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?
“The economic slowdown is wreaking havoc on the automobile industry in India. All major automakers in the country reported declining sales throughout the course of last year and the downturn continued this year, as well as manufacturers, reported a 13 percent decline in January year-on-year. Now, vehicle registration data has rubber-stamped the downturn.”
https://www.cnbctv18.com/auto/vehicle-registration-down-over-7-annually-as-auto-slowdown-continues-5340971.htm
“One of the key indicators of India’s economic slump is the declining consumer goods production rate.
“As per the Index of Industrial Production, the production rate was 5 per cent in 2017-18 and fell to 1 per cent in 2019-20. This decline was both in terms of value and volume. This means consumers were not only buying lesser quantities but also opting for cheaper alternatives…”
https://www.telegraphindia.com/opinion/slow-death-of-industrial-output/cid/1747100
“China car sales plunged 92% during the first two weeks of February as the coronavirus outbreak kept buyers away from showrooms. … It was even worse in the first week, when nationwide sales tumbled 96%…”
https://www.bloomberg.com/news/articles/2020-02-21/china-car-sales-tumble-92-in-first-half-of-february-on-virus
“Cracks in Hong Kong’s retail industry are widening as the coronavirus fallout heaped pressure on more players… The viral outbreak has slammed tourist arrivals this year, especially among mainland Chinese who have become the industry’s lifeblood in recent years.
“…[this] follows months of social unrest in 2019 that sank the economy into the first contraction since the global financial crisis in 2009.”
https://www.scmp.com/property/hong-kong-china/article/3051649/cracks-hong-kongs-retail-industry-widen-dickson-concepts
That is excellent news for China. A dramatic drop is car sales, and in the consequent pollution, will probably save thousands of lives.
Except that there are other problems China has besides pollution. It has problems with getting enough food, if people aren’t working. It also has problems with citizens affording enough food, if the food can be raised.
Thank you, Gail, and I agree. It seems every silver lining conceals a cloud!
“Bank of Japan Governor Haruhiko Kuroda said he was watching the coronavirus impact on the economy with “grave concern,” in a nod to the growing toll the epidemic is taking on manufacturing activity and exports across Asia…
“Massive business disruptions in China are starting to spillover into the global economy, with parts shortages rippling through supply chains as far away as the United States. Asian economies that are heavily reliant on exports to China and Chinese tourists are being hit hard on both fronts.”
https://www.reuters.com/article/us-china-health-global-economy/bojs-kuroda-says-watching-with-grave-concern-as-virus-hits-asian-economies-idUSKBN20F0MP
“Asia’s biggest economies are already feeling the brunt of the coronavirus shock. Key gauges for manufacturing in Australia and Japan fell while early export orders for South Korea showed a slump in Chinese demand.”
https://www.japantimes.co.jp/news/2020/02/21/business/japan-australia-economies-coronavirus/#.Xk-czyj7TIU
“Japan’s factory activity suffered its steepest contraction in seven years in February, as the widening fallout from the coronavirus outbreak in China reinforced the risk of a recession in the world’s third-largest economy.”
https://uk.reuters.com/article/uk-japan-economy-pmi/japans-factory-activity-shrinks-at-fastest-pace-since-2012-on-coronavirus-jolt-idUKKBN20F023
“The yen was set for its worst week in two-and-a-half years on Friday, as fears over the creeping spread of the coronavirus epidemic drove funds out of Asia and looking for safety in the U.S. dollar, gold and bonds.”
https://www.cnbc.com/2020/02/21/forex-markets-asian-currencies-coronavirus-in-focus.html
China is both an exporter of raw materials and intermediate parts and a consumer of finished goods. If it has economic problems, all of the countries it trades with are likely to have problems as well.
“Grave concern” comes before market downturns. The Dow Jones is down about 200 points now.
I’m surprised that the price of copper has not fallen more sharply since the onset of the corona virus situation. With the Chinese economy cutting back there should be a steep fall in demand for copper, yet the price isn’t too far off what it was in around July /August last year.
Pingback: Easily overlooked issues regarding COVID-19 | Our Finite World | TRUMPUSSOLINI
Pingback: Today’s News 21st February 2020 | The One Hundredth Monkey
Pingback: Easily Overlooked Issues Regarding COVID-19 – TRICENTENNIAL.US
Pingback: Hope regarding COVID-19 – COVID19
Pingback: Easily Overlooked Issues Regarding COVID-19 | AlltopCash.com
Ms. Tverberg,
I greatly enjoy your writings. I am a frequent writer at Zero Hedge (under the pen name “George Washington”), and have closely followed the coronavirus pandemic.
However, clicking through to the eTurboNews article – and then clicking through to the linked scientific articles – I don’t see any of the racial data depicted in the 1000 Genomes Project table.
I may be missing it, but I think you’ve been taken in by fake news. If I’m wrong, I’ll happily confess. But I don’t see it.
Please take a look.
Thank you.
My understanding of the situation is that the analysis is based on different populations, shown in the chart I displayed. The results are based on how this analysis of how populations differ with respect to ACE2 receptors. So the analysis is not on races, per se, but on different populations, and how these populations (of somewhat mixed race) individuals differ.
It looks to me as if American Indians (not shown separately but indirectly included in a bunch of other categories) seem to be high with respect to ACE2 receptor. They would likely be included in the following categories:
Peruvians from Lima, Peru 78%
Mexican Ancestry from Los Angeles USA 72%
Gujarati Indian from Houston Texas 68%
Genetically, they are related to East Asians, so this should not be terribly surprising.
Ms. Tverberg,
I didn’t explain my question clearly. Specifically, the population data is shown in a table which purports to be from the 1000 Genomes Project. It is not clear whether the 1000 Genomes Project purportedly created the table, or whether someone else created the table based upon information gathered from the 1000 Genomes Project.
However, I have spent weeks looking any confirmation that the 1000 Genomes Project actually gathered the data or created the table. I have found none.
And I have read numerous scientific papers which purport to show different levels of Ace2 receptors and different populations, and have not found ANY (other than a single Chinese study with a sample size of literally 1).
In other words, I understand the concept of Ace2 receptors, coronavirus, and different factors which might increase Ace2. I have written an article exploring one hypothesis: https://www.zerohedge.com/news/2020-02-13/why-most-coronavirus-deaths-have-been-chinese-men . But I’m now skeptical of my own hypothesis.
I am afraid I am no medical expert.
Thanks. I have written to the 1000 Genomes Project to try to confirm or deny that it’s their data.
Read what is at the top of the image. It is supposedly based on their data. It is not their data directly.
I went back and changed the text of Section 6 a bit to make it clear that finding is based on two studies that have not been peer reviewed (which I link to). I also link to one new study (also not peer reviewed) which contests this finding. And I added a sentence at the end, saying “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.”
Pingback: Easily Overlooked Issues Regarding COVID-19 – NATION AND STATE
Pingback: Easily Overlooked Issues Regarding COVID-19 – SYFX+
Pingback: Easily Overlooked Issues Regarding COVID-19 – iftttwall
Pingback: Easily Overlooked Issues Regarding COVID-19 – Investing Money Trends
https://www.worldometers.info/coronavirus/
You may recall a post yesterday in which I commented on the official stats as being 393 more cases for the day, right, and that it had been going down into the 200’s and then in the teens, well, today, the number of added cases for China is a whopping 889 and the day’s not over! Something up, because how could the new cases begin a gradual descent then start rebounding up so much? Inquiring minds would like to know.
Ignore my challenged math above after a long drive, but the greater question is why the numbers are so all over the place. There doesn’t seem to be a discernible trend for new cases in China, at least from official numbers, but maybe that just points to them being bogus.
Ah ha! I found an article about the very topic mentioned above:
https://www.thehour.com/news/article/Confusion-mounts-over-China-s-counting-methods-as-15071671.php
‘Confusion mounts over China’s counting methods as coronavirus numbers swing wildly’
“As Chinese leaders and state media strike a coordinated note this week on the government’s ability to contain the outbreak, inconsistencies and sudden changes in official data are leaving experts – and journalists – struggling to plot meaningful trends, or even place any confidence in the figures coming from government.”
“Hubei authorities have changed their criteria for counting cases twice in the past week. An earlier change that international researchers applauded led to a sudden spike in case numbers on Feb. 12. And the latest shift, the sixth time that national guidelines have been edited since Jan. 15, caused an overnight drop in new cases from 1,693 to 349.”
“Sloppiness of cheating the case # is getting to level of ridiculous,” Eric Feigl-Ding, a visiting scientist at the Harvard T.H. Chan School of Public Health, said on Twitter.”
If the official numbers weren’t questionable enough, now we really have to wonder what the heck the actual numbers really are.
Perhaps changing their methodology so that the numbers are in accord with the government line that the pandemic has now peaked in China, the war against the devil bug has worked, and that full international freedom of movement, etc, should be restored.
Chrome, there is an alternative explanation that does not feed paranoia: information transmission lag. Data from one major node will usually be timely and reliable, but China is now a big infected place. Data must be gathered locally, forwarded to county centres, then to provincial centres, then aggregated, tabulated, and finally released. This all takes time.
Accordingly, if some areas take longer than others, or release aggregated data less frequently, there will be wide variations in the timeliness of the information received by the national authorities.
Determine the maximum transmission lag, multiply by 2.7, and that is the smallest reliable sampling interval.
“Chrome, there is an alternative explanation that does not feed paranoia:”
How is my post trying to feed paranoia? It simply points out inconsistencies with daily new case numbers, just as the linked article backs up. Your jump to an accusation of feeding paranoia is because you didn’t read the posts as they then related to the linked article.
“Data must be gathered locally, forwarded to county centres, then to provincial centres, then aggregated, tabulated, and finally released. This all takes time.”
Did you even read what I wrote or read the article? It’s not about being patient for the numbers to come in, it was about trends. Each day should has a total number of new cases and if that total is compared with other days it’s varying so much there is no apparent trend. People want to know trend – get it?
Also, if you had read the article linked you’d know it was also about the Chinese govt. changing the method of counting 6 times so far, twice in the past week. That’s important to point out, correct? Wake up.
“… struggling to plot meaningful trends, or even place any confidence in the figures coming from government.” …
“Sloppiness of cheating the case # is getting to level of ridiculous” …
“If the official numbers weren’t questionable enough, …”
Is that not feeding paranoia? And yes, people want “the trend”. I explained why that want cannot be satisfied, using simple information theory. You are pursuing a chimera.
Gail is now referenced on ZeroHedge.
https://www.zerohedge.com/geopolitical/easily-overlooked-issues-regarding-covid-19
Next CNN will be calling, it is a small world.
Dennis L.
Well done, Gail!
Gail 2020! 🙂
I hadn’t noticed that. Thanks for mentioning it. Lots of folks linking to it. I have been getting some emails as well, but with negative comments. What I am saying couldn’t be right, or my references aren’t reliable enough.
Pingback: Easily Overlooked Issues Regarding COVID-19 – TradingCheatSheet
China Ministry of Truth Announcement:
New infection numbers are reducing every day. The virus is under control and will be eliminated y the end of next week.
Very creative accounting. They need to teach some lessons to those counting CO2 emissions!
So please lift all travel restrictions asap, so we can get out with our families…..
Pingback: Easily Overlooked Issues Regarding COVID-19 – Finanz.dk
Pingback: Easily Overlooked Issues Regarding COVID-19 - Excalibur News
Pingback: Easily Overlooked Issues Regarding COVID-19 | Newzsentinel
Pingback: Easily Overlooked Issues Regarding COVID-19 - RIGHTNEWS247
https://www.worldometers.info/coronavirus/
it’s noteworthy that the serious/critical % of active cases which was 19% a few days ago and then rose to 20 and then 21 is now at 22%…
Singapore, Japan, Hong Kong, Thailand, Taiwan all rising in cases by 3 to 5% daily…
and the WINNER is:
South Korea… 31 cases two days ago rose to 57 yesterday and NOW is at 156!!!!!!!
can we get some Doomer Math here? that’s about 500% in two days!!!!!!!
that MIGHT BE exponential growth…
where are Fast Eddy and Baby Doomer?
I mean, the doom is hitting the fan for real…
the spike in cases in Beijing in the north of China is ominous…
ah, the smell of doom in the evening…
There are at least another 30 people from around the world that have come off the plague ship and now tested to have coronaviruss in their home countries after being ‘clear’ when they left Japan, all in quarantine.
Japan in their wisdom allowed 500 ‘clear’ people to disembark and roam around Japanese cities, so the genie is well and truely out of the bottle.
The nail in the horseshoe, is really just Leibig’s law of the minimum, that when coupled with modern JIT stocking methods, guarantees the world is in for a whole lot of pain and misery over the next year or 2.
China, by shutting down is in a complete bind, as everything needs to be restarted, but parts of the country are in lockdown, with other provinces likely to go into their own lockdown at different times, so Leibig’s law and JIT work against all other factories because of one minor part here and there.
We have been talking about all these possible problems on both here and before on The Oil Drum for well over a decade, and now the problem is here. The world is in a state of disbelief, I hope everyone here is as prepared as they can be.
“The world is in a state of disbelief, I hope everyone here is as prepared as they can be.”
all true about Leibig Minimum and JIT…
but I don’t think this is a situation full of “disbelief”…
actually, I suspect that it’s merely a situation where 99+% of people are oblivious to the unfolding economic crisis, though many/most people whom I have contact with seem to have an awareness of a health crisis far far away…
the economic awareness will change when it gets to the time when most people have a problem caused by JIT breakdown or at least know someone who has such a problem…
China is not alone:
“A dozen towns in northern Italy were on effective lockdown Saturday after the new virus linked to China claimed a first fatality in Italy and sickened an increasing number of people who had no direct links to the origin of the virus.”
AP, dateline Rome, 22 February. Paging Prince Prospero.
I was on YouTube and on a message board for a video on the Corona virus was the following:
“I’m a truck driver, and speaking with warehouse personnel with imported products from China, they have already received notices from the importers that certain shipments are on hold for at least six months. This is just the beginning of supply chain disruptions. I fear that many local small companies that sell imported products from China have been making plans on reducing business or closing them down. A six month disruption could push the world into a definite recession.
On the positive note, local companies are using this opportunity to jumpstart local manufacturing businesses.”
This is how the contagion and panic will really start. Many US stores have a third or more of their goods from China. If the virus is shutting down Beijing and Wuhan, where are these items suddenly going to come from? In cases where there is only one main supplier like vitamins and antibiotics (China), there isn’t going to be another supplier for months or years if ever and certainly not to the present day scale.
And this same concept applies to every other JIT lean manufacturing globalization partaking business, which is pretty much all of them at this point. Think about the thousands of parts that go into cell phones, computers, and cars. If this situation continues, within a matter of weeks this is going to impact millions of companies and absolutely crush the global economy. China’s exports are astronomically large, to say nothing of the other countries that could be impacted in a similar fashion within the next month or so. We are watching the global supply chains break down in real time.
We Have Been Here Before. In the second century BC, an explorer called Chang Ch’ien (張騫) or Zhang Qian opened a supply chain between China and the West, which later became known as the Silk Road. The Roman Empire became importers of silk, but the cost was exorbitant, because most of the supply chain had to be protected from bandits, at great military expense.
The Emperor Justinian made the excellent decision to localise silk production. He sent two Nestorian monks all the way to China, and they brought back, hidden in their bamboo pilgrim staffs, the silk worms and the mulberry leaves they fed on. And so the monopoly was broken. And perhaps it is all going to happen again..
There is a wonderful fantasy story based on this history, called “Silk Roads and Shadows”, by Susan Shwartz, with a most competent heroine in the form of Byzantine Princess Alexandra. Recommended.
Interesting!
Just to remind everyone that starting a factory is not a simple task. The machines are from outside USA and probably China and so are the raw materials, parts, etc. It takes at least 1 year to get everything ready (from hiring to training, sourcing to test runs and quality acceptance). I am afraid, if this continues, we may not even have that 1 year.
“At least six months”
That will definitely be a huge problem. It has come up so quickly that little adaptation is possible.
Also, it is long enough that it will mess up the financial system. Getting a loan to start a new company likely will not be possible.
“At least six months”
“That will definitely be a huge problem. It has come up so quickly that little adaptation is possible.”
Yeah, things are too tightly strung for a long disruption. I’m figuring China will at some point demand people return to work and things will start moving again. People have to eat, so they have to work, bills have to be paid, loans repaid, etc., so this recent lull was just China’s brief opportunity to try and nip this in the bud. Obviously it didn’t work as intended and we’re all going to have to get use to yet another virus, that may go dormant in the Summer and return in the same or different version next winter.
I suspect so, if no effective vaccine can be developed it will probably become endemic and a part of our lives -a return to the norm pre-antibiotics and sophisticated medical science.
A positive would be the reduction in the huge burden of elderly people, for whom adequate pensions and care will be impossible to provide in any case. Again, a return to the demographics of an earlier age -that of our grandparents.
However, if the virus doesn’t weaken the % of serious cases -about 15-20% it seems – means that many irreplaceable people could be lost every year, and the savings on the care of the elderly negated by the pressure on hospitals created by all those serious cases requiring drugs and oxygen.
Measures taken to attempt to limit contagion lock-downs – do work, but are incompatible with the functioning of society and commerce: but an unchecked, infectious while asymptomatic endemic disease also brings huge costs and would make many activities too dangerous for most sensible people.
“What concerns me the most? Supply chain disruptions and their impacts on a world awash in debt.”
https://www.youtube.com/watch?v=0NhJrca9Qts
I’m sure this will elicit more calls from folks here at OFW to “let the virus run its course” instead of risking any impact to BAU… as if authoritarian governments of the world (and make no mistake, they’re pretty much all authoritarian at this point – some are just more subtle about it than others) would ever restrain themselves from trying to exert influence/control and allow anything as monumental as that to occur naturally.
Collapse has been on its way for a long time now. Perhaps the time for endless talking about the end of BAU has come to an end, and the time to prepare for an uncertain future (if you haven’t started preparing already) is upon us?
Cheers,
-GBV
wow…
his picture no longer has a smiling face…
is it a sign of things to come?
uh oh, Chris finally wiped that smile off his face. this must be getting serious.
mortality rate is steadily increasing from 2.0 to 2.9%.
maybe he read someone’s comment here 😉
The 14 Cov-19 positive patients from the Diamond Princess were flown back in a containment box on the same airplane as the other evacuees.
https://www.businessinsider.com/coronavirus-japan-cruise-passengers-isolated-plane-2020-2
Our local CVS pharmacy is out of r-95 masks and is limiting the blue surgical masks to one box per. The local feed store still has r-95 masks with a four box limit and they said they couldn’t restock when their supply gets sold.
The WSJ article didn’t talk about the containment box that I noticed.
Of course, the three people who came down with symptoms during the flight were in the midst of everyone else flying.
Thank you, Bruce. I read that article. The “containment” box won’t work. The virus is inside, the prey outside. That means the box requires an underpressure, an atmospheric pressure less on the inside than the outside. But the box door opens inwards, and so is designed to contain an overpressure. That door will leak.
the price of gold has risen $100 in the last month
every cloud has a golden lining
Let it be noted as of 3:20 p.m. February 20th not one single headline or news article on MSN main page concerning COVID-19.
The silence is deafening.
The WSJ does have quite a few COVID-19 articles, on the front page (not the top, however) of its website and also in the “World” section. It does better than a lot of other media.
A recent WSJ article is Evacuation of Diamond Princess Set Off Race for U.S. Hospital Beds.
It sounds, from the article, as if it was tricky to find beds for the 14 who tested positive. There aren’ t lots of US beds set up for highly infectious diseases.
Also, the 14 who tested positive rode back in the same plane with more than 300 supposedly non-sick passengers from the cruise ship. The article reports,
This sounds like a story that will keep continuing.
“Also, the 14 who tested positive rode back in the same plane with more than 300 supposedly non-sick passengers from the cruise ship. The article reports,”
There have been some really questionable actions taking place recently, from no infection experts on the cruise ship docked in Japan, to 14 day quarantines when more time is likely a better strategy to be safe, and now this one which ranks right up there at the top. Most jets have air circulation systems that do not filter/kill viruses, so all those passengers shared the same air. I mean come on people.
It may turn out the reason the virus becomes a pandemic from an epidemic, is because the characteristics of the virus was above people’s ability to outsmart it. If that’s the case, then as a species we deserve what we get.
“Evolution is smarter than you are”, Leslie Orgel. We are the largest biomass of untapped prey on the planet; this outcome was only a matter of time. “Thou art weighed in the balances, and art found wanting.” And in many depictions, the one holding the balances is Nemesis.
The Washington Post has had an article a day, with frequent updates. https://www.washingtonpost.com/world/asia_pacific/coronavirus-china-live-updates/2020/02/20/3159df72-535c-11ea-b119-4faabac6674f_story.html
https://www.washingtonpost.com/health/coronavirus-diamond-princess-cruise-americans/2020/02/20/b6f54cae-5279-11ea-b119-4faabac6674f_story.html
Thanks! It has some interesting things that I hadn’t seen before. Here are a few samples:
I found this one strange:
That should solve the problem!
Not surprising, if they are closing schools and restricting travel.
We will have to watch and see if these changes (one city of 9 million) get fuel use rising. That will be a sign people are actually out using the roads and starting factories back up.
Oh, dear!
The FBI purchase sound like it’s for the FBI staffers -‘ But we are doing it for the country, to limit the outbreak!’ Ha, sure….
They will be disappointed to find out that the masks and sanitizers are really of next to no use, as far as one can see.
The FBI are like the old Bolsheviks: ‘The vanguard of the Revolution need the best food, clothes and medicines sot hat they can work for the people!’
Ah, good old human nature……
Xabier, FBI bureaucrats, like all others, hardly ever do what is useful: they do what will make a good press release. And when their folly is exposed, the press releases will be fish wrapping and nobody will remember.
I am beginning to think the disease is the destroyed environment of China. 1.3 billion on the edge of dying from pollution just add a typical flu and it is the straw that breaks the dictators back.
That would seem to be as good a guess as any other which if true means moving production out of China and into other countries leads to the same issues, what to do with waste. In “Limits to Growth” pollution is one of the variables plotted as I recall. The limits may not be the finite resources but the finite places to put the industrial waste and still make it economic to produce many goods.
If you are correct, it will be interesting to see which goods are economic to produce based on their waste cost. Production can be robotized, but the waste is more or less constant.
Again, if the environment thesis is correct, China is not going to be a world power, indeed imagine putting a nuclear submarine to sea with so much as one infected sandwich that is overlooked. A cruise ship would look like a picnic compared to sailors falling over at their stations, nuclear missiles, reactors and who knows what else.
This is not looking to be an easy problem.
Dennis L.
you are as correct as anyone can be
an infinite number of ‘problems’ must inevitably cumulate in a single catastrophe, there’s probably a law of physics in there somewhere
The old thing of ”for want of a nail the shoe was lost”—and so on… we just don’t know which nail will come loose and cripple the horse and throw the rider
the ultimate problem of course will come through denial, because denial will result in dictators reacting violently to ‘prove’ something isn’t happening.
we had that when the first doc who blew the whistle was threatened by state officials.
this situation was held until the spread of infection couldn’t be hidden,
we will see the same thing in saudi—they will go on pretending that their oil field are bottomless, until they hit bottom and the oil stops flowing. this is likely to happen about the same time as the don’s ‘saudi america’ collapses.
the the don will be in a state of unstable denial and react violently to prove himself right
thus the political leader will take any course of action to prove himself right and hold onto power.
the coronovirus was made worse by political denial, but it’s a problem not confined to bodily sickness
Somehow, whatever happens, it always leads back to Donald. Amazing, that.
Deagel has been forecasting huge drops in population and per capita GDP for 2025 in most of the old industrialized nations for the past fifteen years or so. At one time, they were projecting the US population would go down to 60 million. But rejoice, the latest projection is for 99 million!!
The Big Question has always been, how do we get from here to there? And the answer, until now, for the US, was swirling around economic collapse due to the loss of global dominance, with a dash of civil war thrown in. However, we now have the potential scenario in which the Chinese, upset because they suspect someone in the US dropped a bioweapon targeting East Asian DNA on them in Wuhan, or some Dr. Evil character living in a cave somewhere, react to their own mess by dropping a bioweapon on the Americans and everyone else, targeting European DNA, and inflicting massive casualties on people of European descent everywhere.
http://www.deagel.com/country/forecast.aspx
possibly you misread my comment because you wanted to.
before I got to the donald, I cited the saudi dictators as a prime example of reality-denial, also chinese reality-deniers. I could have included our own Boris, or Korean Kim, or the Aussie lunatic with equal de-merit.
The don is a symptom of our disease, not the cause. He denies reality, so leaves himself open to account for his stupidity. His comments are ridiculous, so leaves himself open to ridicule.
If of course you think that the emperor is wearing the finest suit of clothes you’ve ever seen, and he is a world class intellect, that is an opinion you are entitled to.
reality though, is difficult to deny long term
Donald is the anointed one—anointed by the Electoral College to serve as POTUS.
But a lot of people have never accepted his election as legitimate—not ordinary working people per say, but a lot of people in high places nestled comfortably within the bowels of the body politic.
These people have been trying very hard to delegitimize the Don and remove him by power, illicitly, unconstitutionally and conspiratorially, or in concert if you will.
That’s a big problem for the US, and it also makes good theatre, but my personal opinion of the Don is neither here nor there. I was never a fan. I never even watched a single episode of the Apprentice.
But I must confess to regarding Trump as a giant who bestrides the Potomac like a Colossus, as a Hercules who is doing his best to clean the stables, and most of all as a Gulliver pinned down by an army of Lilliputians. And I’m looking forward to the bit where he takes just revenge on all those who have been plotting against him. On top of that, I have to concur with some of the Greatest Minds of history that enemies are a good test of a man’s character.
You can always judge a man by the quality of his enemies.
— Oscar Wilde
I ask you to judge me by the enemies I have made.
— Franklin D. Roosevelt
“Judge a man by the reputation of his enemies.”
– Arabian Proverb
“A man with no enemies is a man with no character.”
— Paul Newman
“Blessed are ye, when men shall revile you, and persecute you, and shall say all manner of evil against you falsely, for my sake. Rejoice, and be exceeding glad: for great is your reward in heaven: for so persecuted they the prophets which were before you.”
— Matthew 5:11-12, King James Version
“Viel feind, viel ehr” (Translation: many enemies, much honour)
— Georg von Frundsberg
“You have enemies? Why, it is the story of every man who has done a great deed or created a new idea. It is the cloud which thunders around everything that shines. Fame must have enemies, as light must have gnats. Do no bother yourself about it; disdain. Keep your mind serene as you keep your life clear.”
— Victor Hugo
“Loose change can often be found under seat cushions!!”
— Ebenezer Scrooge
“He doth bestride the narrow world / Like a Colossus …”
Julius Caesar, Act I scene ii. The words are those of
Cassius, plotting “impeachment”.
when someone attains the heights of statesmanship, which I think we agree would describe the POTUS, I think the people at large are entitled to expect statesmanlike behaviour.
The don’s behaviour, looking in as I do from the UK, is more akin to that of a petulant child. This is confirmed I think by his own words and actions, not my opinions.
A child lashes out at those considered at fault, and blames every else for those faults. This behaviour is condoned by those who fawn around him, obviously with their own agendas
Children usually grow out of it, some as age progresses, grow into it
One can only compare him to his immediate predecessor, who at no point demeaned others (as far as I observed), and who seemed to carry the status of a gentleman. (not an easy title to earn). No doubt he had his faults. As did say, Roosevelt, who also carried the same demeanour. ((with his faults too)
Pointing out the obsession with god and guns would be seen as an outrageous fault by many—are those the faults you choose to agree with?
Obama wasn’t scared of disagreement.
The don has got rid of anyone who disagrees with him. This is one of the first steps of the dictator.
As far as I know, no other POTUS has had to settle a $25 m lawsuit for fraud before taking office. Other incumbents have had their dalliances with women, none as far as I know are on record bragging about it.
but beyond all that, my mystification extends to the neckless millions who stand cheering and waving banners of support. Don’t they know the monster they are cheering for? Or the theofascist sycophants who stand behind him? Are there pictures of Obama with godbotherers standing around him, pretending to love jesus?…somehow i doubt it
is the jesusmachine so strong there that people actually believe this stuff? do they really not know where this is leading? All wannabe dictators brag about the size of their armies.
And your cross references are double edged. Character can be judged good or bad
And if I sat up in bed at 3am tweeting mindless hate, I think I would get complaints from the management
Or you could of course be winding me up—and you’re not the emperors tailor after all
My prime suspect for the Dr. Evil in a cave scenario would be Davros of Davos!
https://youtu.be/KYWD45FN5zA
“You are an enemy of globalisation. You must be exterminated. Exterminate, exterminate, …”
Dr Who, “The Davos Operation”, with Tom Baker (The Doctor), Mary Tamm (Romana), and George Davros (as himself).
Zerohedge is reporting that Beijing reports of COVID-19 have increased.
https://www.zerohedge.com/geopolitical/coronavirus-deaths-outside-china-surge-overnight-explosion-new-cases-suggests-outbreak
Excerpts:
Also:
Hm, if this escalates further and further to eventually overwhelming-abandoning nation’s capital, the one key question remains, are we approaching the time horizon for the unimaginable – iodine tablets needed across the world?
To late they are made in China. LMAO
I presume that you are talking about not being able to maintain nuclear power plants and spent fuel pools, leading to rising levels of radiation. If this happens, our thyroid glands are likely to be most affected. Taking potassium iodide pills can help block the radioactive iodine from being absorbed, thus protecting the gland from radiation injury.
We are really running into many different problems simultaneously. We don’t know in which order problems will hit.
At some point, we may not be able to take care of nuclear power plants and spent fuel pools. They require an active supply of electricity to keep pumping and circulating water. California, with its disdain for coal and natural gas would seem to be at high risk area for losing electricity supplies early on.
How many people will be alive when all of this happens is not clear. “All across of the world,” has different practical meanings, depending upon the population remaining.
Iodine pills are only meaningful if you are younger than 40 or pregnant.
https://www.worldometers.info/coronavirus/
Here’s another observation regarding stats on the virus; the Chinese official virus numbers at the site above are likely lower than actual, however could maybe hope trend was still a reflection of the overall numbers. And those new cases numbers had been declining, from peaking in the 300’s to the 200’s then in the teens, until yesterday’s total hit 393 new cases, close to 400. It begs the question; how it could have been coming down to suddenly jog upwards again, unless the numbers are so bogus no trend can be accurately discerned.
Lack of testing supplies; lack of hospital beds; changing definitions
Don’t trust Chinese infection/death numbers.
“A hospital in Central Beijing has reported 36 novel coronavirus cases as of Thursday, a sharp increase in the number of cases reported in the capital city. The new cases bring Beijing’s total to 45, stoking fears that the outbreak could accelerate.”
what are they thinking to say “could accelerate”?
it has accelerated… from 9 cases to 45…
some of us like to use percentages…
that’s a 500% increase…
right up there with the South Korea increase…
it may become a pandemic by March or April…
Pingback: Demand For Physical Precious Metals Surge Due To Fears About Disruptions In The Global Supply Chain - Free World Economic Report
Flu Kills 646,000 People Worldwide Each Year
https://www.medicinenet.com/script/main/art.asp?articlekey=208914
So the argument that cv19 threatans BAU would imply that the death toll was many multiples of the flu? say 5 10 million?
Losing 646,000 people to flu deaths each year is tiny relative to world population. World population is something like 7.8 billion people. Losing 1% of the world’s population to an illness would mean 78 million deaths. Even with that huge number of deaths, world population would not decrease, because births (before this all happened) exceeded deaths to such an extent that world population is growing by a little over 1% per year. To actually decrease population, you would need more than 78 million deaths.
The world has had a lot of epidemics historically. The most recent big epidemic was the Spanish Flu epidemic of 1918-1919. It was estimated to have a death rate of 10%, but only 30% of the world’s population was infected, so 3% died. Even at that, the world eventually recovered.
What makes things different this time is several things:
1. A huge share of the world’s manufacturing is done in China today. See my previous post.
2. All around the world, manufacturers depend on just-in-time supplies.
3. China has shut down a whole lot of its economy to try to contain the illness.
4. Many would-be workers in China are not being paid, because of the shut down economy.
5. Migrant workers (who make up something like 30% of China’s work force) are not coming back from visiting their families after New Year’s Celebration. Their chances of catching the illness are likely better in the the countryside.
We depend on China for a whole lot. Computers and cell phones. Ingredients that go into pharmaceuticals. Shoes. Parts that go into automobiles. China is the world’s largest producer of rare earth elements. “Rare earth metals and alloys that contain them are used in many devices that people use every day such as computer memory, DVDs, rechargeable batteries, cell phones, catalytic converters, magnets, fluorescent lighting and much more.”
https://gailtheactuary.files.wordpress.com/2019/04/rare-earth-mines-production-stratfor.png
A big problem is the disruption of supply chains that is taking place. Without the migrant workers back on the job, a large number of businesses will likely need to remain closed. There will likely be major financial defaults. We will lose whole classes of goods for which we depend on China for necessary supplies.
Exactly; it’s about the impact on networks of commerce, manufacturing and finance, rather than the mortality rate or absolute numbers of the dead.
In no way is this comparable to our annual losses due to influenza, nor is it so comparatively benign an illness -this is increasingly clear as more is learned.
Likely to be prolonged incapacitation and disruption, in one of the principal centres of the global industrial economy.
“Exactly; it’s about the impact on networks of commerce, manufacturing and finance, rather than the mortality rate or absolute numbers of the dead.”
The Corona Virus also carries with it a big fear factor over the flu. If you get the flu, in most cases people survive it and don’t end up with lung or other organs damaged. Many People’s lungs are damaged and some reports suggest many of these people will have long recovery periods, as long as 6 months. Also, many that die do so by their lungs filling with blood which should also cause a lot of fear of getting. I’m mentioning the fear factor because it will affect how many are willing to continue to work around other people that may be infected to keep BAU chugging along.
Good points. Will the workers return… Which is better manual labor in the field or being worker bee in a factory? b4 the outbreak the vote was clear. now… But remember this. “id rather cry in a BMW than smile on a bicycle”. 🙂
Well, in only the recent past people worked and lived alongside others who were coughing with TB, and they knew that they were not long for this world.
That was as it had always been, however sad – but we are facing a big psychological shock to the expectations built up since WW2.
Xabier, tuberculosis used to be called “consumption” and typically only frail young ladies in the upper strata of society died of it. The dead workers in field and factory were invisible to the chroniclers of the time. Although they did make an exception for lower class Cockney John Keats.
CV19 might be just another bug in populations with low ACE2.
It is a little early to say that for sure. We have a number of elderly people who have died of it already, in non-East Asian populations.
“It is a little early to say that for sure.” I couldnt have said it better.
My understanding there are only two things humankind can do wrt a virus. We can affect the timing and we might with time develop a vaccine, which itself will kill some small number of people. China is slowing the spread dragging out the whole event. Might it be better to bite the bullet and get it over with? and get the economy running again.
I agree. And, I think that is what China is going to do. The Chinese govt will no doubt lie about the official death toll and pretend everything is OK and just burn the bodies in the hopes that replacement workers will fill in behind the dead.
The virus is already out in the general population so it is really too late to stop it. Iran reported 2 deaths earlier this week and I think 9 deaths in the past 24 hours. So, it is accelerating now out of China. It is affecting South Korea, Japan, Taiwan and Hong Kong now as well. It must be a very contagious disease. And dangerous.
“Might it be better to bite the bullet and get it over with? and get the economy running again.”
I agree with that idea, ED. The assertion needs to be that unless people get back to work (in China), the world economy will devolve into chaos. Therefore a new policy needs to established called, “Immune System Faith”, or ISF for short, in which people take off their protective gear and go back to work and are expected to have faith in their immune system. They ignore other people coughing and sneezing and simply do their job and go about the business of living. When someone falls to the floor, they are taken outside and placed on a bench – from there they either become alert and go with their life or pass on. No hospital stays, no blood transfusion, nothing. Either people have proven they have faith in their immune system for the good of the Party, or they have failed and fate awaits them.
It would be a similar strategy to when in WWII Stalin set a policy of ‘Not one step back.’ That policy cost millions of lives but it worked, as Russian soldiers fought off the German soldiers at Stalingrad.
Pingback: Demand For Physical Precious Metals Surge Due To Fears About Disruptions In The Global Supply Chain - Lucriasa Financial
An article in the WSJ says that 40% of migrant workers have not returned to the major cities. This would be a huge problem in restarting the economy.
Peering Through the Coronavirus Murk Into China’s Economy
I think of migrant workers being like contract workers. They are the bottom tier of workers. Their children generally cannot be educated in public schools. I am not sure that they have the right to use hospitals. Parents often leave their children with grandparents to be raised, so that they can work as migrant workers.
The WSJ has another article saying that three of their reporters were kicked out because Chinese authorities objected to an opinion article titled, “China Is Really the Sick Man of Asia.” The reporters were not involved in the writing of that article.
Gail, in your previous post you wrote this:
‘Nearly all of the subsidies given are with respect to wind and solar. The biggest subsidy given is that of “going first.” Going first has a huge cost involved, but no one has figured out what the difference in price would be, if wind and solar needed to use batteries to level the playing field with other providers’
What did you mean by ‘going first’ ? The comments closed before I could ask.
The subsidy of going first means that wind and solar are used whenever they happen to be available, in preference to electricity produced by natural gas, coal, and nuclear. In fact, prices drop for other providers, often to negative values, if they cannot stop their production. Nuclear power plants cannot stop. The negative prices mean that nuclear power plants, which are paid for and are providing low carbon electricity, are driven out of business. Coal and natural gas base-load plants are also driven out of business. All that tends to be left is inefficient natural gas peaking plants. The prices for coal, natural gas, and uranium tend to be pushed too low, pushing companies in the business of extracting those minerals toward bankruptcy and the world economy toward collapse.
As more and more wind and solar are added to the grid, the impact gets worse and worse. Eventually, a larger and larger share of their output simply needs to go unused, because it is generated at times of day and times of year when it is not needed. Other providers need to fill in the electricity gaps at inadequate wholesale prices; this becomes an absurd demand. Whoever thinks this approach is “sustainable” is badly deluded in my opinion.
The cost estimates of wind and solar are far too low. They assume:
1. 100% of the electricity wind and solar produce can be used. A smaller and smaller percentage can be used, as more is added.
2. There are no adverse impacts on other electricity producers. In fact, other producers need subsidies to stay open. This cost is omitted.
3. Wind and solar don’t need a huge amount of additional long distance transmission and battery support to be viable.
4. The cost estimates miss all of the extra costs that go with all of the extra long distance transmission. The extra long distance transmission adds to the fire risk. The lines really need to be buried underground, at high cost, to prevent this. This cost is also omitted.
People are fed the ridiculous story that wind and solar are renewable and that the system will be more sustainable. Nonsense!
I agree, Gail, except that with regards to your second point :
2. There are no adverse impacts on other electricity producers. In fact, other producers need subsidies to stay open. This cost is omitted.
I would suggest that this point is not even considered as it is assumed by the vast majority of people that one day all of our electricity will be supplied by “renewable” methods of generation. The idea that there will be no fossil fuel or nuclear power stations would be considered a good thing and the way things should be. At least, that is the impression that I get. The whole “renewables” trend in electricity generation strikes me as being irresponsibly foolish. We are being led joyfully skipping into tragedy. This links arms with the current continued sharemarket exuberance as China crumbles.
What I am saying is that the academic analyses assume that there are no adverse impacts on other producers. Or possibly they need a tiny bit of subsidy. But cost estimates tend to leave this major cost out. So I think we are saying the same thing.
Thank you for your explanation, Gail.
“…[There are an eye popping] US$600 trillion worth of derivatives – over six times global GDP – that appear in financial statement footnotes but not on balance sheets due to “netting” that assumes counterclaim matching and liquidity that won’t exist during the next financial crisis, as for the last.
“Derivatives of such magnitude mean that even small mismatches will cause instant insolvency for many firms, among them some big banks…
“While triggers for dips are difficult to predict, one thing is certain: central bankers face a dilemma.
“They need to raise near-zero interest rates to equip themselves for the next downturn and mitigate distorting effects of low interest rates on real asset values, investments, savings and income equality. Yet, by doing so, they risk causing a downturn, as they have done before.
“So my prediction is that, unless one of the candidates above [slowing growth, unsound financial systems and the coronavirus] triggers a market collapse before they do, central bankers will.
“As I said in 2007, consider selling soon.”
https://www.scmp.com/comment/opinion/article/3051201/if-slowing-growth-unsound-financial-systems-and-coronavirus-dont
“U.S. stock markets continue to blaze in ‘risk-on’ mode despite a number of global headwinds. The Dow Jones Industrial Average pushed nearly 100 points higher on Wednesday, hovering just shy of all-time highs.
“But are traders ignoring the bigger picture? Japan and Germany – two of the world’s four largest economies – are on the brink of recession. Meanwhile, China is expected to record its slowest growth in almost 30 years (and that’s before the coronavirus hit).”
https://www.ccn.com/dow-climb-but-global-economy-teeters-toward-recession/
“Yale’s Stephen Roach said the markets continued move to the upside despite coronavirus uncertainty does not make sense because “irrational exuberance never makes sense.”
““As long as central banks are opening up the liquidity spigot as wide as they are, the markets pay absolutely no attention to any potential threats to economic activity,” Roach said. “It’s the here and now, and it works until it doesn’t.””
https://www.cnbc.com/2020/02/19/markets-may-face-serious-reckoning-amid-coronavirus-stephen-roach.html
We have been trapped.
The US stock market seems to be down a bit this morning. Maybe there will be a bit of a break in the exuberance.
WTI is up to $54.00. Wow!
They are saying it is due to the Chinese stimulus calming demand concerns (which is absurd as China’s stimulus is not going to directly impact Chinese demand at this time) and supply problems in Venezuela and Libya.
I think the fact that paper oil outweighs real oil many times over means that oil prices can be quite easily manipulated in the short-term. Longer-term trends cannot be so easily manipulated, however.
The stock market is there only place to be. As governments have realized that if they prop them up people believe the economy is great. Ask anyone in the U.S and the will say the economy is great
Right. Consider selling soon.
derivitives. If everbodies auto insurance was cancelled tomorow would the banking system end?
“Hong Kong is heading for its first back-to-back annual recessions on record, as the coronavirus outbreak cripples an economy already battered by months of political unrest.”
https://www.straitstimes.com/business/economy/hong-kong-heads-for-1st-back-to-back-recessions-on-record
“Russia’s exports to China dropped by almost a third in the first six weeks of the year as the spread of coronavirus sapped demand in the world’s second-biggest economy.”
https://www.themoscowtimes.com/2020/02/19/coronavirus-hits-russian-exports-to-china-a69355
What is wrong with this picture?
Aussie dollar hits its lowest level in eleven years, meanwhile… “Australian shares scaled a record high on Thursday, tracking Wall Street, as expectations of more stimulus from China amid the coronavirus outbreak… boosted risk sentiment.”
https://www.reuters.com/article/australia-stocks-midday/australia-nz-shares-hit-record-high-on-china-stimulus-hopes-idUSL4N2AJ4W4
World stock exchanges seem to be smelling something and rising. Maybe China’s problems are not to bad for the West? Maybe American industry will resuscitate? I don’t know but Wall Street seems indifferent, or maybe someone is pumping air aka dollars and buying stock?
Freight trade with China remains open, but exports are down by half in the first two weeks of February, according to the article.
““Major disruption to the global supply chain because of the Covid-19 continues, affecting industries from automotive to toys – and the issue continues to escalate,” said Richard Wilding, Professor of Supply Chain Strategy at Cranfield University.
““In China, smaller companies may find it easier to get back up and running. But larger factories may have to go through a cleaning and disinfectant process before staff can fully return and implement appropriate procedures to identify potential infections in the workforce, similar to what we have seen at airports. For larger sites implementing such procedures could take weeks.””
https://www.themanufacturer.com/articles/jcb-coronavirus-can-bring-uk-supply-chain-knees/
“Choked off from suppliers, workers, and logistics networks, China’s manufacturing base is facing a multitude of unprecedented challenges, as coronavirus containment efforts hamper factories’ efforts to reopen.
“Many of those that have been granted permission to resume operations face critical shortages of staff, with huge swathes of China still under lockdown and some local workers afraid to leave their homes. Others cannot access the materials needed to make their products, and even if they could, the shutdown of shops and marketplaces around China means demand has been sapped.”
https://www.scmp.com/economy/china-economy/article/3051534/coronavirus-chinas-manufacturing-supply-chain-pummelled-all
I know that reports on the state of US wind technology try to report on import dependency. The problem the report has is that standard categories there are collected are not sufficiently detailed to determine how much dependency manufacture in the US (and Europe) depends upon Chinese inputs. If an analysis is made of only those categories that are clearly associated with wind, China and Spain dominate:
https://gailtheactuary.files.wordpress.com/2020/02/wind-specific-imports-map-for-2018-wind-techonologies-report.png
The nacelle is the center part of the turbine. According to the report:
I wonder how much of wind turbine manufacture is indirectly dependent upon Chinese exports.
Gail, I would suspect that most of the rare earth magnets used in the wind generators come from China. If not made in China, the materials are most likely mined in China.
I think you are right. I found this article in November 30, 2018, Wind Power Monthly: Rethinking the use of rare-earth elements.
The big concern of this article is possible price spikes and, because of this, using less:
Another quote:
It also says:
“Just 34 per cent of nearly 1000 small and medium-sized firms [in China] said they could survive for a month on current cashflow, a recent survey by Tsinghua University and Peking University showed.
“A third said they could last for two months, while 18 per cent said they could stick it out for three months.
“”There could be big layoffs,” said Wang Jun, Beijing-based chief economist at Zhongyuan Bank.”
https://www.brisbanetimes.com.au/world/asia/china-races-to-contain-job-losses-as-coronavirus-crisis-batters-economy-20200219-p542h4.html
“China said on Thursday it lowered its benchmark lending rates — a move that was widely expected by analysts as the world’s second-largest economy faced threats from an outbreak of a deadly coronavirus…
“Bo Zhuang, chief China economist at research firm TS Lombard, said the Chinese economy would need more “aggressive” easing.”
https://www.cnbc.com/2020/02/20/coronavirus-chinas-pboc-cuts-benchmark-lending-rate-loan-prime-rate.html
I suppose they would like companies to borrow enough money to pay the wages of all of the temporarily unemployed workers. But how will companies really pay this money back?
As Barbie said, “math is tough”. I think the article meant to say that of the 34%, one third (about 11% of the total) said they could survive 2 months, and 18% of the 34% (or about 6% of the total) could hold out for three. Closest fit is a negative binomial distribution (Zipf’s Law), which is what one would expect.
“The coronavirus could cost the global economy more than $1tn in lost output if it turns into a pandemic, according to a leading economic forecaster.
“Oxford Economics warned that the spread of the virus to regions outside Asia would knock 1.3% off global growth this year, the equivalent of $1.1tn in lost income.
“The consultancy said its model of the global economy showed the virus was already having a “chilling effect” as factory closures in China spilled over to neighbouring countries and major companies struggled to source components and finished goods from the far east.”
https://www.theguardian.com/world/2020/feb/19/coronavirus-could-cost-global-economy-1tn-in-lost-output
This is a very low estimate of the real problem, I am afraid.
I agree. It doesn’t reflect the manner in which problems would cascade and self-reinforce.
That is 1/80 of the global economy. A number I find unbelievably low, given that China has already shuttered one third of its production. I suspect the authors know that, but are lowballing the number to make it look as if “stimulus” can fix the problem. It can’t.
Whether it is this pandemic or another or something completely different that shuts down industrial civilisation we find ourselves extremely vulnerable to losing global dimming and it’s attendant rapid increase in global mean temperature.
Complexity is our ‘Achilles’ heel.
https://kevinhester.live/2020/02/15/were-just-one-black-swan-event-away-from-collapse-and-a-total-loss-of-habitat/
It will be blamed on “carbon lag”. Smog is good does not fit the narrative.
Yup. We must have global dimming!!
https://www.livescience.com/coronavirus-spike-protein-structure.html
“Coronavirus ‘spike’ protein just mapped, leading way to vaccine”
There is an interesting photo at the link, but it looks quite complex.
I see the person involved with this says,
Bankruptcy of small firms in the supply chain may be the weakest links in the global supply chain. These small companies are supplying a lot of stuff to the mid tier companies (or even as spare parts for their machines) and he mid tier companies to the multinationals.
https://www.reuters.com/article/us-china-manufacturing/china-bankruptcies-create-cracks-in-global-supply-chain-idUSTRE52535H20090306
We have been foretold a long time ago
For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the message was lost.
For want of a message the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.
opied from Zerohedge…
We’ve described how China’s economic output remains frozen, and even if supply chains were able to restart, companies don’t have enough capital to cover wages, or have delayed or stopped paying workers, suggesting that the Covid-19 outbreak has left businesses on the brink of disaster. Worse, workers can’t freely move around the country, and many are subjected to travel restrictions and quarantines, which has forced a massive labor shortage.
Very apt. Cannot cover wages and thus, workers have nothing to buy food and food prices go sky high due to logistics issues (delivery of food) and shutdown and quarantine. Circular referencing.
Yep, the very best case scenarios remains: China demoted for ~5yrs and the W sustaining only a recession (on massive CB/govs support). While more realistic scenarios are bordering on broken supply chains never to be reconnected again to full extent in many sectors (especially in the frivolous consumerist ware or some specialist items)..
Impossible to put all those vulnerable companies in the chain on financial life support, even if they can decontaminate and find sufficient staff.
‘And all for the want of a horseshoe nail.’
Liebig’s Law of the Minimum, as Gail used to tell us. And what is the name of those sticks in her famous diagram? I’ve forgotten.
Leonardo.
Thank you, DJ.
Leonado Sticks.
https://gailtheactuary.files.wordpress.com/2014/06/leonardo-sticks-dome-01-b.gif
Sort of like the economy works, built up in layers over time; hollow inside.
Just makes me wonder how many sticks the coronavirus will take out.
Strongest shape EVER.
https://science.howstuffworks.com/engineering/structural/geodesic-dome2.htm
Not sure that anyone has posted this one yet?
https://www.youtube.com/watch?v=FXelEi4tqAo
Cheers,
-GBV
“Infections Ex-China Are Growing Exponentially”
Insert super-smiley Chris Martenson picture here
I appreciate the Covid-19 stuff that Martenson has been putting out as of late, but perhaps someone should point out that inserting smiling pictures of oneself beside alarming titles doesn’t make for the greatest of optics…
Cheers,
-GBV
To be fair to Martenson, in his latest video he says that we have a duty to be positive ‘and not a drain’ on the emotions of others.
I recommend the video made by Dr Iwata on the atrocious mishandling of the cruise ship ‘quarantine’ by Japanese officials, and his seemingly justifiedfear that due to the lack of proper procedures and taring doctors and nurses form the ship will be carrying the virus with them back to their own hospitals.
The WSJ gives more information about the situation in Iran.
https://www.wsj.com/articles/iran-takes-emergency-measures-after-two-coronavirus-deaths-in-qom-11582202084
So this answers questions–all of these folks were Iranian. They are not East Asian, so theoretically somewhat spared, but maybe not. The two who died were elderly. Going to pilgrimage sites sounds like a good way to spread the disease. Oil trading may have led to the disease being brought to the country.
CONCRETE
pLEASE EXCUSE THESE TWO OFF-TOPIC POSTS
https://www.theguardian.com/cities/2019/feb/25/concrete-the-most-destructive-material-on-earth?CMP=share_btn_link&fbclid=IwAR3s2ebQjrhsXnpuAPkJA-KOYz4DbqHikMe4P9C05widUxZ2ORqkBMMx2rk
Concrete is requires a lot of heat to be made. It has a big CO2 footprint, almost any way it is made.
We pave our roads either with asphalt or with concrete. Asphalt is one of the products produced when oil is extracted, then separated into chains of varying lengths. Asphalt has long chains. If oil prices are high enough, these long chains can be “cracked” and made into products such as gasoline and diesel.
If we are no longer producing fossil fuels, I don’t think we have any way of paving roads, other than using cobble stones or the equivalent. Our electric vehicles will likely have to run on unpaved roads, if there is electricity to operate them.
Gail, Roman concrete needed no heat whatsoever. They even had concrete that could set under water. A few fringe researchers in Texas have been trying to rediscover this technology, with limited success, because the detail is in the choice of raw materials.
The dome of the Pantheon is made of concrete, built in the 2nd century AD (and designed by the Emperor Hadrian). When finished, it was the largest freestanding concrete dome in the world. It is still the largest freestanding concrete dome in the world. Once again, “finesse” technology wins.
What works best on unpaved roads: the mule.
And the slave.
Pingback: Demand For Physical Precious Metals Surge Due To Fears About Disruptions In The Global Supply Chain - Investing Matters
I don’t believe this will fly. There are practical concepts but no soul to it. But for what it’s worth…
https://www.facebook.com/JamaicaWiLove/videos/560297677888892/UzpfSTEwMDAwMzY4ODIyNjMwOTpWSzoxMzAyNjk5NTczMjUyNjYz/?multi_permalinks=1302719243250696¬if_id=1582166590004252¬if_t=group_activity
“On Friday, eight days after the couple left the islands, …”
So the airlines are “scrambling” to contact people, after they have been infectious and at large for eight days? Far too little, far too late. Perhaps we could improve our chances by simply not doing expensive and totally useless virtue signalling exercises? Nature is not impressed.
Bad headlines for the airlines!
The next day, the man tested positive for COVID-19. A day later, the woman did too
https://news.yahoo.com/couple-flew-delta-hawaii-japan-190035613.html
Delta Air Lines and Hawaii health officials are scrambling to alert people who may have come into contact with a Japanese couple who tested positive for the novel coronavirus after visiting the state. There are concerns that fellow passengers could have contracted the virus during the couple’s flight home to Japan on February 6.
On Friday, eight days after the couple left the islands, the Centers for Disease Control and Prevention told state health authorities that the man tested positive for the virus, known as COVID-19. A day later, his partner tested positive, The Japan Times reported.
The man began displaying signs of the coronavirus while traveling in Oahu from February 3 to 6. According to the CDC, people can display symptoms of COVID-19 between two and 14 days after exposure, which means the man could have contracted the virus before arriving in Hawaii. It is unclear when the woman began displaying signs of illness.
Delta is contacting all the passengers who flew with the couple on Delta Air Lines Flight 611, a 10-hour journey from Honolulu to Nagoya, Japan. The airliner departed in the afternoon on February 6 and landed in Nagoya on the evening of February 7 after crossing the International Date Line.
“The health and safety of our customers and crews is our top priority,” a Delta spokeswoman told Business Insider. “In cooperation with Japanese health officials, we are proactively reaching out to customers who were on board that flight, as well as taking the necessary steps to ensure the safety of our customers and crew.”
On Wednesday afternoon, the spokeswoman said she didn’t have an update and declined to clarify when the company started notifying passengers.
Looks like this but is out of control!
Just what the Airlines DONT need …..
FEAR on getting on an airplane!
An excellent post Gail. Coincidentally I wrote a similar post just this afternoon. You can find it here if you wish https://makingbetterdecisions.ca/2020/02/19/is-the-coronavirus-a-catalyst-for-the-great-depression-of-the-2020s/
I’m so glad I found your blog. I too have had my wonderings about the viruses discrimination based on gender and race. Your thoughts on the global economy align with mine as well. There is still hope, but the longer this continues that hope will dwindle. We can only hope that our leaders and policy makers make wise decisions.
Keep up your good work! That is a very fine post you wrote. We need slightly different kinds of posts to reach a wider audience.
I deduce that you are female from your “About” page.
https://theriseprinciple.files.wordpress.com/2020/01/sq-emoji-nice-to-meet-you.jpg
We need more women writing, as well.
Thank you Gail! I appreciate that, especially coming from you. Yes, I am female. My name is Shelley. Thanks for visiting. I look forward to your future posts.
https://www.scmp.com/economy/china-economy/article/3051445/coronavirus-chinas-east-coast-provinces-offer-chartered
First of all, does anyone believe 100M workers are back on the job? Coal consumption remains flatlined so pray tell how the factories are running if they are not using electricity?
And does anyone believe the 200M that have not reported can’t get to the factories?
Might it be that they prefer to remain in their villages rather than return to locked down hell holes like Wuhan where they are supposed to risk their lives being crammed into factories to make widgets for the world?
I am thinking the truth is that they are refusing to return.
If you had a job in Wuhan would you return?
Even the Chinese government knows full well that you cannot force 300 million people to work, even if you ask the military to force them. And even if you could, each factory is a Diamond Princess, a disaster waiting to happen.
Soon the assembly lines will stop and the shelves will go empty.
.e.g. Autos are made up of tens of thousands of parts. If a door handle is out of stock, the car does not get to the dealer lot.
Tom Malthus is waving his finger saying I told you so! Our clever brains helped us avoid the trap, but in the end, the complexity of our ‘brilliant system’ will be our Achilles Heel.
There does not appear to be any way out of this.
The Central Banks cannot buy their way out of this one.
sure, the population overshoot in China is enhancing the epidemic…
the CBs could actually let this crisis play out and take the world economy down a notch or two, since the reason for a 2020 economic crisis would not be of their doing…
of course, as you allude, it’s probably out of their control to keep the economy from shrinking…
so down we will go… 2020 global Great Depression…
though one thing for sure (nearly sure), the stock markets will remain artificially high…
the Dow needs 2% to hit 30,000 and the Nasdaq needs 2% to hit 10,000…
I think they both get there amid the China epidemic but before it becomes a global pandemic…
Yep, the likelihood of many important “widgets” going suddenly out of stock is real.
Fortunately enough, lot of the low tech horticulture farming equip. is still made locally/regionally (or could be hacked from the existing stock), but for anything powered up be it vehicles (small or big) machinery (even small scale one) and electronics this could be the end of the road. Mind you there are perhaps still few weeks remaining (to make the long delayed purchase) should the worse case scenarios pan out that way..
Quite so, one hopes that vital parts for harvesters, etc, are being stockpiled now, rather than people being lulled into complacency by the ‘It’s just flu and will be over in a month or two’ meme.
Quite a few stories about supply-chain difficulties appearing now, so maybe they will catch on if they have their wits about them.
Although of no national strategic importance, I’m stocking up myself, as for many materials I only have one living maker left – with skills impossible to learn in less than 5 years or so. In fact, if they die the skill will probably die with them.
A nice gift of a fully stocked workshop for someone if I peg out.myself….. And my wine cellar. 🙂
Coal consumption would indeed be a useful metric for evaluating the truth of how paralyzed China is. Where can you get that metric? I found this but its way too macro.
https://www.ceicdata.com/en/indicator/china/coal-consumption
The article cited weekly coal consumption data. I cant find a source for that.
This is a link to a Zerohedge article that presents some statistics:
https://www.zerohedge.com/economics/terrifying-charts-show-chinas-economy-remains-completely-paralyzed
This is a link to the chart showing coal used by electricity producers:
https://www.zerohedge.com/s3/files/inline-images/coan%20consumption.jpg
Thanks Gail! Certainly concerning. I make the mean around 600. 400 now. Thats “completely paralyzed” ?
“It is evident, that if trade and foreign commerce were held in great honour in China, from the plenty of labourers, and the cheapness of labour, she might work up manufactures for foreign sale to an immense amount. It is equally evident that from the great bulk of provisions and the amazing extent of her inland territory she could not in return import such a quantity as would be any sensible addition to the annual stock of subsistence in the country.”
Thomas Robert Malthus, “An Essay on the Principle of Population”, (1798), Ch 16.