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. Fast Eddy says:

    First the virus hit China. Then, it swept across Europe and North America. But the third wave – when it hits poor countries in Africa, Asia and South America – could be the deadliest yet. And without debt relief, the wave could be a tsunami.

    Rich countries have been absolutely ravaged by coronavirus – healthy populations, strong economies, and the world’s most advanced and well-funded healthcare systems all brought to their knees in a matter of weeks.

    Imagine then what will happen when it rips through countries plagued by malnutrition, HIV/AIDs, unemployment and poverty; where 3 billion people can’t even wash their hands with soap and water, according to UNICEF.

    Several countries in Africa spend more on servicing their debts than on healthcare and education. Countries like Angola and Ghana spend 55% of government revenue repaying debts! We can’t expect these governments to stop a pandemic while hemorrhaging all their precious resources.

    And they could be just days away from disaster.

    https://news.trust.org/item/20200326163721-c1a0k/

  2. Fast Eddy says:

    This … cannot be incompetence:

    BRUSSELS (Reuters) – Barely a month before Europe embarked on a scramble for masks, ventilators and testing kits to fight coronavirus, governments told Brussels their healthcare systems were ready and there was no need to order more stocks, EU documents show.

    This rosy assessment is in stark contrast to the shortages of masks and medical equipment just a few weeks later, when the European Commission estimated needs across EU states to be 10 times higher than would usually be available.

    https://www.reuters.com/article/us-health-coronavirus-eu-prevention-excl/exclusive-things-under-control-how-europe-sleepwalked-into-the-coronavirus-crisis-idUSKBN21J6FF

    Another piece added to the puzzle that indicates that this is a controlled demolition.

    • I am afraid “controlled demolition” is the correct description.

      There was a report published in the US evaluating ability to respond to an epidemic, about the same time. It ranks the US very high. In fact, China came out relatively well, too.

      It seems to be premised on a much smaller scale crisis that needed to be solved.

  3. Covidinamonthorayearoradecade says:

    https://www.wsj.com/articles/italys-coronavirus-death-toll-is-far-higher-than-reported-11585767179

    the Wall Street Journal has done a comprehensive analysis, and their conclusion:

    “In the areas worst hit by the pandemic, Italy is undercounting thousands of deaths caused by the virus, a Wall Street Journal analysis shows, indicating that the pandemic’s human toll may end up being much greater, and infections far more widespread, than official data indicate.”

    • Xabier says:

      What may very well become apparent is that it is both more contagious than hitherto supposed, and the absolute number of deaths far greater than now known (people dying at home – isn’t that what we say that we all want anyway, rather than a soulless hospital death or lingering on in a care home?) but that overall the actual mortality rate is relatively quite modest.

      How will it compare, in the end, to the mal-nutrition and even starvation caused by disrupted and broken supply chains and agriculture, and perhaps even failing water supplies (if spare parts and power are lacking)?

      But a pin-prick by comparison, probably: it has the potential to be the fabled flapping butterfly wing that causes a devastating tornado.

      • Robert Firth says:

        Xabier, I agree entirely. But to be fair to the world’s butterflies, should we not call this “the bat effect”? Film at 11.

    • What is striking, however, is if you take the wider Bergamo province, and look at the WSJ data, the death percentage may still not be all that bad. The chart says the population is 1.1 million people. There seem to be about 4,500 deaths by COVID-19, calculated by comparing actual deaths to expected deaths. If we compare 4,500 to 1.1 million, we come out to 0.4%, which is about the number that we might expect would die if everyone caught the illness. The medical system was overwhelmed. Many of these people never even saw the medical system. The people in Italy are disproportionately old and have pre-existing lung conditions.

      The numbers are not as dreadful a people make them out to be.

      The illness perhaps is not finished there, so the numbers may get worse. But these people will hopefully have immunity, when it comes back through again.

  4. Covidinamonthorayearoradecade says:

    all concert halls are silent…

  5. Ed says:

    https://www.rt.com/op-ed/484548-coronavirus–people-die-outcome/
    Bunch of English academics say facts support zero deaths from CV19. In the US we have gone innsane because we do noot like Trump so facts no longer matter.

    • Ed says:

      To be clear I voted for Trump and will do so again if the dems continue to act against the interests of the people and nation.

    • Covidinamonthorayearoradecade says:

      obviously yes, that is the whole idea of lockdown… to minimize deaths…

      like it or not, it’s now too obvious that almost all governments are going for lockdown…

      if academics are still doing their thing in 2021, perhaps they will be able to tell us how many more deaths “above average” there were in a one year period…

      right now, it’s way to soon to say if deaths are just being delayed until the second wave, third wave etc etc…

      (none of that is saying that deaths from economic damage/collapse will not be higher than virus deaths… on that subject, likewise a year from now is a reasonable timeframe for calculations… if we’re still here with those academics)…

    • Malcopian says:

      At 8 p.m. on Thursday 6th March, there was a national clapping event in the UK to thank the NHS workers (National Health Service). I was asleep at that time and don’t approve of mass events anyway. However, a relative joined in and told me that the sound was amazing and that the whole thing was ‘surreal’.

      The NHS is rightly revered in the UK and considered sacred, so somebody chose the right institution to worship. Vast numbers of the population were induced to regiment themselves in order to join in this event – the modern equivalent of the Nuremberg rallies, but we didn’t need a dictator to get us to join in. We did it ourselves. 😦

      Boris Johnson and Prince Charles were reported as getting COVID-19, but are they dead or indisposed? No. They continued working. I don’t see people collapsing in the streets, nor did I before the lockdown. Having seen the video reports above of empty hospitals in NY, I am beginning to wonder what is going on. Perhaps the Emperor does indeed have no clothes. Even that drama queen ‘Fast Eddy’ has subscribed to the World Hysteria Movement, as we should perhaps call it. Pop star ‘Madonna’ even did a COVID-19 broadcast from her bath. Perhaps we should also give Madonna the clap she so richly deserves. 😉

      • Ed says:

        Malcopian, yes it is sad to see FE seduced to the dark side. At the hospital my wife and son work at 130 mile north of NYC still ONE case. My friend who went to pick up HCQ ? HQC) in Jiryas Jeol life an normal there. It is like Tinker Bell you have to believe.

        • Malcopian says:

          Yes, it’s very weird, Ed. Maybe the Illum in ati have been warned that the ay – lee – ens are due to land and that all Earthlings must be kept indoors.

      • I have corresponded with several people with COVID-19, and none of those cases amounted to very much. I am sure I have had a biased sample. But it certainly supports 80% or more with very mild symptoms.

        • Stella says:

          Really? I thought you had a statistical background? Antidotal evidence? Sad…..I have talked to people in great shape that are in their 30’s and have gotten it and felt like they were going to die and could not breathe. I am sorry, I can understand a trumper saying stuff like you said but someone with a background in math? Statistics? I talked to someone who talked to someone etc…not very professional. You probably won’t even release this…post!

          • I didn’t say it was the only thing I looked at. Every calculation I make leads to the conclusion that the mortality rate is less than 1%, on a fully diluted basis.

      • Fast Eddy says:

        You seem to have missed the videos of sick and dead people overflowing into the hallways of hospitals in Wuhan, Italy and now New York.

        If you are going to shout f a-ke news…. then you’ll have to explain why the PTB are f—aking this thing… and collapsing THEIR world.

        Someone told me that the banks are behind this (profiting) — they shut their hole when I pointed to the share prices of Goldman and JPM …. Goldman alone has lost 30B in market cap….

        I have a mate who is cooped up in his apartment in Hong Kong who works for an investment bank – he normally works 12+ hours a day… he is working ‘maybe 3’ – there is next to no business activity.

        Someone else suggested the MSM is creating hype to make money — they shut their hole when I pointed out the share prices of major media groups … and the fact that they are committing suicide because they are killing off their advertisers….

        So best not to trot those out.

        You may be out of touch with reality — but I am very much in touch — I just terminated a contract with a service provider yesterday — the CEO was effectively begging me to continue — he had cut his salary by half and axing staff because of a deluge of contract cancellations — as he put it ‘we’re all in this together’

        Sorry to hear this mate but I am in this for number one — my staff and my shareholders… and we are fighting for our lives too…

        I have some very good people who I have worked with for many years — who rely on me to keep the machine operating … so that they can feed their families and pay rent — and I am trying to work out how to keep them on board to the bitter end.

        This is very real. It’s not some hyped up Y2K scare.

        If you believe that then why don’t you venture out into NYC and lick some door knobs.

        Who would have thought that searching ‘licking door knobs’ would bring up such e ro tic results!!! Do girls have door knob fe ti shes? I never knew….

        • What I think you miss is how steady and low deaths (and for that matter, hospitalizations) are.

          With respect to deaths, the United Nations publishes expected crude death rates for individual countries. These are expected deaths relative to 1000 person years, over the period 2015-2020. For some sample countries, these are as follows:

          Australia 6.6
          China 7.1
          United States 8.7
          U. K. 9.4
          Spain 10.0
          Italy 10.6

          Estimates of the death rate per 1000 people who catch COVID-19 varies. A recent article published in Lancet gives this rate as 6.6. (Actually, it shows 0.66% of those who are infected, but this is equivalent. A recent German analysis says 0.4% = 40 per 1000)

          Now suppose that the expected deaths based on the Lancet analysis come in a 2 month period.

          The number of normal deaths in a 2 month period is as follows, based on the amounts above:

          Australia 1.1
          China 1.2
          United States 1.5
          U. K. 1.6
          Spain 1.7
          Italy 1.8

          Then the increase in the number of deaths in the two month period is 6.6.

          The crematoriums have to run overtime. The funeral homes cannot handle the load.

          In China, instead of having to handle 1.1 deaths per 1000, they would suddenly have to handle 7.7 deaths per 1000.

          In Italy, instead of having to handle 1.8 deaths per 1000, they would have to handle 8.4.

          Whatever system has been set up to handle dead bodies, can’t handle the bodies.

          The hospital bed system doesn’t really have slack built into it either, other than getting rid of all of the elective surgery, which is where hospitals make their money. They go bankrupt when you do that. Now we read about hospitals having to lay off staff, with their reduced funding.

          The issue isn’t so much that there are so many total deaths or hospitalizations. It is that the system is not set up to handle fluctuations. But shutting down the whole economy, to spread out deaths and hospitalizations doesn’t seem like a very good approach either.

        • Tim Groves says:

          We should have a better idea about how devastating Covid-19 is when we get the annual figures for deaths in 2020. Until then, best for us—Madonna included—not to lick any strangers’ knobs at all.

          If you are going to shout f a-ke news…. then you’ll have to explain why the PTB are f—aking this thing… and collapsing THEIR world.

          This is an important point. We don’t have to explain anything at all. It’s the PTB’s story, not ours. We have the right to accept it or reject it without giving reasons.

          In addition, without knowing the reasons why they might be faking, any explanation a doubter put forward would be mere conjecture.

          Carl Sagan famously wrote that extraordinary claims require extraordinary evidence. I don’t hold with that. Any claim requires adequate evidence if you want that claim to be accepted. As recipients or consumers of news, we are not required to accept anything others tell us at face value. If the claim is extraordinary, we are less likely to accept it unless we find the evidence persuasive or the source of the claim credible.

          One of the first questions we should always ask when presented with the news of the world is, how much credibility does the mass media, governments, international organizations and intelligence agencies have for us? If we find their credibility to be low, or zero, then we should look very critically at anything they choose to present to the public.

          • Covidinamonthorayearoradecade says:

            sure, like:

            don’t believe anything…

            (here’s a joke: it’s just the flu)…

          • Fast Eddy says:

            Tim – while we may not know what the true numbers are with Wuhan … and if this is all hype…

            But I think we can be confident in terms of the impacts on the economy… unless this is the mother of the mother of the mother of all psyops…

            I was just in Queenstown for the first time — it is a ghost town… so all those people who would be working there are most definitely not.

            I can pop onto Air NZ or Cathay Pacific and try to book flights — and quickly reconfirm that they have slashed 96% of their flights.

            There are obviously many ways one can confirm the impacts of the Wuhan Virus….

            If the PTB have concocted this massive scam… then I need to understand why they would do this.

            Because if this continues …. I expect that this will eventually collapse the global economy… and that will end us and them …

            Why would they commit suicide?

            • China was in desperate shape with respect to fuel supplies when this all broke out, with their flat coal production. There were also academic types who thought they knew it all, with respect to modeling. They had had a conference in November, and needed something to try out their theories on. To add to the confusion, economists cannot seem to model the economy except to assume that whatever happened in the past will happen in the future.

              There was also the issue that this virus is very peculiar. Most people are hardly affected at all. Some are affected more but get over it quite easily. A few are very badly affected. Also, our testing for it is terrible. Estimates seem to be that 30% of the people who really have the illness will test negative.

              When you put these things together, President Xi in China was convinced to put into effect very stringent actions to control the spread of the virus. Then he lied about how successful his effort was.

              Also, people didn’t understand that without a vaccine, it is highly unlikely that we can actually stop the virus without herd immunity building up. So all of this social distancing is just about putting off getting the virus, not stopping the virus.

              People saw the images from China and were convinced we needed to “do something.” But they didn’t stop to think that stopping the economy made no sense.

            • Fast Eddy says:

              If you do something — you might buy a little time while praying for a miracle.

              If you do nothing — within weeks countries are very quickly overwhelmed and their economies collapse…

              We saw that in China when China covered this up – did nothing — the virus went viral — overwhelming Wuhan hospitals and creating a massive panic — workers refused to report to the factories … the situation appears to be somewhat better and the factories in China are coming back online (although threatened by a second wave of infections).

              If the CCP had not locked down Hubei — and just let this thing spread…. Walmart shelves would most definitely be empty by now.

              Of course there will be no miracle — we will end up in the same place one way or the other… but it is a brilliant sunny fall day here… we are not yet starving … so I am ok with the decision to lockdown.

              Anyway, I need more time to complete my knife fighting training … I’ll have my black belt in a few more weeks.

  6. The metaphorical train wreck has now produced a literal train wreck.

  7. Covidinamonthorayearoradecade says:

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

    Brazil 7,000 cases and 244 deaths…

    and 4 weeks behind Italy…

    Sweden 5,000 cases and 239 deaths…

    the let-it-rip experiments are continuing…

    • Lastcall says:

      The deaths we can tally; the cases not so much; they are more a function of testing intensity. Sooooooo many just shrug this off and will never be counted as a ‘case’.

      We can’t dodge this, but we could have avoided destroying, ahead of time, BAU.

      I again ask, where are the statistics on the deaths.
      Demographics tells me that Italy should average about 2000 deaths per day (popn of 60m, ave. age 80..?)…actually, who is dying, and are there many without pre-existing conditions?
      Far, far more will die, in due course, as a result of the broken world economy IMHO. Lets see how this looks in a years time; the true victim will be globalisation.

      • The very bad area of Italy had COVID-19 deaths equal to 0.4% of the population, comparing the WSJ death and population numbers. It is bad, but not dreadfully bad. I made that calculation in another comment.

    • DJ says:

      But Sweden havent hardly tested anyone.

  8. Lastcall says:

    We have flattened the curve for the elderly, and killed the economy for the rest, particularly the young.

    A Cost/Benefit outcome that only a bunch of academics and those with their noses in the public trough could ‘model’ as an acceptable outcome.

    Mass hysteria on par with the witches of Eastwick or the ‘Red Scare’, or Weapons of Mass Destruction.

    https://unherd.com/thepost/lord-sumption-on-the-national-coronavirus-hysteria/

    • Covidinamonthorayearoradecade says:

      though the flattened curve might only be delaying those elderly deaths until the second wave third wave etc…

      so our leaders may have destroyed the economy and saved no net elderly lives within a year from now…

      it’s a lose/lose scenario…

      • Lastcall says:

        I agree both paths were unpalatable, but as with so many things, we avoided the short sharp shock.
        We dodged a bullet in 2008 with trickery and lies and shifting of debts, but set up a date with destiny by doing so. I believe we have done the same here. We will all be third-worlders when the subsequent waves of this come through.
        I never had any vaccinations as a youngster, went through the childhood diseases. It turns out my generation (50 and above) were the only truly immune people in NZ’s recent measles spike; anybody else had to be re-vaccinated. Is this progress?
        We have all but lost anti-biotics through mis-application; is this the first wave we we lose vaccine effectiveness through dancing too close to natures precipice?

    • Chrome Mags says:

      “Mass hysteria on par with the witches of Eastwick or the ‘Red Scare’, or Weapons of Mass Destruction.”

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

      If you go to that site of official Corona virus numbers, back out China and Germany. Then take deaths and recovered and total them to get closed cases, then divide deaths into the closed cases total and it’s about a 30% fatality rate. Meaning out of every 100 people testing positive 30 die. That percentage is not talked about in mainstream news because it’s a very scary number, but behind closed doors I’m sure that number has not gone unnoticed by doctors. Also, it’s not just the elderly dying. There are people 30-60 dying also. The total cases and deaths does pale in comparison to the world population and other ways of dying, however the number of cases and deaths is still rising with reinfections still occurring in Wuhan, China where this got started. So it’s not hysteria without cause, at least not statistically.

      • Lastcall says:

        Guess time will tell. Little old NZ has had hundreds of cases, a few on ventilators, one dead elderly lady so wots happening?
        When the dust settles, the truth may stagger out into the light of day huh.
        I am betting the cure will prove to be pretty bitter medicine.

        • Again, NZ could have been fortunate not getting the combo of the most virulent and deadly strain, plus the factor of bunch of “silently” infected super-spreaders running around..

          Italy and Spain were clearly not that fortunate
          (+obviously their self inflicted “cultural” wounds enabling the spreading)..

          ps and your point why the care for the elderly at all? (apart from emotional reasons), well also for one BIG thing, because “..that’s where the money is..” – as most of the world “wealth” is owned by them.. hence the protective measures put in place..

          it’s a *social pyramid, where younger must keep working on the lower decks to enable the BAU complexity to last as long as possible, they could revolt at some point and topple the system, but I doubt it, the numbers and attitudes are not there (at least in the North/West of the globe)


          * yesterday the VP Pence visited some warehouse facilities, authoritatively talked to a young guy on the shift there, it was classic case of that unidirectional power relation, Pence basically counter acting the first few under reported strikes taking place around the US; because he/they know very well if critical nodes of JITs go on strike, the next day they workers can successfully demand anything at this dire point from govs: M4A, MMT/ UBI, .. , … ; fortunately for the elites this will never happen in critical mass as American public is genetically predestined as UNABLE/UNWILLING to mount a nation wide shutdown-uprising for social rights..

      • Xabier says:

        One distortion is that the hospital fatality rate is very high, but that is just what one would expect with only the very serious cases ending up there. It’s easy to get alarmed looking at that death rate.

        I watched an interview with a British respiratory consultant, and he mentioned that milder cases are being sent back home, with instructions as to how to monitor the illness in case it becomes grave. So all the hospital patients are in a very serious state finding it very hard to breathe. I was also clear that he is rather scared of catching it himself.

        In military terms, the hospital patients are mostly ‘stretcher cases’, not ‘walking wounded’.

        And that is stretcher cases in 1800, not 2020 – little to be done with them, except experiment with medication and provide oxygen.

        We seem to cling to the notion that to be in hospital is to have hope ( hence the obsession with largely useless ventilators) : but in the case of a novel epidemic of this kind, it is really the last chance saloon.

  9. psile says:

    The pandemic merely exposed the vulnerabilities of a structurally unsound financial and economic system.

    If the Virus Hadn’t Caused the Crash, Something Else Would Have

    The novel coronavirus has already had a significant impact on the global economy, which will worsen if the outbreak and the shutdowns designed to contain it continue for very long. But it’s only an accelerant: If not Covid-19, as the disease caused by the virus is known, something else would have started the conflagration. Shortfalls in revenue and cash flows, caused by the shutdowns, have simply exposed the vulnerabilities of a structurally unsound economic and financial system.

    A fall in revenue is problematic but manageable without debt. Unfortunately, in the aftermath of the 2008 crash, debt levels were increased rather than reduced, encouraged in part by low policy rates and the abundant liquidity engineered by central banks globally. Global debt as a percentage of GDP rose from around 250% in 2007 to 325% in 2019. Current debt levels are triple what they were in 1999. Businesses and households, with declining or no income and high levels of borrowing, now face an existential struggle to meet large financial commitments…

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