It Is Easy to Overreact to the Chinese Coronavirus

Recently, a new coronavirus has been causing many illnesses and deaths. The virus first became active in Wuhan, China, but it has already spread to the rest of China. Scattered cases have been identified around the rest of the world as well.

There are two important questions that are already being encountered:

  • How much of an attempt should be made to limit the spread of the new virus? For example, should businesses close to prevent the spread of the virus?
  • Should this disease be publicized as being far worse than flu viruses that circulate each year and cause many deaths among the elderly and people in poor health? The median age of those dying from the new coronavirus seems to be about 75.

Unfortunately, there aren’t easy answers. We can easily see the likely outcome of under reaction. More people might die of the disease. More people might find themselves out of work for a couple of weeks or more with the illness. We tend to be especially concerned about ourselves and our own relatives.

The thing that is harder to see is that reacting too vigorously can have a hugely detrimental impact on the world economy. The world economy depends on international trade and tourism. China plays a key role in the world economy. Quarantines of whole regions that last for weeks and months can have a very detrimental impact on the wages of people in the area and profits of local companies. Problems with debt can be expected to spike. The greater the reaction to the coronavirus, the more likely the world economy will be pushed toward recession and job loss.

The following are a few of my thoughts regarding possible overreaction:

[1] The Chinese coronavirus seems to be extremely contagious, even before a person who has been exposed shows any symptoms. The only way we can be certain to contain the virus seems to be through quarantines lasting up to 14 days.

China’s National Health Minister, Ma Xiaowei, has provided information that seems quite alarming. With the new virus, a person may become communicable shortly after he/she has been infected, but symptoms may not appear for up to 14 days. This allows the infected person to infect many others without realizing that he/she is a carrier for the disease.

Today, the United States and many other countries screen for the virus by checking passengers arriving on planes from affected areas for fevers. Given the information provided by China’s National Health Minister, this approach seems unlikely to be sufficient to catch all of the people who may eventually come down with the disease. If a country really wants to identify all the potential carriers of the disease, it appears that a 14-day quarantine for all travelers from infected areas may be needed.

Such a quarantine becomes administratively difficult to handle for the huge number of people who are likely to travel from China. Such a quarantine would make it impossible for pilots and other airline workers to make a living, for example. They would be spending too much of their time in quarantine to do the work needed to support themselves and their families.

A related concern is that person-to-person transmission is very easy with the Chinese coronavirus. We don’t know for certain how many people each infected individual infects, but one estimate is that each infected person transmits the disease to an average of 2.5 other people. With this transmission rate, the number of people having the disease can be expected to grow exponentially, perhaps for several months.

Based on these concerns, it seems to me that funds spent on trying to contain the coronavirus are likely to be largely wasted. The new Chinese virus will spread widely, regardless of attempts to contain it. At most, quarantines will slightly slow the transmission of the disease. At the same time, quarantines will be quite disruptive of commerce. They will tend to reduce both total wages and total output of goods and services of the area.

[2] Deaths from pathogens are part of the natural cycle. They help prune back the population of the old and weak.

We know that in ecosystems, one of the functions of naturally occurring fires is to clear out “deadwood,” to allow healthy new growth to occur. In fact, some types of seeds seem to require smoke for germination. When inadequate natural burning takes place, bushfires as seen in Australia and forest fires as seen in California become an increasing problem.

Deaths from pathogens seem to play a similar role in human economies. This is especially the case with pathogens that especially target the weak and old. Most flu viruses have this characteristic. Early reports of deaths from the coronavirus suggest that this same pattern of targeting the old and weak is occurring with this virus as well. As noted above, the median age of those dying from the new coronavirus seems to be about 75 years.

Since the 1940s, modern medicine has been able to develop antibiotics and vaccines to counteract the impact of many pathogens. This, of course, makes citizens happy, but it has the disadvantage of changing the population in a way that leaves the economy with a much higher percentage of elderly people and others in poor health. This higher level of elderly and medically needy people makes it easy for viruses and other pathogens to make their rounds, just as leaving deadwood on the forest floor makes it easier for fires to spread.

With this rising population of people who cannot support themselves, tax rates for the remaining citizens tend to become very high. Young workers may become discouraged because they do not have enough income remaining after paying taxes to raise their own families. In effect, they cannot support both their young families and the many old people.

Viewed from this unusual perspective, the operation of the Chinese coronavirus might even be considered a benefit to society as a whole. The world has overcome the impact of measles, typhoid, polio, and many other diseases. In some sense, it “needs” a new disease added to its portfolio, to replace the ones that have been mostly taken care of by modern medicine. In this way, pensions and other payments targeting the old and weak don’t become too great a burden on the young.

[3] If the Chinese coronavirus were simply allowed to run its course, without publicity that it was in any way unusual, somewhat less than 1% of the world’s population might be expected to die. 

To see what would happen if the Chinese coronavirus were to run its course, we might look at what happened with the Spanish Flu, back in 1918. At that time, doctors did not have a way of treating the virus and authorities downplayed concern for the disease. The US Center for Disease Control reports that 500 million people, or one-third of the world’s population, became infected. At least 50 million people (about 10% of those infected) died.

We don’t yet know with accuracy how many of those infected will die from the current virus. A recent estimate is that about 2.3% of those who are infected will die of the disease (based on 107 dying out of 4,600 infected). If we assume that the percentage of the population that will ultimately catch the new virus is 30%, then the share of the world’s population that would be expected to die would be about [(1/3) x 2.3% = 0.76%].

The UN estimates that the world’s population can be expected to grow by about 1.05% in 2020. If this is the case, the effect of the Chinese virus would be to sharply dampen the population increase for the year. Instead of population rising by 1.05%, it would rise by only 0.29% (= 1.05% – 0.76%), assuming all of the deaths associated with the Chinese coronavirus take place within a year. While this would be a change, it would be a fairly small, temporary change.

All of these deaths would be tragic for the families involved but, in a way, they would be less of a problem than the deaths that took place back in 1918. At that time, mortality was high for healthy 20- to 40-year olds, making the flu particularly disruptive for families. The total percentage of the population that died was also much higher, about 3% instead of 0.76%.

[4] A major danger of the virus seems to be one of overreaction.

Today’s world economy is fragile. China, like other countries, has a large amount of debt. Debt defaults related to poor profits of companies closing their operations for a time and workers losing income could easily skyrocket.

Closing down transportation from China would risk pushing the world economy into a very bad recession. In fact, simply having a very large number of people out sick from work would be expected to have an adverse impact on the economy. Spending a large amount of money on hospitalizations and face masks cannot compensate for the loss of productivity of the rest of the economy. Thus, the tendency would be toward recession in China, even if no action toward cutting off travel were taken.

China is a huge supplier of goods to the rest of the world. In fact, in 2016, it used more energy in producing industrial output than the United States, India, Russia and Japan combined.

Figure 1. Chart by the International Energy Agency showing total fuel consumed (TFC) by industry, for the top five fuel consuming nations of the world.

China’s economy has been growing very rapidly since 1990. Figure 2 shows this one way, in GDP comparisons using inflation-adjusted US dollars.

Figure 2. GDP of China and the United States, computed as percentages of World GDP. All amounts in 2010 US dollars, as provided by the World Bank.

Figure 3 is similar to Figure 2, except the growth comparison is made in “2011 Purchasing Power Parity International Dollars.” This adjustment is made because typically the currencies of less developed nations float far below the dollar, in terms of what the local currency will buy. The inflation-adjusted PPP comparison compares output on a basis that is expected to be more consistent with what the local currency will really purchase.

Figure 3. Ratios of the GDP of China and the United States to the World GDP. All amounts in 2011 Purchasing Power Parity International Dollars, as provided by the World Bank.

On this PPP basis, China’s GDP surpassed the US’s GDP in 2014. Figure 3 also shows that the United States has slipped from about 20% of the world’s GDP to about 15% on this basis.

We cannot simply cut off trade with China, regardless of how bad the situation is. China is too big and too important now. The rest of the world desperately needs goods and services produced in China, in spite of what is going wrong from an illness perspective. China plays too key a role in supply chains of many kinds for the country to be left out.

Even cutting off tourism becomes a problem. The share of China’s revenue from tourism amounted to 11% in 2018. While not all of this would drop off, even a dip would lead to lower employment in this part of its economy. Jet fuel use would drop as well.

[5] A particular problem today is low prices for many commodities, including oil and other fossil fuels. These prices are likely to fall further, if China’s economy falters further. 

We used to hear that the world would “run out of” oil and that oil prices would rise very high. In fact, if the people who were concerned about the issue had studied history, they would have figured out that a far more likely outcome would be “collapse.” In such a situation, prices of many commodities might fall too low. Revelation 18:11-13 provides a list of a number of commodities, including humans sold as slaves, for which prices dropped very low at the time of the collapse of ancient Babylon.

The problem is a different squeeze than a high-price squeeze. It is more of a growing wage disparity problem, with fewer and fewer of the world’s workers being able to afford the goods and services made by the world economy. This problem feeds back to commodity prices that fall too low for producers of many types. The problem is an affordability issue, rather than one of running out. I have written about this issue many times.

Prices of fossil fuels have been low for a very long time–essentially since late 2014. OPEC has cut back its oil production because of low oil prices. Several US natural gas producers have taken big write offs on natural gas investments. China’s coal production has remained below its 2013 level, because of low prices.

Figure 1. China energy production by fuel, based on 2019 BP Statistical Review of World Energy data. “Other Ren” stands for “Renewables other than hydroelectric.” This category includes wind, solar, and other miscellaneous types, such as sawdust burned for electricity.

If China finds it necessary to cut back on production of goods and services for any reason (excessive sickness within China, visitors aren’t traveling to China, tariffs, customers around the world aren’t buying cars), this reduction in output would be likely to further lower the prices of commodities. More producers would go bankrupt. Countries exporting products as diverse as oil, iron ore, copper and lithium might have economic difficulties.

Lower fossil fuel prices may lead to a cutback in their output, but it is doubtful that this cutback would be offset by an increase in the production of renewables. Falling fossil fuel prices would make the price comparison of renewables to fossil fuels look even worse than it does today. China has cut back on its subsidies for solar panels, and this has led to decreasing Chinese solar installations in both 2018 and 2019.

[6] The best approach might just be to let the Chinese coronavirus run its course. Authorities might also discourage stories about how awful the illness is.

Today, we seem to think that we can fix all problems. Unfortunately, this medical problem doesn’t seem to be fixable in the near-term. We should probably do as governments through the ages have done, which is not very much. We should not publicize the disease as being a whole lot worse than flu viruses in general, for example.

We should certainly look for inexpensive treatments for the disease. For example, there seems to be an effort to examine the possibility of using existing antiviral drugs as a treatment. It seems like an effort could be made to look into ways of treating the disease at home, perhaps using supplemental oxygen for a period. In time, perhaps a vaccine can be developed.

Individuals around the world should be encouraged to get themselves in as good health as possible, so that their own immune systems can fight off pathogens of all types, not just this particular virus. Common sense should be used in washing hands and in avoiding being with sick people. I doubt that it makes sense to encourage the use of masks, goggles and other protective devices.

We, as individuals, cannot live forever on this earth. We also cannot spend an unlimited percentage of GDP on health care: It becomes too high-cost for most citizens. At some point, we need to call a halt to the expectation that we can fix all problems. We live in a world with limited resources. We need to start lowering our expectations, if we don’t want to make our problems worse.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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1,772 Responses to It Is Easy to Overreact to the Chinese Coronavirus

  1. Herbie R Ficklestein says:

    China Stock Recovery Nearing $1 Trillion Is Drawing Skeptics
    (Bloomberg) — Concern is mounting over the speed of a nearly $900 billion rebound in Chinese equities that’s been driven by bets of sustained government support.

    The CSI 300 index of stocks in Shanghai and Shenzhen has climbed 10% since a record sell-off earlier this month, wiping out the slide following the end of the extended Lunar New Year break due to the coronavirus outbreak. The ChiNext gauge of smaller companies, typically the most speculative part of the market, has popped 21% from its bottom to be the best performer in Asia Pacific this year.

    But the central bank’s move to withdraw another 220 billion yuan ($31.5 billion) from the banking system on Tuesday citing ample liquidity, after pulling out a net 700 billion yuan the day before, may show the risks of chasing further gains. The CSI 300 index closed down 0.5% Tuesday while the ChiNext climbed 1.2%, again notching its highest finish since December 2016.
    “Shares are acting like we’re in times of exuberance, not the middle of a huge public health crisis,” said Shi Junbo, a fund manager at Hangzhou Xiyan Asset Management Co. in Beijing. “But as a rule, when shares rise solely on liquidity hopes, they will without exception tumble. We’re not getting away from the impact of the virus on markets once and for all.”
    The ChiNext recouped post-holiday losses just two days after the A share market reopened to the virus scare on Feb. 3 with a record $720 billion plunge, followed by the CSI 300’s jump on Monday to surpass its close before the break. While the ChiNext is up 21% this year, the CSI 300 is down 1%. Many overseas markets are up so far in 2020 despite the spreading of the virus globally, with the S&P 500 Index rising 4.6%.
    However keen Beijing is to mitigate economic pain, officials are also facing constraints on aggressive monetary easing as they struggle with a mountain of debt built up in the aftermath of the 2008 global financial crisis. The government’s 4 trillion yuan stimulus back then helped give rise to a ballooned shadow banking industry that threatened to destabilize

    You mean to tell me the Stock market IS Government Socialism….no way…free Enterprise and all that let the markets decide…can’t be rigged !

    Whatever it takes

  2. Herbie R Ficklestein says:

    But all one needs to do is BUY more STOCKS with TAX BREAK INCENTIVE!
    The White House is considering ways to incentivize U.S. households to invest in the stock market.
    Under the proposal, a portion of income would become tax-free for investment purposes.
    The Trump administration is considering several proposals as part of a forthcoming economic stimulus package.

  3. Sven Røgeberg says:

    «Roughly a quarter of the world’s oil consumption is indirectly subsidized through price controls. Governments across the world price oil and gas below the international market price. This pushes consumption above the market equilibrium. These governments make up the difference via the revenues from general taxation. These are subsidies to consumption. They reduce the private cost of gasoline thus widening the gap with the social cost. These governments basically subsidize pollution.»
    Comment, Gail?

    • Oil exporting countries normally treat their citizens differently than other oil customers around the world.

      Most oil is sold at the world oil price. Oil sold at this world oil price is taxed very heavily. Often, the tax is equal to 90% of whatever is left after paying the oil company’s expenses.

      The country’s own citizens are typically sold oil at a much lower price, closer to the country’s cost of extraction.

      Countries of Europe have been unhappy about this situation. Those concerned about global warming are especially concerned about this situation. How dare these countries not charge their own citizens the world oil price? They label the difference between the world price and the local price a subsidy. I would call it a situation of taxing different customers differently. In recent years, with world oil prices low, countries have mostly been raising their local prices to some extent, so the difference is smaller than when oil prices were high.

      The only subsidies in rich countries are plans some countries to help some low-income residential customers pay their heating bills in winter. These are also considered subsidies. These subsidies are tiny in comparison to the breaks given by oil exporters to their local populations. Note that these subsidies go to customers, not oil companies.

      I personally consider this nonsense. Nearly all of the subsidies given are with respect to wind and solar. The biggest subsidy given is that of “going first.” Going first has a huge cost involved, but no one has figured out what the difference in price would be, if wind and solar needed to use batteries to level the playing field with other providers.

  4. Hubbs says:

    Some millenials still stuck in the mindset of easy, early riches, a trope propelled by the financialization of the economy. You too can build machines, grow food, develop new technologies by day trading in this fiat currency cloud./s

    I am torn between whether to feel sorry for the millenials or want to give them a swift kick in the ass. The Z’rs, of which my 16-year-old daughter is one, are plunging headlong into a real rough set of circumstances beyond their control individually or collectively no matter how hard they work, try to save, or sacrifice. They are upon to be screwed by the system that is currently in place.

    The bottom line, it is easy for me, now on SS, and who was able to amass some savings (how secure is yet to be determined) during a booming economy, relatively little debt, plentiful energy and raw materials etc. to have hope and optimism about the future when I was young. That was a powerful incentive for me to go out and bust my ass, sacrifice and delay gratification.

    Today, there is a malaise across the board where the young people, their lousy work ethic notwithstanding, perceive that they will get screwed no matter what. Difficult for them to get motivated via positive reinforcement when that is the case.

  5. Herbie R Ficklestein says:

    Too much….what the Mainstream media puts out these days is so funny…
    Retirement!? Early? The only way these kids will retire early is by pushing up daisies or be lucky to by one of the new Royalty in the next Medieval Age of feudalism….
    WASHINGTON — “They say millennials are lazy,” billboards plastered across 15 major cities declared last summer. “Retire early and prove them right.”
    That sentiment, reflected in ads for the investment manager Prudential, is the stuff of a 30-year-old’s fantasy — and the Federal Reserve’s nightmare.
    A young generation of aggressive savers could leave central bankers with less room to cut interest rates, which they have long done to boost growth in times of economic trouble.
    To leave the workforce early, millennials would need to build up massive retirement funds and consume less in the process. That hit to demand could slow growth and force rates to drop ever lower to entice spending. And if today’s workers actually managed to retire young, it would exacerbate the situation by shrinking the labor force, further weighing on the economy’s potential.
    Millennials, who are roughly between the ages of 24 and 39 and have not lived through pronounced price spikes, already have the lowest inflation expectations of any adult generation. Their belief that costs will not increase could eventually slow actual price gains by making it hard for businesses to charge more. The Fed’s main interest rate includes inflation, so that would leave it with even less room to cut.
    It may not come to this. Millennials could become more worried about inflation as they age, giving companies more room to lift prices. Their difficult post-recession entry into the labor market means many are laden with student debt, so it’s unclear if they will be able to retire young. But many indicate that they want to leave the workforce early — an ambition that economists say could spell macroeconomic trouble if realized.
    “It would lower interest rates — that’s certainly true,” said Joseph Gagnon, an economist at the Peterson Institute for International Economics. “It would be a double whammy: It directly raises savings” and “it would further reduce the need to invest in factories and offices for these people.

    PS I STILL play Megamillions and Powerball lottery….I have a better chance then they have!

  6. Herbie R Ficklestein says:

    America’s ‘recycled’ plastic waste is clogging landfills, survey finds
    Erin McCormick in Berkeley, California
    The GuardianFebruary 18, 2020, 7:00 AM EST

    Many plastic items that Americans put in their recycling bins aren’t being recycled at all, according to a major new survey of hundreds of recycling facilities across the US.
    The research, conducted by Greenpeace and released on Tuesday, found that out of 367 recycling recovery facilities surveyed none could process coffee pods, fewer than 15% accepted plastic clamshells – such as those used to package fruit, salad or baked goods – and only a tiny percentage took plates, cups, bags and trays.
    The findings confirm the results of a Guardian investigation last year, which revealed that numerous types of plastics are being sent straight to landfill in the wake of China’s crackdown on US recycling exports. Greenpeace’s findings also suggest that numerous products labeled as recyclable in fact have virtually no market as new products
    While the report found there is still a strong recycling market for bottles and jugs labeled #1 or #2, such as plastic water bottles and milk containers, the pipeline has bottomed out for many plastics labelled #3-7, which fall into a category dubbed “mixed plastics”. While often marketed by brands as recyclable, these plastics are hard for recyclers to repurpose and are often landfilled, causing confusion for consumers.
    “This report shows that one of the best things to do to save recycling is to stop claiming that everything is recyclable,” said John Hocevar, director of Greenpeace’s Oceans Campaign. “We have to talk to companies about not producing so much throw-away plastic that ends up in the ocean or in incinerators.”
    In a news release accompanying the report, Greenpeace threatened to file federal complaints against manufacturers who mislead the public about the recyclability of their packaging.
    Jan Dell, the founder of The Last Beach Cleanup and the leader of Greenpeace’s survey team, said the point of the report “was not to kill recycling, it was to show which products are recyclable and which are not.”
    She emphasized that bottles and jugs are indeed worth recycling, but said “our findings show that many items commonly found in beach cleanups – cups, bags, trays, plates and cutlery – are not recyclable. In America’s municipal recycling system, they are contaminants

    I go to a local park in town every day with Mother 97 years old and her doggie Cricket for a walk and get outdoors. So on ground level see the massive volumes of plastic waste that clogs the pockets of natural world for wildlife. It’s EVERYWHERE and grows daily. Our packaging is destroying ecosystems. We people are indeed a plague on other living systems.
    Cheer on the China virus…..hope it gets the job done and culls the out of control two legged ones

    Can only sit and watch the show😜.

    • Recycling works economically for fewer and fewer products, as the price of oil falls. People have the expectation that recycling is helpful, but in a lot of instances, it is not. It would be better if we could burn some of these things for fuel. Of course, they would be polluting and would compete with other fuels.

      • i was under the impression that a great deal of ‘recycling’ was govt subsidised, because separaiting all the mixed material was far more expensive than using basic clean raw materials

        stuff that is subsidised is therefore dependent on taxation to reach the stage of a re usable end product

        if this is so, then those end products must surely cost more to produce than the materials in them are worth?

        • I expect this is the case.

          At one point, subsidies were effectively paying part of the transit costs of sending recyclables to China. Thus, they were paying for oil.

          Cutting back on recycling has contributed to China’s economic problems. At one point, growth in recycling was one source of China’s economic growth.

  7. Pingback: It Is Easy to Overreact to the Chinese Coronavirus — Our Finite World –

  8. Yoshua says:

    The Russian Ruble

    A lot of currencies look like this right now. They have been compressed into extreme low volatility.

    It looks as this is coming to an end very soon this year. Volatility will then explode like it did when the oil price crashed in 2014-2016?

    • Their gov budget is less dependent on energy exports in comparison to rest of the OPEC, that showed again recently during urgent talks on new quota. Also Russians repaid most of their foreign debt. In summary, managed to be more resilient to external shocks. However, since the economics at this point is no longer governed by any sort of logic the currency volatility could spike temporarily for whatever reason again (as you are probably worried), but to what real effect? If they are gradually producing more domestic food and consumer goods, not mentioning the energy etc.. You see, ankle kicking, foreign meddling, proxy wars, sanctions, and other gangster tools is certainly “a nice thing” to have, but some players are able at some threshold to stop/pause the game, take the ball and go home, not engaging with fools anymore.. lolz..

      • Yoshua says:

        Russia’s external debt is at $480B. I think it is mostly held by Russia’s state owned oil companies.

        If the oil price crash again, then the Ruble probably tanks.

        • As you know it’s all about ratios, so there is sub 15% gov/public debt. That gross external debt of ~ $.5T (not gov but private corp or mixed joint ventures mostly) seen vs. their NWF/SWF chest of equal or higher value, moreover there is (~$100T) estimate of natural resource endowment, plus given most of the standing energy contracts are long term not spot price.. so it’s comparatively very low debt country still.

          If you recall from Surplus most of the IC hub countries are running ~600-1500% debts in various metrics, but they enjoy preferential position inside the current global system so they can pretend it doesn’t exist or matter for a (long) while.

          Yes, it’s possible their currency tanks at some junction, again the impact would be relatively insignificant vs countries which had to deal at that point with food and energy shortages and or other pressing emergencies.

          • Yoshua says:

            Eurodollar Futures

            There’s is pressure building globally.

            Last year the charts said that something would break. They didn’t say what. Then the Repo blew up and the Fed had to intervene.

            The charts are now saying that something is about to break again.

            The chart shows that the interest rate in the offshore dollar market is heading towards zero.

            I don’t think that the banks will lend their offshore dollars at zero interest rates. I think that the offshore dollar market will freeze.

            The Fed will have to intervene on a global scale. Will they do it? Can they?

            The charts are not exactly based on science. But they are better than studying chicken bones.

            Let’s see what happens.

          • Yoshua says:





            Rosneft switched to euros as default payment last year.

            Does this mean that Europe can’t by oil from Rosneft?

            • Thanks, that’s interesting vector, both Iraq and Libya toyed with the idea of switching to Euros (or at least increasingly re-balancing towards), however that was at different time epoch (specific faction of) Europeans seemed to posses momentum. That no longer applies, even the other globalist faction is in deep disarray: post Brexit, desired transition of power failed in Germany and France is under slow boiling revolt, CEErs (Poland, Hungary, ~Austria, ..) are openly defiant towards EU’s dictates and threats (e.g. migration crisis, foreign NGOs meddling – national sovereignty etc).

              Back to your point, US is now threatening direct sanctions against European energy companies involved in the Russian supply links, which are basically all the key ones at least in Germany, as the North Sea resource link importance is decreasing or not being enough when pushing offline coal and NPPs at the same time.

              All it seems as redrawing of alliances and dependencies if not in near term, definitely taking place in the mid term..

              Perhaps it’s about (time) to knock down the Euro as such.. basically sacrificing one leg of the system for gaining further breathing space.

            • Yoshua says:

              The European poodle will bark, pee on some flowers and that’s it.

    • Interesting! It could be.

  9. Harry McGibbs says:

    “The WTO’s latest forward-looking Goods Trade Barometer [which measures global trade] stood at 95.5, compared with a level of 96.6 in November [sub-100 denotes contraction].”

    • Harry McGibbs says:

      “The global supply chain is being disrupted, triggering production stoppages in other industrial centres… The odds are high, and rising, that the coronavirus crisis will last through March, which may be enough to push the global economy into recession.

      “There is a significant chance that the crisis will last until summer. The economic disruption may pack enough of a punch to pop the biggest global bubble – centred around the US stock market – in modern history.”

      • Harry McGibbs says:

        “Finance ministers and central bankers from 20 major economies will gather in Saudi Arabia this weekend to discuss the economic challenges posed by the outbreak.

        “The meeting will test how transparent and cooperative the countries can be to tackle a growing health and economic emergency.”

        • Harry McGibbs says:

          “The economic impact of coronavirus grew stronger today as European tech shares slumped while… in South Korea, president Moon Jae-in today called for ’emergency measures’ to tackle an ’emergency situation’.

          “‘The current situation is very serious, even more so than thought,’ he said.

          “The outbreak is also posing an increasing threat to Japan, the world’s third-largest economy, which is already gripped by recession fears.

          “Meanwhile [Brent] oil fell to below $57 a barrel on Tuesday as experts said the outbreak had ‘spooked’ the markets.

          “‘Risk aversion has returned to the markets,’ said Commerzbank analyst Carsten Fritsch…

          “Central banks across the region have already begun slashing interest rates to help ease credit as tourism arrivals plunge.”

        • People are starting to figure out what a problem this is.

  10. Harry McGibbs says:

    “Once Asia’s fastest-growing major economy, India’s recent downturn has seen the government hit the fiscal panic button. Will the coronavirus kill off its rescue effort? …Unfortunately for India’s corporate sector, the coronavirus outbreak is set to damage some of its most indebted businesses.”

  11. Harry McGibbs says:

    “European car sales fell in January, hit by a sluggish global economy, higher car taxes in some EU countries and uncertainty over Britain’s departure from the bloc, the European Auto Industry Association (ACEA) said on Tuesday. In January, new car registrations dropped 7.4%…”

  12. MG says:

    It seems like the human species propagates until falling down from exhaustion, unlike other animals who have not mastered the use of energy. With the availability of the energy, it is easy to believe for it that it dominates the Earth. It eliminates useful plant and animal species, that allow the human species to get better nutrition, in order to have more space for human individuals. However, the “happy ending” is not reserved for this species that behaves so foolishly, but for the deadly germs, invisible to the eye of the self-complacent humans that just wait everywhere to get hold of its victims and devour them.

    • Even if coronavirus were a planned attempt at eliminating 90% of the world’s population, I am doubtful that it could do anything like this, directly. What it might do is pop the economic bubble. Popping the economic bubble may indeed eliminate 90% of most everything. Indirectly, it may eventually eliminate 90% of people.

      • Xabier says:

        If I’m eliminated, I’m coming back to haunt ’em!

        And a truly horrible haunting it will be: one should be able to pass through any bunker walls…..

      • Chrome Mags says:

        Good point, Gail. I was thinking this morning the situation now seems like a 50/50 proposition, that either the virus can be contained and with CB injections, QE etc, BAU regains coherence, even if it’s declined some, OR workers returning to factories in China now or later continue the spread of the virus in the manuf. hub, China, and the knock on effects drop the world economy like a bag of dirt.

        There’s that old saying, “Don’t put all your eggs in one basket”, and for a good reason, however, the world economy put a higher percentage of their manuf. eggs in one basket, China. Then the Corona Virus took hold in the heart of that basket.

        • Xabier says:

          One looks at the %’s which are being bandied about aghast: 80% of this product, 60% of that, 40% of another, made in China – often with a delicate global supply feeding the Chinese production, and on a JIT basis so nothing much in stock for emergencies.

        • Exactly! This is an issue that people lose sight of. It is the same issue that was covered in a recent article in Nature. I mentioned it in the comments before:

          Predicting collapse of adaptive networked systems without knowing the network

          One of the things the article says is, “A system with a single cycle is the most unstable because the deletion of any cycle-node or link breaks the sustaining feedback mechanism.”

          • Robert Firth says:

            For those interested in a rather deep and quite recent theoretical treatment, go here:

            The authors are Chinese; let us hope Emperor Xi has hired them with promises of land grants and nobility. He needs them.

            Summary. Consider a directed graph; it has nodes (places, factories, cities) and arcs (supply chains, airline routes). How resilient is that network? Estimate the importance of the nodes, first in themselves, and next as transit points in between other important nodes. Estimate the importance of the arcs: redundant arcs are less important, for instance if the air cargo route fails can we revert to a goods train route. If the important nodes are connected by multiple arcs, the network is resilient. If the important nodes have backup nodes also interconnected, the whole system is resilient. QED.

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