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.

This entry was posted in Financial Implications and tagged , , , by Gail Tverberg. Bookmark the permalink.

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.

1,772 thoughts on “It Is Easy to Overreact to the Chinese Coronavirus

  1. As always, much to learn from each new article. But given that people my age are being so easily seen to be expendable, I want to put in a word for us: Yes, getting rid of the old and the weak gives us a fresher, more energetic crop of people. So we gain physical health…but we lose experience. And at a time when hyper progress is waning–a time that coincides neatly with people slightly younger than me–it could be very useful to have older people around to recall simpler times, times when the Great Depression still reigned.

    It is very common in this culture to think of material QUANTITY alone, and not in terms of qualitative experiences that some might argue as being what makes us civilized. You have more quantity to spread around with fewer people, but you don’t have more quality.

    Also, making blanket recommendation to cull the old and weak wouldn’t appear to be consistent with the “leaving alone” that a self organizing system might recommend. It seems more economical to steer the direction of the new independently of erasing the old to replace it with the new. I think some conservatism, commonsense and balance would help in determining the health responses to various age groups, and regarding levels of treatment, during the epidemic.

    • Allowing the culling older people has zero long term effect on population levels. To that extent it’s much better to cull fertile or pre-fertile humans. To put it crudely. Not suggesting that any category should be deliberately culled. But disease has a way of culling in nature.

      Most of the major diseases that have been eradicated hit young and old, and few people lived to old age. Meaning that human population was auto correcting. Stopping people from dying is the main occupation of medicine and nearly everyone supports this task. It’s tied up to a very strong human trait that informs us to try to deny our mortality.

      • Backwards. Parents who lose infant children tend to have more children to replace them.
        Anecdotally, people who lose partners or siblings in their prime are also likely to want to “replace” them. High infant mortality is everywhere correlated with high fertility, and falling mortality *precedes* falling family sizes. “I want every good thing for this child before I have another”.

        Save the children, avoid the population bomb.

        • Back when I started work as an actuary, I heard that awards for the death of children in private passenger automobile accidents were very low, about $1,000 per year of life. The reason given was, “The parents can have other children.”

    • Thaks Gail, for thinking this through. I’d also mention that it is an opportunity for people to educate themselves about vaccines, and begin by noting that a flu vaccine protection has a best before date. There seems to be raised expectations of what a vaccine can do.
      But in regard to grandparents, this was how most of our useful knowledge was imparted to the very young. Some things can be taught, and some things you have to get from your parents and grandparents. Once that is lost, it becomes very difficult and expensive to re-learn.

      • I know that some autism groups have been concerned about taking small babies and vaccinating them, simultaneously, for many different things. One of the issues was the preservatives in the vaccines being in the aggregate, detrimental for the babies. I would suppose the impact on the immune system might be another. Needless to say, the medical profession has fought back furiously.

        • Thank you, Gail: that was exactly my conclusion. The vaccines were thoroughly tested and proven to be safe. But those were the vaccines tested in the laboratory. The ones distributed to the masses were adulterated with several other chemicals, to improve their shelf life, and those chemicals were never tested.

          One such adulterant is metabolised by the human body to yield metallic mercury. How much mercury can you inject into a small child before they become mad as a hatter? Modern industrial scale medicine is no longer about health; it is about profit.

    • Those who recall life before the credit and asset booms and the spawning internet can offer a useful counter-poise to the clueless young, I’d agree.

      The most esteemed, and wisest, friend I have is 80 this year, but I am resigned to their loss in the near future whatever this virus gets up to.

      On the other hand, the demographic imbalance is going to be unmanageable, and perhaps we all have to make our peace with God and the world by the age of 50 and recognise that, historically, we have had long lives – brief as that might seem! It’s all bonus time….

      • If we’re not seeing a “better” lifestyle up ahead, why shouldn’t we hold on to this one to the best of our ability, and for as long as possible?

        • Because no man is an island, entire of itself; every man is a piece of the continent, a part of the main. … Therefore never send to know for whom the bell tolls; it tolls for thee.

          • I was thinking of it socially (not individually) for the reasons you mention.

          • No, Man is an island, entire of itself, and totally insular. It is not part of the UK and was not part of the EU either.

            On the other hand, The peninsula of Kintyre is only semi-insular, although it’s tip, the famous Mull of Kintyre, might as well be an island given how far along the Long and Winding Road it is from the nearest pub or fish & chip shop. No wonder Paul got bored with crofting there.

            https://youtu.be/EH7I-WV0LZA

        • Rather than hold on to the lifestyle we have, people want to dismantle the ff industry and replace it with “renewables.” They don’t see the cost to this lifestyle of doing that. Maybe in similar ways, people are anxious to discard something that works, on a gamble that the new thing will be better. Many many things that can be maintained with a different mindset are left to crumble. For me most of our predicament stems from what’s in people’s minds.

          • I agree very much:
            “people are anxious to discard something that works, on a gamble that the new thing will be better,” and

            “For me most of our predicament stems from what’s in people’s minds.”

            Regarding the second: Yes, but this is the way self-organizing systems work. Somehow, it is what people think that brings down the system, perhaps in a way that leaves survivors. The system works in a very mysterious way!

            If people could really reach a situation where all resources were distributed equally, the population would die close to simultaneously.

            • Thanks very much for clarifying this. What it suggests is a don’t worry, be happy philosophy. So don’t worry about what the others are doing that might be bad–we can’t know whether it IS bad. But assuming we are a microcosm of a self organizing whole, doing off in our corner what we feel we were put here to do seems a good bet.

  2. (Bloomberg) — The market took the Federal Reserve’s message Wednesday as fresh evidence of its dovish leanings, with traders gaining confidence that the next move will be a cut late this year.
    While the Fed’s statement offered nothing much new for investors, Treasury yields extended their declines to toward multimonth lows, taking the 10-year to 1.59%, and traders ramped up their bets on a rate cut by November’s meeting. That fed funds futures contract now implies the Fed’s target policy rate will be 1.28%, roughly two basis points lower than earlier in the day. The dollar traded little changed after an initial slide.
    The impetus for the rallies came as Chairman Jerome Powell addressed reporters, emphasizing that policy makers “are not comfortable with inflation running persistently below our 2% objective.” His remarks were to elaborate on the Fed statement’s reference to the current stance of monetary policy as appropriate to support “inflation returning to the committee’s symmetric 2% objective.

    https://finance.yahoo.com/news/fed-message-reinforces-dovish-market-205952827.html

    Boy, I couldn’t make this stuff up….like they are in CONTROL….
    By some tape, string and old gum stuck together…

  3. https://www.nytimes.com/2020/01/31/world/asia/coronavirus-china.html

    “Coronavirus Live Updates: Infections Up Tenfold in One Week, to Nearly 10,000.
    213 people have died and Chinese officials on Friday reported the highest death toll in a 24-hour period.”

    Is it really possible to stop this in China now that 10,000 have it and in all provinces, especially since it spreads from droplets from coughing or sneezing?

  4. Pingback: Tverberg: es fácil reaccionar exageradamente al coronavirus chino | Heaven32

  5. Why Asia is so prone to epidemics attacks?

    https://www.lewrockwell.com/2020/01/bill-sardi/your-chance-of-developing-symptoms-or-dying-from-the-menacing-coronavirus-that-now-threatens-global-human-populations-is-0-0000017482-symptoms-0-0000001137-death/

    “Just in case you are worried, out of a population of 7+ billion people on Earth, your chance of developing symptoms from this corona-shaped cold virus is ~1 in millions and for death ~1 in hundreds of millions. However, risk dramatically increases with advancing age and among malnourished populations such as in Asia where deficiencies of essential nutrients, namely zinc and vitamins C and D, are often prevalent. Modern medicine casts a blind eye at nutrition.

    But regardless of what you have just read here that minimalizes the risk, health officials are beating the Coronavirus drum, with mass contagion predicted and an expert predicting this outbreak could be ten times worse than the 2003 epidemic that left 813 dead. That may only be true in a country with a large portion of malnourished people like China. The estimate that the Coronavirus will grow to 10,000 cases in the Chinese city of Wuhan (11 million population) is still a very low risk — 1/100th of one-percent.”

    “All the advice to stay away from crowds, wear a mask, wash your hands, is silly. That is because the lack of hygiene is not why cold and flu viruses plague the planet in winter months. It is just that winter months are when the human immune system crashes. The disease is lack of internal defense, not external exposure and transmission. The primary reason for this is plunging vitamin D levels from lack of sunlight as the earth tilts away from the sun in the winter solstice.”

    • Why You Can’t Skip Magnesium If You’re Taking Vitamin D

      “”People are taking vitamin D supplements but don’t realize how it gets metabolized,” study co-author Mohammed Razzaque, a professor of pathology at Lake Erie College of Osteopathic Medicine in Pennsylvania, said in a statement. “Without magnesium, vitamin D is not really useful.” [9 Good Sources of Disease-Fighter Vitamin D]”

      https://www.livescience.com/61866-magnesium-vitamin-d.html

      • I’m sure extra magnesium is not necessary when taking vitamin D, if you already have enough magnesium in your body. I’d followed the advice to take a magnesium supplement alongside the vitamin D tablet.

        Before long, I began having memory issues. I’d spend about 3 minutes to recall from my memory a well known name such as Woody Allen. Alzheimer’s has afflicted some of the older members of my extended family, so I was worried. Then I saw a comment from a reader in Gail’s previous post that taking magnesium supplements had given him “brain fog”. I ceased the magnesium supplements and the speed and efficiency of my memory of names gradually returned – thank goodness! So BEWARE!

        • Taking magnesium in large amounts can be harmful. The German norm for magnesium intake from supplements is just 250 mg or less.

          https://www.nutraingredients.com/Article/2017/12/14/Germany-sets-new-daily-limit-on-magnesium-supplements

          Moreover, when somebdy has got a magnesium defficiency, it can not be repaired immediately by ingesting large amounts of magnesium.

          I prefer magnesium chloride baths and magnesium malate w/SRT, which are well tolerated.

          http://scottsdalemagnesiumstudy.com/

          Magnesium l-threonate for memory works in those who need it, but also in reasonable amounts, rather smaller doses for the people with lower bodily weight.

          • It certainly depends the needs of your body. You can have your magnesium levels checked by your physician. The given study (http://scottsdalemagnesiumstudy.com/) shows that it takes long time to achieve healthy levels of magnesium, when somedy is defficient. Determining magnesium defficiency is best done with the complex evaluation of the symptoms.

            D vitamin levels should also be checked by your physician.

            Simply said: The long term defficiency problems usually can not be solved with large doses of vitamins or minerals, as the small defficiencies for longer periods are their cause. You have to wait, untill the levels normalize and the symptoms disappear.

        • Magnesium and potassium are two trace elements hardest to find in a normal diet. My solution was a breakfast cocktail: 50% grapefruit juice, rich in K, and 50% natural mineral water, rich in Mg. My preferred water source was “Gerolsteiner Sprudel”, from the German Alps, which has been a reliable source ever since the Romans found it, and so can be considered a renewable resource.

          I believe that for every shortage in our diet, Nature has a remedy. Thank Gaia, or thank Darwinian evolution; your choice.

    • In Europe before the modern age, physicians were used to regular, if not annual, outbreaks of high-mortality ‘fevers of the poor.’

      Same context: dense populations in slums, very poor nutrition and lack of hygiene, and less able than the rich to move away to safety once the epidemic had started.

      • The frequency of epidemics in early days is one of the reasons why the 1918 Spanish Flu didn’t get much publicity. Everyone expected these. This was part of the reason for big family sizes.

    • “Just in case you are worried, out of a population of 7+ billion people on Earth, your chance of developing symptoms from this corona-shaped cold virus is ~1 in millions and for death ~1 in hundreds of millions…”

      Of 7 billion people, only 1 in 100 million are at risk of dying. That is just 70 people worldwide. The death toll from China alone is more than double that. Need I say more? These people are in so much panic, they cannot even lie convincingly.

      • I think the issue that has caused so much panic was Hubei’s response to the virus, stopping people from leaving Hunan and building more hospitals. China had been criticized for not doing enough with earlier viruses. It wanted to be sure to do enough this time around. This encouraged other in China (like Disney World) and around the world to emulate its actions. Once the example of the type of response was telegraphed around the world, China was in deep trouble, especially because these actions wouldn’t really stop the virus.

  6. Germany’s Overdose of Renewable Energy

    https://www.strategic-culture.org/news/2020/01/29/germanys-overdose-of-renewable-energy/

    “Germany now generates over 35% of its yearly electricity consumption from wind and solar sources. Over 30 000 wind turbines have been built, with a total installed capacity of nearly 60 GW. Germany now has approximately 1.7 million solar power (photovoltaic) installations, with an installed capacity of 46 GW. This looks very impressive.

    Unfortunately, most of the time the actual amount of electricity produced is only a fraction of the installed capacity. Worse, on “bad days” it can fall to nearly zero. In 2016 for example there were 52 nights with essentially no wind blowing in the country. No Sun, no wind. Even taking “better days” into account, the average electricity output of wind and solar energy installations in Germany amounts to only about 17% of the installed capacity.”

    “Today, in order to guarantee stable baseline power and fill the gaps left by its fluctuating wind and solar generators, Germany is forced to rely on (1) CO2-spouting coal and natural gas power plants; (2) its remaining handful of nuclear plants, which it plans to shut down by 2022; and most notably (3) importing electricity from other European nations.

    Most of the imports come from France, where about 75% of electricity is produced by nuclear plants, and from Sweden, where 40% is nuclear-produced. On “bad days” Germany could hardly get along without a piece of this much-dreaded nuclear energy.

    On “good days” Germany floods the rest of Europe with excess power from its wind and solar installations, often at dumping or even negative prices. In this way Germany has turned its huge amounts of wildly fluctuating renewable power sources into a European-wide problem.

    Even with the flourishing European electricity trade, however, Germany is still far from being able to close down its coal and gas power plants.”

    “If we want the system to be largely CO2-free, then the only available option is nuclear energy.”

    • If we want the system to be CO2 free, the only option is less energy. Far less energy. And how can we sustain our civilisation? Far fewer people. But you already knew that. Back to my third reading of Catton’s “Overshoot”.

      • I read Overshoot every year just to keep myself grounded. Each year, more relevant.

      • Writing a post about nuclear is indeed an idea. I have done it several times before, but years ago. I also live in the area where the only new US nuclear power plants (2 of them) are being constructed. In fact, I am paying for them in my electric bill now, so that the utilities involved would not have to borrow as much. The story we hear, year in and year out, is the same:

        Is There More Trouble Ahead for Plant Vogtle Expansion? Experts testify that serious challenges remain

        Expert testimony at last week’s hearing on the combined 20th/21st semi-annual Vogtle Construction Monitoring (VCM) proceeding before the Georgia Public Service Commission (PSC) pointed to (yet again) more trouble facing Southern Company’s 68+ month delayed, budget-busting nuclear expansion at Plant Vogtle near Waynesboro, Georgia. Despite being ten years into construction, the PSC expert witnesses and consultants made it clear that it will be extremely challenging for the two Toshiba-Westinghouse AP1000 nuclear reactors to be completed by November 2021 (for Unit 3) and November 2022 (for Unit 4). The economic news isn’t improving either, as the project’s cost, which has already doubled: from ~$14 billion to over $28 billion, could increase even further, even if those dates are met.

        The cost of the project bankrupted Westinghouse, who was in charge of the project. (So presumably, the real cost of the project was way over $28 billion). Now Southern Nuclear, which is a division of Georgia Power Company, is trying to finish the project by itself. The Fukushima accident happened after the new power plant was started, and it was decided to add more safety features, if I understand the situation correctly.

        If there is a renewal of nuclear power plants, one of the big questions I have is, “Who will build them?” Westinghouse is out of the business. France had to take over AREVA, its company that used to be in the business of building nuclear power plants, until it too had huge financial problems. Nuclear power plants had become too complex and expensive to build.

        There seem to be two standards for construction: a lower concern for safety and much higher concern for safety. The plants that are now planned are mostly in Asia and Russia. https://www.world-nuclear.org/information-library/current-and-future-generation/plans-for-new-reactors-worldwide.aspx
        These are almost certainly plants built to a lower standard of safety.

        Are there even companies available that can build to the expected standard of construction today? EDF in France seems to be trying to restore confidence in French nuclear power plants. It also seems to be lined up to build a plant in the UK. Otherwise, I wonder if we are left with companies from China, India or Russia who are still in the nuclear power plant construction field.

        The nuclear power construction industry seems to me to be in disarray right now, at least outside of Asia and Russia.

        • The 2 new blocks of the nuclear power plant in Mochovce, Slovakia still not operating. The new and new tests must be made in order to remove all improperly carried out works or installed components with compromised quality. Although these faults are outside of the reactor area, they delay the start of the blocks. The police also investigates possible frauds during their construction.

          https://www.webnoviny.sk/venergetike/eight-criminal-prosecutions-in-mochovce-npp-project/

          • I can think of two reasons:

            (1) They have not fallen for the absurd safety standards of some. Russia doesn’t build to absurd safety standards.
            (2) Finland has an electricity system that has very little wind and solar, which is generally given the subsidy of “going first.” This wrecks the rate structure for other producers, including nuclear. Wood and hydroelectric do not wreck the rate structure.

            • There are good reasons to be fearful of the risks associated with nuclear energy production, but my main observation over the years is that fear of nuclear is much greater than is fear of climate change. This tips the scales strongly against nuclear energy.

              Oddly both are invisible forces so you wouldn’t think that would be the case. Much of that fear stems from the two bombs used at the end of the 2nd world war plus three major incidents at nuclear power plants. So it’s not hard to see why this fear is so solidly embedded in the public psyche.

              Meanwhile it seems that climate change disruption will almost certainly destroy our civilisation as we know it. This reality does not seem to lead people into the same level of fear. Rather, this prospect is rather sanguinely accepted – by comparison.

        • A second issue that I might have mentioned regarding nuclear is the way the subsidies for wind and solar are usually put in place, it makes nuclear electricity non-economic. It even drives existing power plants out of business. Once a country has decided to give wind and solar the subsidy of “going first,” they wreck the system for everyone else. The system lasts shorter, rather than longer, as it drives backup power out of business.

        • There are many aspects of the above that the world could manage without, and an equal amount that it can’t without causing too much disruption. There are some forces wanting to cut off China, and this post explains why that could be misguided. But we can also overreact regarding the latter. Overreaction is overreaction. And it has dubious efficacy in a hugely complex world. Why not pursue the “push” that suits one at the local level, and let others do what suits them at whatever level? Why must there be a single approach to China? Who says small groups pushing their local agendas can’t have a useful effect on a self governing system? Why must China be the only game in town for everything? Isn’t that the role of a self organizing system? Isn’t it problematic to make centralized one-size-fits-all lurches rather than pursuing diverse microscopic breakthroughs you can make in your own corner?

        • With nuclear you have to think small, modular, short construction time, spent fuel rods thereafter thorium, assembly lines, batteries of small units (100 MWe) – but it may very well be too late:

          https://www.nextbigfuture.com/2019/05/seaborg-molten-salt-reactor-will-fit-on-a-truck-and-cost-less-than-coal-power.html

          It is worth to note that exactly in Denmark where wind is hailed as a deity there are actually two start ups with the goal to go nuclear.

          • You also have to think “Concern about guarding the reactor; concern about foreign terrorism; concern about spent fuel.” Also, time to approve new devices.

            What are you going to do with the electricity as well? Any place that have much wind and solar will need huge amounts of variable fuel supply for balancing. Nuclear is generally not balancing, unless it is designed that way. If it is designed that way, its return for investors (also, its EROEI) may be too low. Having variable wind and solar basically wipes out the economic incentive for any fixed supply type of electricity, the way solar electricity is priced.

          • I hope the people in Denmark read the blog posts of Paul-Frederik Bach. He is a a retired electrical engineer. Until his retirement in 2005, he was responsible for the integration of wind power into the power grid of Denmark.

            P-F Bach talks about the big subsidies that are needed for wind in Denmark. The orange part of the bars in this chart represent the subsidies.

            https://gailtheactuary.files.wordpress.com/2016/08/netherlands-wind-energy-amount-paid-for-electricity-under-pso-compared-to-market-value.png

            P-F Bach talks about how built transmission is falling behind what is needed. Adding the needed extra transmission will likely need subsidies as well. With inadequate transmission, there is a big difference between the price of necessary imports, when wind is not available, and the selling price of excess wind, when it is available. (It is also not clear to me that there is enough balancing power in Norway/Sweden, if more transmission is built.)

            https://gailtheactuary.files.wordpress.com/2020/01/demark-relative-wind-and-pv-prices-for-export-and-import-p-f-bach-1.png

            He talks about “45% of Danish Green House Gas Emissions Ignored in Climate Targets,” and how its GHG emissions have not really been decreasing.

            He talks about the many near misses that are happening now, in terms of trying to keep the lights on, using as much wind and solar are currently being used in Europe.

        • The nuclear “safety” issue founders on one irreducible fact of Nature: the waste products of a nuclear reactor are far more dangerous than the fuel that went into it. Because they have a much shorter half life.

          Unless this problem is solved, nuclear power is unsafe and will remain so. But nobody (outside Russia) is even attempting to solve it, preferring to bury the waste in the ground or flush it into the sea. In other words, export your radioactive waste somewhere else.

          As ever, entropy trumps human ingenuity.

  7. “A public health scare on this scale is likely to have immediate economic repercussions for China’s economy in three vital ways:

    “…a sharp downturn in the tourism and leisure industry as people cancel or avoid travel and events; a pause in spending, production and borrowing as uncertainty and travel restrictions impact businesses, jobs and consumer confidence; and higher costs related to measures introduced to mitigate the spread of infection…”

    https://edition.cnn.com/2020/01/30/perspectives/coronavirus-economic-impact/index.html

  8. “…since the last recession, the interest rates have not recovered to the level required to tackle a new downturn…

    “In addition, government debt across the world is at record levels. The average debt for advanced economies stands at more than 100% of the GDP, while in China it is through the roof at 300% of the GDP (mostly because of its panicked borrowing during the 2008 financial crisis to support massive fiscal stimulus valued at roughly 12.5% of its GDP). Italy, with an insurmountable government debt valued at roughly 130% of its GDP, is a ticking time-bomb.

    “In this interconnected world, it only takes one weak link to radiate out an economic weakness that spreads globally.”

    https://timesofindia.indiatimes.com/blogs/perspectives-on-global-political-economy/economic-panics-are-hidden-until-they-are-not-the-next-recession-and-potential-policy-responses-with-central-bankers-backs-against-the-wall/

      • I was reflecting that if the mortality rate is fairly low then a global pandemic might actually be better for the global economy, ironically, than a outbreak that remains localised in China because it would render travel restrictions pointless.

        • Right!

          But if travel restrictions do actually slow the path of the virus, and we can do something in the fairly near term to mitigate its effects (vaccine or antiviral) then a person could argue that there would be a positive impact of slowing the spread of the virus.

          The issue is that travel restrictions and the closing of businesses have a terribly detrimental impact on the economy. And I am not sure we can really do enough to slow the spread of the disease to make any difference.

          • “The issue is that travel restrictions and the closing of businesses have a terribly detrimental impact on the economy.”

            Looks like Goldman Sachs had the same thought, Gail. In fact, Dow currently as of this moment at -532 and descending. But there’s time today for it to recover.

            https://www.cnn.com/2020/01/31/business/coronavirus-goldman-sachs-us-economy/index.html

            ‘Goldman Sachs warns that the coronavirus could slow the US economy’

            “The note said that it doesn’t “find a clearly discernible effect of past pandemic scares on aggregate US activity.” Overall, analysts predict the coronavirus will result in “only a small net drag” for the full year. Reasons for the slight decline are a decrease in Chinese tourists to the US and fewer exports to China.”

            • Let’s keep our fingers crossed. No one things about all of China’s debt and its need to keep its economy going. They also don’t think about all of our supply chains. The Dow seems was down 592 a bit ago, but has back up a little.

              A headline says, “CDC Quarantines Americans Evacuated From Center of China Virus Outbreak.”

  9. Pingback: Tverberg: It Is Easy To Overreact To The Chinese Coronavirus | Real Patriot News

  10. Pingback: Tverberg: It Is Easy To Overreact To The Chinese Coronavirus | WeAreChangeTV.US

Comments are closed.