We read a lot in the news about the new Wuhan coronavirus and the illness it causes (COVID-19), but some important points often get left out.
[1] COVID-19 is incredibly contagious.
COVID-19 transmits extremely easily from person to person. Interpersonal contact doesn’t need to be very long; a taxi driver can get the virus from a passenger, for example. The virus may be transmissible even before an infected person develops symptoms. It may also be transmissible for a few days after a person seems to be over the virus; it is possible to get positive virus tests, even after symptoms disappear. Some people may have the disease, but never show symptoms.
[2] The virus likely remains active on inanimate surfaces such as paper, plastic, or metal for many days.
There haven’t been tests on the COVID-19 virus per se, but studies on similar viruses suggest that human pathogens may remain infectious for up to eight days. Some viruses that only infect animals can survive for more than 28 days. China is reported to be destroying paper currency from the hardest hit area, because people do not want to accept money which may have viruses on it. Clearly, surfaces in airplanes, trains and buses may also harbor viruses, long after a passenger with the virus has left, unless they have been thoroughly wiped down with disinfectant.
[3] Given Issues [1] and [2], about the only way to avoid spreading COVID-19 seems to be geographic isolation.
With all of today’s travel, geographic isolation doesn’t work very well in practice. People need food and medical supplies. They need to keep basic services such as electricity and garbage collection operating. Suppliers of food and other services need to come and leave the area and that tends to spread COVID-19. Also, the longer a geographic area is isolated, the larger the percentage of the people within the area that is likely to get COVID-19. The problem is that the people need to have contact with others in the area for purposes such as buying food, and that tends to spread the disease.
[4] The real story regarding the number of deaths and illnesses seems to be far worse than the story China is telling its own people and the world.
The real story seems to be that the number of deaths is far greater than the number reported–perhaps 10 times as high as being reported. The number of illnesses is also much higher. At one point, facilities doing cremations in the Wuhan area were reported to be doing four to five times the normal number of cremations. Some of the bodies in the Wuhan area now need to be sent to other areas of China because there is not enough local cremation capacity.
China doesn’t dare tell its people how bad the situation really is, for fear of panic. They want to tell a story of being in control and handling the situation well. The news media in the West repeat the stories that the government-controlled publications of China provide, even though they seem to present a much more favorable situation than really seems to be the case.
[5] Our ability to identify who has the new coronavirus is poor.
While there is a test for the coronavirus, it costs hundreds of dollars to administer. Even with this high cost, the results of the tests aren’t very reliable. The test tends to produce many false negatives. The virus may be present somewhere inside the person being tested, but not in the areas touched by swabs of the throat and nose.
[6] Some people get much more severe symptoms from COVID-19 than others.
Most people, perhaps 80% of people, seem to get a fairly light form of the COVID-19 illness. Groups that seem particularly prone to adverse outcomes include the elderly, smokers, those who are obese, and those with high blood pressure, diabetes, or poor immune systems. Males seem to have worse outcomes than females.
Strangely enough, there is speculation that people with East Asian ancestry (Chinese, Japanese, or Vietnamese) may have a higher risk of adverse outcomes than those of European or African ancestry. One of the things that is targeted by the disease is the ACE2 receptor. The 1000 Genome Project studied expected differences in ACE2 receptors among various groups. Based on this analysis, some researchers (in non-peer-reviewed studies, here and here) predict that those of European or African ancestry will tend to get lighter forms of the disease. These findings are contested in another, non-peer-reviewed study.
Figure 1. Chart from Coronavirus risk for Asians, Africans, Caucasians revealed.
Bolstering the view that East Asians are more susceptible to viruses that target the ACE2 receptor is the fact that SARS, which also tends to target the ACE2 receptor, tended to stay primarily in China, Hong Kong, Taiwan, and Singapore. While there were cases elsewhere, they tended to have few deaths.
Observational data with respect to COVID-19 is needed to determine whether there truly is a difference in the severity of the illness among different populations.
[7] China has been using geographical quarantine to try to hold down the number of COVID-19 cases. The danger with such a quarantine is that once the economy is down, it is very difficult to come back to the pre-quarantine state.
Data shows that China’s economy is not reopening quickly after the extended New Year holiday finished.
Figure 2. China daily passenger flows, relative to Chinese New Year. Amounts are now down more than 80% and have not increased, even as some businesses are theoretically reopening. Chart by ANZ, copied by WSJ Daily Shot Feb. 17, 2020.
Figure 3. China property transactions, before and after Chinese New Year. Chart by Goldman Sachs. Reprinted by WSJ Daily Shot, Feb. 17, 2020.
All businesses will be adversely affected by a lack of sales if they need to continue to pay overhead expenses. Small and medium-sized businesses will be especially adversely affected. Bloomberg reports that if a shutdown lasts for three months, there is a substantial chance that these businesses will run through their savings and fail. Thus, these businesses may be permanently lost if the economy is down for several months.
Also, restarting after a shut-down is more difficult than it might appear. Take, for example, a mother who wants to go back to work. She will likely need:
- Public transportation to be operating, so she has a way to get to work;
- School to be open, so she doesn’t need to worry about her child while she is at work;
- Masks to be available, so that she and her child can comply with requirements to wear them;
- Stores providing necessities such as food to be open, or she may be too hungry to work
If anything is missing, the mother is likely not to go back to work. Required masks seem to be a problem right now, but other pieces could be missing as well.
Businesses, too, need a full range of workers to restart their operations. If the inspector doing the final inspection is not available, the business may not really be able to ship finished products, even if most of the workers are back.
[8] A shutdown of as little as three months is likely to be damaging to the world economy.
Multiple things are likely to go wrong:
(a) Commodity prices are likely to fall steeply, because of low demand from China. Oil prices, in particular, are likely to fall steeply, perhaps to $30 to $35 per barrel. Besides cutbacks in oil demand from China, there is the issue of a general reduction in long distance travel, because of fear of traveling with other passengers with COVID-19.
(b) US businesses, such as Apple, will find their supply chains broken. They won’t know when, and if, they can ship products.
(c) Debt defaults are likely to become more common, especially in China. The longer the slowdown/shutdown lasts, the greater the extent to which debt defaults are likely to spread around the world.
(d) The world economy is likely to be pushed into recession, without an easy way to get out again.
[9] The longer the shutdown lasts, the more likely there is to be a major collapse of the Chinese economy.
In the event of a long-term shutdown, it would seem likely that, at a minimum, a new leader would take over. In fact, there would seem to be a significant chance of major changes within the economy. For example, the provinces of China that are able to restart might attempt to restart, leaving the more damaged areas behind. In such a case, instead of having a single Chinese government to deal with, there might be multiple governmental units to deal with.
Each governmental unit might consist of a few provinces trying to provide services such as they are able, without the benefit of the parts of the economy that are still shut down. Each governmental unit might have its own currency. If this should happen, China will be able to provide far fewer goods and services than it has in the recent past.
[10] Planners everywhere have been guilty of “putting too many eggs in one basket.”
Planners today look for efficiency. For example, placing a large share of the world’s industry in China looks like it is an efficient approach. Unfortunately, we are asking for trouble if the Chinese economy hits a bump in the road. Using just-in-time supply lines looks like a good idea as well, but if a major supplier cannot provide parts for a while, then having inventory on hand would have been a better approach.
If we want systems to be sustainable, they really need a lot of redundancy. Redundant systems are not as efficient, but they are much more likely to be sustainable through difficult times. There is a recent article in Nature that talks about this issue. One of the things it 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.
“A system with a single cycle” is basically similar to “putting all of our eggs in one basket.” “Deletion of any cycle-node or link” is something like China running into coronavirus problems. We probably need a world economy that consists of many nearly separate local economies to be certain of long-term world economy stability. Alternatively, we need a great deal of redundancy built into our systems. For example, we need large inventories to work around the possibility of missing contributions from one country, in the case of a problem such as a major epidemic.
Conclusion
The world economy may become very different, simply because of COVID-19. The new virus doesn’t even need to directly affect the rest of the world very much to create a problem. The United States, Europe, and the rest of the world are very much dependent on the continued operation of China. The world economy has effectively put way too many eggs in one basket, and this basket is now not functioning as expected.
If China is barely producing anything for world markets, the rest of the world will suddenly discover that long supply chains weren’t such a good idea. There will be a big scramble to try to fill in the missing pieces of supply chains, but many goods are likely to be less available. We may discover quickly how much we depend upon China for everything from shoes to automobiles to furniture to electronics. World carbon dioxide emissions are likely to fall dramatically because of China’s problems, but will the accompanying issues be ones that the world economy can tolerate?
The thing that is ironic is that it is possible that the West’s fear of the new coronavirus may be overblown–we really won’t know what the impact will be with respect to people of European or of African descent until we have had a better chance to examine how the virus affects different populations. The next few weeks and months are likely to be quite instructive. For example, how will the Americans and Australians who caught COVID-19 on the cruise ships fare? What will the health outcomes be of non-Asians being brought back from Wuhan to their native countries on special planes?
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if…
if Chinese manufacturing has slowed to a crawl and may stay there for a long time…
then does the reduction of products on the world market cause a major rise in inflation?
It would appear so, as someone over at peak oil dot com said basic pharm products he gets have already gone up 25%.
food prices in China are now soaring:
https://www.zerohedge.com/economics/terrifying-charts-show-chinas-economy-remains-completely-paralyzed
https://www.worldometers.info/coronavirus/
daily update:
South Korea almost doubles in cases from 31 to 58…
Japan up from 74 to 84… a 13% increase… exponential growth…
Singapore up from 81 to 84… 4% (exponential) increase… but at least they’re trying…
Well even a .0000001% growth is “exponential”. The doubling period is somewhat long :).
Atypically exponential growth refers to human population and financial instruments. AS such it is demonstrably unsustainable IF constant. So there exponential growth is a problem because we are in overshoot. All growth is exponential growth. In the mentioned cases it remained CONSTANT for too long.
This is different. We want CV19 to be unsustainable but certainly not because it runs out of all available resources , its human hosts.
The real question is the rate of infection growing or slowing. Slowing could mean we are approaching a peak shortly. 10 more cases is exponential growth is but so is 1. Certainly you would agree 10 more cases a day is better than 100? they are both exponential growth. Why is a peak important? It means the growth is no longer CONSTANT.
The assumption is there will be a reasonable peak. The assumption is the exponential growth will not be constant and that its peak will not affect BAU for long.
The truth is that without SUSTAINED growth this virus is just a flash in the pan.
None of these other Asian countries show just a tiny percentage of Hubei in numbers.
Thats why no one is alarmed. Hubei is seen as a anomaly. Numbers are tiny small everywhere else. Hubei has peaked (supposedly). The peaks will be tiny in other countries compared to Hubei.(assumption). Back to work. Engines on full. MOAR.
Time will tell. Nothing else.
China says back to work. That may mean more infections. But they will be trace vector containment infections.
Thats the story. Their sticking too it.
Sorry I like my doom tasty not flavorless :).
I promise you flavorless doom will be mentioned annually. 🙂
if the real Hubei numbers are 10x the reported numbers, that would be some sumptuous doom… too bad we don’t know the real numbers…
you’re correct about the math…
but the stats in other countries besides China will tell us the direction of the storyline…
SK went up from 31 to 58 in one day…
a week or month from now, if the next chapter is that they went up from 310 to 580 in one day, then we will be getting nearer to more tasty doom…
310 to 580 in SK my taste buds might be getting a bit overwhelmed. SK and Japan will tell the story. But consider this
“So far this season, at least 26 million influenza illnesses, 250,000 hospitalizations, and 14,000 deaths have occurred.”
https://www.medscape.com/viewarticle/925443
Thats 7x the deaths in Hubei
peatmoss: when yeast ferments sugar into alcohol, it also grows exponentially until it reaches a peak. The peak occurs when there is no more sugar. That is also the natural life cycle of a virus, but we almost always have some defence against it. Almost always; during the Black Death many communities were indeed wiped out completely, so the defence is not guaranteed.
We also know from the cruise concentration camps that exposure in such an environment will peak only at 100%. Food for thought (and viruses).
My friend buys construction equipment from China. He received word from today that everything was peachy from one of the manufacturers. Back at work crisis over. I feel compelled to point out that BAU has continued for a long time. There seems to be a lot of confidence here that this is the big one whether economic or physical. No one knows the future. It could be exactly as bad as the opinion is here or exactly as good as the MSM is preaching. Or somewhere in between. Or better or worse than either. We dont know. We dont know the day we will die either.
The fact is this Blog has been predicting bleak outcomes for a long time now. That takes nothing away from its brilliant analysis. The fact is that BAU continues. That cant be ignored either.
Myself I chilled out after learning about ACE2. A much lower ACE2 amount could well turn this tiger into a kitten. Speculation? No different from doomster speculation. Am I deluding myself? Maybe. Humans are real good at that. What species are the patrons of ourfiniteworld I forget? Oh yeah JIT economic etc. I get it . I appreciate the analysis very much.
If and when next Valentines day rolls around and this blog is discussing a different impending doom will Gail and comenters address the fact that BAU rolls on? It rolls on until it doesn’t. Just like the day we die. Long live the king. Long live BAU. Crazy? Like a fox . 🙂 All we have is this day. It is important IMO that we love ourselves. This allows us to love others. If we really want to have the analysis presented here evaluated it has to accommodate love and humor too. Without that its just more doomster noise.
I enjoy a good daily dose of doomster noise… 😉
when I joined in on reading and adding to these comments in 2017, I honestly found some of the Deep Doomers to be quite entertaining in a somewhat amusing fashion… too bad they have all moved on…
many probably find some of my comments to be unintentionally hilarious… who knows?
but the Deep Doomers could have been correct at any time… they just were not…
but it’s coming… could be in a month or a year or a decade, but it’s coming…
in the meantime, there is much valuable insight here on a daily basis…
perhaps this is a perfect time for…
BAU tonight, baby!
We know that looking back at history, a very common pattern of economies has been overshoot and collapse. The population essentially outgrew their resources. After a period of plateauing, the economies collapsed. In some cases, the central government collapsed, as the central government of the Soviet Union did in 1991, leaving the member republics. Other times, war was involved. Most wars are resource wars. Countries that collapse are the ones that lose these wars.
Another version of collapse involves epidemics. This often happens when the population is not in good health to begin with, due to poor nutrition. Too much pollution could enter in as well.
Another version involves changing weather/climate. If an economy is doing well enough, it can build up surpluses for lean times. An economy operating too close to its maximum output will collapse during a period of adverse weather.
In our opinion, the world today is operating close to its limit. The 2008-2009 crisis gives a hint as to where we are headed. The thing that will ultimately bring the world economy down is likely a financial crash. But it could have elements of other problems as well, including an epidemic that “messes up” supply lines badly.
Regarding:
I wonder whether this will really be the case, a month or two from now. The government of China doesn’t want to let outsiders know how bad things are. It is possible that the company has some inventory it can send now. It is also possible that this order relates to a part of China that is relatively untouched by the coronavirus crisis so far. It is possible that the Chinese contact is lying to the friend who buys construction equipment.
Or, I suppose it is possible that at least parts of China are really getting back to work.
A major concern I have is the big cutbacks in wages Chinese workers seem to be receiving. This is terrible for the economy as a whole. Workers need enough wages to buy food and pay their mortgages. We won’t know for certain exactly what is happening for a little while longer.
I keep talking about enjoying BAU, for as long as it lasts. So I am with you on that one.
Let’s keep watching this over the next few weeks. Epidemics often grow exponentially. We don’t seem to have a good way of stopping this one yet.
I received word from our computer supplier as follows yesterday:
[2:01 PM, 19/02/2020] (name deleted) : from our Lenovo rep directly; Due to Covid-19 and CPU shoratge impact, all CTO and back to back order require up to 8 to 12 weeks ordering lead time.
[2:02 PM, 19/02/2020] (name deleted): CTO is custom built orders – 8-12 weeks is actually 2.5x the norm
Then JPMorgan has put this out:
https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/inline-images/china%20coal%20consumption%20at%20power%20plants.png
I just read that the CCP has employed 1600 trolls to fight against negative news.
How much are they paying you?
I see this article up on zerohedge:
https://www.zerohedge.com/economics/terrifying-charts-show-chinas-economy-remains-completely-paralyzed
“How much are they paying you?” LOL. Got accused of being a paid troll for being optimistic. My friends would double over laughing.
I pledge allegiance to doomsters union #ofw
i have a card
and a tatoo
Hey where do you sign up for paid troll work? Could use the cash. 🙂
peatmoss, trolls weren’t paid: they were given bridges, and the right to tax any who crossed over them. Perhaps the first recognition of the importance of supply chains (!).
I hadn’t thought about that.
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“Iran’s state-run IRNA news agency reported Wednesday that the new virus has killed two Iranian citizens.
IRNA quoted Alireza Vahabzadeh, an adviser to the country’s health minister, as saying both of the elderly victims had been carrying the coronavirus and were located in Qom, about 140 kilometers (86 miles) south of the capital Tehran.
Earlier on Wednesday, Iranian authorities had confirmed two cases of the new virus, the first in the country.”
Thanks for all your extensive research. Very informative!
Mark
Sent from my iPhone
>
Mark is one of my cousins.
We now have an update on the cruise ship coronavirus cases:
https://www.cbsnews.com/live-updates/coronavirus-china-outbreak-death-toll-infections-latest-updates-2020-02-19/
I wonder how many of those 500 getting off the ship would text positive within two or three days.
When I heard today about the 500 being allowed of the cruise ship I was dismayed. An arbitrary time period of two weeks for this virus is wishful thinking. I’m convinced now the virus is ‘out there’ to jump from one person to another, hop scotching across the planet like the flu or a cold. I don’t see it being contained, not even in Wuhan where they’ve tried hard. I think it’s because at some point people get worn down and have to go back to their lives to work or whatever, even if it means the virus makes the rounds. In other words people tried to stop it, but it ended up being too difficult.
Dr Iwata says that there was NO proper infection control on the ship, as it was run entirely by non-expert bureaucrats – and he fears that the medical staff may carry infection back to their communities and hospitals.
President Xi’s face mask looked very insubstantial to me in this photo of him visiting a hospital about February 9 or 10.
https://ichef.bbci.co.uk/news/660/cpsprodpb/1236C/production/_110840647_059863206-1.jpg
This is not a P95 mask, for example. Some device is being used to clean his hands, it looks like. No gloves.
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1976 — US: Four recruits die at Fort Dix of a new flu virus which is a hybrid of Asian flu with one that causes flu-like illness in pigs (“swine flu”). Worries about an epidemic similar to the 1918-19 swine flu epidemic which affected 500,000 Americans. Big vaccination campaign started.
Do you have a link?
Sure:
https://wwwnc.cdc.gov/eid/article/12/1/05-0965_article
It sounds like they never did figure out exactly what happened. According to the abstract: “Where did A/New Jersey come from? Why did transmission stop?”
The video in this post has a segment that addresses the problem of handling the bodies of the dead. It brought to mind the Chicago heat wave of 1995 when over 700 people died in Chicago. It was reported at the time that the coroner had to bring in nine refrigerated semi-vans to provide storage for the influx of bodies. This all stuck in my mind as I was driving truck at that time and went through Chicago on that July weekend at the peak of the heat and I was pulling a reefer-van.
From the phone call segment with the operator of the crematorium, it appears that, whatever the true numbers of the dead are, it was overtaxing their system.
In the book, THE GREAT INFLUENZA by John M. Barry, it states that “In 1918, the world population was 1.8 billion and the pandemic probably killed 50 to 100 million people, with the lowest credible modern estimate at 35 million. Today the world population is 7.6 billion. A comparable death toll today would range roughly 150 to 425 million.” https://www.amazon.com/Great-Influenza-Deadliest-Pandemic-History/dp/0143036491 Mr. Barry further states that “Although the influenza pandemic stretched over two years, perhaps two-thirds of the deaths occurred in a period of twenty-four weeks, and more than half of those deaths occurred in even less time, from mid-September to early December 1918.”
In a previous post, Mr. Firth put forth 700,000-800,000 deaths as an estimate for Covid-19.
If we round that to a million deaths and use one year as the period, we would see 2,739 deaths per day. If we estimate that the average weight of a body is 125 pounds then we have 342,465 pounds of cadavers per day. If we say that 45,000 pounds is a maximum load for a refrigerated semi-van, then we would have 7.6 semi-truckloads per day….. for a year.
If we use a mid-range of Mr. Barry’s estimated 1918 death toll and use one year for the period, we would have 2,283 semi-truck loads of bodies per day.
Just another aspect of our dilemma.
A rural mass grave from the time of the Black Death has been uncovered in England: it would appear that villagers took the bodies of the dead – including many children – to the local monastery where they were buried with great care, nicely laid out, dressed in shrouds. One can imagine ox- carts creaking along the road. In towns, with larger numbers, burial was much less ceremonious. The suggestion is that it was too many for the village graveyard.
London underground meanders to avoid plague pits:
http://www.bbc.com/autos/story/20160906-plague-pits-the-london-underground-and-crossrail
The yuan is breaking down. The yen is breaking down. The euro is on the verge of breaking down.
https://pbs.twimg.com/media/ERJhivAXkAAONXh?format=jpg&name=large
Doesn’t sound good!
Dont BRING me DOWN…
All together now….sing a long…
Classic ELO….when we were young and happy…😘
https://m.youtube.com/watch?v=z9nkzaOPP6g
Might as well enjoy the break down with cheer!
My son, 36, spent six years in China. He has been back in the US fur years. He is still hacking his lungs up. Basically damaged for life.
Beijing Cough!
https://m.youtube.com/watch?v=8t8mIC3i-xQ
China did the West a big favor by importing our very polluting industries and being our work house….thank you!
i suspect that anyone exposed to diesel fuel fumes, burnt or unburnt, for prolonged periods has permanently damaged lungs. that includes a lot of work boats and research ships. i don’t go near them unless considered necessary. the smell is sickening. i think that’s your body sending a message to stay away.
i’ve washed my clothes in the ship’s laundry after a cruise. after unpacking them at home, they still reek of diesel. back to the washer, and then airing out the suitcase. the fumes saturate everything.
doomphd, I sympathise. At one time, my job involved a lot of air travel, at a time when the back third of the cabin was filled with smokers. On arriving home, I would undress just outside our front door and pack my clothes into a big plastic bag, where they stayed until taken to the dry cleaners. A long shower got most of the pollution out of my hair, happily. One of the best things that happened to my generation is that smoking in public became unacceptable. Maybe the next generation will wage the same war against the public use of cellphones. And no, I would never set foot on a cruise ship, even if it had “Segeln Macht Frei” over the entrance.
China is now cracking down on dirty money as it works to contain the coronavirus outbreak.
On Friday, the Chinese government announced in a press release that banks can only release money back into the public after undergoing a disinfectant treatment intended to eliminate the coronavirus.
The initiative specifies that cash withdrawn from hospitals and other high-risk areas be “specially treated and sealed separately.” Treatment may include high temperatures or an ultraviolet light to disinfect the currency, which must then be stored for no less than 14 days before going back on the market.
According to the World Health Organization, it is unknown how long the coronavirus can survive on surfaces, though “preliminary information suggests the virus may survive a few hours or more.”
“Simple disinfectants can kill the virus making it no longer possible to infect people,” says WHO, also noting the importance of thorough hand-washing
https://www.yahoo.com/entertainment/china-begins-disinfecting-cash-attempt-203232682.html
Wash your money honey
“On Friday, the Chinese government announced in a press release that banks can only release money back into the public after undergoing a disinfectant treatment intended to eliminate the coronavirus.”
That’s good, but the trouble is once it’s changed hands a few times the chances of the virus getting on the money again makes it a risk to handle. My suggestion to the Chinese is wear disposable plastic gloves and put the paper money in a plastic bag. They’re wearing masks, so might as well go with gloves too.
Just as an aside, for those that have worn masks before, a lot of moisture is exhaled from the lungs and they get wet on the inside. The trouble with that is moisture makes for a perfect breeding ground for bacteria and viruses. Unless it’s the type of mask that’s sealed on all sides, air will enter via the path of least resistance, which isn’t through the filter but along the edges. It’s even possible that unsealed masks present a greater risk than no mask.
Also, if they did work, people might have to spend months with the masks, gloves and other apparatus.
In fact, I expect that they would need to look like the doctors in the intensive care facilities, with head to toe coverings.
“In fact, I expect that they would need to look like the doctors in the intensive care facilities, with head to toe coverings.”
I agree, but what a sight that would be, something out of a futuristic dystopian sci-fi movie. “Now we need everybody to learn the protocol of putting on your suits so they are hermetically sealed.”
That was exactly how David Vetter lived, the famous “boy in the bubble”.
Deutsche Bank: coronavirus may drag Germany into recession
Jill PetzingerJill Petzinger, Germany Correspondent, Yahoo Finance UK
Yahoo Finance UK12 February 2020, 07:23 GMT-5
The coronavirus outbreak could cause the German economy to fall into recession this year, according to a study published by Deutsche Bank Research.
“We expect the coronavirus to dampen gross domestic product by 0.2 percentage points in the first quarter, making a technical recession highly possible in the winter half-year,” the study says.
The economists said that the coronavirus “poses a risk to the global recovery, as hopes rest on a recovery in the Chinese economy.”
Germany’s export-driven economy is heavily reliant on China, its most important trading partner. Germany’s exporters already felt the effects of the cooling Chinese economy in 2019, and its car manufacturing industry is particularly vulnerable to any weakening demand from the enormous Chinese automotive market.
Everything is a technicality…
Tbh Germany should already be in recession even without the novel coronavirus, given what’s been happening to their manufacturing and exports. Their 0.2% and 0% GDP growth figures for Q3 and Q4 2019 respectively are highly suspect.
At least the virus gives them a rationale and a cover story for further bad news.
Coronavirus “May” drive Germany into recession. How about, “certainly will, if it isn’t there already.”
Recession seems likely to begin just about everywhere. I’m wondering just how nuts CB’s are going to get trying to counter it. Powell already said they will aggressively combat any sign of recession, so it would seem the gloves will come off to do just about anything at all, but the dangers of doing that as the cliff edge comes into focus – oh my!
Coronavirus causes 85% plunge in Adidas business in China
Jill PetzingerJill Petzinger, Germany Correspondent, Yahoo Finance UK
Yahoo Finance UKFebruary 19, 2020, 6:06 AM EST
he coronavirus outbreak has brought Adidas’ (ADS.DE) business activity in China to a near-halt.
The world’s second largest sporting goods manufacturer said on Wednesday a significant number of its stores and partner stores were still shut down, and those that were open are suffering a big drop in customer traffic.
As a result, business activity has plunged by around 85% since the Chinese New Year on 25 January from the same time the year before, Adidas said.
“In view of the daily changing situation, the extent of the overall impact on our 2020 financial year cannot be reliably quantified at this time,” said Adidas.
The company, headquartered in the Bavarian town of Herzogenaurach in Germany, is also seeing a drop in the numbers of customers visiting its stores in Japan and South Korea, but says it has so far not been able to quantify the impact of the virus outbreak on business activities outside of China.
Adidas said it will update in more detail on the impact of coronavirus on sales and profit during its annual earnings report in March.
Its German rival Puma (PUM.DE) said today that the virus outbreak could be expected to hurt sales and profits in the first quarter — half of its shops in China are temporarily closed — but that it was still expecting to hit its overall targets for 2020.
Adidas and Puma are two on a long list of global brands, including Apple and Starbucks, that have had to shut all or most of their stores as the coronavirus outbreak rapidly spread across China from its epicenter in Wuhan city in Hubei province.
Nike said last week that in the short term it expected the coronavirus situation “to have a material impact on our operations in Greater China,” but noted that its online business was still strong.
As of today, the death toll from coronavirus stands at over 2,000. More than 75,000 people have been infected, all but around 1,000 of them in mainland China
No need to panic just yet, we have it under control…really we do…..
When ever I feel panic rising, I just turn to those nice soothing ‘What is the coronavirus?’ articles in the MSM.
They set my mind at rest perfectly,and I’m left wondering how I could ever have been troubled by this for even a moment.
What really, really worries me is Fake News: do you know how many minds it troubles and misinforms each year? Shocking! Wake me up when the coronavirus is as bad as that!
” Fake News” or regrettable error such as The WHO site cites 2 available vaccines that do not exist according to Pr Didier Raoult.
And don’t forget the stockmarkets, Xabier – they’re doing grrreat!
“FTSE 100 index closed higher midweek as US stocks also headed north amid optimism over China and the coronavirus.”
https://www.proactiveinvestors.co.uk/companies/news/913195/ftse-100-closes-firmly-in-green-as-potential-chinese-economic-moves-boost-sentiment-913195.html
https://i.dailymail.co.uk/i/pix/scaled/2013/01/27/article-2268998-17314613000005DC-709_308x185.jpg
Yeah – financial markets appear to have completely decoupled from economic reality. It’s all about bailout expectations, stoked by CBs. The crazy thing is that it’s not irrational. As I recall, the JCB long ago started buying a Nikki ETF, so why wouldn’t other CBs? Plus, as you know, stocks are priced at the margin, so they wouldn’t even have to buy much. Of course, if they needed to they can create infinite fiat. So we can realistically have a true, honest to goodness, economic collapse while any asset markets CBs want to support can continue to reach record highs.
What can I say, while the human frontal cortex is an amazing thing, it’s not all it’s cracked up to be.
I should hasten to add that if panic selling ever ensues for whatever reason, CBs may not be able to buy fast enough to prevent a crash, especially considering that computers would be doing most of the selling automatically. So, buying in these times truly is like playing at a casino – just as Keynes lamented in the 1930s.
“Yeah – financial markets appear to have completely decoupled from economic reality. It’s all about bailout expectations, stoked by CBs.”
That’s it for sure. When a virus like this one has the opposite effect on Wall Street you know the CB’s are juicing it.
Herbie, please regard this message as in no way critical of your most informative post. But, even as I try to live with the possibility of a major pandemic, I am repeatedly shaken, alarmed, and demoralised by the many, many news articles that talk about supply chains, production, money, and, in sum, material things. Where moth and rust doth corrupt.
No man’s bankruptcy diminishes my wallet, but every man’s death diminishes me. This crisis transcends our selfishness, our exploitative society, our global economy, our desire for wealth. I fear it will become a refiner’s fire; no, I trust it will become one, and purify us with the chastisement of Nature, or, if you will, of Nature’s God.
Here on my Island, in retirement, with much time to reflect, this question remains: how, then, are we to live? And the same answer asserts itself: in fear and trembling, but yet in hope. If not for me, for those whom I love; for as the sundial in that English plague village reminded me: Ut umbra, sic vita.
Robbie, thanks for your concern about my feelings. It’s OK, I’m gonna celebrate by BIRTHDAY in a couple of days reaching early retirement age of 62! How about them apples?
https://m.youtube.com/watch?v=emapZzstxzU
Considering an early out and chill like yourself, even dropping doom sites like our
past mascot here, Fast Eddie, and ignore the show.
Found a nice spot here in Florida, which is ideal for an old man to putz around, play golf, fish, hike, camp and enjoy BAU until it falls off the cliff.
Have a few items on my plate 😁 and really don’t expect much at my age.
If I DON’T have a retirement….so what! Lived better than 99% of those ever did on the Earth.
Like a Greek God…
OK wishing myself a Happy Birthday!
Herbie, Happy Birthday. May you have many more, and may you enjoy them in good health and happiness.
In just two months, I shall be 75; but, God willing, still healthy and happy. Let us enjoy whatever He gives us, and be thankful.
In six short days, it will be Ash Wednesday, and a time for reflection, penitence, and renewal. Dominus tecum.
Thank you! And you and I made it past the finish line and now for some Victory laps!
https://m.youtube.com/watch?v=zAux_lN9rIg
Hope he kicks the can for a few more years!
Nice summary. It looks like in your last article you seemed to think people were overreacting to the initial outbreak of this virus. Now it appears as if you’re more concerned and listing off the reasons it could hit harder than folks are expecting. Is that a correct assumption on my part and do you believe that this has the potential to get completely out of hand with what we already know?
It appears as if China is under-reporting cases/deaths and because their medical systems are clearly overwhelmed; it’s also possible that they can’t help it. If they don’t have enough test kits and kits are inaccurate, how do we expect China to know how bad it is? According to WHO data pulled in from https://www.worldometers.info/coronavirus/ it appears as if the death rate is 12% of cases in an overwhelmed system. There could be more cases and the real death rate could be quite a bit higher or lower. Obviously you’re not going to have that death rate if cases are isolated and the patient receives great medical care. But if it really spreads so easily perhaps it’s already too late.
I think this is moving into the realm of a 2007/2008 level of crisis, just from what’s happening with China. Now we have cases in Egypt, Iran, US, Japan, Singapore, S. Korea, Taiwan, and on cruise ships that could very easily infect tens of thousands of other people. They may already be infected and in the incubation period and we won’t find out for another 3 weeks. There’s no way everyone who is presently infected is accounted for, what with all sorts of people randomly disembarking on flight/ships in all directions at all hours of the day. Many other sustained transmission vectors are probably going on right now.
I see airliners, cruise ship corporations, and all resource/commodities that go in/out of China as being massively impacted from this right now. That’s going to hit big banks in the next few quarters through loans and derivatives as well. More economies than China could collapse here. Iran for example is in bad shape and now they have infected there. How is that going to impact their oil exports, particularly when China is no longer taking their crude? Their economy is in a dangerous situation right now, as is anyone’s that’s overly reliant on China. The supply lines are holding for now in the US but with 25-35% of goods on Walmart/Target’s shelves being from China this could get pretty bad in another few months, especially if the cases keep growing exponentially.
I think that the situation is a lot worse than 2008-2009. I think that the situation definitely has a possibility of getting completely out of hand, simply from the damage it is doing to China. The problem is the rest of the world’s dependence on China.
This is without even considering what the virus does to the rest of the world.
One exacerbating factor with lower respiratory illness like Covid-19, that is present in China but not in most of the Western countries gripped by coronavirus panic is environmental lung damage. Millions of Chinese now living in modern cities, especially ones now in the 60s and above, grew up in relative poverty in the countryside where open flame solid fuel cooking was (and still is) the norm.
As recently as 1990 a quarter of a million people in China died due to air pollution every year. Rapid modernisation has cut that number to around 60,000 but the legacy of people especially vulnerable to lower respiratory illness remains. That’s not to say that coronavirus won’t spread, or that it couldn’t mutate into a strain like the 1918 flu that killed young, fit people by overstimulating their immune reactions, but it should put another perspective on the current outbreak.
https://quadranting.com/2020/02/13/dr-strangefear-or-how-i-learned-to-stop-worrying-and-love-sars-cov-2/
India and Africa both have the same “open fire for cooking” problem, I believe. To some extent, it is going away in India, with the use of bottled LPG gas for cooking.
India seems to burn used clothing for some processes (making little clay pots for Delhi, I believe). This also gives off a lot of particles. I believe this is discarded used clothing from rich countries.
While China is at a different level of pollution, everyone in the West has lungs gravely damaged by pollution too – just not as obviously.
Diesel pollution did a lot of damage, killed a great many, and is still going on.
I recall in one of his articles, David Korowicz stated in one paragraph that we know the system is resilient because if it wasn’t it wouldn’t have lasted this long given the many crises over the decades. But the rest of the long article was about all the vulnerabilities. It came across to me like saying the cup is half empty, but we know it’s also half full because if it wasn’t, it wouldn’t be half empty; nevertheless let’s just talk about the empty part.
The reality is that the system is so vast and complex that we simply can’t predict the timing of its demise any better than geologists can predict the timing and location of earthquakes even though they know with certainty they will happen. And yet the ongoing certainty here among highly intelligent and well educated commenters, for years, that the end must be near is quite remarkable. I read once that uncertainty is so uncomfortable that entire religions arose to help cope. Sounds reasonable to me. Spoiler alert: we just don’t know and almost certainly can’t know.
However, there are some non precise tools how to narrow it down somewhat.
For example by applying “3rd/4th turning” concept provides us with clues the system is long overdue for profound change (at the minimum) prior ~[2025-2040] window..
There is in theory the possibility that the collapse will not be complete. It many leave some countries operating, at least for a while.
There is also the possibility that the collapse will extend over a number of years. Food and water may hold up, for example, while many other things disappear, at least in parts of the world.
We know that something that go on forever will at some point fail. Exactly how and when it will fail is a mystery. In a way, perhaps this is a blessing.
I completely agree that collapse is the most likely outcome for reasons you’ve articulated well elsewhere. In fact, you opened my eyes to vulnerabilities I hadn’t thought of. It’s the sometimes incessant talk of imminence without evidence that’s too much for my taste (including the rolling this year, or next year, etc.) that’s quite common here. There are still vast amounts of resources available and sharp economic slowdowns short of collapse may extend BAU beyond linear interpolation. Of course, gross mismanagement and corruption may very well bring about complete collapse with plenty of resources still readily available (stranded, I suppose.)
Here’s an anecdote: when I noticed health insurance premiums and deductibles and copays (in the U.S.) start to skyrocket, I said this is crazy and no way can it continue because it will soon get so expensive that only the wealthiest will be able to afford health care. That was just under 30 years ago. It took me a while to stop expecting improvements right around the corner, even though I still think the current and longstanding trends are unsustainable. Now that I think about it, I wonder if that’s a microcosm of sorts for BAU or IC.
That’s why we have oracles. “If Croesus attacks Persia, he will destroy a great empire”. And I’m sure we all remember what happened next.
Australia is following closely what is happening in China. The Sydney Morning Herald:
https://www.smh.com.au/world/asia/china-races-to-contain-job-losses-as-coronavirus-crisis-batters-economy-20200219-p542h4.html
The big issue is a “lack of jobs” issue. As the article says:
Back at the time of early epidemics, people seemed to work, as much as they were able, even if this spread the virus around a little more quickly. From a theoretical point of view, I think that this is close to the only thing an economy can do. If wages in an entire geographic area are cut off, the system will tend to collapse. It will be almost impossible for the economy to resume at the previous level.
I am not certain that spreading out an illness over time is helpful either, unless doing so allows the use of new drugs (or vaccines) that are truly helpful in greatly scaling back the symptoms. The longer an economy is not able to operate, the less the likelihood it can get back to a normal level.
Coronavirus may be the straw that breaks the back of oil fracking
16 Feb 2020
https://fortune.com/2020/02/15/coronavirus-oil-prices-fracking/
Iran’s crude-oil sales have been battered by a sudden downturn in demand from its last big trading partner, China, following the deadly coronavirus outbreak, U.S. and Iranian officials said, a blow that lands as the Islamic Republic faces the risk of an economic collapse
https://www.wsj.com/articles/coronavirus-outbreak-slams-irans-embattled-economy-11581627392
Thanks! Iran’s big issue is this:
With China’s demand down, this is a huge problem for Iran. The Fortune story tells the problem with low prices, without as much demand from China.
And coronavirus has now reached Iran:
“Iranian authorities confirmed on Wednesday two cases of the new coronavirus, the first in the country, the semi-official ISNA news agency reported.”
https://apnews.com/c4d12a3d3061f3557ac2b959bca5716d
“The illness, now officially labeled COVID-19, has raced across the globe, infecting tens of thousands of people and killing more than 2,000, predominantly in China.
“Countries have closed their borders to Chinese travelers; airlines have slashed flights and limited routes. Points of transit across Asia—train stations, bus depots, airports—have seen traffic plummet, and some are nearly deserted.”
https://www.theatlantic.com/international/archive/2020/02/economy-coronavirus-myanmar-china-tourism/606715/
“The coronavirus outbreak in China could be about to affect menus in Japan.”
https://www3.nhk.or.jp/nhkworld/en/news/20200218_49/
“Jaguar Land Rover has warned it could run out of car parts at its British factories at the end of next week, as the coronavirus halts supplies from China.
“Britain’s biggest carmaker added its voice to a chorus of companies counting the cost of the outbreak, as the epidemic weighs heavily on international business and trade.”
https://www.theguardian.com/business/2020/feb/18/uk-car-factories-running-out-of-parts-due-to-coronavirus-warns-jaguar
“From Sony to Takeda Pharmaceutical, top Japanese companies across industry lines are telling employees to work from home as the country continues to see a rise in coronavirus cases.”
https://asia.nikkei.com/Spotlight/Coronavirus/Thousands-work-from-home-as-Sony-and-Takeda-join-telework
I wonder how people doing manufacturing work from home.
Although the looks and feel of JLR was usually exceptional event, the longer term value in terms of quality was not there. Now with these supply chain issues only a fool would by this brand now, and should the virus issues be resolved successfully in the future, lets rather wait another year afterwards to settle things down. It’s like the maxim of waiting with purchase for the release of first “facelift edition”, as only uninitiated guinea pigs are buying brand new model (issues everywhere) cars or any industrial made products in general.
A person wonders how many cars will be built this year. Certainly fewer than in 2019.
So, we now have simultaneous supply and demand shocks for autos on top of already weakening demand. Should be interesting.
It is hard to see how the vegetable import problem will improve in the short term. A person wonders whether it would be possible to import the virus on the vegetables, also.
“The Federal Reserve has doled out tens of billions to calm the short-term lending markets after they went haywire in September.
“But initiatives by the U.S. Treasury Department — to ensure it always has enough cash to pay its bills as the deficit soars to a trillion dollars — could make it harder for the Fed to prevent a repeat.”
https://finance.yahoo.com/news/fed-doesn-t-want-another-110000351.html
“The build-up of corporate bonds has hit unprecedented levels since the 2008 financial crisis and created a global stock of outstanding debt with a lower rating quality and higher payback requirements compared with past cycles, the OECD said.”
https://www.reuters.com/article/us-corpbonds-oecd/quality-of-corporate-debt-falls-as-bond-stocks-hit-all-time-high-oecd-idUSKBN20C2DS
I can believe the quality of debt is down. If the impact of China’s problems were factored in, the quality would be even lower.
“European stock markets are set to open in positive territory Wednesday, helped by gains in Asia, as market participants expect central bank largesse to mitigate the damage caused by the outbreak of the coronavirus in China.
“”Any investor concern around impact on demand globally from the virus will be offset by expectations that global central banks will ride to the rescue,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.”
https://www.investing.com/news/stock-market-news/stocks–europe-seen-higher-looking-for-central-bank-largesse-2088052
“The idea that central banks can address any problem that emerges in markets is surely one of the most dangerous in finance. Since the outbreak of the coronavirus in China, it is reaching the point of parody.”
https://www.ft.com/content/843af018-4c23-11ea-95a0-43d18ec715f5
“Mexico’s central bank cut interest rates to 7% last week, marking the 800th interest rate cut by a central bank since the Lehman Brothers’ bankruptcy in September 2008, Bank of America Global Research notes…
“The number of rate cuts from central banks have picked up steam since last year when the global economy’s growth rate stumbled to its slowest since the financial crisis.”
https://www.axios.com/central-banks-interest-rate-cuts-great-recession-35ddfceb-41ad-4819-9e0b-fb89fb449d4d.html
So, what do central banks do if recession really hits?
Quite insane.
This is in ‘Plague, what plague?! There’s a feast at the palace tonight, see you there!’ territory.
Junkies looking for the next fix, and thinking of nothing else.
Finance can indeed disconnect from physical reality, proven……
The disconnect between the giddy markets and the actual economy is certainly growing ever more jarring. Oil up today, too:
“Oil rose to a two-week high on hopes that economic stimulus from China can revive demand battered by the coronavirus…
“Crude is being supported along with equities by signs that China, the world’s biggest oil importer, is considering steps to shore up its economy, such as direct cash infusions and mergers to revive its airline industry.”
https://www.chron.com/business/energy/article/Oil-Stable-as-Rosneft-Sanctions-Offset-Virus-Led-15067053.php
I wonder how the prices are staying up this way. Magic?
I see US stock markets are up today. Oil prices are up. It looks like everything is going well.
The Age of Miracles clearly didn’t end with the Middle Ages.
Doom is so fake news……
“Rail blockades have brought Canada’s manufacturing industry to a virtual standstill, and the industry will start seeing plant closures and temporary layoffs soon if it continues, the group that represents the industry says.
“Rail and transport protests are hurting a key cog of Canada’s economy at a time when it can hardly afford the hit…”
https://www.cbc.ca/news/business/manufacturing-rail-blockades-1.5466893
“Shortages of food and fuel could be among the fallout from continuing rail blockades by Indigenous groups and environmental activists protesting against a natural-gas pipeline project on Canada’s west coast, warn the country’s retailers and manufacturers…
“Canada’s largest cargo rail network has been ground to a halt in Ontario and in the west coast Canadian province of British Columbia.”
http://www.xinhuanet.com/english/2020-02/17/c_138792837.htm
The paper this comes from would seem to be part of the network of papers controlled by the Chinese government. Thus, we can depend on it for as reliable information as the government is giving about deaths and illnesses. Still, it is possible that there is some truth to this story. It would seem like vegetables could be imported from a different direction pretty easily, for example. This is one place where the system would seem to have a fair amount of redundancy.
I can believe that manufacturing is being hit, more than food. Food supplies come from a wider variety of sources, although it may take time to set up different supply chains.
“This situation is regrettable for its impact on the economy and on our railroaders as these protests are unrelated to CN’s activities, and beyond our control,” CN spokesman Alexandre Boulé said in the statement.
Of course the situation is not beyond your control. Do what your predecessors of a century ago would have done: shoot the protesters on sight. Problem solved. A civilisation that refuses to defend itself deserves to collapse/
“A Dubai-based operator of ports and terminals around the world is returning to full state ownership with a proposed transaction and a subsequent delisting from Nasdaq Dubai.
“This could be one of the latest signs that the oil-rich countries in the Middle East are still struggling to shore up budgets and finances in the aftermath of the 2014 oil price crash.”
https://oilprice.com/Energy/Energy-General/A-Middle-East-Financial-Crisis-Is-In-The-Making.html
“In Dubai, the shopping malls and expat bars are as crowded as ever, but the economic outlook is not as sunny as the weather outside. Jobs figures are at their weakest for a decade, the low point of the financial crisis, as the city’s debts continue to bite.
“In Saudi Arabia, meanwhile, the reform plans of the “ambitious” crown prince, Mohammed bin Salman, show signs of coming off the rails.”
https://www.thetimes.co.uk/edition/world/when-will-the-gulf-go-bust-wtjjhscf0
The Middle East needs higher prices!
According to the article:
If oil revenues are down, everything is down, however.
“In my 2010 book, Crisis Economics, I defined financial crises not as the “black swan” events that Nassim Nicholas Taleb described in his eponymous bestseller but as “white swans”. According to Taleb, black swans are events that emerge unpredictably, like a tornado, from a fat-tailed statistical distribution. But I argued that financial crises, at least, are more like hurricanes: they are the predictable result of builtup economic and financial vulnerabilities and policy mistakes.
“There are times when we should expect the system to reach a tipping point – the “Minsky Moment” – when a boom and a bubble turn into a crash and a bust. Such events are not about the “unknown unknowns” but rather the “known unknowns”.
“Beyond the usual economic and policy risks that most financial analysts worry about, a number of potentially seismic white swans are visible on the horizon this year. Any of them could trigger severe economic, financial, political and geopolitical disturbances unlike anything since the 2008 crisis…
“Financial markets, meanwhile, remain blissfully in denial of the risks, convinced that a calm if not happy year awaits major economies and global markets.”
https://www.theguardian.com/business/2020/feb/19/the-white-swan-harbingers-of-global-economic-crisis-are-already-here
“It is not unusual for these organizations [like the World Bank and IMF] to be optimistic: after all, they do not want to be seen as naysayers, or prophets of doom, especially if their pronouncements are later denounced as self-fulfilling prophecies.
“But ‘talking up the economy’ can have grave consequences, as with the 2008-2009 global financial crisis (GFC). Then, the IMF revised its forecast upward in July 2007, a month before the US ‘sub-prime’ mortgage crisis morphed into the worst global downturn since the Great Depression of the 1930s.
“Meanwhile, the OECD was confident that any US ‘soft-landing’ would be offset by robust European economic performance. Such forecasts fostered a false and ultimately dangerous sense of invulnerability and complacence before the storm broke.”
https://www.pressenza.com/2020/02/global-economy-still-slowing-dangerously-vulnerable/
Agreed!
Show me the MONEY!
Chinese Companies Say They Can’t Afford to Pay Workers Now
Lulu Yilun Chen and Jinshan Hong
BloombergFebruary 19, 2020, 12:45 AM
(Bloomberg) — A growing number of China’s private companies have cut wages, delayed paychecks or stopped paying staff completely, saying that the economic toll of the coronavirus has left them unable to cover their labor costs.
To slow the spread of the virus that’s claimed more than 2,000 lives, Chinese authorities and big employers have encouraged people to stay home. Shopping malls and restaurants are empty; amusement parks and theaters are closed; non-essential travel is all but forbidden.
What’s good for containment has been lousy for business. With classes canceled at a coding-and-robotics school in Hangzhou, employees will lose 30% to 50% of their wages. The Lionsgate Entertainment World theme park in Zhuhai is closed, and workers have been told to use up their paid vacation time and get ready for unpaid leave.“A week of unpaid leave is very painful,” said Jason Lam, 32, who was furloughed from his job as a chef in a high-end restaurant in Hong Kong’s Tsim Sha Tsui neighborhood. “I don’t have enough income to cover my spending this month.”
Across China, companies are telling workers that there’s no money for them — or that they shouldn’t have to pay full salaries to quarantined employees who don’t come to work. It’s too soon to say how many people have lost wages as a result of the outbreak, but in a survey of more than 9,500 workers by Chinese recruitment website Zhaopin, more than one-third said they were aware it was a possibility.
The salary freezes are further evidence of the economic hit to China’s volatile private sector — the fastest growing part of the world’s second-biggest economy — and among small firms especially. It also suggests the stress will extend beyond
https://finance.yahoo.com/news/chinese-companies-t-afford-pay-020241284.html
,….
At Foxconn Technology Group’s Shenzhen factory, workers returning from the Lunar New Year break are quarantined in the dorms before they can return to work. They’re getting paid, but only about one-third of what they’d earn if they were working.Without full, regular paychecks and few places to spend them these days anyway, Chinese consumers could cut spending in some categories to zero, said Bloomberg’s Shu. And it may not bounce back: For example, she said, if you skip your daily latte for two months, you’re not likely to make up for those missed drinks later in the year.
With limited reserves and less by way of remote technologies, the smaller companies that underpin China’s vast private sector are particularly vulnerable. Among broader efforts to help firms stay afloat, policy makers have called on state-run banks to make loans at cheaper rates to small businesses in particular.
Sounds like a recipe for disaster. Cutting off wages is cutting off the “self-reinforcing feedback loop” that makes the system work.
Not paying wages is a huge, huge issue. It tends to bring the whole system down. I have commented on this in some other comments.
YOur conclusions are that the Chinese Era will end. But for me, we are already living in The Post-Chinese Era https://www.linkedin.com/pulse/post-chinese-era-begins-osvaldo-coelho/
I am afraid I don’t agree that the new era will be “service heavy.” We need to go back to local manufacturing. Services will wither away.
“Can Solar Power Compete With Coal? In India, It’s Gaining Ground
“Electricity from sunlight costs less, a hopeful sign for developing nations building out their power grids”
https://si.wsj.net/public/resources/images/B3-GA685_INDIAS_700PX_20200204025937.jpg
” … Solar’s big problem: It generates power only when the sun shines. Wind power, similarly, works only with wind. So displacing fossil fuels could require cheaper ways to store energy. And the more renewables in the power-transmission grid, the more the grid will need to be rebuilt to accommodate those special characteristics.
“That inefficiency is why the IEA forecasts the amount of power solar generates to rise to only 11% of the world’s total by 2040, around half that of coal or natural gas.”
https://www.wsj.com/articles/solar-power-is-beginning-to-eclipse-fossil-fuels-11581964338
Solar also makes the grid less stable. The price subsidy it by letting solar “go first” is terribly unfair to other operators.
Looks like the “never have symptoms” you tube video got censored.
Need different reference then. There seem to be lots of them, but not necessarily videos.
Thanks for the updated article on the Corona Virus situation, Gail.
Now it still may be possible for the virus to take its course with BAU returning without the hiccup putting a permanent ding or collapse in the world economy, however there is an analogy to what happened from Earth’s ancient history. For those familiar with the meteor that hit Chixulub, Mexico, it just happened to hit a deposit of gypsum, that spewed into the atmosphere, adding to other debris blocking sunlight long enough to cause an extinction event. Scientists say if it landed just a few moments earlier or later and it wouldn’t have been anywhere near as devastating.
In this case, the virus got started in the heart of the world’s manufacturing hub? Anywhere else in the world and it wouldn’t have been as initially bad, providing more time to potentially develop a vaccine while BAU chugged along. Now we’ll track the situation to find out if it was our version of the meteor. Now I’m not saying our species could become extinct, but our oil age economic engine could.
Quite true: in South America, Africa, it wouldn’t have mattered a bit in so far as international ramifications are concerned – just another humanitarian disaster.
But in the new ‘workshop of the world’, industrially-developed Asia, a very different matter.
I am afraid you are right. Perhaps there is a guiding hand behind all of the coincidences that shape the world economy.
if you have not already it is time to stock up on food as the window to do so may be about to shut
Tedros at the WHO recently stated, just a day or two ago, in one of his wonderfully uninformative and evasive, speeches that ‘we have a window but can’t say for how long it will be open’.
He was referring to the preparations that need to be made by medical authorities for the pandemic which is probably inevitable, but this applies just as much to us and we should take the hint. Everything is in code today.
Due to great political and economic sensitivity, pandemics – like recessions -will only ever be declared in retrospect, not in advance.
WHO is a political organization. It can’t say anything that will offend anyone.
Exactly: nonetheless, one can read between the lines of their bland announcements – when Tedros says that the ‘window’ for the world outside China will not be open for long, we should take note.
https://www.worldometers.info/coronavirus/
Singapore up from 77 cases to 81, a 5% increase, higher than yesterday’s 3% increase…
these are still small numbers, but the increase is exponential, and Singapore, though trying very hard, has not yet stopped the upward spiral…
South Korea cases spike almost 50% from 31 to 46…
no breakout epidemic other than in China, but by March or April we may be acknowledging the inevitable…
great summary of the situation
Possible Black Swan event. Get ready.
2020 Understatement of the Year candidate…
if you want to speculate about “possible”, this possibly could be the biggest Black Swan event EVER…
since the world is at its highest population ever, the possible consequences of this real actual true Wuhan Black Swan have a target range that exceeds any past event…
I’m up for debate about the biggest past Black Swan “ever”, but this could become the biggest…
possibly…
For example, how will the Americans and Australians who caught COVID-19 on the cruise ships fare? What will the health outcomes be of non-Asians being brought back from Wuhan to their native countries on special planes?
These people are generally from the elite class, healthy and wealthy.
It may skew the data.
But they do give a “best case” scenario. How do non-smokers, in pretty good health, fare?
According to the accounts I have read, these people are also old. Most of them are over 60; many over 70. And I doubt they are that healthy; being rich; they will be self indulgent, unwilling to fast or exercise, and reliant on expensive Western medicine to keep them going. Lock them up on a cruise ship, which is really just a high tech concentration camp, remove the expensive and labour intensive health care, and my guess is that they will die like flies.
A medical survey a few years ago of well-heeled westerners, of 60 yrs of age, showed – to the great surprise of the physicians – that all of them had at least one life-threatening condition, and most had 2-3.
This was entirely unexpected, given their higher social status and the conditions in which they had lived and worked.
“If China is barely producing anything for world markets, the rest of the world will suddenly discover that long supply chains weren’t such a good idea.”
Perhaps a good thing? Sometimes you need to smack people in the face to get them to wake up to the obvious…
Anywhoo, wanted to share this:
https://www.youtube.com/watch?v=gojy7ChZ8h8
Chris sounds to be in agreement that the next 1-2 weeks should likely let us know where Covid-19 is heading for the rest of the world…
Cheers,
-GBV
My birthday is May 1st I figure it will be clear by then.
Thanks for the link to the new video. I am afraid I am still not convinced that testing, testing, testing and masks are going to do very much good. If hospitals are going to get overwhelmed, I am afraid this will happen, regardless of the amount of testing or masks. If people dodge getting the virus from one person, they likely will find another person to get it from fairly soon.
It is good news that the plasma treatment seemed to work. This means that there are some antibodies developing that are working.
next 2 weeks? yes and no…
obviously we will know (a tiny little bit) more in 2 weeks, but this health/economic crisis is a long term one…
I don’t think 2 weeks will give a clarity to the long range prognosis…
we hear about symptoms not appearing for 24 days etc…
I think it’s going to be region by region crises…
new one(s) every month or two…
he is/we are all guessing… time will tell…
Perhaps we will start to get more reports of the virus that are somehow out in the community, but are not related to getting off a plane or ship. We know that there likely are quite a few cases of this kind, but they are not showing up in the numbers.
China has taken drastic (heroic?) measures to slow (stop?) the spread. When everyone in China has had the virus and the survivor have survived my guess is they will carry the virus for ? months, years? life? Then the rest of the world will get it. Unless it mutates to a milder form we are all going to get it. Being a non-smoker, healthy, non-polluted environment I am optimistic. On the negative side male, not young 61. Bring it on let’s get it over with one way or the other.
We don’t know for certain that having the illness gives immunity. Some sources say it comes back worse! If this happens, the problem is the body’s over-reaction to the virus. An interview with Dr. Lipsitch gives some insight:
https://news.harvard.edu/gazette/story/2020/02/harvard-expert-says-coronavirus-likely-just-gathering-steam/
Well, not good for me but maybe just what the world needs.
> COVID-19 transmits extremely easily from person to person.
OR the protective measures (isolation, masks, etc.), are not good enough.
Right from the beginning, an expert on TV said “Masks against viruses have to be a very good fit to the face, therefore solid with straps, and the filters mounted on them changed regularly and disposed of properly. These are expensive and NOT like the simple masks being worn by everybody I’ve seen. You can’t wear a mask and smoke at the same time.
https://podcasts.apple.com/us/podcast/coronavirus-treatment-parentese-helps-baby-talk-seals/id151485804?i=1000464942696
This is a link to an interview show with several people interviewed. The first person on the show is with a Dr. Sheean from Univ. of North Carolina at Chapel Hill, talking about the drug Remddesivir that the company Gilead has been working on. The drug works by stopping replication of the virus. The drug is intended for coronaviruses in general and has been tried on Ebola. It was tried on one patient with COVID-19, and the patient got better. There is no proof that the drug was the reason why, but I think they said that the patient was not doing well before the drug was tried. The drug is still in trial stages, but China is testing it on some of their patients, too.
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A recent article claimed(I believe it was Chris Martinson site) that Asians were not anymore vulnerable than other ethnic groups but smoking was a big risk factor that increased mortality.
Smoking is still very common in China
I noticed that when I was there. A lot of the men smoke.
Also, just breathing the air there is probably equivalent to smoking several packs a day.
Between smoking and air pollution, I would think the Chinese would be very vulnerable to lung diseases. They also have a high incidence of tuberculosis.
I keep thinking this is the main reason we are not seeing this spread outside of China that much or at least not with the severity that it has in China.
What of containment? Maybe still remotely possible? Measures needed!
Dr. Tom Friedman explores the issues in What’s next for Covid-19?
https://www.thinkglobalhealth.org/article/whats-next-covid-19
There is an article (not yet peer reviewed) out of the Los Alamos National Laboratory that seems to say that about all we can do with our many efforts is slow the speed with which the virus spreads. https://www.medrxiv.org/content/10.1101/2020.02.07.20021154v1.full.pdf
I keep hoping I will see a final version, but I haven’t seen a final version yet. Maybe they will change their numbers in the next version.
The numbers they gave in the report gave an initial daily increase in illnesses of 29%. With all of the restrictions that took place in Wuhan, this was cut back to 14% per day. This increase is still incredible.
At these levels of increases, and with the amount of undetectable transmission that is going on, it is difficult to make an adjustment to the system that truly fixes the problem. If the rate continued at 29% per day, in theory the virus could spread worldwide in 90 days. At an increase of 14% per day, it would spread worldwide in about 6 months. At an increase of 10% per day, it would spread world-wide in about 8 months.
Admittedly, transmission will likely slow in countries where people are more spread out and customs are different. But we still seem to have a problem with the lack of being able to tell who has it and is spreading it.
At best, we are talking about a vaccine being available in 18 months. Somehow, it would have to be distributed worldwide as well. We don’t seem to have a chance to slow the spread enough to make things work very well.
What we are seeing now is the very beginning of an exponential curve. The amount look low for a long time, before the suddenly seem to take off.
Agreed. 8 doctors warned of it in Wuhan the end of Dec. Beijing was notified early January- BUT refused to stop the Lunar New Year celebration/travel. That probably spread it faster than just local transmission.
The Chinese official attitude is truly disgraceful: I see that even now the Chinese ambassador is pressing the NZ government hard to lift travel restrictions which were imposed to protect New Zealanders.
She maintains that cases of the virus ‘have been falling for 13 days’ and that it is all nearly over!
She also states that ‘this is not the view of the Chinese government alone, it is the view of the WHO, and as members we ought to follow what they say’.
We should recall that Tedros Yesus – the shifty Ethiopian at the WHO – argued that no travel bans whatsoever should be put in place, an argument very pleasing to Beijing but with no medical justification.
We would actually be in very deep trouble if governments had all followed this dubious advice.
Tedros is condemned by his own words, in his most recent speech at which he stated that there is ‘a brief window to prepare’ which will close some time soon.
I did a quick calculation for this thing spreading from just 1 infected person in this city, and it is clear that within a month or so no medical system could prepare adequately given the high % of serious complications – everyone will be on their own at home more or less, sink or swim.
Not to mention the inadvisability of attending an over-crowded hospital – dangerous places at the best of times as we know from the stats on disease contracted while being resident at the best of times.
To state the obvious, no medical system can grow exponentially, even with warning…..
I did a calculation of the expected number of hospitalizations in the US, if 70% came down with the virus and 20% were hospitalized. If you could spread these hospitalizations over a full year, it would add 46.2 million hospital admissions to the recent 34.3 million hospital admissions. These hospital admissions would be longer than average, as well. We would need to cover 2.44 times as many bed days as we used in 2018 (including regular as well as coronavirus hospitalizations as well as other hospitalizations). Somehow, we would need to more than double our hospital bed capacity. I have no idea how much would need to be added to intensive care capacity.
We could not possibly afford to make a change of this kind. We would not have staff for this many beds either. Hopefully, some sort of drug becomes available, or it doesn’t affect our population as badly as others. The story is incredibly bad, if you work out the numbers of how many could be hospitalized, and how long the hospitalizations might be (over ten days on average). Length of stays are from this report: https://www.medrxiv.org/content/10.1101/2020.02.07.20021154v1.full.pdf
Nice summary of where we are today. Do you think we can get another at the end of the month, or will they just come as you see the need?
Don’t touch that dial boys and girls. Stay tuned for previews of our next exciting episode!
I have been writing posts about every three weeks. To some extent, they need to fit in between other things I am doing.
Normally, I would put up a post about March 10, but I may think about putting one up sooner. I plan to be traveling two different places. I will be in Houston for the CERA meeting the week of March 9 – 14. Since I write about energy related issues, I get in as “media” (free). I have never been to one of these conferences. I am interested in hearing what people have to say about low oil prices.
The other trip is a short personal trip, before the CERA meeting.
So I may be writing another post in closer to two weeks, rather than three.
Very informative! Thanks Gail. Tim
IF ( a big IF) the global economy gets through this virus crisis without a big disruption, it might considered evidence of how resilient is our massively fossil-fueled industrial global system. David Korowicz and others have tried to document the fragility of this system to disruption. But with so much energy still available to the globe, the global economic system may be able to re-organize and adapt and life may go on somewhat as before. This will be quite the test whether we are very fragile or fairly resilient. My guess and hope is resilient. We shall see….
We shall see. I am afraid of a big disruption.
I think we’ve already seen that it is very resilient. That doesn’t mean it can go on forever and it doesn’t mean that there won’t be a point where that resilience fails dramatically.
Right. Sooner or later Korowicz will be proven right and entropy will have its way with us. The question is one of timing.
In that regard, this coronavirus may prove illuminating. Assuming no very near-term resolution, the economic fall-out from it will be be an absolute acid test of the central banks’ ability to reverse a serious downturn when they *appear* to lack ammo.
In a few months we could either be in a worst case scenario or actually feeling quite reassured that there is still life and resilience in the global financial system.
Just love your stuff.
Thanks!
So do I. It seems a couple of my comments were folded in to the summary; I’m honoured to have moved this discussion on a little, if only by 1%. Thank you, Gail.
I haven’t been giving recognition to commenters. This would get to be difficult. I get a lot of my ideas directly or indirectly from commenters.
Gail, no recognition is needed or required. It is enough to have helped with the conversation.