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.

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?

 

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

About Gail Tverberg

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

2,589 thoughts on “Easily overlooked issues regarding COVID-19

  1. https://www.boston.com/news/health/2020/03/06/massachusetts-coronavirus-cases

    8 total cases in Massachusetts:

    “State officials Friday announced five new cases of COVID-19, all involving attendees of a meeting the Cambridge-based biotech company Biogen held at the Long Wharf Marriott hotel in Boston last week.”

    while Biogen doesn’t seem to be involved with anti-viral applications, it is with great delight that I mention the sweet IRONY that this “biotech” company has found itself squarely in the beginning stages of a Boston epidemic…

    my dear old friend Schadenfreude…

  2. in this midnight hour, I could go all in on the melodrama of the unfolding crisis… so why not…

    the coronavirus has found me…

    not personally, yet, but in 3 months it has replicated again and again as it has migrated half way around the world to get here in the northeast corner of the USA…

    now we know for certain that the symptoms don’t show in persons for many days, usually, so what could we conclude from that?

    why, of course, the virus has spread farther than where any case has been reported…

    it’s ahead of the reporting…

    by what distance of time and place?

    who knows?

    but if it’s being reported now and close by, such as less than two hundred miles and closing in, then where are the closest unreported cases?

    at my workplace?

    at the store I shopped at today after work?

    at the local sports events/concerts which I haven’t attended this month?

    and what will I do?

    probably do what is decided by my employer…

    if my workplace stays open, I’ll likely be there…

    if closed, I suppose I will have a lot more time for internet melodrama…

    • Finally when their (already paid for) mass produced hybrid tech would be pushed into almost every model econobox/mid/luxury, the industry goes down.. What a bummer..

    • Remember back in the day, Japan was just known for its Photography?
      Mickey Rooney playing the funniest Mr Yunioshi!

      Japan’s largest camera trade show cancelled due to viral outbreak
      February 14, 2020 (Mainichi Japan)
      This March 1, 2018 photo shows a Sony A7 III, part of a new range of mirrorless cameras, at a trade show in Yokohama. (Kyodo)
      TOKYO (Kyodo) — Japan’s largest photo industry trade show due to begin in late February in Yokohama has been cancelled because of coronavirus fears, an organizer said Friday.
      “We put top priority on the health and safety of visitors and exhibitors,” Camera and Imaging Products Association, the organizer of the annual event, said in a statement.
      The show for consumers, CP+2020, which was scheduled to be held for four days from Feb. 27 in the port city near Tokyo, was to feature the newest cameras and related devices.
      About 135 companies, including Nikon Corp, Canon Inc. and Olympus Corp., had planned to take part in the exhibition, which has attracted about 70,000 visitors every year

      https://mainichi.jp/english/articles/20200214/p2g/00m/0bu/097000c

      Looks like a Recession is here Folks….Imagine that …surprise, surprise

  3. “Behind the turbulence are confusion and anxiety, and a sense that the modern world is in an unprecedented situation. “There’s no playbook for this,” said Derek Devens, a portfolio manager at the fund company Neuberger Berman. “That’s been really hard for people to digest…

    “A sudden global disease outbreak isn’t the kind of risk that many market players were trained to react to. Few investors are epidemiologists. The most sophisticated financial models and the fastest-moving trading algorithms are flying blind.

    “This you can’t even put a model on, because it’s not really something that we’ve seen before,” said Michael Feroli, the chief U.S. economist at JPMorgan.

    “In financial circles, there’s a term for such events: a black swan. They are rare but ominous… Uncertainty breeds fear, and fear breeds panic.”

        • I think you almost need a gift economy to get along without currency. In such an economy, a person gains status by what they give away. If someone is very fortunate (say, wins the lottery), they are expected to share the benefits with everyone in the community. Gift economies only work when groups are small enough so that everyone knows one another. This limit is 150 to 180 people. Anyone who doesn’t share is kicked out.

          • I was going to ask how you can have a lottery without currency, but then I remembered Shirley Jackson.

          • It may be that those with too much are kicked out, i.e. the 1% and better, or corollary, one can be a bear or a bull and make money, pigs go to market. Anyone here have any guesses as to whether 1% and up are first out or last? Bernie certainly is making some people nervous.

            A guess, as things become more local those government employees with pensions greater than those paying the the taxes will quickly cease being paid, local councils will send no or fewer funds. As the Federal Governments of the world have less or nothing to distribute, they will lose control over local governments, local authorities will simplify and ignore some mandates.

            This is unfortunate as pollution mandates seem to make a great deal of sense, that one is serious as China is showing. EPA is sort of a maintenance of the commons idea, the US has done a good job in this area, not perfect, but very good. Actually, the US has done very well in almost all areas accepting that nothing is ever perfect.

            Always the optimist, maybe somehow we can come together and keep it together. I hope we don’t go down to the size you mentioned, that is a very limited skill set.

            Dennis L.

            • Yes, that’s good point about local gov bodies suddenly stopping enforcement of upper level state level mandates for reasons of complexity, staffing, supplies/JITs, funding crunch. We discussed it earlier also in terms of inner balkanization process, Gail put it briefly in her article ~moth ago..

            • Dennis, what you have described is close to what happened in the later Roman Empire. The currency was debased, commerce faltered, the roads and harbours could no longer be maintained, … The result was a congeries of semi stable and semi peaceful successor states, which in course of time became Mediaeval Europe.

              The same evolution nearly happened in the East, prefigured by the career of Zenobia, Queen of Palmyra (after whom one of my son’s cats is named), but in the event there were enough neighbouring greedy empires to swallow the fragments in their cradle.

              Decentralisation and relocalisation can be a dark tunnel, but say not the struggle naught availeth.

          • Sharing like this is very much an Arabic cultural trait. I worked for a while in Oman, there you were expected to give what ever a person asked of you but it was very rude to do so. We were once camping in the desert when a group of Arabs drove up, sat down and drank all our beer.

      • Marco, we are already friends on Facebook – I am plain old Harry Gibbs there.

      • 100% in the USA and 100% globally…

        it is certain because it’s already here and severe…

        it will very probably be a Great Depression…

        so only that technicality would not name it a recession…

        • Really? I have been trying to tell my family to get ready, but because they are big Trump supporters they think that the democrats are making a big deal about this to hurt his chances of being re elected. Even a recession is a political football! If I tell my family that the u.s economy is weak they think that I am being political! Unemployment is way down because you have over 10,000 baby boomers retiring every day! That is a lot of jobs! And the stock market is where it is because of the FED take them out of the picture and what do you have? With such low interest rates where else can you put your money! Oh well I guess they will find out soon enough….

          • “Oh well I guess they will find out soon enough…”

            yes, in only a couple of days…

            there’s a major crash coming on Monday…

          • “Unemployment is way down because you have over 10,000 baby boomers retiring every day!”

            Funny when I looked it up the over 65 population increased 3% while the entire US population increased 6.9%, since 2010. Between 2017 and 2018 0.4% 65+ between unemployment rate went down 0.6%, according to a fred graph. So while 10,000/day sounds impressive it really means nothing. I think around 20,000/day die from heart disease, obesity or some such. So 10k means not much. After all many of them still work past that age, heck one my brother does, part time because he can and it gets him out of the house.

            *Everything* is a political football, always has been, “Remember the Maine”. Of course the news media chasing after every, “If it bleads, it leads” story doesn’t help. The natural human attitude that “it ain’t my fault” contributes.

            Remember when President Trump was trying to get people to make things here. And getting beat up about it. Be nice if all that stuff that *isn’t* being made in China *now* was made here. Wouldn’t it. Back to everything is political.

            Higher power help us if he didn’t get beat up for trying to quarantine people, totalitarian don’t ya know. Then he gets beat up for not doing enough(far better justification, IMO). Heck, how do you enforce a quarantine without controlling your borders.

            T2M

            • I don’t quite understand your numbers,,,”
              “Funny when I looked it up the over 65 population increased 3% while the entire US population increased 6.9%, since 2010. Between 2017 and ”

              Is this increase in number of working age people? Yes the economy has increased but what about the massive FED spending? What about the massive U.S debt? I am saying that the argument that we have a strong economy in the U.S is a dead cat bounce when you factor in the massive debt burden we are placing on the future. and maybe debts don’t matter and if that is the case lets add 10 trillion to the debt!!! That will really stimulate the economy! 700 FED rate cuts! What else ?!
              “Remember when President Trump was trying to get people to make things here. And getting beat up about it. Be nice if all that stuff that *isn’t* being made in China *now* was made here. Wouldn’t it. Back to everything is political.”
              No I don’t remember Trump bringing manufacturing here; I do remember him pretending to care and doing a lot of grandstanding but very little to make it happen…it is a great marketing tool just as big business uses green economy BS to sell more products….
              Most of your argument is antidotal with very little facts just because you have one brother working part-time does not mean everyone does. I am not even sure what you are trying to say….

            • In response to Stella
              March 8, 2020 at 1:04 pm.

              You don’t understand the numbers, why am I not surprised. At least you admit it.

              When the the percentage of people passing retirement age is less than the decrease in unemployment rate and the the labor force participation rate is increasing your retirement number is a useless factoid. Sounds great but means nothing or worse seems the opposite of the actual situation.

              I actually read the 40 page pdf unemployment report there have been months when more people are getting employment than are getting added to the total US population. Unlike after 2008 when people were leaving the work force (labor force participation rate and employment to population rates were decreasing and unemployment was rising). Do I think it will continue, not a chance!

              Are people actually retiring? To hear people talk, they aren’t, to make ends meet they have to keep working to stay fed and housed. So then they would be like my brother(for different reasons) drawing Social Security(“retired”) and still working. According to what is written!

              “700 hundred fed rate cuts”

              Wow, you really do have problems with numbers and geography (and countries) as well. According FED Graph , “Effective Federal Funds Rate” was .66% in January 2017. It is now 1.59%.

              https://fred.stlouisfed.org/series/DFF

              No worries, it is anecdotal.(sarcasm)

              Which part of “TRYING” were you unable to comprehend. It is quite different than the imaginary statement your response was constructed against. Or for that matter what President Trump says.

              The solar industry (and others) would like to talk to you about tariffs (more like whining over 2 or 3 percent of the installed system’s cost). That is all legally that the president is able to do. Especially after 20+ years of opposite efforts. At least he is renegotiating trade deals, Congress still has to approve the deals. As I have said before the President really is limited.

              Of course it is all anecdotal if you fail to understand numbers or read what you want instead of what is written.

              You think I like President Trump, actually I don’t. Thing is all the other choices were worse. No, I do not like the deficit. Does he remind me of a used car salesman, well yes he does. I lean more toward libertarian. Less government is generally better to a *point* …

              Oh by the way, according to the Bureau of Economic Analysis the US personal disposable income includes savings rate as a percent of personal income. In 2019 Personal Saving is 7.9% of personal income. Highest it has been since 1999 with the exception of 2012.

              https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=2#reqid=19&step=2&isuri=1&1921=survey

              I hope that link works I had to navigate to it. It is in table 2.1.

              I think I am done with this, probably shouldn’t even have typed this addition.

              Enjoy,
              T2M

              PS: For a funny. A higher percent of the people in Maine are over 65 than Florida(a whole tenth of a percent). A different factoid I happened across. Who said all retirees are moving south. 🙂

              PPS: Yep different things driving that in the two different states. Just funny to someone who did head to Florida to retire, early.

  4. For those who are cynical about FEMA, there’s a lot of solid information in his presentation: nothing hidden, more or less.

    • How can Corona virus numbers in the U.S be accurate? I don’t know anyone who has access to a test….the numbers have to be way off. I know a lot of people who have had flu like symptoms….none have been tested for covid-19. I would not be surprised if they are purposely not giving out the test to keep people calm. Yes you can’t trust China….but the U.S is no better.

      • true… the virus has been racing ahead of the “reported” cases since the beginning in December…

        the numbers must be higher than reported…

        AND…

        the virus must be closer in distance to each of us…

        points to ponder…

      • Well first thing, do happen to have a few hundred thousand test kits in your back pocket?

        Then it gets complicated …

        I could recommend reading John Ringo though he writes good SF books he gets a lot of things very wrong. For fun a somewhat recent one was about a virus(rabies variant and the as we know it world ends) getting loose. Good read and first book may be instructional, 4 book series.

          • Nah it didn’t truly tank until the end of book 4, IMO.

            Of course I like “Doc” Smith and Ryk E. Spoor space operas(what I am re-listening to right now) so my opinion is like most others, useless unless it is not. lol

            T2M

        • I like when people talk about libertarian views and less government as if they are a tough independent person making their own way in this world….ha! ha! ! That would have been great in the 50’s but you are way past that now! The United States government and their antics are the only thing keeping this system going….including your SS Check Thinkstoomuch!
          The savings rate you quoted is taken out of context as well. Look up how many people in your country have enough for retirement or just one bad downturn! America likes to print money and that’s just what they will do this week. The people in power don’t know of anything else….maybe lower interest rates again? If the U.S did not have the FED this system would have collapsed maybe for the better a long time ago. The U.S is in just as bad of shape as the rest of the world.

    • Think of all of the laid off workers, working for the airlines. Also, the lower revenue of the airports and the hotels near the airports. More people are likely to be laid off.

  5. Why the Coronavirus Could Threaten the U.S. Economy Even More Than China’s
    The first place to look for answers is China, where the virus has spread most widely. The news has been grim with deaths, rolling quarantines and the economy’s seeming to flat line, though the number of new cases has begun to fall.
    Advanced economies like the United States are hardly immune to these effects. To the contrary, a broad outbreak of the disease in them could be even worse for their economies than in China. That is because face-to-face service industries — the kind of businesses that go into a tailspin when fearful people withdraw from one another — tend to dominate economies in high-income countries more than they do in China. If people stay home from school, stop traveling and don’t go to sporting events, the gym or the dentist, the economic consequence would be worse.
    In a sense, this is the economic equivalent of the virus’s varied health effects. Just as the disease poses a particular threat to older patients, it could be especially dangerous for more mature economies
    This is not to minimize the indiscriminate and widespread damage that the disease has caused by disrupting the global supply chain. With shortages of everything from auto parts to generic medicines and production delays in things like iPhones and Diet Coke, a great deal of pain is coming from the closing of Chinese factories. That proliferating damage has central banks and financial analysts talking about a global recession in the coming months.
    Nor is it to discount the possibility that the United States will be spared the worst effects. Scientific and public health efforts might limit the spread of the virus or quickly find a treatment or vaccine. The warmer weather of summer might slow the spread of the coronavirus as it usually does with the seasonal flu. Many things could prevent an outbreak as large as the one in C
    But it is to say that an equivalent outbreak in the United States might easily have a worse economic
    As a baseline, several factors work against the United States. China’s authoritarian government can quarantine entire cities or order people off the streets in a way that would be hard to imagine in America, presumably giving China an advantage in slowing the spread of the disease. In addition, a large share of American workers lack paid sick days and millions lack health care coverage, so people may be less likely to stay home or to get proper medical care. And 41 percent of China’s population lives outside urban areas, more than twice the share in the United States. Diseases generally spread faster in urban areas.
    Beyond those issues, however, is a fundamental difference in economic structure: When people pull back from interacting with others because of their fear of disease, the things they stop doing will frequently affect much bigger industries in the United States.
    Consider travel. The average American takes three flights a year; the average Chinese person less than half a flight. And the epidemiological disaster of the Diamond Princess has persuaded many people to hold off on cruises. That cruise ship stigma alone potentially affects about 3.5 percent of the United States, which has about 11.5 million passengers each year, compared with only 0.17 percent of China, which has about 2.3 million passengers.
    But over all, the United States is substantially more reliant on services than China is. And, on the flip side, agriculture, a sector not noted for day-to-day social interaction and so potentially less harmed by social withdrawal, is a 10 times larger share of China’s economy than it is in the United States.
    So for all the talk about the global “supply shock” set off by the coronavirus outbreak and its impact on supply chains, we may have more to fear from an old-fashioned “demand shock” that emerges when everyone simply stays home. A major coronavirus epidemic in the United States might be like a big snowstorm that shuts down most economic activity and social interaction only until the snow is cleared away. But the coronavirus could be a “Snowmaggedon-style storm” that hits the whole country and lasts for months.
    So go wash your hands for the full 20 seconds. And show some more sympathy for the folks quarantined in China and elsewhere. Because if it spreads rapidly in the United States, it could be a heck of a lot worse.

    • https://www.worldometers.info/coronavirus/

      Interesting article, Herbie. Thanks by the way to the poster that suggested using Chrome as a browser to replace my old one that couldn’t get the above link. Works great also for YouTube videos.

      I know posters are getting use to these numbers but today is another big numbers day:
      Italy +1247 to 5883
      Iran +1076 to 5823
      It’s like Italy and Iran are in lockstep.
      France +296 to 949, soon to surpass 1,000
      Germany +130 to 800
      US +54 to 373
      SK +448 to 7041

      Interesting that South Korea’s new cases are declining from their peak daily increases. Looks like their efforts to slow the spread are working. I’m wondering if the US will balloon in numbers or if we’ll be able to do something similar to SK. Keeping those passengers on that cruise ship just off SF shore should help keep US case numbers down – lol.

      • https://www.kcra.com/article/cruise-ship-san-francisco-positive-coronavirus-california/31266014

        “21 people aboard a mammoth cruise ship off the California coast tested positive for the new coronavirus and 19 of them are crew members, Vice President Mike Pence announced Friday, amid evidence the vessel was the breeding ground for a deadly cluster of more than 10 cases during its previous voyage.”

        That last part presents an interesting question. Presuming the ship was thoroughly cleaned before embarking on a new voyage, was the cleaning sufficient to rid the ship of the virus or were the crew members carrying it without knowing?

        • Tomorrow half Italia Will be lock down. Red zone. They told now Is news. Monday market in Milano Will crak again

          • On related note, Germany banned exports of specific medical items, in turn Austria, which was dependent on this key source lacking own domestic production (enough?) in this field, just announced only emergency/accident surgeries from now own..

            Mind you that’s one of the best healthcare system in the world, however as shown very JIT supplies oriented… Also circulating stories about the theft of cleaning and other supplies in hospitals, presumably by entrepreneurial newly arrived inhabitants..

        • According to the article:

          An epidemiologist who studies the spread of virus particles said the recirculated air from a cruise ship’s ventilation system, plus the close quarters and communal settings, make passengers and crew vulnerable to infectious diseases.

          Put this together with the many people who are throwing off viruses without actually coming down with COVID-19, there is a recipe for disaster.

    • I don’t see how this could be any worse in the U.S than China; they are both terrible. You have the largest manufacturing country basically shut down. What a dumb writer, its all about the U.S…. no its not. People have this notion that the U.S can operate on its own with no effects of recession overseas effecting the U.S….dummies… How long can the FED wait until another rate cut? My guess is they are hoping to make it through the week or month but won’t be able to.

    • “And 41 percent of China’s population lives outside urban areas, more than twice the share in the United States. Diseases generally spread faster in urban areas.”

      so about 59 percent of China’s population lives INSIDE urban areas!

      only about 800 million people…

      so the author greatly misunderstands where the bigger urban problem is…

      lolz…

    • There would seem to be very much greater risk of over-reach in China, and rebellion because of this overreach. I could imagine Mr. Xi losing his position as president. In fact, I could see a major breakup of the economy, if geographical areas of the economy cannot restart. China’s problem could directly lead to debt defaults.

      The US will have a serious problem with supply lines that don’t work for as long as China’s production is down. The US’s problems could also lead to defaults. The world’s financial system is likely to be in disarray. It would seem like pretty much the whole world would have trouble, if China and the US have troubles.

      • And yet the Common Flu kills more than the “Coronavirus” each year. This whole thing smells fishy to me as if a group of individuals i.e. Davos Elites wanted to collapse the global economy and needed a scapegoat or a manufactured Black Swan.

        Meanwhile at my local Walmart I can’t find basic liquid hand soap because I ran out and the shelves are bare.

    • “Demand shock”. It takes the author a long time to get to the point, and then he sort of trips over it. The US is not a “service economy”; it is a “debt economy”. And the viability of a debt economy hinges on one factor only: the velocity of money. If it is high enough, the revenue stream can reassure the creditors, service the debt, and make a case for the debt to be rolled over rather than repaid. But when that velocity falls below a critical threshold, the debts become unsustainable and the economy collapses.

  6. I’m putting together a song library to listen to if the worse comes to worse and I’m fading from this world to the other side stricken down by the China Viruses…..
    One top of my list…

    Here in Florida just in, two unlucky souls have died

    Sen. Rick Scott on threat coronavirus poses to Florida’s economy
    Florida’s tourism industry braces for disruption as coronavirus fears shake the American public
    Florida Gov. Ron DeSantis issued an order Saturday directing a Level II public health emergency in the state after two people, who were both in their 70s and had traveled overseas died, according to the Florida Department of Health

    Maybe a Hurricane can come in and distract the people!

    • Here in Florida just in, two lucky souls have died…

      there, fixed it for you… 😉

    • The point is to limit social interaction. That is what brings the R naught down to around one. Nothing else works, as far as I know. That is a big deal for the older population. You may not realize it, but the safety of the older loved ones you have near you is in part based on your behaviour.

      • We have built an economy that very badly needs social interaction. Limiting social interaction collapses the economy, in not very long–weeks or months.

        It seems to me that what traditionally brings the R naught down below 1 letting community immunity build up sufficiently that there are not enough people without antibodies to infect. If we look back historically, this approach is the approach that ended epidemics. It also helped overcome the problem of too many people relative to resources. With the smaller population, young people suddenly had more job opportunities, for example.

        We have decided that somehow we are special. We can push the virus into submission. We think we should be able to have enough hospital beds and medical providers and medical equipment so that everyone can get through this epidemic nicely. Unfortunately, this doesn’t seem to be possible. But we are adamant that somehow we can fix the situation, at least for ourselves and our loved ones. The fact that the economy collapses, leaving us without food, piped water, electricity, and oil doesn’t occur to us to be a problem.

  7. is anyone watching opec? I wonder if Russia thinks it can bleed out the other players in the oil game thereby giving it a great advantage. They have been trying to corner the oil market for sometime. This article says that russia has low extraction cost which I think is bull shit…because it has high overhead as well but it is interesting to see how they are playing. Extraction cost is something I can never get a straight answer and one time they are high in eagle ford and baakan and another report will say that they are low….

    https://www.zerohedge.com/geopolitical/russia-just-told-world-no

    • There are probably three parts to extraction costs: (1) the direct cost of extraction, (2) the amount the government needs in taxes on the extracted oil to keep up its system, and (3) the cost of borrowed/invested capital to keep the operation going. Lowering interest rates sort of helps (3).

      The reason you can’t get a straight answer is because Item (1) isn’t really the right answer. Also, the amount the government needs in taxes depends on population, among other things. It can sort of get along with less for a little while, but eventually, there is a problem with the government being overthrown.

    • Well low interest rates will help but low oil prices are going to shut down a lot of wells and layoff a lot of people I wonder how the Texas economy will do without that revenue. More argument for recession there is going to be a crazy week on the stock market this week. Que the talking heads telling us to stay in the market…..its all good

    • https://www.zerohedge.com/geopolitical/russia-just-told-world-no

      yes, as a matter of fact, I am watching OPEC+…

      “Russia told everyone they are prepared for lower oil prices.”

      “Russia can ride out, if not thrive, in this low price regime because:
      the ruble floats to absorb price shocks in dollars.
      a majority of their oil is now sold in non-dollar currencies – rubles, yuan, euros, etc. – to lessen their exposure to capital outflows.
      the major oil firms have little dollar-denominated debt.
      low extraction costs.
      its primary governmental budget ebbs and flows with oil prices.
      All of this adds up to Russia holding the whip hand over the global market for oil.
      The ability to say, “No.””

      so…

      Russia would like higher prices, but are okay with lower prices…

      so…

      I assume Russia will be out of OPEC+… no more OPEC+…

      OPEC now will have to make cuts of 10+million bpd to have a chance at higher prices…

      such large cuts will do great harm to the economies of OPEC countries IF they don’t work to raise prices…

      and I think they can’t get prices up… the coronavirus supply destruction and demand destruction is too powerful…

      so…

      for OPEC countries, it’s a lose/lose situation…

      if the virus hits them all like it has in Iran, then it could be a lose/lose/lose situation…

      • You are wrong because of the enormous government debt in Russia – oh, wait. Well, Russia can’t produce enough food to feed itself – oh, wait. Anyway, these arguments are silly. Russia is in trouble, because, “truth is more important than facts.”

        • I’ve recently been reading that Russia got rid of all of its foreign debt…

          true or false?

          and Russia is a net exporter of food…

          true or false?

          I thought the point of the article which I quoted was that Russia would suffer through low oil prices but that they were prepared to do so… ?

  8. Wife and I last evening watched ‘Contagion’, a 2011 movie with Jude Law, Lawrence Fishburne, Gwyneth Paltrow, Matt Damon & Kate Winslet, about a pandemic virus. You have to wait until the end of the movie to find out how the virus got started, but cutting to the chase, a bat eats some banana, drops a piece in a pig farm, a pig eats it, an Asian chef buys it, cooks it, wipes his hands on his apron, then shakes hands with Gwyneth Paltrow. She then gives it to other people, including some guy she’s cheating with on husband, Matt Damon. Paltrow dies, the Dr. tells Damon she’s died and Matt says, “Ok, so when can I talk to her?”

    The movie though has some good science moments of discussing information relating to the virus. Eventually a vaccine is distributed, but that takes a long time because we’re talking about everyone still alive in the world. Meanwhile people remain in their homes. How they get food is not shown.

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