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?


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

        • I hadn’t realized that import/export data would be available for China this soon, because I thought that data would be delayed. It is interesting that exports are “only” down by 17.2% and imports are down by 4%. I suppose if they China is not producing as much, it needs to import relatively more of goods like food, masks, and disinfecting solutions.

          I understand that some industries, such as steel mills and aluminum mills, have continued to produce in China, because it is difficult to shut these down for short periods, and production is far from Wuhan. These industries would contribute to continued electricity (and coal) use in China, and would add to exports. China is mostly not making finished products with iron or steel, however, so the production is adding to inventories and forcing the world prices of these commodities down. Transportation is particularly down, especially affecting the demand for oil.

        • yes… that is the appropriate word for today…

        • Marco, I have a cold. It is just a cold (fingers crossed). It is taking some effort to remain calm. IF I get a fever then PANIC!!!!

      • Shutting down businesses because a few employees test positive is a strategy that ultimate collapses the economy, as far as I can see. Sort of like putting a tourniquet on your arm, because you have a scratch on it.

        • However, many places cannot function with 30% of the workforce at the peak of the epidemic off sick for a month at a time, so even ordering companies to stay open won’t really be effective either.

          In some sectors customers will be totally absent even if the venue or shop is manned and open.

          • True. If there are a lot of small businesses, say farms, that don’t need a lot of tending a some times of the year, many of them can more or less continue in operation. Or other family members who are well can take over some of the duties. A few stores might also be able to stay open as well. A cobbler might make fewer shoes, and a seamstress might make fewer dresses, but without a lot of debt, these operations could get back to working quickly.

            With our big businesses with specialized workers, it is almost impossible to do without 30% of workers. At best, in a manufacturing facility, a company can make fewer of a particular product by operating fewer lines of production. Overhead costs would make the production unprofitable, however.

    • The -7.1% GDP change for Japan was in the October to December quarter, after raising the sales tax, before all of the coronavirus problems started.

  1. ““Central banks across emerging markets are, on the one hand, facing huge sell-offs in their currencies; and on the other hand, a slowdown in growth,” Cedric Chehab, head of country risk and global strategy at Fitch Solutions, told CNBC’s “Street Signs Asia.”

    ““So what do they do? Do they cut interest rates to stimulate growth or do they raise interest rates to support their currencies? I think a lot of central banks are going to be squeezed by this policy dilemma now,” he added.”


  2. Collapse may very well arrive because of people’s response to the virus. Part of the problem is that the world is already near collapse. Epidemics are often part of collapses. It is just that we have forgotten to think about them. Gail told 2’weeks ago. This Is history

    • I think this is more about manufactued fear and hysteria by the press. They have done a good job of stoking the flames. I’m pretty sure Chris Martenson has sold a few more subscriptions to Peak Prosperity Dot com.

      This guy tries to use some needed common sense and just shows some of the behind the scenes shenanigans that can take place.


      • I am afraid this article includes a lot of wishful thinking. Our world economy is too close to the edge for this to happen, in my opinion.

  3. Ladies and Gentlemen, it was a pleasure…

    This was one of the few corners of rationality and long-term thinking present on the web, but now it looks like this will be the Black Swan that brings down the whole fragile edifice.

    Thank you for giving us a space, Gail.

    All the best and good luck,


    • Just do the maths. This is already going expontial in italy. Best wishes to all.

    • You are welcome. Epidemics have brought a lot of economies down in the past. If an economy is already near the edge and also has illusions about its ability to save itself from the epidemic, it seems to encourage geographical areas to undertake the equivalent of apnea (as in sleep apnea, with a cessation of breathing). This cannot be a solution. The patient dies from the treatment.

  4. Italia Will go out only whit another currency…Need some years. I prepper for 3 years of absolutly darkness

      • Be glad for US old clunky ways, as your home well pumps are usually single phase, which is ~3x less expensive to furnish with renewables than EU/RoW three phase systems. Also in next step down you are also more endowed with favorable land per capita ratio, so animals can pump it up.. Obviously %%(sub)urban depop / slavery / feudum comeback phase won’t be pretty transitional period anywhere.

  5. Wait when virus arrive south Italia. After Will be caos. They have not hospital. 6 Person die in jail.

  6. “With U.S. stock futures set to plunge at the open, investors will be watching for key market circuit breakers to kick in and limit or halt the market altogether.

    “Futures contracts hit “limit down” on Sunday evening after CME-traded stock index futures contracts sank 5%, halting trading below that level and preventing futures from falling any further.”


    • Milano in apnea = Milano in temporary cessation of breathing. This works only for a very, very short period. It will kill the economy very quickly, if sustained, just like human cessation of breathing.

      • Our “leaders” must soon realise the precautions are way more dangerous than the virus and turn around forcing people back to work? Hope it is not to late …

        • “Our “leaders” must soon realise the precautions are way more dangerous than the virus and turn around forcing people back to work? Hope it is not to late …”

          That’s what I’ve been suggesting in many posts, but no one else suggested something similar until I saw your post. The big picture is the remedy of shutting down areas of commerce is worse than the virus. My wife started to get angry at me because this is what I was saying, so I stopped talking about it. Humans are for the most part emotional, not logical, so the route of trying to avoid the virus has taken hold, but we need to realize that strategy will fail the world economy in a pandemic, then we’ll all be in a chaotic mess. The only alternative is to buck up and go about the business of BAU before there isn’t one to go back to.

          In 1918 during the Spanish flu was likely different because the economy had not grown as big or anywhere near as connected. Now it is a global economy connected to an extent that will not permit a long siesta. People in Wuhan are still stuck in their apartments. “Put out the all clear and stop reacting to the virus before it’s too late and there is nothing left to go back to” is my message, but I don’t hear that from politicians. So down the tubes we go I guess.

    • Marco, I found this comment from an Italian. I want to ask if it is true because I am in Asia. I know Italy will still be there but what do you think? Thanks.

      “Prisoners are rioting because authorities won’t let their relatives visit them, the military got employed, a Neapolitan selfquarantined with his sister but never received tests or medical care thus leading to the death of his sister, the video went viral, also hospitals in the south are slowly but surely starting to get full.
      Basically, there won’t be an Italy next week.”

      • Yes i saw video. Maybe naples not ready for protocol for take ill coronavirus. Honestly i not belive 100 per cent nothing Who arrive from naples. In jail they told was apocalittic immagine. But not explaine. Maybe was die 6 Person in jail maybe 3 . Dont know. Maybe from medicine they stole maybe from guns. Not are info. Jail sistema in Italia Is another old old problema never solved. Are 2 times people can be inside. A lot africana and other country and HIV and contagius. Italia have a lot of skeleton in closet

        • Thanks… Need to ask. Too many fake news.

          Many people left North Italy when quarantine orders came in. This is not good for the southern Italy.. Take care. Stay safe….

      • I wonder if similar calamities will take place in Singapore (where I live) these coming months. I sure hope not…
        The sorry state of affairs now overwhelming the planet seems an invitation to sit down for a bit of reflection. Where will you be going? Where can you go? What can you do that will make a difference?
        Is it really going to be ‘lights out’ for us now?…

        • Singapore has warmth and humidity working for it. Its number of cases per 1 million population is far below So. Korea, Italy and Iran. It is more in line with Norway and Sweden. We will see what happens.

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