Economies won’t be able to recover after shutdowns

Citizens seem to be clamoring for shutdowns to prevent the spread of COVID-19. There is one major difficulty, however. Once an economy has been shut down, it is extremely difficult for the economy to recover back to the level it had reached previously. In fact, the longer the shutdown lasts, the more critical the problem is likely to be. China can shut down its economy for two weeks over the Chinese New Year, each year, without much damage. But, if the outage is longer and more widespread, damaging effects are likely.

A major reason why economies around the world will have difficulty restarting is because the world economy was in very poor shape before COVID-19 hit; shutting down major parts of the economy for a time leads to even more people with low wages or without any job. It will be very difficult and time-consuming to replace the failed businesses that provided these jobs.

When an outbreak of COVID-19 hit, epidemiologists recommended social distancing approaches that seemed to be helpful back in 1918-1919. The issue, however, is that the world economy has changed. Social distancing rules have a much more adverse impact on today’s economy than on the economy of 100 years ago.

Governments that wanted to push back found themselves up against a wall of citizen expectations. A common belief, even among economists, was that any shutdown would be short, and the recovery would be V-shaped. False information (really propaganda) published by China tended to reinforce the expectation that shutdowns could truly be helpful. But if we look at the real situation, Chinese workers are finding themselves newly laid off as they attempt to return to work. This is leading to protests in the Hubei area.

My analysis indicates that now, in 2020, the world economy cannot withstand long shutdowns. One very serious problem is the fact that the prices of many commodities (including oil, copper and lithium) will fall far too low for producers, leading to disruption in supplies. Broken supply chains can be expected to lead to the loss of many products previously available. Ultimately, the world economy may be headed for collapse.

In this post, I explain some of the reasons for my concerns.

[1] An economy is a self-organizing system that can grow only under the right conditions. Removing a large number of businesses and the corresponding jobs for an extended shutdown will clearly have a detrimental effect on the economy. 

Figure 1. Chart by author, using photo of building toy “Leonardo Sticks,” with notes showing a few types of elements the world economy.

An economy is a self-organizing networked system that grows, under the right circumstances. I have attempted to give an idea of how this happens in Figure 1. This is an image of a child’s building toy. The growth of an economy is somewhat like building a structure with many layers using such a toy.

The precise makeup of the economy is constantly changing. New businesses are formed, and new consumers grow up and take jobs. Governments enact laws, partly to collect taxes, and partly to ensure fair treatment of all. Consumers decide which products to buy based on a combination of factors, including their level of wages, the prices being charged for the available goods, the availability of debt, and the interest rate on that debt. Resources of various kinds are used in producing goods and services.

At the same time, some deletions are taking place. Big businesses buy smaller businesses; some customers die or move away. Products that become obsolete are discontinued. The inside of the dome becomes hollow from the deletions.

If a large number of businesses are closed for an extended period, this will have many adverse impacts on the economy:

  • Fewer goods and services, in total, will be made for the economy during the period of the shutdown.
  • Many workers will be laid off, either temporarily or permanently. Goods and services will suddenly be less affordable for these former workers. Many will fall behind on their rent and other obligations.
  • The laid off workers will be unable to pay much in taxes. In the US, state and local governments will need to cut back the size of their programs to match lower revenue because they cannot borrow to offset the deficit.
  • If fewer goods and services are made, demand for commodities will fall. This will push the prices of commodities, such as oil and copper, very low.
  • Commodity producers, airlines and the travel industry are likely to head toward permanent contraction, further adding to layoffs.
  • Broken supply lines become problems. For example:
    • A lack of parts from China has led to the closing of many automobile factories around the world.
    • There is not enough cargo capacity on airplanes because much cargo was carried on passenger flights previously, and passenger flights have been cut back.

These adverse impacts become increasingly destabilizing for the economy, the longer the shutdowns go on. It is as if a huge number of deletions are made simultaneously in Figure 1. Temporary margins, such as storage of spare parts in warehouses, can provide only a temporary buffer. The remaining portions of the economy become less and less able to support themselves. If the economy was already in poor shape, the economy may collapse.

[2] The world economy was approaching resource limits even before the coronavirus epidemic appeared. This is not too different a situation than many earlier economies faced before they collapsed. Coronavirus pushes the world economy further toward collapse. 

Reaching resource limits is sometimes described as, “The population outgrew the carrying capacity of the land.” The group of people living in the area could not grow enough food and firewood using the resources available at the time (such as arable land, energy from the sun, draft animals, and technology of the day) for their expanding populations.

Collapses have been studied by many researchers. The book Secular Cycles by Peter Turchin and Sergey Nefedov analyze eight agricultural economies that collapsed. Figure 2 is a chart I prepared, based on my analysis of the economies described in that book:

Figure 2. Chart by author based on Turchin and Nefedov’s Secular Cycles.

Economies tend to grow for many years before the population becomes high enough that the carrying capacity of the land they occupy is approached. Once the carrying capacity is hit, they enter a stagflation stage, during which population and GDP growth slow. Growing debt becomes an issue, as do both wage and wealth disparity.

Eventually, a crisis period is reached. The problems of the stagflation period become worse (wage and wealth disparity; need for debt by those with inadequate income) during the crisis period. Changes tend to take place during the crisis period that lead to substantial drops in GDP and population. For example, we read about some economies entering into wars during the crisis period in the attempt to gain more land and other resources. We also read about economies being attacked from outside in their weakened state.

Also, during the crisis period, with the high level of wage and wealth disparity, it becomes increasingly difficult for governments to collect enough taxes. This problem can lead to governments being overthrown because of unhappiness with high taxes and wage disparity. In some cases, as in the 1991 collapse of the central government of the Soviet Union, the top level government simply collapses, leaving the next lower level of government.

Strangely enough, epidemics also seem to occur within collapse periods. The rising population leads to people living closer to each other, increasing the risk of transmission. People with low wages often find it increasingly difficult to eat an adequate diet. As a result, their immune systems easily succumb to new communicable diseases. Part of the collapse process is often the loss of a significant share of the population to a communicable disease.

Looking back at Figure 2, I believe that the current economic cycle started with the use of fossil fuels back in the 1800s. The world economy hit the stagflation period in the 1970s, when oil supply first became constrained. The Great Recession of 2008-2009 seems to be a marker for the beginning of the crisis period in the current cycle. If I am right in this assessment, the world economy is in the period in which we should expect crises, such as pandemics or wars, to occur.

The world was already pushing up against resource limits before all of the shutdowns took place. The shutdowns can be expected to push the world economy toward a more rapid decline in output per capita. They also appear to increase the likelihood that citizens will try to overthrow their governments, once the quarantine restrictions are removed.

[3] The carrying capacity of the world today is augmented by the world’s energy supply. A major issue since 2014 is that oil prices have been too low for oil producers. The coronavirus problem is pushing oil prices even lower yet.

Strangely enough, the world economy is facing a resource shortage problem, but it manifests itself as low commodity prices and excessive wage and wealth disparity.

Most economists have not figured out that economies are, in physics terms, dissipative structures. These are self-organizing systems that grow, at least for a time. Hurricanes (powered by energy from warm water) and ecosystems (powered by sunlight) are other examples of dissipative structures. Humans are dissipative structures, as well; we are powered by the energy content of foods. Economies require energy for all of the processes that we associate with generating GDP, such as refining metals and transporting goods. Electricity is a form of energy.

Energy can be used to work around shortages of almost any kind of resource. For example, if fresh water is a problem, energy products can be used to build desalination plants. If lack of phosphate rocks is an issue for adequate fertilization, energy products can be used to extract these rocks from less accessible locations. If pollution is a problem, fossil fuels can be used to build so-called renewable energy devices such as wind turbines and solar panels, to try to reduce future CO2 pollution.

The growth in energy consumption correlates quite well with the growth of the world economy. In fact, increases in energy consumption seem to precede growth in GDP, suggesting that it is energy consumption growth that allows the growth of GDP.

Figure 3. World GDP Growth versus Energy Consumption Growth, based on data of 2018 BP Statistical Review of World Energy and GDP data in 2010$ amounts, from the World Bank.

The thing that economists tend to miss is the fact that extracting enough fossil fuels (or commodities of any type) is a two-sided price problem. Prices must be both:

  1. High enough for companies extracting the resources to make an after tax profit.
  2. Low enough for consumers to afford finished goods made with these resources.

Most economists believe that an inadequate supply of energy products will be marked by high prices. In fact, the situation seems to be almost “upside down” in a networked economy. Inadequate energy supplies seem to be marked by excessive wage and wealth disparity. This wage and wealth disparity leads to commodity prices that are too low for producers. Current WTI oil prices are about $20 per barrel, for example (Figure 4).

Figure 4. Daily spot price of West Texas Intermediate oil, based on EIA data.

The low-price commodity price issue is really an affordability problem. The many people with low wages cannot afford goods such as cars, homes with heating and air conditioning, and vacation travel. In fact, they may even have difficulty affording food. Spending by rich people does not make up for the shortfall in spending by the poor because the rich tend to spend their wealth differently. They tend to buy services such as tax planning and expensive private college educations for their children. These services require proportionately less commodity use than goods purchased by the poor.

The problem of low commodity prices becomes especially acute in countries that produce commodities for export. Producers find it difficult to pay workers adequate wages to live on. Also, governments are not able to collect enough taxes for the services workers expect, such as public transit. The combination is likely to lead to protests by citizens whenever the opportunity arises. Once shutdowns end, these countries are especially in danger of having their governments overthrown.

[4] There are limits to what governments and central banks can fix. 

Governments can give citizens checks so that they have enough funds to buy groceries. This may, indeed, keep the price of food products high enough for food producers. There may still be problems with broken supply lines, so there may still be shortages of some products. For example, if there are eggs but no egg cartons, there may be no eggs for sale in grocery stores.

Central banks can act as buyers for many kinds of assets such as bonds and even shares of stock. In this way, they can perhaps keep stock market prices reasonably high. If enough gimmicks are used, perhaps they can even keep the prices of homes and farms reasonably high.

Central banks can also keep interest rates paid by governments low. In fact, interest rates can even be negative, especially for the short term. Businesses whose profitability has been reduced and workers who have been laid off are likely to discover that their credit ratings have been downgraded. This is likely to lead to higher interest costs for these borrowers, even if interest rates for the most creditworthy are kept low.

One area where governments and central banks seem to be fairly helpless is with respect to low prices for commodities used by industry, such as oil, natural gas, coal, copper and lithium. These commodities are traded internationally, so it is not just their own producers that need to be propped up; the market intervention needs to affect the entire world market.

One approach to raising world commodity prices would be to buy up large quantities of the commodities and store them somewhere. This is impractical, because no one has adequate storage for the huge quantities involved.

Another approach for raising world commodity prices would be to try to raise worldwide demand for finished goods and services. (Making more finished goods and services will use more commodities, and thus will tend to raise commodity prices.) To do this, checks would somehow need to go to the many poor people in the world, including those in India, Bangladesh and Nigeria, allowing these people to buy cars, homes, and other finished goods. Sending out checks only to people in one’s own economy would not be sufficient. It is unlikely that the US or the European Union would undertake a task such as this.

A major problem after many people have been out of work for a quite a while is the fact that many of these people will be behind on their regular payments, such as rent and car payments. They will be in no mood to buy a new vehicle or a new cell phone, simply because they have been offered a check that covers groceries and not much more. They will remain in a mode of cutting back on purchases, not adding more. Demand for most kinds of goods will remain low.

This lack of demand will make it difficult for business to have enough sales to make it profitable to reopen at the level of output that they had previously. Thus, employment and sales are likely to remain depressed even after the economy seems to be reopening. China seems to be having this problem. The Wall Street Journal reports China Is Open for Business, but the Postcoronavirus Reboot Looks Slow and Rocky. It also reports, Another Shortage in China’s Virus-Hit Economy: Jobs for College Grads.

[5] There is a significant likelihood that the COVID-19 problem is not going away, even if economies can “bend the trend line” with respect to new cases.

Bending the trend line has to do with trying to keep hospitals and medical providers from being overwhelmed. It is likely to mean that herd immunity is built up slowly, making repeat outbreaks more likely. Thus, if social isolation is stopped, COVID-19 illnesses can be expected to revisit prior locations. We know that this has been an issue in the past. The Spanish Flu epidemic came in three waves, over the years 1918-1919. The second wave was the most deadly.

A recent study by members of the Harvard School of Public Health says that the COVID-19 epidemic may appear in waves until into 2022. In fact, it could be back on a seasonal basis thereafter. It also indicates that more than one period of social distancing is likely to be required:

“A single period of social distancing will not be sufficient to prevent critical care capacities from being overwhelmed by the COVID-19 epidemic, because under any scenario considered it leaves enough of the population susceptible that a rebound in transmission after the end of the period will lead to an epidemic that exceeds this capacity.”

Thus, even if the COVID-19 problem seems to be fixed in a few weeks, it likely will be back again within a few months. With this level of uncertainty, businesses will not be willing to set up new operations. They will not hire many additional employees. The retired population will not run out and buy more tickets on cruise ships for next year. In fact, citizens are likely to continue to be worried about airplane flights being a place for transmitting illnesses, making the longer term prospects for the airline industry less optimistic.

Conclusion 

The economy was already near the edge before COVID-19 hit. Wage and wealth disparity were big problems. Local populations of many areas objected to immigrants, fearing that the added population would reduce job opportunities for people who already lived there, among other things. As a result, many areas were experiencing protests because of unhappiness with the current economic situation.

The shutdowns temporarily cut back the protests, but they certainly do not fix the underlying situations. Instead, the shutdowns add to the number of people with very low wages or no income at all. The shutdowns also reduce the total quantity of goods and services available to purchase, regardless of how much money is added to the system. Many people will end up poorer, in some real sense.

As soon as the shutdowns end, it will be obvious that the world economy is in worse condition than it was before the shutdown. The longer the shutdowns last, the worse shape the world economy will be in. Thus, when businesses are restarted, we can expect even more protests and more divisive politics. Some governments may be overthrown, or they may collapse without being pushed. I fear that the world economy will be further down the road toward overall collapse.

 

 

 

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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4,744 Responses to Economies won’t be able to recover after shutdowns

  1. Harry McGibbs says:

    “Strangely enough, epidemics also seem to occur within collapse periods. The rising population leads to people living closer to each other, increasing the risk of transmission. People with low wages often find it increasingly difficult to eat an adequate diet.”

    This put me in mind of the 2006 film ‘Apocalypto’, directed by Mel Gibson and set against the backdrop of a collapsing Mayan civilisation. It is hugely entertaining and well worth a watch if you are bored in your self-isolation:

    • At that time there were the Spanish galleons to save the day. There are no saviors now.

      • Yorchichan says:

        Hate to point out the obvious, but it was Eurasian diseases brought by the Spanish that decimated the Mayan civilisation.

        The Spanish did about as much saving as aliens are going to do for us.

        • Robert Firth says:

          Hate to remember history, but the collapse of the Classic Maya civilisation was essentially complete by the end of the tenth century. Of course, blaming everything on dead white guys is the current fashion, but I fear Clio disagrees.

          • Yorchichan says:

            There were people living in Mexico when the Spanish arrived, they were known as Mayans, and some of them lived in cities. It may not have been ‘Classic’, but there was a Mayan civilization.

            The Spanish behaved despicably, but they were not to blame for the natives lack of immunity to Eurasian diseases. No one suggested as such.

            • Malcopian says:

              But the Spaniards were all good Catholics, who have done so much for the world, as fellow poster Dennis L. will surely tell you.

            • Robert Firth says:

              Thank you, but not quite. When the Spanish arrived in Yucatan, there was exactly one Mayan city still populated: Tulum, I have been there; indeed, I have visited almost all the Mayan country in Belize, Guatemala, and Mexico. Tulum was spared the civil wars and other damage because it was isolated on the coast and sheltered by thick jungle. It was also just about the only functioning port, which made it too valuable to destroy. And yes, it did indeed finally succumb to European diseases, but in that respect it was unique.

              By the way, I once wrote a story for my children set in Tulum; it was called “Dusty”, and was about a princess and her pet guinea pig.

    • Robert Firth says:

      Perhaps we can call her “Itzel”, the Maya word for ‘rainbow’. According to Persian legend, the first pearl was created when a rainbow fell to Earth. The Persian name is “Margarita”, from which, of course, the contraction “Greta” is derived. The world holds many marvels.

  2. Pingback: Economies won’t be able to recover after shutdowns | Basic Rules of Life

    • According to Google Translate, on Monday, March 30, all maritime connections with Sicily, Sardina, and the Tremiti Islands, because of an order by the commissioners of Tirrenia seizing all current accounts. Two of the Italian ministries intervened, asking that this matter be settled in 24 hours, so that supplies of food and pharmaceuticals could get to the islands.

  3. Marco Bruciati says:

    Sardegna risk ti be whitout ship for bring food. Because Tirrenia can defoult. And Yesterday gov gived 600 euro to help. Arrived 300 000 ask

  4. Harry McGibbs says:

    “A new quarter has brought a fresh jolt of volatility to global equity markets, with stocks in Europe and Asia dropping as the coronavirus crisis worsens in the US and pressure on global economies mounts.

    “The falls, which follow the worst quarter for global markets since the 2008 financial crisis, came after President Donald Trump warned that nearly 250,000 people could die in the US from Covid-19.”

    https://www.ft.com/content/db37c3d0-e51b-4542-8bd7-99c946057783

    • Trade barriers sound good, but they don’t work well. Countries have surpluses, but can’t trade them with other countries with shortfalls.

  5. Harry McGibbs says:

    “In a single week in March, as financial markets convulsed and major parts of the economy began shutting down, banks made over $240 billion in new loans to companies — twice as much in new lending as they would ordinarily extend in a full year.

    “Brian Foran, an analyst at Autonomous, a research firm that did the calculations, initially thought it was a typo. “That’s really an unprecedented figure,” he said. “I’ve never seen anything like it.””

    https://www.nytimes.com/2020/03/31/business/coronavirus-companies-banks-loans-credit.html

  6. Chrome Mags says:

    “As soon as the shutdowns end, it will be obvious that the world economy is in worse condition than it was before the shutdown. The longer the shutdowns last, the worse shape the world economy will be in.”

    From those two sentences in the conclusion, is a weird analogy. Corona virus patients on ventilators have to be put under, meaning unconscious. The longer they are under the more damage occurs physically, mentally and emotionally. 1-3 days is tolerable but most patients suffering from this virus requiring a ventilator are under for 1-3 weeks.

    So the analogy is; The longer a patient is on a ventilator, the worse shape that person is in recovery, just as the longer the economy is put on hold, the worse shape it will be when trying to kick-start it into higher activity. And, just as many recovering patients will be trying to reboot their brains, governments will be trying to reboot their economies.

    • Chrome Mags says:

      It’s almost like the world economy is rapidly being shifted on to a ventilator. The CB generated funds are expected to keep the economy breathing while it’s unconscious. Good luck in recovery.

    • Xabier says:

      ‘As above, so below’ as the old alchemists used to say…

      Reduced lung-function has serious effects on mental capacity, not just physical strength.

      Although some effects may be positive: when I was in hospital once for asthma caused by diesel pollution, I could see people’s ‘auras’, an odd but illuminating experience!

      • Would you pls share more on this transcendental experience?
        Was the halo effect like few centimeters around the humans or way larger?
        Were these auras sort of pulsating themselves or more like a quasi solid object?
        Thanks

        • Xabier says:

          For me it was somewhat hazy – different to the usual descriptions, and therefore probably an inferior kind of experience – but it was also accompanied by a very strong perception of the individual nature of the person, a very strong emanation not based on their physical appearance but on some kind of spiritual essence.

          In fact, all I could tell about the person was how they felt, what they projected in some way. I could perceive this at some way off.

          ‘Aura’ may be the wrong term to use, except as short-hand. No doubt being immobilised, but not sedated, allowed my mind to perceive things which are normally over-laid by normal activity and preoccupations.

          It makes one wonder about the effects of breathing exercises and fasts: these certainly can produce hallucinations and fantasies, but may have other uses in developing new perceptions.

          • richarda says:

            Thanks Xabier. There may be somenting similar in Tai Chi, in that exercise should begin with a state if Wu Shu, or both emptiness and oneness with everything. Useful in martial arts where your mind is aware of your immediate surroundings while your body does something else.

            • Robert Firth says:

              Wu Shu (武 術) was widely practiced in Singapore also. As you say, it begins with emptying the mind (the ‘softer’ part) and preparing the body (the ‘harder’ part). There was even a children’s show called “Wushu Warriors”, complete with a wise old mentor who did not say “Do or not do, grasshopper”.

    • The public needs to know the mortality of being a corona ventilator patient.There is also significant morbidity as this poster has noted. The mortality is 66-79% in several studies in China and Italy. That means you have one chance in 3 or 4 of surviving. It’s not quite a death sentence but close. It is probably possible to put many folks on CPAP(continuous positive airway pressure) and achieve similar results in selected cases but that remains to be seen. At least they are easier to manage and the patients can remain conscious. The real death sentence could be to the hospitals who will go unpaid and the surviving patients who can’t pay. BTW I intubated and managed ventilator patients for decades before retirement.

    • Good point!

  7. Harry McGibbs says:

    “Having a central bank help the government spend by magic-wanding cash into existence has long been considered an economic-policy taboo, a dangerous last resort for failing states. But no less an authority than Ben Bernanke has argued that it might be a government’s best option “under certain extreme circumstances.”

    “Now many mainstream economists and Wall Street financiers are arguing that those extreme circumstances have arrived.”

    https://www.theatlantic.com/ideas/archive/2020/03/we-need-start-tossing-money-out-helicopters/608968/

  8. Fast Eddy says:

    Not locking down was never an option

    https://youtu.be/NloOWphI5bw

    • It is too bad that people could not see what the attack on COVID-19 does to the rest of the economy. This isn’t a war to defeat COVID-19. It is an approach to allow the battle go on endlessly.

  9. Harry McGibbs says:

    “With their populations at risk, their public finances stretched, and financial markets in turmoil, many emerging market states and developing countries face a huge challenge. Will they have the resources to ride out the challenge? And if not, where will they look for outside assistance in an increasingly divided and multipolar world in which the United States, the European Union, and China have all been through an unprecedented shutdown?

    “At the head of the list of vulnerable countries is South Africa… In Brazil… the currency was reeling even before Bolsonaro decided to discard any strategic approach to the virus. Chile, Thailand and Turkey have all been knocked back. Argentina’s much-needed debt restructuring has been blown off course.

    “India’s sharemarket is plunging, its exchange rate has slumped and its banks are under pressure.

    “The shock has delivered a blow not just to sharemarkets and government bonds but also to commodities… Think of desperately poor Nigeria; think of fragile Algeria, where oil and gas account for 85 per cent of export revenue.”

    https://www.afr.com/policy/economy/the-coronavirus-is-the-biggest-emerging-markets-crisis-ever-20200330-p54fg4

  10. CTG says:

    Just a nasty thought came to my mind. Don’t shoot the messenger. If I am God and I want to have some fun, let the long pending California earthquake take place……

    I have serious doubts that there will be any resources or will to rebuilt the devastated area in the immediate future.

    Think about it at the academic point of view – I think there will be no cavalry coming in to help to rebuild. I do think that it will be “a man for its own or a state for its own”. Nevada and Oregon will say I am too tied up to help you. With social distancing? oh man… Agree or disagree?

    • Xabier says:

      We’ve already seen national states hold back whole categories of pharmaceuticals; next will be food on the basis of feeding their own first.

      Spain is quite seriously fragmenting at the moment, with each Autonomous Region pretending they can manage things better than the Madrid government – deluded of course, and in practice they do not have the legal powers/military force to resist central mandates.

      • Robert Firth says:

        Xabier, you may well be right, but I am not so sure. As the Spanish flag testifies, the “regions” have an old and strong tradition of autonomy. Catalonia (or Catalunya if you prefer) is one example, and if their government called all able bodied men to the colours, I think millions would respond. Andalusia (or Al-Andalus if you prefer) would survive, especially after they rebuilt their traditional links to an equally downsized North Africa. Castile? Maybe not.

    • Harry McGibbs says:

      Earthquake *could* happen of course but more likely is another Hurricane Harvey-type event, as the Gulf of Mexico is extremely warm right now.

    • There is almost certain to be some sort of big natural event in the next six months. States (or countries of the EU) will want help from the outside, but no one will offer aid.

  11. CTG says:

    Irrespective of what each country is doing, it is

    1. Fracturing the relationship with every country. Politicians are more interested in handling internal virus-related issues than all other international issues.
    2. Every country is now looking its own country. It does not matter if the country is doing a good job or not but it is “a man for its own”. It may come to a point where food export will be curbed.
    3. All these are very bad for international trade

    On lockdowns

    1. It is extremely deflationary when the economy shuts down.
    2. People just use up their savings and no productive work is done.
    3. The velocity of money is close to zero or probably zero (except for food purchases only)
    4. The money that has not changed hands during the shutdown and the usage of savings to sustain the living is a monetary black hole for the economy (extremely deflationary).
    5. Government printing money is not a solution. Printing money does not solve DEMAND DESTRUCTION. Printing money and giving to people does not matter if the factories are closed. A lot more money, lowered supplies means higher inflation. Higher inflation is bad for savings.
    6. Free money encourages laziness
    7. Essential business is hard to identify. I broke my spectacles and I cannot buy one. My dog is sick and needs a vet. Similar to the egg carton article, something will break somewhere and it cannot be long term.

    Even without the shutdown, the economy is already in a mess everywhere in the world :

    1. Anecdotal evidence shows that many customers will default on their payment to their suppliers where the good are always sold on credit because they have gone through one month of no sales. Zero sales for everything except food, medicine and groceries. Imagine the economy travelling 50mph just slammed into a solid wall.

    2. Rents, payments, etc must be paid. Many business will fail and if there is a moratorium of rents, then the landlords will suffer because the may be loaded with loans to the banks and ultimately, the banks will suffer. The daisy chain is too long and it will impact a lot of people.

    3. Start up from a shutdown is not easy as some people are already jobless. People may just leave the industry, went to another place to live or may even be dead. Training ? easy? don’t think so.

    4. Many discretionary spending will off the table. No one is going to buy any new cars, properties, luxury watches or even things that are deemed not essential.

    There are just too many consequences that will happen and most of them are unknown and people do not seem to realize. I told my friends that the grocery chains will not tell you when their warehouses will be empty until it is empty. In the mean time, the C-Suite execs will sell their stocks which is at all time high.

    Politicians have painted themselves in to the corner for there is no “release criteria” for lockdowns. Are they going to say “If the infection is less than 100 cases per day, then I will remove the lockdown”. Politicians do not want to bear responsibility of releasing the lockdown (no more release on Easter in USA?) if infection is stabilizing. Only China was in lockdown and going to be released because of its political structure where the citizens has no say over it.

    Like my previous post, even if a lockdown is removed, people are still scared (remember the hysteria even it is just slightly worse off than flu). We are now so conditioned on social distancing that the world we know pre-corona will be so vastly different from post-corona (that is if the economy is still holding together).

    Personally, I doubt the economy will hold together much longer. Central banks have used up all their ammo – interest rates and print money. The Feds already say that they will buy up anything with unlimited firepower but why is it the stock market is not moving up rapidly? Say DJIA going to 30,000 instantly but it is like going down and up and down again?

    Let us ask any sane working person (not the welfare queens or very old people who are going to die anyway) all over the world. If you are given $10,000, what are you going to do? Go out and buy a new phone or save for rainy day because you may be out of work? If you say “save for rainy day”, then you can see for yourself how deflationary it will be. Velocity of money is still zero.

    If the virus is still lurking around among humans (the most probably scenario), will any of you here in the immediate future (Within 6 months from the date of lockdown release) splurge on a trip to the other side of world (like Spain, Italy, China or Korea) for a holiday? You know the answer.

    • All good and logical points, BUT humanoids have very long track record of living under siege war-time economy mandates. Is it destructive on many levels? Yes, but it’s not guaranteed over night instadoom either.

      Lets wait for some (semi-)core IC going bust (for real) first, and from the observed effects the timing will become perhaps more clear for the others as well..

      • CTG says:

        The humans today unfortunate are not so resilient as the olden days. We dont have the attitude, the knowledge and the skills to survive outside our comfortable industrial civilisation

        • GBV says:

          Humans have been around a long time… survival instincts have been bred into us. When the time comes, and it’s dog-eat-dog / kill-or-be-killed, you may be surprised just how (violently?) resilient some people can be…

          Cheers,
          -GBV

          • CTG says:

            They can be violent but not resilient. When the food is gone, so will they. What are the chances if survival for urban areas?

          • ITEOTWAWKI says:

            The only resilient people in the world that can live outside of the matrix we have built ourselves are the few tribes that probably number a few hundreds in the world who are still hunter-gatherers…the rest are finished…from the Chinese woman in a rice paddy field in some remote village in China to the billionaire with his fully stocked end-of-the-world bunker to the best prepared prepper in the world…pre-WW2 I would agree, there would have been people who would have been able to make it…but then again pre-WW2 the world was not as connected as it is today, so the chances of a complete global collapse were not as high….

    • I definitely think you are right about the situation being deflationary. We are seeing this in oil prices and copper prices. I noticed wood prices are at a record low too. Let’s go build new houses! Except there are not many people who would think about buying them.

      It is hard to see how this can unwind in a nice way.

  12. Fast Eddy says:

    In the Paraguayan capital, Asunción, Alberto Ruíz, a member of a residents’ social organisation in the deprived Tacumbú neighbourhood, told the Guardian that authorities had done very little to support families left without any income.

    Almost all citizens in the country are confined to their homes. “They tell you to stay at home, to protect your family. But in poor neighbourhoods, you have to go out to earn a living: if you don’t, you die of hunger,” Ruíz said.

    https://www.theguardian.com/global-development/2020/apr/01/extreme-coronavirus-lockdown-controls-raise-fears-for-worlds-poorest

    Starvation is right around the corner…..

    • According to the article: At fist people were singing on their balconies, but

      “Now people are more afraid – not so much of the virus, but of poverty. Many are out of work and hungry. There are now long queues at food banks.”

  13. Fast Eddy says:

    “If the government expects this money to be used to feed people, then municipalities won’t have money for other things,” said Orsina. “And the new tranche of €400m, if you divide it up between all municipalities, is peanuts. The problem has been offloaded to mayors – Italians will now go asking them for money that they can’t give. Expectations have been created that can’t be satisfied.”

    There are also signs that criminal organisations are exploiting the situation. Investigations are under way into the activities of a Facebook group called “National Revolution” that has been inciting people to loot supermarkets.

    “The people [behind this group] are those who, before the lockdown, made a living from house robberies and shop thefts,” said a source from the Sicily unit of Digos, Italy’s anti-terrorism police squad. “But with some of these criminal activities being on standby due to the lockdown, the only shops open to rob are supermarkets and chemists. These are people who, due to rampant poverty in the south, usually survive from criminal activities, but who are now not doing so well.”

    Leoluca Orlando, the mayor of Palermo, has asked the government to establish a “survival income” for the poorest citizens owing to fears that “criminal groups could promote violence acts”.

    https://www.theguardian.com/world/2020/apr/01/singing-stops-italy-fear-social-unrest-mount-coronavirus-lockdown

    • Xabier says:

      Not unexpected.

      In England the when the regulations for the cash-in-hand scrap metal dealers tightened up, the gypsies turned to robbing houses to make up for the lost income.

      A sound business decision.

      • Robert Firth says:

        An even sounder business decision for the house owners: keep and bear arms, and when you shoot, shoot to kill.

    • Robert Firth says:

      “If the government expects this money to be used to feed people, then municipalities won’t have money for other things,” said Orsina.

      And if the money is not used to feed people, very soon there will be no municipalities. Typical blinkered bureaucrat.

  14. CTG says:

    There are some people here and many on other chats and boards that say “it is just a flu”. Here are my points.

    1. This virus lies between the normal flu and Ebola in terms of fatality (or how easy you die from it)
    2. This virus is possible much more contagious than flu.
    3. It does not matter at all now if it is man-made or natural. It is already amongst us.

    The hysteria is immense because of China shutting down its entire economy just before CNY. I believe due to pollution and lower quality of healthcare and unhealthy people (including smoking), the number of death is very high. We may not know the final figure.

    As we are interconnected and information travels instantaneously, a large percentage of the people knew that people were dropping dead in the streets. This raise the awareness and brought hysteria to a new level. Imagine if there is no Facebook, Twitter, WhatsApp or any form of messaging, the level of “hysteria and knowledge of this virus” will be minimal or even nothing.

    Now, everyone who has internet knows about this virus. As it starts to appear in western world, people remember the Chinese dropping dead in Wuhan. and the start to come out with various models (mathematical models) on how many will die and the concept of flatten the curve.

    It is 100% true that our healthcare system is not sufficient to copy with a pandemic.

    Politicians are “forced” to do something, whether they agree to it or now because the hysteria is very deafening. So, something they did – lockdown.

    Flu is less contagious and less deadly. It is an old disease and people just say “you have a flu” and you don’t even need to go to hospital. However, with the hysteria surrounding this novel coronavirus (by the way coronavirus has been around for a long time) is very high and everyone wants to be hospitalized. As the mortality rate is higher than flu, it will overwhelm the healthcare system.

    *** IMPORTANT **
    Now let us just say that this novel corona virus, instead of showing flu symptoms, it has the Ebola features – hemorrhagic fever where blood will spurt out from the eyes, nose and ears.

    Everything else remains the same just that it does not show flu systems.
    Do you think that people will

    1. Say “it is just a flu”?
    2. Become very panicky? I would say extremely panicky
    3. Our whole world would be burning by now because all the healthcare workers are not going to work anymore.

    As you can see, I believe that those who say that it is a “nothingburger” is because they cannot see that social media and instant messaging has already condition the population to ask the politician to “do something” and that this virus is still virulent but not as deadly as Ebola

    For those who says that it is “just a flu”, will those people say it if it is a hemorrhagic type of virus but not as deadly as Ebola but spreads very fast? I am 100% sure that there will be no one say “it is just a flu”

    I tell people – the virus is not lethal but the economic consequences are.irrespective of lockdown or no lockdown

    • Tim Groves says:

      The virus could be as nasty as it is being touted as being. OR it could be a huge nothing-burger that has been incredibly well marketed. Or it could be somewhere in between.

      Just because an illness is labeled as coronavirus, that doesn’t prove it is the novel coronavirus. Just because a death is marked down to coronavirus, it doesn’t follow that the novel coronavirus was the culprit.

      I had been suspicious of how this crisis was being marketed by the media to the public from the start. But I was also willing to accept that the novel coronavirus was much more serious than ordinary flu viruses. However, as time goes by, the balance of what I hear and see is leading me in the direction of considering it to be a novel coronavirus not in the sense of being new but in the sense of being fictional—the novel coronavirus, the fairytale coronavirus, the make believe coronavirus, or whatever.

      What has led me there is the hype surrounding the pandemic despite the apparent fact that—exactly like common or garden flu—it kills people who are already ill or immune compromised and leaves most healthy individuals it infects with light or no symptoms.

      Like you, I tell people who are interested in discussing it that the virus is not as serious as is being portrayed—although people at risk should take reasonable precautions to avoid it—but that the economic consequences of shutting down the economy are going to be lethal.

      Not surprisingly, most people just don’t get that—especially those who are still glued to the idiot box.

    • Tim Groves says:

      But if the virus story has been manufactured in order scare people, there must be an ulterior motive. Our leaders and governors and controllers and owners would not have done this merely as an April Fools joke.

      Economies are being cooled and freedom of movement and association is being restricted. This is the lockdown. And even if the lockdown is eased in a few months, it will not be rescinded completely. Also, the economy will not come back completely. To borrow a very apt cliché, it’s the end of the world as we know it.

      IMHO, this crisis marks the implementation of a Globalist Wet Dream. They are going to try to corral us into a virtual panopticon and keep individuals socially and physically isolated to a greater extent than in the past. Most of our shopping is going to be done online and there will be a lot more telecommuting for those who still have jobs. China has been beta testing this for several years now with some success. It will be entertainingly and persuasively PRed so that most of us will embrace the required changes enthusiastically. Government’s are going to take a far more personal interest in our welfare and there will be no more street demonstrations or marches by ungrateful proletarians against their benevolent governments.

      Oh, wonder! How many goodly creatures are there here! How beauteous mankind is! O brave new world,. That has such people in ‘t!

      • CTG says:

        Personally I don’t believe humans have the capability to execute any new world order or one world currency or one globalist world.

        If they use this virus to do this work of theirs, then I think we humans is destined to die off miserably. Virus mutated and cannot be controlled. Homo sapiens is stupid enough to use this method. No personally I believe that this may be released purposely or unintentionally but not because of one world government or anything similar to that.

        World economy cruising at 50mph and slamming at the wall with an instant stop is not a good idea to introduce a new world order.

      • Robert Firth says:

        “The Tempest”, Act V scene 1, Miranda speaking. By the way, I named my first daughter Miranda. Memo for tonight: watch “Forbidden Planet”.

      • Are you thinking that they believe that we (or at least many of us) can live this way indefinitely? It would save the problem of demonstrations?

        As long as we have food and a few people working from home, things will be OK. Plus some farm workers, and some folks to transport the food from farms.

        • Fast Eddy says:

          That’s a novel thought … to go with a novel virus.

          Perhaps the Elders had determined that the end game had arrived…. the gun was out of ammo…

          So they pulled out the nuclear bomb … and detonated it.

          Could the strategy be:

          Dump the virus on the world — get everyone to go home and be with their families — stop the riots — maintain essential services for as long as possible and provide MMT to as many people as possible while bailing out everything for as long as possible — get the bare minimum to the poor (food…) … buying us a month or two…

          And finally … flooding the world with Fentanyl…

          Did I mention my mate who is dying from cancer was on Fentanyl? When he takes it this glorious smile comes over his face… it’s as if the pain is left behind and he enters utopia.

          Take enough of those suckers and you enter an eternal utopia.

          Sounds better than slamming a car into a rock cut… or jumping from the roof of the old Montreal Forum 🙂

      • Fast Eddy says:

        Or we are going to be herded into our homes… and cower under our beds… and wait to starve to death… And we won’t make a peep…. we’ll just lie down and die.

        I think it’s a brilliant scheme — if that’s the plan

  15. Thanks again for a perceptive and important post!
    Just one detail. I think the point that the rich can not consume enough in order to keep the wheels of economy turning is correct, but the reasoning given is partially misleading. According to recently published research, the wealthy actually use proportionally *more* energy-intensive services (travel, transport, vehicles, etc.).
    https://www.vox.com/energy-and-environment/2020/3/20/21184814/climate-change-energy-income-inequality
    However, this energy-intensity of the consumption by the wealthy is not enough to make up for the depressed demand by the less wealthy.

    • Xabier says:

      A friend who owned a hedge fund raged in 2008 ‘This is what happens when you let poor people think they can own stuff!’

      Thinking, obviously, about sub-prime – very funny to see him so upset.

      But the truth is that the mass of poor people do have to be able to buy stuff, whether as sub-prime borrowers or not, they are a vital element in the whole shoddy, tottering construction, without which it simply cannot function.

    • They use more per person, but there are a whole lot more poor people, who need to eat food and get to work.

  16. Rodster says:

    “It’s Happening: Oil Producers Are Now Paying Clients As Wyoming Sour Price Turns Negative”

    https://www.zerohedge.com/energy/its-happening-oil-producers-are-now-paying-clients-wyoming-sour-price-turns-negative

    • I bet the St. Louis Fed missed the fact that a lot of healthcare workers would be laid off, because without office visits and elective surgeries, there isn’t money to pay them.

  17. psile says:

    Some real Mad Max sh*t looming here.

    Remember, many countries are only a couple of weeks behind Italy.

    ‘We Have to Eat’: Sicily Police Crack Down on Looting

    http://images1.naharnet.com/images/231060/w460.jpg?1585480931

    “Police with batons and guns have moved in to protect supermarkets on the Italian island of Sicily after reports of looting by locals who could no longer afford food.

    The novel coronavirus has claimed more than 10,000 lives across the Mediterranean country, about a third of the world’s total, creating the worst emergency Italians have known since World War II.

    Simultaneously, it has eroded the economy, which had been the third-largest in the European Union before the new illness reached Italian shores from China last month.

    A lockdown designed to curb contagion has shut almost everything across the country since March 12, depriving millions of steady incomes.

    The building sense of desperation reportedly boiled over on Thursday in Sicily, long one of Italy’s least developed regions.

    According to La Repubblica daily, a group of locals ran out of one of Palermo’s supermarkets without paying.

    “We have no money to pay, we have to eat,..”

    • Fast Eddy says:

      With this is happening in Italy… then keep an eye on poor countries…

      • psile says:

        My eye’s on France as the literal new sick man of Europe. It’s really picking up with the virus now. With half the cases of Spain’s, it’s putting on as many new ones every day and growing. The caseload is doubling every ~3 days. What with the Yellow Vests in rebellion for more than 18 months, the country is a real tinderbox.

    • doomphd says:

      when i visited Catania, Sicily in 2013, the restaurants and street vendors in the poorer southern part of the city were serving horse meat. it looked like desparation then. the horse meat was eatable, but tasted strange to those used to eating beef or chicken. the cuts were lean, though.

      • Hide-away says:

        Mortadella (horse meat) is just another dish in that part of the world, often a specialty.

    • I am afraid this kind of thing is coming many places.

  18. >>>>THE POST -CORONAVIRUS E-CONOMY when GLOBALIZATION has COLLAPSED……. a NEW CAPITAL-LESS ECONOMY ….. with VIRTUAL E-CAPITAL —- . SO WHAT TO DO for survival ?
    …when disasters like coronavirus will shut down the world’s economy, and WHEN it would require 50++ TRILLION DOLLARS for massive medical care and massive welfare to sustain survival … WHERE WILL THE MONEY COME FROM? ….WHEN INVESTOR’S TRUST has ERODED, ans GOVERNMENTS ARE BANKRUPT AND WHEN THERE IS NO MONEY TO FEED 800 MILLION PEOPLE GOING HUNGRY EVERY DAY … or 3 BILLION JOBLESS PEOPLE WORLDWIDE, …So what should nations do in order to survive on their own without PRIVATE-CAPITAL,…===>>> CREATE VIRTUAL E-CAPITAL WIITH A NEW INNOVATIVE PUBLIC-PRIVATE BANKING PARTNERSHIP ..or REVOLUTION ….. Dr. Anthony Horvath author of http://www.capitallessism.com

  19. psile says:

    Hundreds of cars waited as long as five hours in line to receive emergency supplies from a food bank in the Pittsburgh area.

    They served 1500 cars and then ran out.

    https://youtu.be/Ixq5kCJYfPw

    • One of the most dystopian scenes ever, lining up in ~150hp automobiles to get some token relieve food ration.. The energy leverage mismatch is just out of this world..

  20. davekimble3 says:

    Increased GDP is built on increased Energy Consumption, which in a fossil fuel powered country leads to increased CO2 emissions, which leads to increased Global Warming and drier weather patterns, which leads to increased frequency of droughts, cyclones, wildfires, deaths from heat-stroke, extinction of species and widespread environmental destruction.

    So increasing GDP leads to more chaos and destruction. So we should want a REDUCTION in GDP, but where is the politician saying that ? Nowhere, because they wouldn’t get themselves elected promising LESS of everything.

    The people want MORE bread, MORE circuses, MORE fuel and MORE jobs. The people don’t care about Polar Bears. They never cared about Giant Pandas, Bengal Tigers and Northern White Rhinoceroses so why would they care about Polar Bears ? The scientific community haven’t even documented all the species that exist now, let alone collected sample specimens.

    While we in Australia get fined $1,000 if we get too close to each other, when we should be “social distancing”, in India the slums pack millions into very close proximity to each other without running water or any form of sewage disposal. This demonstrates that we don’t care about Indians any more than Polar Bears. The same goes for Africans and Indonesians.

    • Mostly, what people care about is immediate risks for themselves. They continue to eat food that they know they shouldn’t eat. They don’t exercise. And they certainly don’t care a whole lot about the people in India.

    • If you click through to the model, it projects a total of close to 94,000 deaths by August. If the mortality rate is 0.4%, this would imply 23.5 million people had the disease by then. With 325 or 330 million population, that is only a small fraction of what we would need for herd immunity. We likely will back with the virus, as soon as the controls let up.

  21. Covidinamonthorayearoradecade says:

    https://nypost.com/2020/03/31/coronavirus-could-travel-27-feet-stay-in-air-for-hours-mit-researcher/

    social distancing at 27 feet?

    perhaps more old news…

    • All of this quarantining at one point was just about helping the healthcare system level the load of case. The idea wasn’t really to stop all cases, just to stop some cases. There will be a lot of cases around until we get herd immunity built up. We are basically trying to delay building up herd immunity as long as possible, with all of the shutdowns.

      Of course, now the health care system is laying off people in great numbers. They really need elective surgery and office visits to survive financially.

  22. Covidinamonthorayearoradecade says:

    https://news.trust.org/item/20200331222223-j5t3m

    “LONDON, April 1 (Reuters) – Losing your sense of smell and taste may be the best way to tell if you have COVID-19, according to a study of data collected via a symptom tracker app developed by British scientists to help monitor the pandemic caused by the new coronavirus.

    Almost 60% of patients who were subsequently confirmed as positive for COVID-19 had reported losing their sense of smell and taste…”

    this may be old news to some…

  23. Covidinamonthorayearoradecade says:

    https://www.breitbart.com/radio/2020/03/31/dr-nicole-saphier-reason-hope-developing-coronavirus-treatments/

    treatments… no vaccine in sight:

    “Antiviral medication Remdesivir is also being tested as a treatment for coronavirus and, noted Saphier. The drug demonstrates “some benefit in patients,” she added, and is being prescribed via compassionate use as it has not yet been sufficiently researched for safety as a treatment for coronavirus.

    Saphier said she is “excited” about research into Lenrolimab as a treatment for COVID-19.

    “[Lenrolimab] is an immunotherapy antibody that [shows] a lot of benefit in triple-negative breast cancers, which is one of the most aggressive forms of breast cancer,” said Saphier. “They also tried using it in some HIV patients and saw some benefit, and now they’ve tried it in COVID-19 patients, and they’re seeing some benefits there, as well. Mind you, it’s an extremely small subset. They’ve given it to less than 10 patients, but over half of those patients were quickly withdrawn off the ventilator, or even moved out of the ICU.”

  24. CTG says:

    Guys, please read the following link. This is what Gail’s article is all about restarting the economy. the inertia to continue to stay at home even after the lockdown is release is very high. People are still scared, reluctant or short of money.

    ‘Relax, Eat Out & Shop’: China In Desperate Bid To Jump-Start Consumer Economy As Rest Of Globe In Lockdown

    As China believes it’s over the coronavirus hump, with signs that “normal” could be just around the corner, leaders in Beijing are attempting to jump-start the economy once again. “Relax, eat out and shop. That’s the latest message from the Chinese government to its people, after months of warning them to stay indoors because of the coronavirus,” Bloomberg writes.

    We noted earlier that it’s smaller employers that remain the beating heart of China’s economy, accounting for 99.8% of registered companies in China, employing 79.4% of workers, and contributing more than 60% of gross domestic product and, for the government, more than 50% of tax revenue. The fact that retail sales plunged 20.5% in January and February and once-bustling malls and market spaces remain largely empty means many cash-strapped small businesses are unlikely to survive long enough to see consumers return to the streets in normal numbers.

    Yet residents, after months in self-isolation, with whole cities and provinces that were on government enforced lockdown only now opening their gates, might have good reason to be skittish and untrusting about venturing out to cafes, restaurants and malls – given fears a dreaded potential ‘second wave’ could hit – but also given rampant unemployment due to the national shutdown (with some 5 million losing their jobs in the first two months of 2020 alone) will naturally encourage more families to stay in thrift mode, forgoing their regular consumption habits of better times before the outbreak…………………..

    https://www.zerohedge.com/economics/relax-eat-out-shop-china-desperate-bid-jump-start-consumer-economy-rest-globe-lockdown

    Anyone has any delusions that there will be a V-shape recovery?

    • Covidinamonthorayearoradecade says:

      “the inertia to continue to stay at home even after the lockdown…”

      that’s good…

      in·er·tia
      /iˈnərSHə/
      noun
      1.
      a tendency to do nothing or to remain unchanged.

      also, it has been said that it takes a person about 21 days to change a habit…

      and fear is a really great motivator…

      all together, this crisis has permanently changed the behavior of billions of people… the ones who have some money will be holding on to it more tightly… or just afraid to go to where they would normally be spending…

      as has been repeated, the recovery will be an L shape…

    • timl2k11 says:

      “Anyone has any delusions that there will be a V-shape recovery?”
      Most investors, apparently.

    • Fast Eddy says:

      China appeared to be bouncing back, with flight cuts being reversed, services added and fuller planes, but then imposed further travel restrictions. The measures stalled its recovery in domestic travels and dealt a blow to neighbouring countries, which will only benefit once travel restrictions are lifted.

      https://www.scmp.com/news/hong-kong/transport/article/3077905/coronavirus-covid-19-crisis-deepens-recovery-hopes

      The fraught world of theatrical experience was struck another blow on Friday as China abruptly closed all its movie theaters—again. The news, reported by the Hollywood trade press on Friday, came just one day after it was announced that the city of Shanghai was set to reopen more than 200 theaters over the weekend.

      https://www.vanityfair.com/hollywood/2020/03/china-closed-movie-theaters-coronavirus

      This demonstrates how intractable this problem is… you really cannot re-open anything until every single case of the virus is eliminated…

      If a single person is infected (symptomatic or asymptomatic) out of 1.4 billion people — and you reopen — you are pretty much guaranteed to head back into hell.

      If a single person from another country enters China and is infected… you head back to hell…

      The only way out of this is if the virus burns out on its own.

      We are likely already too late — you cannot get toothpaste back into a tube.

      • Ed says:

        “The only way out of this is if the virus burns out on its own.”
        Thank you Fast, that is my understanding also. There is no magic about two week, half a lunar cycle, there is no magic with the new 30 days. Maybe some sacrifices to the virus ban cigarettes.

      • We keep getting inklings that China really doesn’t have the problem solved, no matter how much its official numbers have claimed that the problem was solved.

        • Fast Eddy says:

          Unless a country eliminates the virus internally and bans all travel into their country…. then there is no way to eliminate WP19 (Wuhan Plague 2019).

          A vaccine is highly unlikely — the virus will likely eventually burn itself out…. Spanish Flu did after 3 years…

          Oh hang on… HIV has not burned itself out. There goes that theory….. File it under ‘the virus will abate with the hot weather’

    • Right! It is the fact that people still don’t feel safe from a second wave. It is the fact that small businesses failed. Many things go together.

  25. Fast Eddy says:

    Did the Central Banks (Elders) who run the world, create and unleash the Wuhan Plague as a controlled demolition — and therefore the entire point was to crash the economy and blame the Plague?

    If not, (a big IF), then they had two choices:

    1. Do nothing. Allow the Plague to wash over the planet infecting what surely would be billions – and killing hundreds of millions. The effect of doing nothing would have been — literally within a few weeks — that all businesses would have ceased to operate.

    Not only would workers be infected (or die) and be unable to operate businesses, government offices, schools, hospitals, public services, coal plants, nuclear plants, grocery stores etc…. nor would there be enough people to maintain the grid…..

    But even healthy workers would refuse to come to work for fear of being infected.

    We would likely already be toasted by now if there was no attempt to contain this Chinese plague (Chinese plague Godfrey… get it?)

    2. Lockdown + Massive Stimulus & Bailouts. This is the choice that has been made by most governments. They are in a desperate fight to defeat the CCP Plague … and obviously know that if a key pillar of the economy (see Korowicz) fails… we get a total collapse. So far they have been able to hold back the tsunami …. obviously at some point they fail.

    But we are still alive and kicking due to containment. We continue to fight another day.

    While the human race prays for a miracle.

    Only gods perform miracles… and there is no god…. so the humans will be disappointed.

    But the PTB have made the right choice (if you believe there is merit in the human species continuing)… and that is to fight the China Plague ….

    With Option 1 the chances of survival are 0.

    With Option 2 the chances of survival are perhaps 1 in a trillion.

    Brazil seems to have chosen Option 1. Let’s keep an eye on that country….

    Obviously… this is not going to end well, no matter which choice was made.

    • Covidinamonthorayearoradecade says:

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

      Brazil 5,000+ cases and 200 deaths…

      but! their first reported case was February 24th, about 4 weeks behind Italy…

      so if those numbers double every week…

      10,000 and 400…
      20,000 and 800…
      40,000 and 1,600…
      80,000 and 3,200…

      those LOW numbers would be more likely with a lockdown…

      no lockdown = pandemic and pandemonium….

      • Covidinamonthorayearoradecade says:

        “Comparisons:
        Every year an estimated 290,000 to 650,000 people die in the world due to complications from seasonal influenza (flu) viruses. This figure corresponds to 795 to 1,781 deaths per day due to the seasonal flu.”

        estimated 1,300 deaths per day due to the seasonal flu…

        only 1,300…

      • Fast Eddy says:

        These numbers are actually useless. Most people are not getting tested.

        My mate in Bali (who is recovering from Wuhan) says there are loads of people with the Wuhan … his wife runs a spa and 5 of their staff had the symptoms … sent them to the hospital — hospital told them to go home… no test…

        These numbers are as has been stated by many medical agencies ‘the tip of the iceberg’

  26. Covidinamonthorayearoradecade says:

    https://theintercept.com/2020/03/31/rikers-island-coronavirus-mass-graves/

    “NEW YORK CITY is offering prisoners at Rikers Island jail $6 per hour — a fortune by prison labor standards — and personal protective equipment if they agree to help dig mass graves…”

    it’s just the flu… (sarc)…

    but it’s odd that they wouldn’t use heavy digging machinery…

  27. Pintada says:

    Gail says, “The coronavirus problem is pushing oil prices even lower …”

    I thought that Putin and Saudi Arabia had some involvement in the amount of oil being pumped. Am I wrong?

    • They had this OPEC+ coordination going on for several years, but it supposedly disintegrated in past weeks (or there is some 5D chess going on how to smack down the US/CAN alt oils..)

  28. psile says:

    Breaking News:

    SUBARU MOTOR CORP ANNOUNCES IT WILL SUSPEND ALL PRODUCTION IN JAPAN AND ABROAD – KYODO

  29. milan says:

    A very important piece on oil just appeared at the Saker blog. Trump phones Putin about getting the price of oil back up to 60.00.

    https://thesaker.is/oil-price-rises-after-trump-phones-putin/

    Beyond this Covid has now a struck an American Aircraft Carrier:

    https://www.msn.com/en-ca/news/world/aircraft-carrier-captain-pleads-for-help-with-coronavirus-outbreak/ar-BB11YqMM?ocid=msedgdhp

    • Covidinamonthorayearoradecade says:

      WTI way up to $20.50…

      “Various oil-producing countries have suffered from this as global storage capacity for oil has rapidly been filled up.”

      obviously, this is because demand has crashed… and demand will remain low for many months/years, perhaps at barely half the 2019 level…

      so unless production is cut by about half, all storage will be full in a month or two…

      big problem!

      without storage, pumped oil would have to be spilled on the ground, and prices will crash to single digit $…

      so how to solve this big problem?

      ALL oil producers will have to cut their production by 50%…

      “Hello, Vlad, you’re gonna have to cut by half.”

      “Nyet! YOU cut by half. And Saudi Arabia too!”

      • Covidinamonthorayearoradecade says:

        also, when production on a well is stopped, there can be major problems with restarting the well again…

        gee, a problem with a business restarting… sound familiar?

        the big deal is that the ultimate oil recovery could be much less because of what the stoppage does… I don’t know the technical details…

        so who is going to volunteer to cut their production in half?

        no one!

        we could be seeing that single digit $ oil later this year…

        good times!

    • Fast Eddy says:

      They can ramp the price to whatever they want to — it won’t help with demand — in fact it will obviously reduce demand even further.

      And those storage tanks will continue to fill up……..

  30. John Doyle says:

    A good and sound article to concentrate the mind.! I am of a different opinion, except that the end of our current civilisation is coming sooner instead of later, The 250 year secular cycle is at its end.It won’t be prolonged for much longer. As with all dynasties wealth accumulates in the end at the top of society and we are there now. One hope I had was that this pandemic sets up a different system without these excesses. .
    The planning, now in line with MMT and unrestricted access to funds [with caveats] will save the day this time. There is no need to ask where does the money come from. [c forget tax]It emerges in the fed accounts as soon as the government authorises the spending and checks are sent out, [or the electronic equivalent]. The US Fed spent $29Trillion on bailouts between 2008 and 2010, for 1400 entities. Considering the scale today $29Trillion looks like small change. It is an exponentially bigger problem now.
    As you intimated. restarting will be very complex. So If the governments can hold their nerve the outlay to keep as much of the economy functioning will see it through. They just have to spend up to fill the gap. It is $Trillions thanks to 3-4decades of austerity and its destructions. Pass new laws to reset and wipe most of the propaganda machine.

  31. Hester Kevin says:

    “Ultimately, the world economy may be headed for collapse.”
    I was of the opinion that the world economy was in early stage collapse before this event. It can only be closer as a result.
    “As soon as the shutdowns end, it will be obvious that the world economy is in worse condition than it was before the shutdown. The longer the shutdowns last, the worse shape the world economy will be in. Thus, when businesses are restarted, we can expect even more protests and more divisive politics. Some governments may be overthrown, or they may collapse without being pushed. I fear that the world economy will be further down the road toward overall collapse.”
    I will be very surprised if industrial civilisation survives this level of destabilisation considering it was teetering before we all got the bug.
    I’ve added this analysis to my most recent blog post on the unfolding collapse.
    Many thx.
    https://ourfiniteworld.com/2020/03/31/economies-wont-be-able-to-recover-after-shutdowns/?fbclid=IwAR3opK-tvjR9XHMnlXlgTjiRcHuu29VGvIPI0KvDQC7YCs8-eLjPYWEwEJg

  32. Modelling different parameters

    Identify and Isolate
    Social distancing
    Travel restrictions
    R – values
    Central hubs

    Simulating an epidemic
    https://www.youtube.com/watch?v=gxAaO2rsdIs

    Many of the hubs are big shopping centres which replaced the good old corner shops

  33. GBV says:

    “The economy was already near the edge before COVID-19 hit … I fear that the world economy will be further down the road toward overall collapse.”

    You are concerned the economy, which probably should have collapsed a decade ago (or more?), is going to collapse faster because of shutdowns… 😐

    Can somebody remind me what continuing BAU at all costs (including whatever morality / integrity we have left as a species) accomplishes again?

    Cheers,
    -GBV

    • Covidinamonthorayearoradecade says:

      “Can somebody remind me what continuing BAU…”

      it gives us the sweet irony of knowing that we are communicating here on the internet even while the host of the internet, BAU, is the object of your desired discontinuation…

      or maybe it’s just that BAU helps us to stay alive…

      • Ed says:

        Irony is over used I like comedy.

      • GBV says:

        I still have fond memories of an internetless-childhood… I doubt I would spontaneously combust if I no longer had 24/7 access to advertising that demands I continue to consume; soul-killing pornography that ruins my ability to have meaningful and intimate relationships; mind-numbing pop culture; or an ongoing propaganda-based news cycle. And not to be rude, but I would lose no sleep over never having to read another one of your snarky replies in this lifetime 🙂

        But interesting to know that you (and so many others) value living a hollow, vapid, consumer-based life that exists only due to mass exploitation and suffering of so many others in this world, rather than embracing an “honest” life (as short as it may be) that is fraught with challenges, risks and conflict.

        I’d argue those challenges, risks and conflicts are what make us feel truly alive, are what teach us how to be decent / honest human beings, and are what help us respect / appreciate life.

        Cheers,
        -GBV

        • Karl says:

          I don’t see any path forward that leads to an “honest” life. Currently civilized people are going to behave exceptionally badly during a collapse. The survivors, if any, and their descendants will revert back to brutal feudalism (hello iron maiden and rack) or Hunter gathering (hello gauntlets and sacrificial fires). BAU, for all it’s faults, gave us in the first world bubble the most genteel lifestyle the world will ever know in my opinion. I say, bring on the vapid consumerism!

        • JMS says:

          Sorry, GBV, but to live a honest decent life has never been among the main goals of most human beings. What all human beings want, if they can, is to be richer than their neighbor, to have has many wives and kids as possible, and live as large as they can. You can hate the shallow and stupid mass culture, but then you should be consistent and also hate the species who created it and who love it and who thinks nothing of destroying the life for money. IOW, you should be a misanthrope. Are you?
          I am. And as a misanthrope, what do I care about the future of our carcinogenic species? Good riddance.

          • Fast Eddy says:

            I am the leader of The Misanthropy Fan Club. I have a side gig as the head of the Shadenfroide Club. All bases are covered

  34. Covidinamonthorayearoradecade says:

    breaking news:

    https://thehill.com/policy/energy-environment/490419-controversial-keystone-xl-pipeline-construction-to-proceed

    the Keystone XL pipeline extension is good to go!

    what great timing too! (sarc)…

  35. “China can shut down its economy for two weeks over the Chinese New Year, each year, without much damage. But, if the outage is longer and more widespread, damaging effects are likely.”

    Gail, you continue to conflate the Chinese economy with its Western counterparts. That won’t work. They are not alike.

    China’s economy is already back at 75% of capacity and, during the break, didn’t ‘shut down.’ February rail loadings, for example, were up 4.5% YOY.

    Even Wuhan operated within cordons sanitaires, not lockdowns, and vital work like computer chip development was uninterrupted.

  36. Duncan Idaho says:

    Pouya Alimagham پويا عالي مقام @iPouya – 0:48 UTC · Mar 31, 2020
    The regime doesn’t want to antagonize the religious classes. Thus, it isn’t doing anything about the fact that some religious sites remain open & clerics are encouraging worshippers to come & pray. These gatherings risk exploding #COVID19.

    I’m talking about the US, not #Iran.

  37. matteo says:

    What’s great about this blog is that it doesn’t portray the economic system in an energy- and physics-blind way. Still, an “economy” is also a social phenomenon. Money is a human narrative used for and by the self-organising process.
    This system relies on growth to exist. Why? Because 85% of the money is created by private banks giving loans. If interest is not repaid on those loans, there are defaults or the money in circulation goes to zero. Hence, new loans need to be taken out somewhere by somebody in the economy so that existing debt can be repaid by the others. Now, new loans are granted only when somebody is deemed credit-worthy, i.e. when they show some future economic growth prospect. This future economic growth entails the use of energy to perform some thermodynamic process. The economy therefore relies on growing energy supply and on a growing supply of those resources that are transformed and transported using said energy supply.

    So there is no physical reality behind this human narrative. We could set up a deflationary economic system with a stable money supply reflecting the fact that energy and resources are actually limited. Any growth would have to be compensated by degrowth somewhere else, instead of by growth somewhere else. This is not unthinkable. Ageing societies for example degrow their consumption. A lot of cement and steel used for construction could be spared by using lighter sheltering materials and habitat models, and so on… Nominal capital expressed in money would not grow, but Earth’s resources would be depleted more slowly and some could even be consumed at regeneration’s pace.
    Why not?

    • CTG says:

      Our system is designed to grow in order to survive. You can read up how our system is design. Without growth, our system paralyses. It would be good if you can investigate this as it will take long an article to keep you updated on this. There are plenty of reading material outside.

      • Stephen says:

        That’s why we need a new system.

        • matteo says:

          Exactly, we’re still a bunch of apes. There are many ways in which we can organise ourselves to access, use and share the resources available within the laws of physics.
          This mental shortcut of growth as necessary is sloppy.

    • Stephen says:

      I hope we’ll have an opportunity to try degrowth before it’s too late.

      • Fast Eddy says:

        Um… in case you had not noticed… we are trying degrowth right now.

        How do you like it?

      • Xabier says:

        ‘De-growth isn’t like that, it’s just a sweet-sounding name for Collapse.

        One can’t try a shot in the head just to see how it is….

        ‘De-growth’ lulls people into thinking it might a pleasant reality, a better, non-consumerist world.

          • CTG says:

            You are talking about degrowth for everyone, which is not possible under this “overshoot situation”

            Our society and overall system has a critical threshold or tipping point. We will not know about this tipping point until it is over. Once it is over, it is unlikely that other than the Amazon tribes to survive. Not even the Amish because we are still interconnected. We still need the fruits of industrialization to survive.

            Assuming that you manage to escape the horrors of urban collapse and went deep into the woods. Do you even have the skills, tools and knowledge to survive ? Do you know that you need at least 2-3 months from planting your vegetables before you can even harvest? What are you planning to eat while waiting for harvest. Do you know that at times, there are crop failures? whar are you going to eat?

            Here is an example of tipping point : There is no “undo”

            https://www.youtube.com/watch?v=1y3bKIOkcmk

            A lot of people really love to talk about degrowth without even thinking of practical matters. I guess they just cannot see it

            • matteo says:

              Well one person who is really practical and does loads of practical calculations is Vaclav Smil, he’s written a whole book on growth and he does think we can degrow.The heart of the matter is that energy abundance has created a system geared to waste. There is waste everywhere and a lot of “non-wasted” energy and resources that go into things that are not needed for survival and not needed to make us happy. There is so much waste everywhere that we can perfectly organise a degrowing societies within the laws of physics. We need however to change not physical reality, but our mental representations in order to get there and clearly if we fail to see this and collapse before, we will not get there.

  38. Stephen says:

    Thanks Gail for another great article.
    Yes those believing the V shaped recovery meme will be greatlyly disappointed.
    I just hope that after several years of cascading declines there is a bottom that can maintain a few essential services. And of course I’m also worried about the poisoned crop lands and radiation pools Paul.

  39. “Most economists believe that an inadequate supply of energy products will be marked by high prices”

    That was the oil price shock in 2008 caused by a kink in the crude oil production curve in 2005

    You had a graph in previous posts, showing the max oil price going down, showing the affordability problem:

    http://crudeoilpeak.info/wp-content/uploads/Brent-max-trend_2000-Mar2020.jpg

    “the world economy was in very poor shape before COVID-19 hit”

    10 Mar 2020
    Impact of Corona Virus similar to some earlier peak oil scenarios
    http://crudeoilpeak.info/impact-of-corona-virus-similar-to-some-earlier-peak-oil-scenarios

    They way I see it now is that the Corona virus is accelerating what happened after 2008

    Massive money printing is happening right now. In Australia:

    Federal Government offers $130b in coronavirus wage subsidies for businesses to pay workers
    https://www.abc.net.au/news/2020-03-30/coronavirus-wage-subsidies-government-businesses-workers/12103108

    I expect that governments will be reluctantly forced to take over many essential companies. We are on the way to a war-time economy

    • Covidinamonthorayearoradecade says:

      “I expect that governments will be reluctantly forced to take over many essential companies.”

      yes, and not only do I expect it also, but I sure hope they do it sooner and not later, which could mean too late…

      essential companies are modeled in some of those Leonardo Sticks…

      • Yes, this has been predicted here for years, the last stage of IC must be definition involve some sort of (semi/mixed) authoritarian – re-distributive type of govs. It’s almost like autoimmune over response to fatal condition, followed by death..
        Now, this stage could last few months to years to few decades..

    • Thanks for your links. I am sure that the “secured” loans of oil companies are a lot less secure now, with the price of oil dropping. Lender may be getting worried that this will stick around for a while. More downgrades in loans can be expected.

  40. You made a good case that we should not have shut down the economy because of the virus. You did not however offer an alternate plan. Let’s assume you are right and we send everyone back to work. What then do we do with the people who get sick in numbers too large for the health care system to handle? I suppose they could stay at home to recover or die however this would be very hard on family members. Is this what you propose?

    There is another issue I think needs to be addressed. You more than anyone know that we are living on borrowed time. Let’s say we go back to work and thus avoid collapsing the economy in 2020. If we print lots of money and are very lucky we might keep the game going for another 10 years. After which we collapse anyway, and probably with more suffering and a higher risk of war due to the even larger debt bubble. Perhaps the virus offers an excuse for us to take our medicine now, rather than later when we’ll be even sicker?

    • Wearing KF94 masks seems to be a good alternative to shutting down businesses, if I understand this Korean infectious disease specialist.

      https://youtu.be/gAk7aX5hksU

      They seem to be fairly inexpensive. The are not quite as good as the P95 masks, but close enough. There seem to be quite a few areas of the world that are making more use of masks and not shutting down nearly as much.

      I didn’t figure out where I could put that in the post. The knee jerk reaction is just “shut down everything,” without thinking that there are other ways of doing social distancing that are a whole lot less harmful.

      • GBV says:

        I think you’ve ignored/avoided the crux of Rob’s comment (the same question I continue to ask here at OFW):

        “After which we collapse anyway, and probably with more suffering and a higher risk of war due to the even larger debt bubble. Perhaps the virus offers an excuse for us to take our medicine now, rather than later when we’ll be even sicker?”

        Why do you continue to suggest BAU be maintained when you simultaneously admit collapse is unavoidable? What makes you believe that no (further) harm is being done by extending BAU versus collapsing now and forging whatever future we can with what little is left on God’s (polluted, exploited) Green Earth?

        -GBV

        • CTG says:

          Why do you continue to suggest BAU be maintained when you simultaneously admit collapse is unavoidable? What makes you believe that no (further) harm is being done by extending BAU versus collapsing now and forging whatever future we can with what little is left on God’s (polluted, exploited) Green Earth?

          So that we can enjoy the last moments of BAU since nothing can be done. I know more of the commenters here know that the endgame is inevitable. It is just a matter of “when” and “how”. Gail’s blog has been around for many years (since 2007??). People come and people go. Those who are here know that it is just a matter of time.

          I do guess that this is the end of the road because there is no way “stopping the worldwide economy” for months will be consequence-free.

          So, raise a glass or wine, whiskey, juice, water or whatever you are allowed to drink and toast to good health and enjoy BAU.

          Most of the old timers here are not pessimistic. We are all enlightened and we are all practical people who do not moan the end of days. We lead our lives as normal human beings. What we subscribe to is not a belief but reality.

          • Xabier says:

            The Romans built some magnificent luxury villas in Britain, and I suspect the owners kept up the under-floor heating, the sauna, drinking fine imported wines, going out hunting, and buying pretty slave girls right up to the end of the system’s viability.

            The collapse came, and the villas soon lay under scrubs and woodland.

            That’s all one can do: go with it to the very end.

            It’s impossible to prepare for system collapse, or insulate oneself for the simple reason that the current system demands full participation if one is to be viable.

            One cannot stand with one foot in the present and another in a ‘collapsed’ future.

            There is no such future: the collapsing system will take one with it.

          • GBV says:

            “So that we can enjoy the last moments of BAU since nothing can be done.”

            Hate to break it to you, but life will go on for many (even if only for awhile) after BAU ends.

            Those of you who wish to party it up until BAU ends and are unwilling to do anything to help future generations deal with the harsh future that faces them (i.e. start to plant the seeds for a future, post-BAU existence, regardless of how meagre it may be) are cowards who have no sense of responsibility. Your way of thinking – “Use it all up! Suck it dry till there’s nothing left! Have a few drinks and then just die!” – has and will be the cause of so much suffering on Earth.

            -GBV

      • Pintada says:

        Everyone should wear a mask in anything like a social situation. I predict, that before this is over anyone not wearing one in public will be taking their life into their hands.

        In fact, I predict that before the end of the year someone in the US will beaten by a mob for not wearing a mask, and either end up in the hospital or dead.

        • doomphd says:

          if you are sick, then wearing a mask in public is helpful to others. if you are healthy, then wearing a mask will not stop you from getting the disease, especially those other than n95 masks, which are hard to breathe in.

          • Nope, the Asians clearly demonstrated that with mass adoption of even sub par masks you stop the exponential spreading, and most importantly you especially knock down the leverage of the “super-spreaders” who are often asymptomatic blokes..

            Now, the prospect of further echo contagion, following peaks, and reintroduction from abroad are still a bummer, but that’s for another discussion.

          • Xabier says:

            Even an imperfect mask reduces viral-load and discourages face and hair- touching.

            Ironically, those old ‘Plague Doctor’ outfits from the 17th century would be quite good: fully-covered head to toe, hat to keep virus off one’s hair, etc.

            • Yes, I forgot to mention the [viral load] aspect, which is super important as weaker immune systems can’t cope suddenly with such “horse kick” impact event.. Specifically, when travelling (or going into low ceiling shop) in mass transit, the close proximity breathing, coughing, loud talking, sneezing, .. tends to produce large dense sprays of viral loads.. He who at this point still travels without goggles, mask and gloves in subway, train, bus has got clearly a suicide wish in mind. Interestingly this point not stressed on W-msm enough (at all), well likely because of private parking slot at office and posh car status with filtered A/C, so they just don’t care about the unwashed..

    • Stephen says:

      Perhaps this 2020 collapse will leave us a minimal chance of survival. Whereas a continuation of pedal to the metal BAU may have been fun but guaranteed our extinction.

      • Covidinamonthorayearoradecade says:

        speaking of guaranteed, if/when this virus crisis subsides, every attempt will be made globally to push the pedal down as far as possible…

        no more pedal to the metal 2019 version, but the 2021 version will try to get back there, though failure is certain…

        perhaps pedal half way to the metal…

        • Tango Oscar says:

          Congress is preparing a 4th Coronavirus stimulus package as we sit here reading. Trump said last night he wants 2 Trillion in it just for infrastructure alone. These guys are going to spend like it’s going out of style in order to prevent a full on collapse.

    • CTG says:

      Rob,

      In response to your last paragraph:
      “There is another issue I think needs to be addressed. You more than anyone know that we are living on borrowed time. Let’s say we go back to work and thus avoid collapsing the economy in 2020. If we print lots of money and are very lucky we might keep the game going for another 10 years. After which we collapse anyway, and probably with more suffering and a higher risk of war due to the even larger debt bubble. Perhaps the virus offers an excuse for us to take our medicine now, rather than later when we’ll be even sicker?”

      Based on what is happening and my own personal opinion, the “borrowed time” and the “real actual time” is converging and it is probably only a couple of months difference. There is no more “10 years”. To me, this is akin to

      We have built up a large pile of brush, wood, twigs, dry tinder for a large fire (all the debts)

      We do not have enough manpower, willpower and political will to clear the dry brush (reduce debts and be more responsible)

      We have also put in a large stash of gasoline (printing money) among the pile of dry tinder

      All it takes is a spark and it can be from any sources (this virus is one of them) for everything to burn fiercely.

      The first will start out small and possibly you can contain it (GFC2008) but you still keep adding fuel and dry tinder.

      This time round, the spark (virus) is totally different. It not only sparks the dry tinder, it makes all the firefighters sick and some of them even ran away. The spark (virus) is not just a spark but a flamethrower that keeps on going (very infectious).

      So, to me, the future is now here. I find that it is just impossible to paper this over.

      We can still kick the can but we ran out of road

      • In 2008 I felt like you do now and was proven wrong. Now I’m older and more cautious in my predictions. They can get away with printing a lot of money because citizens don’t understand what’s going on and don’t want to know.

        • psile says:

          They can control the printing of the money, for now, but they can’t control what happens to the money, or where it goes. Nor can they be on both sides of the transaction. Like Mac 10 said:

          “Just because I paid a million dollars for a brick, doesn’t mean that all bricks everywhere are worth a million dollars”. Price discovery will continue to work its way through the system as trillions in debt are either defaulted on, paid down, or written off.

      • GBV says:

        The fire may be unavoidable, but if you survive it then you have a responsibility to clean up the mess you made / contributed to.

        Stop hiding behind the inevitably of collapse – recognize that on the other side of collapse, hard work and sacrifice awaits us all. If you don’t plan to stick around for it, that’s fine, but feel free to lend a hand and do something useful for those that do before you shuffle off this mortal coil.

        -GBV

    • Xabier says:

      Yes, they should die at home and the logistics of burying or cremating them en masse have to be addressed.

      Hard on their families? Of course, but that’s life.

      The death is the hard thing, not the location. It was the norm until very recently to die at home after all.

      But we seem to want to put the whole burden of life and death on to ‘professionals who are human beings likely to catch the virus themselves – do we really have the right to do that?

      I fear very much for a surgeon friend who has volunteered to work in a Covid ward: his life may well be wasted.

      I fear for all of them, badly-equipped and working long hours in so contagious an environment.

      • Harry McGibbs says:

        “Yes, they should die at home and the logistics of burying or cremating them en masse have to be addressed. Hard on their families? Of course, but that’s life.”

        This will I suspect be the situation here on Islay, should the virus make it here, as we only have one ventilator and the population is skewed towards the elderly. Palliative care at home will likely be the norm.

    • Ed says:

      Rob, the idea of a slower kinder collapse sounds nice but in the end the number of humans needs to decrease significantly. Maybe the kindest would be a fast killing virus. This does not seem to be it too little killing.

  41. Hide-away says:

    Thanks for the new article Gail.

    It is interesting how the markets also believe the general narrative and are not as forward thinking as most give them credit for. It was obvious to me the stockmarket was heading for a big plunge back in late January. The obvious catalyst was coronavirus, however the market kept rallying higher on it’s last legs, as the narrative was ‘coronavirus is not a problem’. Of course that was incorrect.

    It seems to me the market does not understand the energy dissipative structure that the world economy is. For this reason I expect markets to rally as we start to see the numbers of coronavirus victims/death fall, only to run into a brick wall later as companies slash forecasts and growth plans.

    I think for some of us, the path forward is just very obvious, while most of the world is in a state of disbelief.

  42. Adam Welch says:

    Thank you Gail. Very well thought-out analysis as usual.

  43. Larry says:

    Virtual hugs to Gail if she is into such things. I am always appreciative of the way she illuminates current events.
    First we must survive physically. Second we must carry on economically. The second may be near impossible but it doesn’t matter if the first objective is not accomplished.

    • Thanks for the virtual hugs.

      Economically is pretty much as important as physically. There are a whole lot of other things besides COVID-19 that we could die of. The fear of COVID-19 is really a distorted fear for most people. I see Chris Martenson is saying that Germany’s 0.4% death rate from COVID-19 seems to be a correct calculation, in his video recorded March 30. He thinks his earlier estimates may be high, because there were too few cases with little or no symptoms in the base.

      People should be worried about not being able to get drugs from overseas for a whole lot of diseases because of broken supply lines. That didn’t make it into the post.

      I always worry that the US central government will simply give up and hand over its functions to the individual states. If states can figure out a way to give Social Security, Medicare, money issuance, bank and pension guarantees, and a whole lot of other things, fine. Otherwise, everyone is on his/her own.

      • Xabier says:

        If that is the true fatality rate, then ironically the most at-risk group will be all the over-exposed hospital staff, not the general population.

        It also means that with universal masks, mass testing and selective quarantines, it could have been contained without crashing everything and all low-risk, mostly younger, groups could have gone about their lives unmolested.

        • Ed says:

          Xabier, it would mean the whole thing is just global hysteria. I better understand Easter Island now. Will there be an out group we can blame?

    • Fast Eddy says:

      Why must we survive?

      So we can continue to moan about how WE are destroying the planet? And how WE need to do something about it?

      You can’t have your cake (carry on economically) and eat it too (save the planet)

      So we have to choose.

      Open your eyes Larry — the solution is at hand!

      The Wuhan Plague is the planet’s Last Stand.

      It is fighting desperately to remove the scourge… no.. no… the CANCER…. that has metastasized to nearly 8 billion cancerous cells….

      You are cheering for the wrong team Larry.

      http://cdn.zmescience.com/wp-content/uploads/2014/04/im-afraid-u-have-humans.jpg

  44. Bei Dawei says:

    “Looking back at Figure 2, I believe that the current economic cycle started with the use of fossil fuels back in the 1800s. The world economy hit the stagflation period in the 1970s, when oil supply first became constrained. The Great Recession of 2008-2009 seems to be a marker for the beginning of the crisis period in the current cycle.”

    In the 1800s, national economies were not as interlinked. Also, the switch to oil from coal was a natural one, so the rise of the present cycle should really extend back to the Industrial Revolution.

    At the other end, economic Depressions occurred during the 19th century as well (although at various times in various countries, and for various causes). These recent ones aren’t so unique.

    • Covidinamonthorayearoradecade says:

      though of course this Depression is unique…

      entirely global, and incredibly deep…

  45. Likewise, Tim. Diminishing returns, indeed, Gail.

    I hope what was considered politically impossible is going to become politically inevitable. It has been abundantly clear to me for a very long time that we need to rethink urban infrastructure, particularly within low-income and informal settlements—especially given that new infectious diseases will likely continue to spread rapidly into and within cities. I think it is past due for an overhaul of current approaches to urban planning and development.

    I’m not a Milton Friedman follower, however, I think there is an opportunity to promote more holistic solutions, today, similar to what transpired in the 1930s with The New Deal.

    “Only a crisis—actual or perceived—produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible become politically inevitable.” -Milton Friedman

  46. Tim says:

    I’ve been looking forward to Gail’s latest report, and also dreading it.

    • Covidinamonthorayearoradecade says:

      like many, I prefer to hear the truth with all of the dread it may contain…

      thanks, Gail… many truths and spot on…

      this one highlight just before the conclusion:

      “With this level of uncertainty, businesses will not be willing to set up new operations. They will not hire many additional employees.”

      this is inevitable, that any closed business that does reopen will almost definitely not be attaining full capacity and full service…

      a reopening business will have to gauge the level of demand for its goods or services, and this will happen very quickly…

      as in China, many/most closed businesses are going to find that their demand has crashed, and never mind “new operations” and “additional employees”, it will be an achievement for any business to reopen at half capacity…

      the dread will become real…

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