worse before they get better. Anyone who doubts that needs only to take a look at the state of Britain’s prisons. The country’s penal institutions are bursting at the seams, forcing the government to activate emergency measures such as holding inmates in police cells and pushing forward early-release plans for some. … One former prison governor commented in mid-July that Britain was ‘one major public order event, like protests or football disorder’ away from collapse. On cue, anti-immigrant riots broke out at the end of the month.” — Matthew Brooker in “[Britain’s Prisons Crisis Is a Measure of Starmer's Pain]( “Germany became a magnet for those escaping conflict over the past decade. Now it needs to become a beacon for highly skilled professionals. Increasing public discomfort with immigration and the rise of the far-right could prevent the country rising to the challenge. The nation’s future prosperity depends on attracting millions of economic migrants to fill gaps left by retiring baby boomers. But the domestic mood is grim following a spate of violent crimes allegedly perpetrated by foreigners. … The government has a duty to protect its citizens, but Germany can’t afford to halt all migration. … The country has gone from powerhouse of the euro zone to laggard: The economy is expected to stagnate for a second year.” — Chris Bryant in “[Germany Can’t Afford to Turn Its Back on Migrants]( Further Reading It’s [too darn hot]( to be healthy. — Lara Williams Australia’s green [billionaire](. — David Fickling Don’t talk to the [Monkey King]( about women. — Catherine Thorbecke Will Seoul go [ballistic]( — Hal Brands Elon Musk’s [flawed freedom](. — Adrian Wooldridge How the Fed will help [Singapore]( — Andy Mukherjee Where [enough gas]( may be insufficient. — Javier Blas Walk of the Town: A Familiar Profile at the British Library I wrote a column this week about [my path to UK citizenship]( and the role British music played in it. I didn’t have room to mention how it played a part early in my journalistic career before I even had an inkling I’d be living in London. I was reminded of it by an illustration for sale at a recent exhibition at the British Library: Beyond the Bassline: 500 Years of Black British Music. At the show’s gift shop, I saw this image on the shelf: At the British Library gift shop Photograph by Howard Chua-Eoan/Bloomberg I recognized the profile immediately — and its inspiration. In the mid-80s, I was working for Time in Manhattan as a fact-checker and suggested a cover story on a young British woman of Nigerian descent whose jazzy style and smoky voice were captivating the world — Helen Folasade Adu, better known as Sade. My boss agreed, commissioning this portrait that made it onto the cover of the magazine’s overseas editions — making copies of it a rarity. April 1986 cover of Time International It was a milestone for me: The first time a subject I’d suggested had made it to the cover of Time. As for Sade, her debut album Diamond Life went on to sell over 10 million copies and held the record for the best-selling debut album by a female British vocalist for almost a quarter of a century. Drawdown Thanks for keeping in there. Get ready for more bickering as election season heats up. ”Can we just agree to be disagreeable?” Illustration by Howard Chua-Eoan/Bloomberg Notes: Please send backbiting and feedback to Howard Chua-Eoan at hchuaeoan@bloomberg.net. [Sign up here]( and follow us on [Instagram]( [TikTok]( [Twitter]( and [Facebook](. Follow Us Stay updated by saving our new email address Our email address is changing, which means you’ll be receiving this newsletter from noreply@news.bloomberg.com. 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