China’s mistakes are adding up

Plus: The Fed-induced housing problem. [Bloomberg]( Follow Us [Get the newsletter]( This is Bloomberg Opinion Today, a river of Bloomberg Opinion’s opinions. [Sign up here](. Today’s Agenda - Stop [hitting yourself](, China. - The [Fed ruined housing](bbg://news/stories/RGG3THT1UM10). - [Back-to-school gear]( is not cheap. - Congress can [help stop another Jan. 6](. A River Runs Through It My favorite Sun Tzu quote might be: “If you wait by the river long enough, the bodies of your enemies will float by.” First, it suggests I can win at life by doing three of my favorite things: - making no effort - enjoying a water feature - relaxing Second, it lets the imagination run wild with why the enemies ended up floating in the river dead. Did they have a violent confrontation with some third-party enemy? Did their camp devolve into anarchy over the last s’mores marshmallow? Did they comically hop one-legged into the river trying to put on their battle pants? The mind reels. The US and China are not quite “enemies,” exactly. The state of their relationship is mostly icy with a chance of [Thucydides Trap](. They’re barely controlled bitter rivals like SEC football schools or Real Housewives. But Sun Tzu’s dictum still applies here. And at the moment, the US seems to be the one sitting by the river while China keeps injuring itself with its own weaponry. The latest example is China’s effort to squeeze Taiwan after Nancy Pelosi committed the unforgivable sin of visiting it. After reminding the island of all the cool ships and planes it has, Beijing put out a paper suggesting [Taiwan could be the next Hong Kong](, under the same “one country, two systems” model. Given how much Beijing has squeezed those “two systems” into one miserable, autocratic system lately, Matthew Brooker writes, Taiwan has all the more reason to avoid China’s embrace. Beijing has also lashed out over Pelosi’s visit by cutting off climate talks with the US. All that does, Hal Brands writes, is remind a world already suffering the effects of anthropogenic warming that [China is one of the prime causes]( of said warming. Holding the entire climate hostage because it has a sad over Taiwan will only make China more enemies.   China has been making such mistakes for years. Tim Culpan points out [Beijing blew $100 billion on its semiconductor sector]( over two decades but still badly lags rivals in Taiwan and South Korea. This is largely because it chose to deprive itself of any outside help, to prove the superiority of its system or something. At the rate China is self-sabotaging, the US can almost just sit back and watch the river. We Bought a Housing Problem Speaking of powerful, secretive entities making trouble for themselves: the Fed. As you may have heard, it has something of an inflation problem. Some people accuse it of causing that problem by waiting too long to raise interest rates. But then so did just about every other central bank in the world. If you’re looking for an original sin unique to the Fed, look back on its decision to keep filling its boots with mortgage-backed securities last year, even as housing prices soared to record highs. Bloomberg Opinion’s own Brian Chappatta warned this was a [bad idea]( way back in May 2021. But the Fed didn’t listen. It kept buying MBS for many more months. The result, writes Allison Schrager, was an [overinflated housing market and distortions](bbg://news/stories/RGG3THT1UM10) in the mortgage market that could make houses harder to buy and sell for years to come. The combination of high home prices and rising interest rates is locking many first-time buyers out of the market. It’s also contributing to one of the “stickier” parts of inflation: rent. Beneath the pleasing facade of this week’s better-than-expected CPI report, [such inflation components stayed ugly](, warns John Authers. That means the Fed isn’t nearly done cleaning up its mess.   Telltale Charts On the brighter side of inflation, you can still get [shoes and clothing on the cheap]( at retailers, writes Andrea Felsted. Back-to-school gear, not so much. The climate bill is the result of [clean energy getting cheap enough to be politically palatable](, writes Eduardo Porter. But by itself the bill won’t help the US meet emissions goals; that will take pricier solutions. Further Reading A bill to fix the Electoral Count Act could [prevent another Trump-style coup attempt](. — Bloomberg’s editorial board [Putting out a hit on John Bolton]( might be a sign Iran is not negotiating in good faith. — Bobby Ghosh At a time of sanctions, inflation and war, [crypto is failing its test](. — Lionel Laurent Disney [joins other streamers in hiking prices](, meaning the days of cheap streaming are over. — Martin Peers Unlike single-stock ETFs, [single-bond ETFs are good for investors](, giving them access to something hard to trade. — Jared Dillian The CDC needs to [communicate clearly about monkeypox vaccines](. — Lisa Jarvis Climate change is [making coffee expensive](. — Clara Ferreira Marques ICYMI Merrick Garland asked a judge to [unseal Donald Trump’s warrant](. A drop in cortisol appears to be [a harbinger of long Covid](. [Thinking too hard]( can make you tired, which is why I never do it. Kickers The [World Excel Championship]( was on ESPN 2 (not [the Ocho](). (h/t Scott Kominers) A 17-year-old designed [what could be the EV motor]( of the future. Seems bad: [Trees are growing in the Arctic tundra](. Zoo gorillas invented a [new call to communicate with humans](. Notes: Please send spreadsheets and complaints to Mark Gongloff at mgongloff1@bloomberg.net. [Sign up here]( and follow us on [Instagram](, [TikTok](, [Twitter]( and [Facebook](. Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. You received this message because you are subscribed to Bloomberg's Opinion Today newsletter. 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