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?

 

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. Hill Billy says:

    https://www.scmp.com/economy/china-economy/article/3051445/coronavirus-chinas-east-coast-provinces-offer-chartered

    First of all, does anyone believe 100M workers are back on the job? Coal consumption remains flatlined so pray tell how the factories are running if they are not using electricity?

    And does anyone believe the 200M that have not reported can’t get to the factories?

    Might it be that they prefer to remain in their villages rather than return to locked down hell holes like Wuhan where they are supposed to risk their lives being crammed into factories to make widgets for the world?

    I am thinking the truth is that they are refusing to return.

    If you had a job in Wuhan would you return?

    Even the Chinese government knows full well that you cannot force 300 million people to work, even if you ask the military to force them. And even if you could, each factory is a Diamond Princess, a disaster waiting to happen.

    Soon the assembly lines will stop and the shelves will go empty.

    .e.g. Autos are made up of tens of thousands of parts. If a door handle is out of stock, the car does not get to the dealer lot.

    Tom Malthus is waving his finger saying I told you so! Our clever brains helped us avoid the trap, but in the end, the complexity of our ‘brilliant system’ will be our Achilles Heel.

    There does not appear to be any way out of this.

    The Central Banks cannot buy their way out of this one.

    • Covidinamonthorayearoradecade says:

      sure, the population overshoot in China is enhancing the epidemic…

      the CBs could actually let this crisis play out and take the world economy down a notch or two, since the reason for a 2020 economic crisis would not be of their doing…

      of course, as you allude, it’s probably out of their control to keep the economy from shrinking…

      so down we will go… 2020 global Great Depression…

      though one thing for sure (nearly sure), the stock markets will remain artificially high…

      the Dow needs 2% to hit 30,000 and the Nasdaq needs 2% to hit 10,000…

      I think they both get there amid the China epidemic but before it becomes a global pandemic…

    • Yep, the likelihood of many important “widgets” going suddenly out of stock is real.
      Fortunately enough, lot of the low tech horticulture farming equip. is still made locally/regionally (or could be hacked from the existing stock), but for anything powered up be it vehicles (small or big) machinery (even small scale one) and electronics this could be the end of the road. Mind you there are perhaps still few weeks remaining (to make the long delayed purchase) should the worse case scenarios pan out that way..

      • Xabier says:

        Quite so, one hopes that vital parts for harvesters, etc, are being stockpiled now, rather than people being lulled into complacency by the ‘It’s just flu and will be over in a month or two’ meme.

        Quite a few stories about supply-chain difficulties appearing now, so maybe they will catch on if they have their wits about them.

        Although of no national strategic importance, I’m stocking up myself, as for many materials I only have one living maker left – with skills impossible to learn in less than 5 years or so. In fact, if they die the skill will probably die with them.

        A nice gift of a fully stocked workshop for someone if I peg out.myself….. And my wine cellar. 🙂

    • peatmoss says:

      Coal consumption would indeed be a useful metric for evaluating the truth of how paralyzed China is. Where can you get that metric? I found this but its way too macro.
      https://www.ceicdata.com/en/indicator/china/coal-consumption
      The article cited weekly coal consumption data. I cant find a source for that.

    • Robert Firth says:

      “It is evident, that if trade and foreign commerce were held in great honour in China, from the plenty of labourers, and the cheapness of labour, she might work up manufactures for foreign sale to an immense amount. It is equally evident that from the great bulk of provisions and the amazing extent of her inland territory she could not in return import such a quantity as would be any sensible addition to the annual stock of subsistence in the country.”

      Thomas Robert Malthus, “An Essay on the Principle of Population”, (1798), Ch 16.

  2. RISE says:

    An excellent post Gail. Coincidentally I wrote a similar post just this afternoon. You can find it here if you wish https://makingbetterdecisions.ca/2020/02/19/is-the-coronavirus-a-catalyst-for-the-great-depression-of-the-2020s/
    I’m so glad I found your blog. I too have had my wonderings about the viruses discrimination based on gender and race. Your thoughts on the global economy align with mine as well. There is still hope, but the longer this continues that hope will dwindle. We can only hope that our leaders and policy makers make wise decisions.

    • Keep up your good work! That is a very fine post you wrote. We need slightly different kinds of posts to reach a wider audience.

      I deduce that you are female from your “About” page.

      We need more women writing, as well.

      • RISE says:

        Thank you Gail! I appreciate that, especially coming from you. Yes, I am female. My name is Shelley. Thanks for visiting. I look forward to your future posts.

  3. Herbie R Ficklestein says:

    Bad headlines for the airlines!
    The next day, the man tested positive for COVID-19. A day later, the woman did too
    https://news.yahoo.com/couple-flew-delta-hawaii-japan-190035613.html

    Delta Air Lines and Hawaii health officials are scrambling to alert people who may have come into contact with a Japanese couple who tested positive for the novel coronavirus after visiting the state. There are concerns that fellow passengers could have contracted the virus during the couple’s flight home to Japan on February 6.
    On Friday, eight days after the couple left the islands, the Centers for Disease Control and Prevention told state health authorities that the man tested positive for the virus, known as COVID-19. A day later, his partner tested positive, The Japan Times reported.
    The man began displaying signs of the coronavirus while traveling in Oahu from February 3 to 6. According to the CDC, people can display symptoms of COVID-19 between two and 14 days after exposure, which means the man could have contracted the virus before arriving in Hawaii. It is unclear when the woman began displaying signs of illness.
    Delta is contacting all the passengers who flew with the couple on Delta Air Lines Flight 611, a 10-hour journey from Honolulu to Nagoya, Japan. The airliner departed in the afternoon on February 6 and landed in Nagoya on the evening of February 7 after crossing the International Date Line.
    “The health and safety of our customers and crews is our top priority,” a Delta spokeswoman told Business Insider. “In cooperation with Japanese health officials, we are proactively reaching out to customers who were on board that flight, as well as taking the necessary steps to ensure the safety of our customers and crew.”
    On Wednesday afternoon, the spokeswoman said she didn’t have an update and declined to clarify when the company started notifying passengers.

    Looks like this but is out of control!
    Just what the Airlines DONT need …..
    FEAR on getting on an airplane!

  4. Artleads says:

    I don’t believe this will fly. There are practical concepts but no soul to it. But for what it’s worth…

    • Robert Firth says:

      “On Friday, eight days after the couple left the islands, …”

      So the airlines are “scrambling” to contact people, after they have been infectious and at large for eight days? Far too little, far too late. Perhaps we could improve our chances by simply not doing expensive and totally useless virtue signalling exercises? Nature is not impressed.

  5. Pingback: Demand For Physical Precious Metals Surge Due To Fears About Disruptions In The Global Supply Chain - Investing Matters

    • Concrete is requires a lot of heat to be made. It has a big CO2 footprint, almost any way it is made.

      We pave our roads either with asphalt or with concrete. Asphalt is one of the products produced when oil is extracted, then separated into chains of varying lengths. Asphalt has long chains. If oil prices are high enough, these long chains can be “cracked” and made into products such as gasoline and diesel.

      If we are no longer producing fossil fuels, I don’t think we have any way of paving roads, other than using cobble stones or the equivalent. Our electric vehicles will likely have to run on unpaved roads, if there is electricity to operate them.

      • Robert Firth says:

        Gail, Roman concrete needed no heat whatsoever. They even had concrete that could set under water. A few fringe researchers in Texas have been trying to rediscover this technology, with limited success, because the detail is in the choice of raw materials.

        The dome of the Pantheon is made of concrete, built in the 2nd century AD (and designed by the Emperor Hadrian). When finished, it was the largest freestanding concrete dome in the world. It is still the largest freestanding concrete dome in the world. Once again, “finesse” technology wins.

      • Xabier says:

        What works best on unpaved roads: the mule.

  6. GBV says:

    Not sure that anyone has posted this one yet?

    Cheers,
    -GBV

    • GBV says:

      “Infections Ex-China Are Growing Exponentially”

      Insert super-smiley Chris Martenson picture here

      I appreciate the Covid-19 stuff that Martenson has been putting out as of late, but perhaps someone should point out that inserting smiling pictures of oneself beside alarming titles doesn’t make for the greatest of optics…

      Cheers,
      -GBV

      • Xabier says:

        To be fair to Martenson, in his latest video he says that we have a duty to be positive ‘and not a drain’ on the emotions of others.

        I recommend the video made by Dr Iwata on the atrocious mishandling of the cruise ship ‘quarantine’ by Japanese officials, and his seemingly justifiedfear that due to the lack of proper procedures and taring doctors and nurses form the ship will be carrying the virus with them back to their own hospitals.

    • The WSJ gives more information about the situation in Iran.
      https://www.wsj.com/articles/iran-takes-emergency-measures-after-two-coronavirus-deaths-in-qom-11582202084

      Iran closed schools and imposed emergency measures in a central province near the country’s capital after two people who tested positive for the coronavirus died, the first fatalities in the Middle East from the disease.

      Five people so far have been diagnosed with the Covid-19 virus, Iran’s health ministry said Thursday. Four of them in the city of Qom, one of the country’s main pilgrimage sites about 75 miles south of Tehran, where the two elderly patients died a day earlier.

      Another case, a doctor, was diagnosed in Arak, 70 miles southwest of there.

      Iran said the infected were all Iranian, but didn’t explain how the disease might have reached the country. The two people who died in Qom had not had a trip abroad, authorities said. China is a major trading partner of Iran and several other countries in the region, and is one of the last remaining customers for Iranian oil.

      So this answers questions–all of these folks were Iranian. They are not East Asian, so theoretically somewhat spared, but maybe not. The two who died were elderly. Going to pilgrimage sites sounds like a good way to spread the disease. Oil trading may have led to the disease being brought to the country.

  7. CTG says:

    Bankruptcy of small firms in the supply chain may be the weakest links in the global supply chain. These small companies are supplying a lot of stuff to the mid tier companies (or even as spare parts for their machines) and he mid tier companies to the multinationals.

    https://www.reuters.com/article/us-china-manufacturing/china-bankruptcies-create-cracks-in-global-supply-chain-idUSTRE52535H20090306

    We have been foretold a long time ago

    For want of a nail the shoe was lost.
    For want of a shoe the horse was lost.
    For want of a horse the rider was lost.
    For want of a rider the message was lost.
    For want of a message the battle was lost.
    For want of a battle the kingdom was lost.
    And all for the want of a horseshoe nail.

    • CTG says:

      opied from Zerohedge…

      We’ve described how China’s economic output remains frozen, and even if supply chains were able to restart, companies don’t have enough capital to cover wages, or have delayed or stopped paying workers, suggesting that the Covid-19 outbreak has left businesses on the brink of disaster. Worse, workers can’t freely move around the country, and many are subjected to travel restrictions and quarantines, which has forced a massive labor shortage.

      Very apt. Cannot cover wages and thus, workers have nothing to buy food and food prices go sky high due to logistics issues (delivery of food) and shutdown and quarantine. Circular referencing.

      • Yep, the very best case scenarios remains: China demoted for ~5yrs and the W sustaining only a recession (on massive CB/govs support). While more realistic scenarios are bordering on broken supply chains never to be reconnected again to full extent in many sectors (especially in the frivolous consumerist ware or some specialist items)..

    • Xabier says:

      Impossible to put all those vulnerable companies in the chain on financial life support, even if they can decontaminate and find sufficient staff.

    • Malcopian says:

      ‘And all for the want of a horseshoe nail.’

      Liebig’s Law of the Minimum, as Gail used to tell us. And what is the name of those sticks in her famous diagram? I’ve forgotten.

  8. Chrome Mags says:

    https://www.livescience.com/coronavirus-spike-protein-structure.html

    “Coronavirus ‘spike’ protein just mapped, leading way to vaccine”

    There is an interesting photo at the link, but it looks quite complex.

    • I see the person involved with this says,

      Still, McLellan thinks a vaccine is likely about 18 to 24 months away. That’s “still quite fast compared to normal vaccine development, which might take like 10 years,” he said.

  9. Kevin Hester says:

    Whether it is this pandemic or another or something completely different that shuts down industrial civilisation we find ourselves extremely vulnerable to losing global dimming and it’s attendant rapid increase in global mean temperature.
    Complexity is our ‘Achilles’ heel.

    https://kevinhester.live/2020/02/15/were-just-one-black-swan-event-away-from-collapse-and-a-total-loss-of-habitat/

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