Easily overlooked issues regarding COVID-19

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.

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.


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?


About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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2,589 Responses to Easily overlooked issues regarding COVID-19

  1. Harry McGibbs says:

    “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.”


    • Harry McGibbs says:

      “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.”


    • Agreed!

      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”.

  2. Harry McGibbs says:

    “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.”


    • Harry McGibbs says:

      “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.”


    • According to the article:

      Dubai has for years relied on luxury real estate, tourism, logistics, and financial services for revenues, rather than on oil, which, truth be told, is not abundant in Dubai as is in and offshore Abu Dhabi.

      If oil revenues are down, everything is down, however.

  3. Harry McGibbs says:

    “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…”


    • Harry McGibbs says:

      “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.”


      • 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.

    • Robert Firth says:

      “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/

  4. Harry McGibbs says:

    “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.”


  5. Harry McGibbs says:

    “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.”


  6. Harry McGibbs says:

    “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.”


  7. Coronavirus may be the straw that breaks the back of oil fracking
    16 Feb 2020

    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

    • Thanks! Iran’s big issue is this:

      China is now the last major buyer of Iranian oil, the Islamic Republic’s most lucrative commodity.

      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.

    • The big issue is a “lack of jobs” issue. As the article says:

      Rising job losses could hurt incomes and consumption, reducing the chance of a sharp recovery in the economy once the outbreak is contained, economists said.

      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.

  8. Ano737 says:

    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.

      • Ano737 says:

        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.

    • Robert Firth says:

      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.

  9. 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.


    • 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.

    • Xabier says:

      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.

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