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. Ed says:

    Corporations are starting to tell employees to take earned vacation in Q2. My take they are running out of cash to pay employees and the vacation obligation bucket needs to be used.

  2. psile says:

    This one’s a real be atch…

    Breaking News from Singapore: The second wave of CV-19 is picking up steam. 142 new cases today and reimposition of full lockdown. Apparently, even having a friend over carries a big fine.

  3. Country Joe says:

    Haven’t paid much attention to the stories of fake Moon landings over the years as it seemed another ridiculous woo woo.
    After reading Dave McGowan I’m now convinced that the moon landings belong right in there with the nonsense of going to Mars.
    We now pay Russia $80 million per seat to take our astronauts to the ISS when 50 years ago we were flying to the Moon and back??? Now I get it.
    I take FE’s ranting about the Moon landing fake as an attempt to point out the degree to which our govt’ and their propaganda machine, the MSM, will go to get our brains in line.
    The current fake to cover the collapse of the financial system is more of the same.
    I have read numerous MD’s stating that the tests are unreliable and therefore the numbers of cases are meaningless. We know when someone is dead but what “virus” they had is not so certain.
    Yet they have shut down the world’s economy.
    Gail had it right from the beginning.

    • FE-snark says:

      So let me get this straight: there’s no evidence of massive propaganda before 1970 or since. It took a moon landing story to convince you there is. Really? Also, the Soviets and Chinese were in cahoots, so they didn’t expose it. Sounds about right.

      As for “virus”, there’s no such thing. I even looked for it with a magnifying glass and saw no such thing. Proof positive.

      Talk about distractions. Sheesh.

    • This is getting ridiculous..

      Did Lenin mooned NASA-Hollywood after-all? The second rover mission shows close-up camera shoot of honorary badge of Lenin(?) in front of the extended leg for landing skid, which is covered in dust.

      Recap, even the first rover mission, linked previously, shows dusted landing skids of the platform from different angle.

      Lunokhod 2. Lunation 1. Session 1. Panorama 1+2:
      http://www.planetology.ru/panoramas/lunokhod2.php?page=0&language=english

      Lunokhod 1. Lunation 3. Session 7. Panorama 16:
      http://www.planetology.ru/panoramas/lunokhod1.php?page=13&language=english

      Conclusion:
      The terrain pictures with many granular features and rock details, clearly show much higher resemblance to contemporary/later rover missions to Mars/Moons/.. as they have been publicly presented. So we can conclude only two major possible scenarios are in the realm of possible. First Apollo mission was staged or the second, namely the world simply adjusted to more professionally done fakery via the Soviet-Russian expertise.

      Case closed.

    • Fast Eddy says:

      The tell is in that Bloomberg interview re the masks.

      HK has 8M people crammed into a small space — almost everyone wears masks. HK is NOT in lockdown.

      NZ is 4.5M in a much larger space — M Fast says maybe half the people at the PaknSave uses masks. NZ is in near total lockdown – only essential services operate

      HK now has fewer infections that HK.

      But… the expert in that interview says the jury is out on masks.

      Case Closed. Game Over. The Verdict is In. This is The Big Lie. The Biggest Lie in the History of the Planet. Nothing comes close. Not WMD… not Je sus. Not Buzz Aldrin etc…

      NOTHING.

      Why? Because this lie is not like lying about the Tooth Fairy or Santa… some harmless lie whose purpose is to… hmmm… what is the purpose of those fairytales? Is it to prep kids for bigger lies later — or is it to bring a little joy to their lives…..

      This lie is going to extinct us.

      Well we were about to go extinct anyway so maybe it’s not really that Big of a Deal … certainly not really sinister…

      Do you think The Euthanasia Project is a better tagline that CDT?

      I am thinking of making that change but not sure which resonates better. I may have to take this to Don….

  4. ITEOTWAWKI says:

    Hahahaha!

    Cheers Coronavirus:

  5. Marco Bruciati says:

    We are in in lock down from 1 month and in se zone positive still grown

    • When I look at Italy’s COVID numbers, it looks like new cases each day are down a bit:

      In fact, new COVID deaths are down as well.

      If we look at cumulative deaths relative to population, Italy is doing better than Spain. Its results are about the same as for France and the United Kingdom. Germany is doing better, perhaps because of the old tuberculosis inoculations.

      So, in some sense, Italy seems to be past peak COVID, at least until this round of shutdowns is lifted. When this happens, cases will likely increase again.

  6. Ed says:

    Here in New York State Columbia University Medical School was doing a study of HCQ for CVV19. The dictator of NYS (Cuomo) shut it down. A world class research university medical school (the place where the smart doctors hang out) is shut down by dictator with no medical training.

    Remember 500 years ago in Europe when we humans were learning about human anatomy? Dissection of human bodies had to be done inside the university wall to protect from charges of witchcraft and satanism. Well now the ingestion of a small dry pill is high treason to dictator Cuomo and his army of troopers. Western civilization was apparently about a millimeter deep. Welcome back to the star-court. Who will be the first person burn at the stake by the dictator.

    • Dan says:

      You are absolutely priceless.
      The comments here have gone downhill in the last few weeks. As someone who followed Gail here from the oil drum I don’t really see what you bring to the table except bitching and belly aching.
      I suppose we should listen to Dr. Trump
      Is that where we are going with this Red Team vs Blue Team –
      Either bring some meat to the table (I know you’re new but that’s what you do) or shut the he’ll up.
      Take it to Zerohedge

      • Sven Røgeberg says:

        I supert your view, Dan. Something has happened in the comment section the past weeks. Could it be due to the fact that many psychologist and psychiatrist have been forced to close their doors?

      • Very Far Frank says:

        The comment section isn’t supposed to be a curated gallery Dan; you don’t have to like or find value in what people say. In which case simply ignore them.

        Personally I much prefer to have an open comment section- even if it invites some dross- rather than having someone who’s actually ‘belly aching’ dictating what someone can or can’t say.

        • I am afraid that there is some truth to what Ed is saying. We are taking a giant step backward in terms of freedoms.

          • Bobby says:

            Yes. Freedom of expression without completely holding to fixed views. It’s of benefit this site is not unreasonably censored like so many other virtual domains. Useful knowledge is sheared at Ourfiniteworld by Gail and other contributors, these are the gems make the internet worthwhile. Thank you all for this space _/\_

          • timl2k11 says:

            The governor of New York is a dictator?

            • Bobby says:

              The freedom bit is you get to make up your own mind about stuff, but still express views. Be challenged and find common ground. Its a process

              like making good music

            • Lidia17 says:

              Yes. All the state governors are issuing extra-legal and completely arbitrary dictums. For example, here in VT, one cannot buy seeds at the Wal*Mart: the governor has deemed that a “non-essential” purchase. In one of the “M” states (Michigan?) plant nurseries were shut down, so no-one can purchase vegetable starts for the garden.

              If that is not dictatorial, what is?

        • Fast Eddy says:

          There are limits…. Zero Hedge is what happens when there are absolutely no rules…

          Worth noting that… because that’s where we head when collapse hits and the police disband.

          There are lot of shocking people on this planet who will welcome the chance to run riot.

          Again … the CDT is a good thing…. we should welcome it

          I was driving up the coast a couple of months ago and saw some bikers in their colours… I was thinking how wonderful it would be to drive my 4×4 into the lot of them them then back over their heads as they lay on the ground smashed in pieces…

          I was also thinking that these are the sorts of vermin that will be on the loose at some point … when you consider that then you think about the CDT (if that’s what we are looking at) … then it is a very good outcome.

          These critters are not braver than anyone else… they’ll be hiding under their beds too… and the military will be around long enough to gun the scum down if they try to start any trouble.

          Not hard to understand the PTB catching up in Davos and agreeing to this plan.

          • Dmitry Orlov has suggested the possibility of individual unemployed citizens banding together and charging citizens for “protection” from undesirable elements. This would seem to be a substitute for governments collecting taxes to pay for police.

            • Fast Eddy says:

              There are many problems with that … but the main one is that if you want to fight bad guys then you need equally bad guys.

              Think of biker gangs. Or criminals. Or ex-military men.

              Out of work neighbours won’t have a chance….

              Of course you could try to hire ‘mercenaries’ … and pay them with? Oh food… see The Prince for the downsides of hiring cut throats…..

              BTW – Orlov is not on the Dream Team.

      • JMS says:

        Don’t move, the “fake news” meme creators have you exactly where they want: isolated in your cell, with everybody lined up in front of the tv like obedient citizens, with the daily newspaper on your smartphone and curled up in fear.
        Meanwhile, your freedoms and rights disappear silently behind the MSM noise, without even give you time to kiss goodbye the rights to strike or protest, censorship is made legal again in a Western Europe (herradolf would be proud of us) and the state of emergency phase will be followed, maybe in a few months, by permanent state of exception and martial law, as supply chains disruption empties the shelfes and the starving masses take to the streets.

        The PTB know that a quarantine/lockdown of even a few months will have a collapsing effect on the economy. If they maintain this quarantine, that can only mean they want the economy to collapse. Therefore, controlled demolition. It is the only hypothesis that makes sense AFAICS .

        • Xabier says:

          Another thesis that also makes sense is that they are underestimating the profound general effects of the lock-downs, and just how long they will persist for.

          There is probably a naive belief that things can be ‘fired up’ again, after they have filled their pockets with all the support, and with asset valuations more or less undamaged.

          I have found even very successful people in finance ($100’s of millions level but not billionnaires) to be quite naive and ill-informed outside their own narrow specialisation.

          So, that they are delivering a potentially fatal blow to everything and acting as the catalyst for the fall of the whole system may not be apparent to them.

          They are not systemic thinkers, they are not long-term planners.

          • Xabier, we have been at this match several times already.
            Simply, in today’s world ~$100M wealth ranked people influence very little. That’s like ~4-5degree separation from the truly systemic players or their allowing bureaucracies.

            And obviously at some threshold even the systemic players ran out of options how to can kick the pseudo BAU once more. Perhaps the moment arrived now, could be later.

          • JMS says:

            I have a hard time believing that, Xabier. I think it’s not necessary to be a systemic thinker to know that the global economy was already near the precipice before covid-19, and that even a small push could throw it into the abyss of recession/depression. After all, there are hundreds of newspapers/ economy websites in the world, all of them more or less filled with worrying headlines at least since 2008. And I suppose these publications are not read only by Harry McGibbs 🙂
            For me, it is clear that politicians, big businessmen do not tell us everything they know. And in fact, why should they do it? It is not in their interest. Knowledge is power, right? Saludos!

        • JMS, very high probability you are correct. Nevertheless, your macro story being right doesn’t negate the need to shield yourself “reasonably” from the virus. Simply, why stand on the receiving end of double whammy by the elites: collapsing economy under your feet and on top of that infecting/damaging your health to some degree.

          • JMS says:

            Oh but I take my precautions, since although I believe MSM is selling us the wrong apocalypse, I have no doubt that this virus is real and probably more dangerous than the flu (and I have no time now to get sick – many things to do and read and see). But of course, like everybody in OFW, I am much more concerned with the consequences of the lockdown than with the virus.

      • 09876 says:

        There are many aspects of this crisis that fall under red team blue team.
        I could care less which team advocates which.
        I am terrified of the consequences of both government spending and fed balance sheet.
        I am not real scared of the virus.
        I would like to have access to HCQ if i did contract the virus.
        Have you considered that by placing things in the red team or blue team category you are unable to evaluate them objectively?
        I dont own a television. i have formed these viewpoints on my own. I see viewpoints associated with trump demonized. I find this hard because somtimes they are the same as my own.

  7. Minority Of One says:

    Excuse me that oil has already been commented on. Perspective from the UK.
    Here, in a UK city, as I walk around town to do my shopping, I’d estimate road traffic has fallen by about 90%, from the pre-virus levels. Passenger flights I think have stopped completely in the UK.
    About 90% of crude oil, and the other types of oil, I believe, goes for transport fuel, so were the rest of the world to follow the UK example, demand would be falling by a hell of a lot more than 50%.
    But let’s say 50%. That would imply:
    a future oil price of $5-10 / barrel, surely
    a cut in global oil production of about 50 million barrels per day.
    Interesting to see how that will pan out. No-one wants to cut production. No-one in the past except companies within OPEC, has ever voluntarily cut production. Outside of OPEC, they invariably keep pumping no matter how low the price goes.
    If oil gets anywhere near $10 / barrel, that should be enough to finish off UK oil production – the oil companies will be losing money by the barrel load- they can hardly make a profit at $50/barrel.
    This will come as a shock to Brits, and especially Scots, who have been told time and again (so that they all believe it), in particular by an economics professor who keeps appearing on TV, that UK oil production will last for at least another 30 years. There probably is enough offshore oil left to do that, but the current small quantities would become tiny quantities soon enough, and every barrel would be pumped at a loss. I don’t see Boris et el bailing them out, but you never know.

    • you are quite right about oil

      the cost of oil advances in tandem with the cost of extracting it

      this links to wages of the people running oilfields, and pension funds invested in oilfield, and so on.
      even the value of your house is propped up by the ‘value’ of oil.
      if oil doesn’t return to being burned at current rates, the value of your house will crash pro rata

      that should terrify everyone. You have a mortgage for 250000 on a house that is unsaleable, that crashes the housing market, because the ‘debt’ of 250000 still exists, but the ‘security’ on that debt has vanished

      it isn’t possible to just lower the price and effectively give oil away because right now we dont have the means to use it like we did only a month ago

      the world economic system is dependent of oilburning and that burning delivering a certain expected ‘value’

      if that ‘value’ isnt forthcoming, the entire edifice must collapse

    • I don’t think that 90% of oil use is transport related. Products that are not burned make up a sizable chunk. One chart I see says 13%, but that seems high. There is also use for agriculture, construction, military, operating irrigation pumps, and heating. A fair amount of the transportation use is for food and other necessary goods. Some of the transportation use is for things like police, ambulance, and maintaining electrical transmission lines.

    • Adam says:

      One thing that is incorrect in your post is the statement that :
      “No other oil producer has voluntarily cut production”
      The Texas Railroad Commission used to be a thing in the States until about 1971, they were the OPEC of the day.

      I agree though that for the oil producing states, cutting production is a very difficult choice.

      • When a person looks at the pattern of oil production and prices, it becomes clear that high oil prices tend to give rise to higher oil production and lower prices tend to force production downward.

        This is the opposite of what people who read what economists say would like to believe. In their view, “scarcity” brings on high prices. This is not really true. A refinery that needs a particular kind of oil may be willing to pay a premium, temporarily, if there is a shortage of the kind of oil it needs. Ultimately, everything I see says that it is the ability of customers to afford energy products made with high priced oil that allows oil prices to rise. The high oil prices in the 1970s came as women were added to the labor force, computers will making companies more efficient, and the economies of a large number of countries were booming all at once (US, Europe, Japan, Russia). The boom in oil prices leading up to 2008 was fueled by the rise in cheap manufacturing (based primarily on cheap coal) from China, India, and other Asian countries. This allowed incomes around the world to buy more finished goods and services.

  8. Fast Eddy says:

    A quick note before moving on: a little research has revealed that NASA now acknowledges that maintaining clean-room conditions on space exploration vehicles while performing EVAs on planetary bodies poses a bit of a problem.

    The agency’s solution is something known as a ‘suitport.’ The basic idea is to design a rear-entry spacesuit that will remain attached to the exterior of the vehicle when not in use. The astronaut will enter through the rear of the suit and then detach himself from the vehicle. Reentry will require reversing the procedure.

    NASA has even generously provided an image of a proposed lunar rover with two integrated suitports, as seen above. The agency feels that such technology will be required for any ‘return’ trips to the Moon or for landing on and exploring other planets.

    As with the space radiation shield that will also be required for any ‘return’ trips to the Moon, NASA offers no explanation for why such technology was not required back in 1969.

  9. Fast Eddy says:

    Oh… and if anyone was thinking the Woohan was not some BS flu dumped on us re CDT…. and was hopeful that the lockdown was going to eliminate it …. think again.

    They have their agenda — they’ve made all this effort to scare us sh i t less — do you REALLY think they were going to let this go?

    This is no different than firing a 7mm round through your forehead. Oh – the 7mm round kills you instantly – with this you slowly starve.

    International Travel Off the Table for Six Months: Coronavirus Q&A
    .
    With coronavirus infection rates slowing in some of the worst-hit countries, governments are now weighing whether they might soon be able to ease restrictions to avoid further damage to their economies.

    I asked Peter Collignon, an infectious diseases physician and professor of clinical medicine at the Australian National University Medical School, about the latest developments in the pandemic, and how countries might slowly return to normal as infection rates decline and restrictions are eased.

    Here’s my conversation with Peter.

    Jason Gale: Peter, can you tell us what kinds of indicators will governments be using to determine whether current measures — border closures, curbs on public gatherings, physical distancing policies, etc — have been effective in controlling the epidemic?

    Peter Collignon: The main indicator we need to use is what is the current level of new infections within the community, in other words what is happening with your epidemic curve. If your epidemic curve is continuing to rise, it means you haven’t got control of the epidemic and you may even need to think about putting new controls on. But if your epidemic curve is falling or at a low level but stable, then gradually you can start thinking about taking some of the controls off. This virus is likely going to be around for two years at least, which means all the measures we have in place — vigorous hand-washing, physical distance — might need to continue for a while.

    JG: What are your views on current testing levels, and what do we need to be doing more of?

    PC: A lot and a lot more! At the moment, we don’t know enough and the only way to know more is by testing — more and more people in the community, including people without risk factors. Covid-19 should be part of the tests that GPs test for as part of their routine panel. We should also be testing sewage, which could be the best way of testing the whole of the community. We also need antibody testing to understand what proportion of the community has been exposed to the virus and have immunity.

    Residents Shelter-In-Place As Governor Says Michigan Covid-19 Peak Is Coming
    A medical worker seals a test from a patient at a drive-through testing facility at Millennium Medical Group in Michigan on April 7.Photographer: Emily Elconin/Bloomberg
    JG: As some countries seem to be bringing the outbreak under control, people are keen to know what an eventual reopening looks like? What sort of measures might still need to be in place in three months or six months as we await a treatment regimen or eventual vaccine?

    PC: There are some measures we will need to keep. A safe and effective vaccine isn’t likely to be available in large amounts for 18 months to two years. How long we keep restaurants closed, for example, will depend on the spread within communities. The levels of control need to be inversely proportional to how many new cases you have and what the epidemic curve is looking like.

    JG: Is eradication of the virus still an option for countries where outbreaks are currently controlled and contact tracing is robust? If we expect the virus to become seasonal, is herd immunity the only viable strategy at this stage, which means eventually more than half of us will need to get sick?

    PC: It would be nice, but I don’t think it’s a realistic goal. No country has been able to achieve it. I think eradicating this is difficult. It’s the transmission of the virus from people who have no or minimal symptoms, so it can go undetected until people are sick enough to go to the hospital. It’s why we need the antibody tests to know who has been exposed to the virus. I think we’re stuck with it.

    JG: The issue of mask-wearing is a hot topic in many countries. WHO has just updated its guidance, and stopped short of suggesting widespread community use. Is this solid policy, or is this a political hot potato for WHO?

    PC: I think there is still a lot we don’t know about masks. I don’t think there is any evidence that respirator masks are any better than surgical masks for protection in the community. Respirator masks are most important for certain high-risk procedures performed by health-care workers. I do think that if we are getting widespread community spread then masks made from cloth may have a place particularly. Masks may have a greater effect on protecting the community from individuals who are infected. The benefit of cloth masks is that they can be washed at home in hot water and dried in the sun, and you are not decreasing the supply of critical medical supplies.

    Residents Rush Trains, Take to Highways as Wuhan Lifts Lockdown
    Travelers wearing protective masks inside the Hankou railway station in Wuhan, China on April 8.Source: Bloomberg
    JG: We’re hearing that the coronavirus can attack other areas of the body besides the lungs? Where else can it cause disease and how significant is this?

    PC: It’s predominantly the respiratory tract. There is no doubt that it can replicate in other areas, such as the gut and cause diarrhea. There has been some suggestion of other organs, such as the heart, being infected, but we need more evidence for this.

    JG: We’ve all read reports of possible re-infections, and there still seems to be some confusion about whether people who recover acquire immunity. What has to happen before we can answer this question definitively?

    PC: We need a lot more antibody tests done in large populations to know. There may be some people who get infected twice, but currently we believe that is uncommon. The vast majority of people who recover from Covid-19 appear to develop protective immunity. The question is how long that protection lasts.

    JG: We’ve seen airlines lay off thousands of staff and travel grind to a halt. Even after economies begin to open, do you have any insight into how long it may take before people are flying again, and what our airports can do to protect travelers and keep new outbreaks from developing?

    PC: International travel will be off the table for at least six months. I think travelers will be quarantined for two weeks here in Australia. We really need more information before we can know when to lift restrictions. I suspect we will find travel insurance won’t cover people. I can’t imagine international travel as a tourist is going to be on the horizon in under six months.

    JG: A lot of the focus has been on Asia, Europe, and the U.S., but Iran shows the dangers facing less-developed regions like sub-Saharan Africa. Do you have concerns on that front, both from a humanitarian standpoint and the risk the virus may return from those regions?

    PC: In countries where sanitation and hygiene is poor, and there’s a lot of crowding, it’s likely to circulate undetected, and they are less likely to have the resources to manage the threat. Also it will harm whatever tourism industry they might have. We are all focused on the U.S. and Europe, but if you are resource-poor you are going to do a lot worse.

    Volunteer Workers Disinfect Iran Capital As Virus Cases Surge
    A volunteer sprays the ground to disinfect a public bus terminus in Tehran on March 27.Photographer: Ali Mohammadi/Bloomberg
    JG: We’ve seen a lot of reports of people testing positive for coronavirus despite not displaying any symptoms. How prevalent do you think this is?

    PC: There seems to be a wide spectrum of disease that people can have. I think we have to be careful about “asymptomatic” cases because a lot of people are pre-symptomatic and some may have a very mild form of the disease. Antibody tests will help to tease out some of these questions about how silently the infection may be spreading. Over the next month or two we should have tested groups in the population to see how many people have antibodies and therefore have been exposed to the virus.

    JG: As societies grapple with ways to keep people safe, what sort of measures can we take in future given the virus is likely to be seasonal?

    PC: I can’t see how spraying streets does very much. But cleaning with detergents and other agents that kill the virus are important. These should be directed at high-risk areas such as door handles, patient-alert buzzers, commode chairs. The more something is touched, the more it needs to be cleaned. But if you are sick, don’t go to work, don’t use public transport. Masks, I don’t think we know. During SARS, when people were using masks in Hong Kong, there is some evidence that there were fewer respiratory-tract infections. I think we need to learn from this particularly because this virus won’t disappear.

    JG: The past few years have seen avian influenza, SARS, MERS, the swine flu pandemic, and renewed outbreaks of Ebola. Is there a pattern here, and do you expect more zoonotic viruses as a result of population growth/mass food production?

    PC: Yes! Most of the diseases that have emerged as problems for humans have come from animals. Just about every viral diseases you can think of have their origins in animals. SARS-CoV-2 is just an example. The more we disturb the environment, the more population growth we have, the more intensive farming we have without adequate biosecurity, the higher the risk. This reinforces the problems that occur when we have exotic animals and people in close contact.

    https://www.bloomberg.com/news/articles/2020-04-08/coronavirus-q-a-expert-says-no-international-travel-for-6-months

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