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:

    Just wondering … does anyone still think man has been on the moon?

    Surely not….

    • beidawei says:

      Here’s a great video proving the moon landings were fake. Just don’t listen to the parts where SciManDan pretends to “debunk” it, listen to the parts in between:

    • Ed says:

      Yes. an east test would be to find the laser reflector that were placed on the moon. They are three sided mirrors that form a corner. Regardless of the exact angle the light enters it returns exactly back the same path to the source. it is just geometry. There should be no shortage of academic paper on there use at the time. If they are not too covered with dust at this point yo may be able to bounce a laser pulse off of some of them your self,

        • Kowalainen says:

          Bah, the Internet is a hoax. All information is already stored and played back inside your portable computer, a semiconductor and software miracle of fakery and delusion.

          Who in their right mind could believe that wireless information transmission is possible. I mean, there is obviously nothing physical connecting the devices. Ergo fake. Electricity too, that is one of the epitomes of fake. How can energy be transmitted in stationary solid metal wires? Totally impossible. Real energy transmission uses explosions, pistons and pushrods. It is so obvious it hurts.

          And why stop there, Enron Musk is certain the universe is a simulation. Yep, there you have it. The whole shebang is fake. Except for explosions, pistons and pushrods.

      • matm1211 says:

        Yes there are more than 40 years of Lunar Laser Ranging (LRR) data. Various observatories around the world (in Nice France, New Mexico US) are still sending laser beams over there. It is these days for example used to test with great accuracy general relativity principles…

    • Back to basics, there had been laser beam experiments both in the early/mid 1960s before the landing missions and also afterwards, moreover also differentiated by using either placed “mirror” on the Moon surface (Soviet-French) or just experiments when shooting lasers on the bare Moon surface, which again could be of different material properties (~glass from meteor impact or just dull low reflective material).

      It has been also discussed in the comments to large depth:

      ps frankly, again, don’t get the interest in these tangential issues, when the astronots are clearly caught on footage faking the ~deep space~ flight placing cut outs and transparencies on the windows inside the module when still in Earth’s orbit..

      this case has been closed years ago, sorry,
      humanoid = bad can’t travel to moons..

    • doomphd says:

      they broight back Moon rocks to study and left a laser beam repeater at Tranquility Base.
      to use your terminology, these are “fact bombs”.

      The photos look fake because we don’t usually see such conditions. Do you think we would build such enormous rockets, landers, etc. just to fake the landings?

      the gold foils are useful in space and NASA still uses them on landers and rovers.

      we lost a lot of fine humans in the effort, e.g., Apollo III. we almost lost more, e.g., Apollo XIII. it was an enormous effort to fulfill the promise of a fallen US president.

      • yup

        without going there—what point could there possibly be to it all, other than job creation schemes for Phd’s

        would love to have theories on that—it has to be the ultimate question that nobody asks or answers

        Cmon Eddy—you must have an answer to that

        • Tim Groves says:

          Again, Norman, you are asking doubters to speculate as to why an organization would try to sell a false narrative as true. Speculation is all very well, but it isn’t the doubters’ job to explain why somebody else might be not telling the truth. This narrative you are asking them to analyze the motive behind isn’t their story. So what you are doing is dodging the issue. Your questions about motive should to be addressed to the people selling the story, not to the people doubting it.

          • Kowalainin says:

            BS, DJ, BS, extraordinary claims require extraordinary evidence. If you claim something as a hoax, the burden of proof lies upon you.

            Norman is asking for a rationale behind the claims. Flat earthers, anti vaxxers, fake moon landings, empty hospitals and instadoom. It’s all hunky dory for sensation seekers trying to fill an intellectual void which never can be topped up.

            But you know what; it’s all good. Many outrageous claims have been found to be grounded in reality. And it is good food for thought if it was relevant to the subject and backed by strong reasoning. Which unfortunately sorely is lacking.

            This is nothing else than myopia laden pure and unadulterated bovine *********.

            • Kowalainen says:

              Not DJ, Tim, I meant.

            • JesseJames says:

              “Flat earthers, anti vaxxers, fake moon landings, empty hospitals and instadoom.”
              A facetious type of argument K… lumping together these beliefs…they have nothing in common. Some may be flat stupid, others not so much. There is abundant evidence to any moron who can search for it that many vaccines are flat dangerous.
              As I have proven in my post today…there ARE empty hospitals.
              Instadoom has never been promulgated on this blog by anyone….so why do you throw it in?
              Please make better arguments.

        • Fast Eddy says:

          Why did we f ak e the mo- on landings?

          Answer: http://centerforaninformedamerica.com/moondoggie-3/

      • Are you for real? The whole laser beam issue is just discussed above in astonishing details, refers to old msm articles, the comments incl. math and links to science papers etc.

        Moon rocks, you mean the ones from the NASA meteorite impact site expedition to polar regions before the mission, or the one donated officially to Netherlands govs, which after recent “unscheduled” box unsealing showed to be petrified wood (and the msm tried to spin it as possible theft)?

        Enormous rockets are needed to reach orbit with humans on board.

        • doomphd says:

          “Enormous rockets are needed to reach orbit with humans on board.”

          Saturn V was an American human-rated super heavy-lift launch vehicle used by NASA between 1967 and 1973.[7] The three-stage liquid-propellant expendable rocket was developed to support the Apollo program for human exploration of the Moon and was later used to launch Skylab, the first American space station.

          The Saturn V was launched 13 times from the Kennedy Space Center in Florida with no loss of crew or payload. As of 2020, the Saturn V remains the tallest, heaviest, and most powerful (highest total impulse) rocket ever brought to operational status, and holds records for the heaviest payload launched and largest payload capacity to low Earth orbit (LEO) of 140,000 kg (310,000 lb), which included the third stage and unburned propellant needed to send the Apollo command and service module and Lunar Module to the Moon.[5][6]

          https://en.wikipedia.org/wiki/Saturn_V

          • Fast Eddy says:

            This doesn’t raise any doubts in your mind? Not even a little?????

            SpaceX CEO Elon Musk has now given four presentations about his company’s Starship rocket, but all of those updates mostly focused on the vehicle’s external stats. Musk has barely touched on the technologies needed to keep people alive and healthy while on Starship — technologies that need to be developed relatively soon if the spacecraft has any hope of carrying people to deep-space destinations like the Moon and Mars in the near future.

            https://www.theverge.com/2019/10/4/20895056/elon-musk-starship-spacex-human-health-life-support-radiation

            “Beyond Low Earth Orbit, space radiation may place astronauts at significant risk for radiation sickness, and increased lifetime risk for cancer, central nervous system effects, and degenerative diseases,” NASA writes on its website. “Research studies of exposure in various doses and strengths of radiation provide strong evidence that cancer and degenerative diseases are to be expected from exposures to galactic cosmic rays (GCR) or solar particle events (SPE).”

            https://www.inverse.com/article/42407-elon-musk-space-radiation-worse-than-we-thought

            • doomphd says:

              i heard a NASA JPL scientist give a seminar basically admitting the same thing about the radiation. what it means is it’s probably OK to visit the Moon and perhaps even Mars, but once there, the astronauts will have to inhabit natural or artificial shelters to escape the long-term exposure to ionizing radiation. because Mars trips will likely take much longer, they may even have to live in built-in radiation escape shelters, if the Sun acts up and starts throwing flares into space, like it did in 1859.

          • Covidinamonthorayearoradecade says:

            thank you, dooomphd…

            • i1 says:

              NASA apparently lost all the original video tapes from the lunar landings. However, every photograph taken on the moon is still archived. This is curious because the film used in those Hasselblad cameras will degrade significantly when exposed to a vacuum due to off-gassing. Not to mention the damage done from ionizing radiation. It is certainly a painful lesson for former Apollo fanboys such as myself.

            • Covidinamonthorayearoradecade says:

              “NASA apparently lost…”

              what kind of unfactual unreferenced opinionated opinion is that?

              this https://en.wikipedia.org/wiki/Moon_landing is loaded with references…

              perhaps it will rekindle your fanboydom…

              peace to all…

      • Fast Eddy says:

        Oooh the moon rocks …. how do you know they are from the moon?

        Might they not be pieces of asteroids?

        SpaceX CEO Elon Musk has now given four presentations about his company’s Starship rocket, but all of those updates mostly focused on the vehicle’s external stats. Musk has barely touched on the technologies needed to keep people alive and healthy while on Starship — technologies that need to be developed relatively soon if the spacecraft has any hope of carrying people to deep-space destinations like the Moon and Mars in the near future.

        https://www.theverge.com/2019/10/4/20895056/elon-musk-starship-spacex-human-health-life-support-radiation

        “Beyond Low Earth Orbit, space radiation may place astronauts at significant risk for radiation sickness, and increased lifetime risk for cancer, central nervous system effects, and degenerative diseases,” NASA writes on its website. “Research studies of exposure in various doses and strengths of radiation provide strong evidence that cancer and degenerative diseases are to be expected from exposures to galactic cosmic rays (GCR) or solar particle events (SPE).”

        https://www.inverse.com/article/42407-elon-musk-space-radiation-worse-than-we-thought

    • This article has a lot of fine insights in it. For example:

      The first stage of a supernova is implosion, analogous to the long-term decline in interest rates that began well before the onset of systemic crisis in 2007, which has accelerated since then, and which fell off a cliff just as coronavirus began its rampage in early January 2020. Falling interest rates are fundamentally the result of two factors: falling rates of profit, and the hypertrophy of capital, i.e. its tendency grow faster than the capacity of workers and farmers to supply it with the fresh blood it needs to live.

      It goes astray at the end, however, suggesting that what we need is a global health services to solve our problem. We don’t have the resources to fight this illness, no matter how we go about it. We would need a bigger “profit margin,” and a less crafty virus.

  2. CTG says:

    Supply chain… supply chain….

    European car plants close as industry crisis deepens

    PSA and Fiat Chrysler to shut factories as demand tumbles and supply chains disrupted

    Europe’s car industry is facing its worst disruption in a decade, as manufacturers announced plans to close dozens of plants across the continent amid the deepening coronavirus outbreak.

    France’s PSA, which owns the Peugeot, Citroën, Vauxhall and Opel brands, said on Monday that it would close all its European plants, including Mulhouse in France and the UK’s Ellesmere Port. Italy’s Fiat Chrysler will shut eight sites, including six in its home market.

    Volkswagen, the world’s largest carmaker, could shut production lines because of disruptions to supply chains as a growing number of European countries close borders and impose lockdown measures, according to people familiar with the matter.

    The plant at the German carmaker’s Wolfsburg headquarters is set to shut within days unless the group can replace parts coming from Italian and Spanish suppliers.

    In a day of turmoil for the region’s car industry, Renault, Ford and Nissan also shuttered facilities in Spain, and BMW’s home state of Bavaria declared a state of emergency.

    “The situation will likely get worse from here,” said Philippe Houchois, a car analyst at Jefferies.
    Coronavirus business update

    How is coronavirus taking its toll on markets, business, and our everyday lives and workplaces? Stay briefed with our coronavirus newsletter.

    Plans to close the plants temporarily came as shares in car companies tumbled as the spectre of widespread industrial shutdowns across the continent grew.

    PSA will shutter all of its European sites this week until the end of the month, following meetings with its unions.

    The company said that the decision was taken “due to the acceleration observed in recent days of serious Covid-19 cases close to certain production sites, supply disruptions from major suppliers, as well as the sudden decline in the automobile markets”.

    VW’s Wolfsburg plant, which makes some of the brand’s flagship products, including the Golf and the Tiguan and Touran sports utility vehicles, is one of the German carmaker’s sites potentially affected by difficulties of securing parts from Italy and Spain. The facility is currently up and running, although on-site restaurants have been closed.

    Staff working on assembly lines at the plant have been told to bring their own food, and to board internal shuttles from the back door in order to avoid infecting drivers.

    “Things are getting more complicated and the situation is changing rapidly,” said VW. “We have far more suppliers for European production in Italy and Spain than in China.”
    How coronavirus is hitting global business

    Fiat had planned to reopen four factories on Monday that it had closed for deep cleaning and to be retooled to operate with fewer staff.

    However car sales, particularly in its Italian homeland, have fallen sharply. Italian car sales dropped 9 per cent in February, but the country has been all-out locked down during March as the outbreak spread, with people banned from leaving home except for essential work or to buy food.

    The shutdown allows “the group to be ready to commence production promptly once market conditions allow”, Fiat said on Monday.

    Shares in Renault, which has closed two sites in northern Spain, fell 20 per cent on Monday, taking their losses to 80 per cent in the past year. PSA stock dropped 16 per cent.

    Germany’s carmakers also suffered, with Daimler down 11 per cent, BMW falling 12 per cent and VW dropping 13 per cent.

    “The reality is that auto stocks across Europe are getting hit as plants close and both supply and demand are going to be hit severely in the coming weeks,” said Thomas Besson, analyst at Kepler Cheuvreux

    https://www.ft.com/content/dd76d42a-678b-11ea-a3c9-1fe6fedcca75
    Behind paywall. need to search using Google.

    • Thanks! The most important part of this article would seem to be

      PSA will shutter all of its European sites this week until the end of the month, following meetings with its unions.

      The company said that the decision was taken “due to the acceleration observed in recent days of serious Covid-19 cases close to certain production sites, supply disruptions from major suppliers, as well as the sudden decline in the automobile markets”.

      With supply chains extending around the world, it is impossible for any one place to get up and running without all of the other places being up and running. If we use long shutdowns to try to control the virus, that takes an impossibly long time. If it were possible to shutter sites only when workers were sick (or rum them at less than 100% capacity), we would seem to be in much better shape to get up and running sooner.

      • Kowalainen says:

        Yes, let’s get those &*#%^+€+#%^ N95’s and air filters out en masse. Slap some PVP-I on the hands and face and call it a day.

        • 09876@aol.com says:

          Best post ever. Man up. Its war. you do your best. You take some hits.
          In war its understood. If you are not willing to take some hits you lose.

          • Kowalainen says:

            The academic “flattening the curve” is pure unadulterated bovine excrement. Locking up people at home in apartments sharing the same recirculated ventilation system is madness.

            Once N95-N99’s are available en masse and mailed to the populace, the “curve” will be hitting the Seneca cliff.

            SARS CoV-2 is an airborne upper respiratory tract infection causing virus. Breathing filtered air is of course the only effective mitigation in existence. Additionally slapping some PVP-I on your hands and face will kill viruses as you poke yourself in the nose and rub your instruments of vision.

            Fsck “testing”, fsck “lockdowns”. It won’t cure the underlying problem, anyway, for how long and at what cost will this farce continue?

  3. ITEOTWAWKI says:

    When did the regular flu ever come close to the projected numbers of what would happen without a quarantine and let the virus do it’s thing on all of us:

    https://www.sciencenews.org/article/covid-19-when-will-coronavirus-pandemic-social-distancing-end

    From the article:

    “Since a vaccine is at least 12 to 18 months from being available (SN: 2/21/20), the fastest way to herd immunity would be to let the virus burn through the world’s population unimpeded. According to a March 16 report released by researchers at Imperial College London, in the United States, the pandemic would peak in about three months under that scenario.

    But….
    The costs of such a strategy would be overwhelming. Upward of 2 million Americans would die from infection alone, according to the same report. Roughly 81 percent of the U.S. population would get infected, the team estimates.”

    Um 81 percent of the US population in 3 months is 262 million people infected..has that ever happened in a regular flu season??

    When have 60 doctors in Northern Italy died from treating regular flu…in 1 month…let me know if you do have such a stat…

    https://www.medscape.com/viewarticle/927753

    Again, you let the virus rip, pandemonium ensues..

    You quarantine, pandemonium ensues…

    Between the Devil and the Deep Blue Sea

    • Ed says:

      Two million social security, medicare, medicaid, welfare takers killed could be just what the budget needed. The Fortune Five Hundred corporations are making an effort to keep their staff safe. It will not be an equal kill across all levels of society. As always Bill Gates and Warren Buffet where are they? Way way way far away.

      The stop windows are already boarded up in the cities. Interesting note local restaurants are taking this opportunity to remodel without losing revenue. Local are flying big American flags off of their cars and truck. The slums of NYC are “locked down” and their is no storage of army troops in addition to the governors private army of troopers (state police are called troopers in NY a bit honest). The troopers run in packs, always wear body armor, drive large black SUVs with large battering rams on the front, always carry gun and tazer and shotgun in car. I think they will have no issue running down or shooting as many as needed. I have never seen them deploy machine guns it sure would be interesting to know hoow many machine guns they have in stock. ITE there will be no pandemonium in New York State. Just the iron fist rule of a strong man who should be the next president of the United Sates.

      • Ed says:

        shop shortage wish wp had edit

      • 09876 says:

        “I have never seen them deploy machine guns it sure would be interesting to know how many machine guns they have in stock.”
        The homeland security budget has been quite generous.

    • psile says:

      Yes, a lot of people don’t seem to get this φίλε. There are only difficult choices now, and after the dust settles, we still have the fallout from the bursting of Bubblezilla to deal with too.

      • ITEOTWAWKI says:

        Psile, einai yemato malakes edo…YEMATO!!

      • Fast Eddy says:

        Can someone explain to me how someone could look at this formula:

        5,000 infections in the US vs 42 million in 2017/18 + a string of videos showing empty hospitals + CBS news using hospital footage from Italy pretending it was taken in a US ICU…..

        And not think they were being fu kk ed with?

        Most people I have point this out to think I have lost the plot….

        I probably won’t follow with my evidence of the Faked Moon Walk…. hahaha

        A better question — why am I surrounded by billions of fooooking IDI o TS?

        I won’t be surprised if at some point I am stoned to death or burned at the stake as a heretic. It is often the price that one pays for greatness…

  4. Nope.avi says:

    It looks like the prevailing sentiment regarding this virus is that authorities are using it as part of a “managed collapse” strategy. Politicians of all political stripes will use it to reduce government budgets. Businesses will use it to reduce the the quantity of goods produced.

    The question is will billions of people quietly starve to death to avoid spreading a disease?

    • I thinking that we are seeing in Italy that people won’t quietly starve to death.

      It seems like we should start seeing an increasing amount of objections to what is happening as time goes on.

    • psile says:

      Sorry, but capitalism cannot run in reverse. Unless the debt spigots re-open, and soon, the whole thing is going to go over the precipice.

  5. Marco Bruciati says:

    I would like as a topic of the next article course the food shortage in Europe and the breakdown of Europe

    • DJ says:

      Food shortage will be solved by import.
      To bad for those we will import from.

      • Kowalainen says:

        The surplus goes to the highest bidder. Too bad for Africa.

      • it may be that our problem is not so much importing food ‘from’

        as importing it ‘with’

        food is the base energy resource, so the people we import food from (assuming we’re not actually stealing it) must receive some form of payment that enables them to acquire their own base energy resource in a different form—ie money with an actual value

        if we can’t offer them anything with which to do this, then no foods with be forthcoming

        • DJ says:

          I predict no calorie shortages in europe in the next few years, but very possibly somewhere else.

          • i hope you’re right

            the uk imports about 50% of its food right now but a lot of that is non essential

            I’m not sure that 65 m could be self sufficient here

            No nation wllingly exports food when their own people are starving

            • DJ says:

              Oh that happens all the time. The so called famines in Ireland or Sweden.

            • i did say ‘willingly’ for a reason

              the irish landlords were mostly of English extraction and took food energy from their lands and sold it and didnt care that their own people starved.

              in any event, Ireland and england were seen as the same nation

              I don’t know much about the swedes but I imagine they had a similiar situation

            • DJ says:

              Yes, better selling oats to english horses than giving it to lazy northerners.

              I think we should think about corporations not countries.

              But if I’m wrong … it is enough some countries produce a surplus then they will be willing selling it, and I believe europe will be better able to pay for it than some of the african or asian countries.

            • Xabier says:

              Just think how much of those imports to the UK must be wine and chorizo, etc. And dark chocolate.

              Inessentials we wouldn’t even dream of as we dig our ‘Victory’ gardens, much preferring dumplings and cabbage with a cup of sawdust-grade tea.

        • 09876 says:

          The financial system is still functioning. Dollar demand is very high. VERY high compared to currency basket. There is not a viable alternative. BUT. Infinite money printing and monetizing debt can not continue indefinitely. THe future? Trade ends without a unit of exchange? SDR? Somthing else? Anti christ along in 3 2 1? I say three years of currencies still working minimum.

          • That seems as good summary of the situation. For SDR they need(ed) the other major hubs still operating on all pistons for allowing the big switcheroo, not merely demoting of the US through internal atrophy.. As you probably know it didn’t pan out, late 1990s early 2000s were about the promise of EUR dominance, and 2010s about the promise of China taking it all before ~2035. Instead the ERoE internal dynamics stalled rapidly for all the given hubs, and now we are into GFC_ver2, with M4A, MMT/UBI all the rage, ..

            Perhaps situation-plans changed and the game has evolved into such wobbly state it’s non salvageable on macro control joy pad from now on, so it will be just chaotic disintegration starting within this decade. Remnants would eventually mount retro feudalism where possible with fraction of the pop.

            Or perhaps the Wuhan bug over response really pushes austerity (demand) plateau policies as some speculate here, and the SDR regime with local digital currencies (and chipped pop) comes down as the savior of the day for a while..

            • Kowalainen says:

              Nah, it’s techno feudalism ramping up.

              It is easy to enforce it by releasing the kraken as high-tech home brew pathogens and hobbyist grade “terror” attacks on infrastructure.

              Either it’s the tech class that rules or it is the skimmers. I’m happy to side with the first.

              I say fuck em’. It’s the end of the debt driven consumerism enabled by the scammers.

          • you could be right

            but

            last Christmas we were all jollying along

            End of Feb the same

            then BANG

            the world shudders to a stop, the shops empty, the roads empty, factories shut down planes and cruise ships cease to move.
            World population suddenly terrified.

            I always said it would be quick, and I had my own theories. But I always thought in a 10 year span as ‘quick’ , by no stretch of the imagination did i think 10 days.

            as i keep blathering on—its not the money we have to worry about, it’s energy.

            fossil fuels have no value unless we are actually using them, and with the above factors—we are not using them–hence oil is dropping through the floor. Nobody wants it because we dont have a use for it in a world that isn’t moving. (the old bike and ditch problem)

            We cannot just print money to ‘use’ it without fuelburning. Money has no functional meaning unless it is underpinned by (surplus) energy. The more ‘surplus’ you have, the higher your standard of living.
            (Hence the period of the ‘American Dream’ which lasted from 1945-1970)

            Reduce energy towards ‘living parity’ and your standard of living falls.

            Reduce it ‘below parity’ and your standard of living crashes sharply.

            Anyone unable to grasp that should check out what happened in Zimbabwe when they stopped producing selling and using raw primary energy. (they started printing $5m notes, thinking the were printing ‘value’.

            Some OFW’ers will scream hoax and conspiracy, having nothing else to occupy their thought processes, but normal ‘flu’ does not kill young fit doctors and nurses treating it, or 3% of those it infects.
            This information is established and has no room for ‘conspiracy’ nonsense.

            This has terrified the world, and crashed energy use. It isn’t possible to ‘force’ users to consume more energy than the economic system can absorb, no matter how cheap it is.

            You can even give it away, but if there’s nothing to actually use it for, it will sit in fuel tanks.

            Example—if you were offered free flights to some exotic destination right now—would you take it?
            You wouldn’t, and no one would let you in anyway.
            the don is screaming to open up the world because his hotels and golf courses are drowning him in debt. The same is happening all over

            And all this in just a month.

            • NikoB says:

              I hate it when you use good reasoning Norm.

              Stay well.

            • ITEOTWAWKI says:

              Yep Niko, I have been following Norman since circa 2010 when he had his End of More blog and then read his book End of More in 2013. Since then I have read his many detailed comments here and on the Resilience website (he kept bringing those degrowth, must transition to clean energy crowd back to reality) and his articles on Medium.

              He is definitely high up on the list of people who have made me understand the predicament we are in.

              And for that, I thank you Norman!

            • thanks for your kind words guys

              have to confess that nobody hates the stuff i write more than i do

              i have grandkids and with them in mind, i know what my words are saying. luckily they ignore most of my ramblings and get on with their lives, which is as it should be

            • Fast Eddy says:

              Can you provide evidence that loads of medical professionals do not die from the flu each year?

              BOOM – check this out:

              Up to 650 000 people die of respiratory diseases linked to seasonal flu each year

              https://www.who.int/news-room/detail/14-12-2017-up-to-650-000-people-die-of-respiratory-diseases-linked-to-seasonal-flu-each-year

              We are at 69,000 deaths so far with Wuhan. We have LONG way to go before we bust that record.

              And why am I thinking quite a few medical professionals die….

            • with one wife and 3 daughters in the nursing profession, (one of whom is now at a very senior level)
              and subsequent inevitable involvement with all things medical for years, I think I would have become aware at first hand if there had been any unusual rates of sickness catching in that field.

              As it was (and is) there doesn’t seem to have been, other than in the current situation

            • Fast Eddy says:

              As Tim has explained… and as you can see on Governor Cuomo’s website — the Wuhan Virus is a FLU.

              Cuomo’s site does NOT differentiate between Wuhan and any other flus that are currently making the rounds of NY State.

              There is no evidence that Wuhan is more contagious or in any significant way different from other brands of flu.

              Yes yes we are told you can pass it without symptoms and it wrecks the lungs… but as I have referenced on the CDC site — the same goes for ANY brand of flu.

              If flu is flu then how is that medical professionals would contract Wuhan from patients in any greater numbers than they contract it when dealing with other flu sufferers?

              I deal in FACTS. And DATA. And LOGIC.

              ‘My wife’s sisters a men tally re t ard ed brother who got a a sympathy job at the local hospital mucking out bed pans said…’ does not count.

              If you want to convince me then I leave it to you to get onto google and do the research. Cuz the onus is on you — and I have to go to my knife fighting lesson shortly …. so I am what is referred to as bizzy.

            • apologies about the typo—no relation to Martin I promise

              don’t slip and fall on your sword

    • My crystal ball is a little cloudy, when it comes to differentiating one European country against another. The best I could probably do is talk about Europe generally.

      Stopping everything at borders now seems like insanity. COVID-19 is everywhere, with or without stopping things at borders.

      • Fast Eddy says:

        Correct. It is impossible to stop Wuhan Flu. Just like it is IMPOSSIBLE to stop or cure a common cold.

        So why bother even trying?

        Do what the US did in 2017/18…. nothing. That was an excellent strategy that did not cause tens of millions of people to lose their jobs — nor did is collapse the economy.

        Of if governments want to do something to stop some people from getting sick, encourage hand washing – not only now — but all the time. If people washed their hands multiple times per day they’d get sick a whole lot less.

        Don’t get me wrong — I am all for the containment strategy…. because I can see the Big Picture. It will collapse the economy and extinct humans.

  6. Harry McGibbs says:

    “”Everyone’s [in Inuvik] getting ready to go to their camps,” he told Al Jazeera via phone. “People are starting to panic. The shelves in the stores are getting empty.””

    https://www.google.com/amp/s/www.aljazeera.com/amp/indepth/features/indigenous-canada-turn-land-survive-coronavirus-200401073446077.html

    • Canadian indigenous people are trying to go back to the land. I can imagine this will work during summer. During winter and spring, I expect it will be a major challenge.

  7. The snake pit is getting funnier each day, now the German msm (CIA poodles) stepped up the pressure. In one segment they claim these Q3 army games hosted in China, where US left some biological containers, resulted in mere malaria infection not SARS-Wuhan-bug type of virus. Apart from that all jolly good, return to sleep zombies, lolz. Interestingly, anti malaric treatment has been tested around the world with some %% success against it already.

    It’s a fast spinning bowl of propaganda and counter propaganda from all sides..
    And the take home away quote: “..have elevated conspiracy theories on the diplomatic level..”

    • Chrome Mags says:

      No country wants to be responsible for this pandemic, so it’s devolved into a blame game.

    • Fast Eddy says:

      Wuhan is no more scary than any flu — what is scary is that the el de rs are destroying the means to put food on the table for billions of people….

      Imagine you are a tricycle driver in India … you have no savings… and now you have no job….

      That truly is scary.

      The end game surely is not far off… the Indian fella is not alone … people will be facing starvation already.

      • Sorry, I’m not interested in Indian fella one bit, the colonial period forcing aside, their over pop to avail. resources is just of their own making as in other places of the world..

  8. Dennis L. says:

    More questions:

    1. If a person with an ankle bracelet is caught leaving quarantine is arrested where is he/she put?
    2. If placed in jail, then that jail becomes infected.
    3. When the jail is infected, what happens to the guards?
    4. Are the infected guards locked down with infected inmates?
    5. If non infected guards in a sufficient number refuse to be guards, is it any longer a working jail?
    6. What if that person was placed in her/his house along with family and the doors, windows nailed shut? Has that been tried? Would that threat enforce a degree of familial social enforcement?
    https://www.zerohedge.com/health/ankle-monitors-ordered-kentucky-residents-crackdown-quarantine-quitters-begins

    A simpler solution has already been proposed in a certain East Asian country not far from Japan. It would seem possible to employ that form of enforcement and yet maintain social distancing. Is that a solution for either the individual or society?

    How does an individual make any long term plans if they have not been exposed to the disease and developed an immunity? If you hide out and wait for the all clear and potentially meet one carrier it is over for that individual. The longer the time lapse, the older one becomes, the poorer the immune response.

    The young are getting out and being called irresponsible, are they? Their immune systems are at the highest level and will only decline going forward. Those who gain natural immunity will see another day, those who fail will be following what we believe is a law of nature, the immunity of the herd will be greater. Those who don’t make it will have had a hell of a going away party. Or, is it better to die in bed with a ventilator or die in bed with …..? Those with a choice have already made it to a certain degree – “Party Like It’s 1999” comes to mind.

    Isn’t this what herd immunity essentially implies? Am I missing something?

    Dennis L.

    • Speaking about South Korea, on 1950 it simply buried its prisoners alive, or drowned them, as the North Koreans were going deep into the country. At least 100,000 prisoners (most of them communists) were simply killed without firing a single shot.

    • Kowalainen says:

      Yes, there is no “herd immunity” for the influenza which have been ripping in the populace since the 1500’s. Now with SARS CoV-2, the ripping will require mitigation.

      Luckily the mitigation is cheap and can be mass produced in copious quantities.

      Lean back, grab some popcorn and don’t overthink this while you stay away from the sources of infection if you can’t source a N95 mask and PVP-I.

    • Xabier says:

      The ‘party option’ has much to recommend it.

      I certainly hope my last companion will not be a ventilator…..

  9. timl2k11 says:

    Does anyone think the internet is partly to blame for the hysteria around this virus? I mean now everyone has access to instant information about everything that is going on. Is it paralyzing us? Back before the 24/7 news cycle would there have been this kind of reaction?

    • War says:

      It’s a factor sure but perhaps the bigger factors are the consolidation of big media in fewer hands, lack of critical thinking, fear-driven narratives that never seem to report on the larger perspective, and the astonishing faith people put in “experts” and manipulated statistics. We live in a time where we need to wake up from the groupthink to avoid heading off a cliff.

      • Lastcall says:

        And if you get it, don’t notice, and life goes on, then don’t tell anyone….

      • Nope.AVI says:

        I think the source of the hysteria is coming from those in charge. The 24/7 news cycle and the social media are constantly seeking more female participants because women are easier to manipulate than men and are able to manipulate others more easily than men.

        Aside from women, there are emotionally stunted 20-something adults who look to the media and government to meet their emotional needs, which include safety and validation.These emotionally stunted adults tend to be very well off but anxiety and depression are unusually high among them.

        On the other hand, most human societies are ruled by the emotional whims of those with power, whether it’s a monarch, a mob, a clergy, or “Experts”.

        If one can deduce who is in charge, then the questions you raise can be answered.
        As of now, no one is claiming to be in charge. The leaders are claiming they are just responding to current events and advice from experts. Experts are saying they are merely reacting to current events too…and are making recommendations based on scant information….

        it can’t be helped!

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