COVID-19 and the economy: Where do we go from here?

The COVID-19 story keeps developing. At first, everyone listened to epidemiologists telling us that a great deal of social distancing, and even the closing down of economies, would be helpful. After trying these things, we ended up with a huge number of people out of work and protests everywhere. We discovered the models that were provided were not very predictive. We are also finding that a V-shaped recovery is not possible.

Now, we need to figure out what actions to take next. How vigorously should we be fighting COVID-19? The story is more complex than most people understand. These are some of the issues I see:

[1] The share of COVID-19 cases that can be expected to end in death seems to be much lower than most people expect.

Most people assume that the ratios of deaths to cases by age group, computed using reported cases, such as those included in the Johns Hopkins Database, give a good indication of the chance of death a person faces if a person catches COVID-19. In fact, the cases reported to this database are far from representative of all cases; they tend to be the more severe cases. Cases with no symptoms, or only very slight symptoms, tend to be missed. The result is that ratios calculated directly from this database make people think their risk of death is far higher than it really is.

The US Center for Disease Control has published Planning Scenarios, based on information available on April 29, 2020.* Using this information, the CDC’s best estimate of the number of future deaths per 1000 cases with symptoms is as follows:

Ages 0 – 49    0.5 deaths per 1000 cases with symptoms

Ages 50-64    2.0 deaths per 1000 cases with symptoms

Ages 65+       13.0 deaths per 1000 cases with symptoms

The CDC’s best estimate is that 35% of cases have no symptoms at all. Thus, if we were to include these cases without symptoms in the chart above, the chart would become:

Ages 0-49   0.5 deaths per 1,538 cases (including those without symptoms), or 0.3 deaths per 1000 cases with or without symptoms

Ages 50-64  1.3 deaths per 1000 cases with or without symptoms

Ages 65+    8.5 deaths per 1000 cases with or without symptoms

A recent study of blood samples from 23 different parts of the world came to a similarly low estimate of the number of deaths per 1000 COVID-19 infections. It reported that among people who are less than 70 years old, the number of deaths per 1000 ranged from 0.0 to 2.3 per 1000, with a median of 0.4 deaths per 1000.

The same paper remarks,

COVID-19 seems to affect predominantly the frail, the disadvantaged, and the marginalized – as shown by high rates of infectious burden in nursing homes, homeless shelters, prisons, meat processing plants, and the strong racial/ethnic inequalities against minorities in terms of the cumulative death risk.

[2] There seem to be things we can do ourselves to reduce our personal chance of serious illness or death.

General good health is protective against getting a bad case of COVID-19. Thus, anything that we can do in terms of a good diet and exercise is likely helpful. Staying inside for weeks on end in the hope of preventing exposure to COVID-19 is probably not helpful.

Continued exposure to huge amounts of disinfectants and hand sanitizers is likely not to be helpful either. Our bodies depend on healthy microbiomes, and products such as these adversely affect our microbiomes. They kill good and bad bacteria alike and may leave harmful residues. It is easy to scale back our personal use of these products.

There are recent indications that vitamin D is likely to be protective in reducing both the incidence of COVID-19 and the disease’s severity. Web MD reports:

Several groups of researchers from different countries have found that the sickest patients often have the lowest levels of vitamin D, and that countries with higher death rates had larger numbers of people with vitamin D deficiency than countries with lower death rates.

Experts say healthy blood levels of vitamin D may give people with COVID-19 a survival advantage by helping them avoid cytokine storm, when the immune system overreacts and attacks your body’s own cells and tissues.

While we don’t know for certain that vitamin D is helpful, there is certainly enough circumstantial evidence to suggest that it would likely be worthwhile to raise vitamin D levels to the amount recommended by the National Institute of Health (30 nmol/L or higher). People with dark skin living in areas away from the equator might especially be helped by this strategy, since dark skin reduces vitamin D production.

Masks seem to be helpful in preventing the spread of infection. A person’s own immune system can handle some level of germs. If two people meeting together both wear masks, the combination of masks can perhaps reduce the level of germs to within the amount the immune system can handle. Our immune systems are built to handle a barrage of small attacks by virus and bacteria. Continued “practice” with relatively low combinations of good and bad bacteria (as occur with masks) will tend to build up our bodies’ natural defenses.

We see dentists and dental hygienists wearing face shields. These shields are readily available over the internet and can be worn with a mask or by themselves. We don’t yet know precisely how much protection they provide, but early models suggest that they can be helpful in two directions: (a) preventing the wearer’s droplets from harming others and (b) reducing the droplet exposure from others. Thus, they may be a worthwhile way to reduce exposure to the virus causing COVID-19, even when others are not wearing masks.

[3] The medical community’s ability to treat COVID-19 cases keeps improving.

There seem to be many small changes that are improving treatment of COVID-19. If patients are having trouble getting enough oxygen, having them lie on their stomachs seems to increase their blood oxygen levels. The cost of this change is pretty much zero, but it keeps people out of the ICU longer.

Originally, planners thought that ventilators would be needed for patients with COVID-19, since ventilators are often used on pneumonia patients. Experience has shown, however, that oxygen plus something like a CPAP machine often works better and is less expensive.**

The simple change of not sending recuperating patients to nursing home-type facilities for the last stages of care has proven helpful, as well. Many of these patients can still infect others, leading to infections in long-term care facilities. Tests to tell whether patients are truly over the disease do not seem to be very accurate.

Last week, it was announced that treatment with an inexpensive common steroid could reduce deaths of people on ventilators by one-third. It could also reduce deaths of those requiring only oxygen treatment by 20%. Using this treatment should significantly reduce deaths, at little cost.

We can expect improvements in treatments to continue as doctors experiment with existing treatments, and as drug companies work on new solutions. Looking at cumulative historical mortality rates tends to overlook the huge learning curve that is taking place, allowing mortality rates to be lower.

[4] More doubts are being raised about quickly finding a vaccine that prevents COVID-19. 

The public would like to think that a vaccine solution is right around the corner. Vaccine promoters such as Anthony Fauci and Bill Gates would like to encourage this belief. Unfortunately, there are quite a few obstacles to getting a vaccine that actually works for any length of time:

(a) Antibodies for coronaviruses tend not to stay around for very long. A recent study suggests that even as soon as eight weeks, a significant share of COVID-19 patients (40% of those without symptoms; 12.9% of those with symptoms) had lost all immunity. A vaccine will likely face this same challenge.

(b) Vaccines may not work against mutations. Beijing is now fighting a new version of COVID-19 that seems to have been imported from Europe in food. Early indications are that people who caught the original Wuhan version of the COVID-19 virus will not be immune to the mutated version imported from Europe.

Vaccines that are currently under development use the Wuhan version of the virus. The catch is that the version of COVID-19 now circulating in the United States, Europe and perhaps elsewhere is mostly not the Wuhan type.

(c) There is a real concern that a vaccine against one version of COVID-19 will make a person’s response to a mutation of COVID-19 worse, rather than better. It has been known for many years that Dengue Fever has this characteristic; it is one of the reasons that there is no vaccine for Dengue Fever. The earlier SARS virus (which is closely related to the COVID-19 virus) has this same issue. Preliminary analysis suggests that the virus causing COVID-19 seems to have this characteristic, as well.

In sum, getting a vaccine that actually works against COVID-19 is likely to be a huge challenge. Instead of expecting a silver bullet in the form of a COVID-19 vaccine, we probably need to be looking for a lot of silver bee-bees that will hold down the impact of the illness. Hopefully, COVID-19 will someday disappear on its own, but we have no assurance of this outcome.

[5] The basic underlying issue that the world economy faces is overshoot, caused by too high a population relative to underlying resources.

When an economy is in overshoot, the big danger is collapse. The characteristics of overshoot leading to collapse include the following:

  • Very great wage disparity; too many people are very poor
  • Declining health, often due to poor nutrition, making people vulnerable to epidemics
  • Increasing use of debt, to make up for inadequate wages and profits
  • Falling commodity prices because too few people can afford these commodities and goods made from these commodities
  • Gluts of commodities, causing farmers to plow under crops and oil to be put into storage

Thus, pandemics are very much to be expected when an economy is in overshoot.

One example of collapse is that following the Black Death (1348-1350) epidemic in Europe. The collapse killed 60% of Europe’s population and dropped Britain’s population from close to 5 million to about 2 million.

Figure 1. Britain’s population, 1200 to 1700. Chart by Bloomberg using Federal Reserve of St. Louis data.

We might say that there was a U-shaped population recovery, which took about 300 years.

A later example that almost led to collapse was the period between 1914 and 1945. This was a period of shrinking international trade, indicating that something was truly wrong. On Figure 2 below, the WSJ calls its measure of international trade the “Trade Openness Index.” The period 1914-1945 is highlighted as being somewhat like today.

Figure 2. The Trade Openness Index is an index based on the average of world imports and exports, divided by world GDP. Chart by Wall Street Journal.

Many of the issues in the 1914-1945 timeframe were coal related. World War I took place when coal depletion became a problem in Britain. The issue at that time was wages that were too low for coal miners because the price of coal would not rise very high. Higher coal prices were needed to offset the impact of depletion, but high coal prices were not affordable by citizens.

The Pandemic of 1918-1919 killed far more people than either World War I or COVID-19.

World War II came about at the time coal depletion became a problem in Germany.

Figure 3. Figure by author describing peak coal timing compared to World War I and World War II.

The problem of inadequate energy resources finally ended when World War II ramped up demand through more debt and through more women entering the labor force for the first time. In response, the US began pumping oil out of the ground at a faster rate. Instead of depending on coal alone, the world began depending on a combination of oil and coal as energy resources. The ratio of population to energy resources was suddenly brought back into balance again, and collapse was averted!

[6] We are now in another period of overshoot of population relative to resources. The critical resource this time is oil. The alternatives we have aren’t suited to fulfilling our most basic need: the growing and transportation of food. They act as add-ons that are lost if oil is lost.

If we look back at Figure 2 above, it shows that since 2008, the world has again fallen into a period of shrinking imports and exports, which is a sign of “not enough energy resources to go around.” We are also experiencing many of the other characteristics of an overshoot economy that I mentioned in Section 5 above.

Figure 4 shows world energy consumption by type of energy through 2019, using recently published data by BP. The “Other” combination in Figure 4 includes nuclear, hydroelectric, wind, solar, and other smaller categories such as geothermal energy, wood pellets, and sawdust burned for fuel.

Figure 4. World energy consumption by fuel, based on BP’s 2020 Statistical Review of World Energy.

Oil has been rising at a steady pace; coal consumption has been close to level since about 2012. Natural gas and “Other” seem to be rising a little faster in the most recent few years.

If we divide by world population, the trend in world energy consumption per capita by type is as follows:

Figure 5. World Per Capita Energy Consumption based on BP’s 2020 Statistical Review of World Energy

Many people would like to think that the various energy sources are substitutable, but this is not really the case, as we approach limits of a finite world.

One catch is that there are very few stand-alone energy resources. Most energy resources only work within a framework provided by other energy sources. Wood that is picked up from the forest floor can work as a stand-alone energy source. Wind can almost be used as a stand-alone energy source, if it is used to power a simple sail boat or a wooden windmill. Water can almost be used as a stand-alone energy source, if it can be made to turn a wooden water wheel.

Coal, when its use was ramped up, enabled the production of both concrete and steel. It allowed modern hydroelectric dams to be built. It allowed steam engines to operate. It truly could be used as a stand-alone energy source. The main obstacle to the extraction of coal was keeping the cost of extraction low enough, so that, even with transportation, buyers could afford to purchase the coal.

Oil, similarly, can be a stand-alone energy solution because it is very flexible, dense, and easily transported. Or it can be paired with other types of less-expensive energy, to make it go further. We can see our dependence on oil by how level energy consumption per capita is in Figure 5 since the early 1980s. Growth in population seems to depend upon the amount of oil available.

As I have mentioned in previous posts, the economy is a self-organizing system. If there isn’t enough of the energy products upon which the economy primarily depends, the system tends to change in very strange ways. Countries become more quarrelsome. People decide to have fewer children or they become more susceptible to pandemics, bringing population more in line with energy resources.

The problem with natural gas and with the electricity products that I have lumped together as “Other” is that they are not really stand-alone products. They cannot grow food or build roads. They cannot power international jets. They cannot build wind turbines or solar panels. They cannot put natural gas pipelines in place. They can only exist in a complex environment which includes oil and perhaps coal (or other cheaper energy products).

We are kidding ourselves if we think we can transition to modern fuels that are low in carbon emissions. Without high prices, oil and coal that are in the ground will tend to stay in the ground permanently. This is the serious obstacle that we are up against. Without oil and coal, natural gas and electricity products will quickly become unusable.

[7] A major problem with COVID-19 related shutdowns is the fact that they lead to very low commodity prices, including oil prices. 

Figure 6. Inflation-adjusted monthly average oil prices through May 2020. Amounts are Brent Spot Oil Prices, as published by the EIA. Inflation adjustment is made using the CPI-Urban Index.

Oil is the primary type of energy used in growing and transporting food. It is used in many essential processes, including in the production of electricity. If its production is to continue, its price must be both high enough for oil producers and low enough for consumers.

The problem that we have been encountering since 2008 (the start of the latest cutback in trade in Figure 2) is that oil prices have been falling too low for producers. Now, in 2020, oil production is beginning to fall. This is happening because producing companies cannot afford to extract oil at current prices; governments of oil exporting countries cannot collect enough taxes at current prices. They hope that by reducing oil supply, prices will rise again.

If extraordinarily low oil prices persist, a calamity similar to the one that “Peak Oilers” have worried about will certainly occur: Oil supply will begin dropping. In fact, the drop will likely be much more rapid than most Peak Oilers have imagined, because the drop will be caused by low prices, rather than the high prices that they imagined would occur.

Amounts which are today shown as “proven reserves” can be expected to disappear because they will not be economic to extract. Governments of oil exporting countries seem likely to be overthrown because tax revenue from oil is their major source of revenue for programs such as food subsidies and jobs programs. When this disappears, governments of oil exporters are forced to cut back, lowering the standard of living of their citizens.

[8] What our strategy should be from now on is not entirely clear.

Of course, one path is straight into collapse, as happened after the Black Death of 1348-1352 (Figure 1). In fact, the carrying capacity of Britain might still be about 2 million. Its current population is about 68 million, so this would represent a population reduction of about 97%.

Other countries would experience substantial population reductions as well. The population decline would reflect many causes of death besides direct deaths from COVID-19; they would reflect the impacts of collapsing governments, inadequate food supply, polluted water supplies, and untreated diseases of many kinds.

If a large share of the population stays hidden in their homes trying to avoid COVID, it seems to me that we are most certainly heading straight into collapse. Supply lines for many kinds of goods and services will be broken. Oil prices and food prices will stay very low. Farmers will plow under crops, trying to raise prices. Gluts of oil will continue to be a problem.

If we try to transition to renewables, this leads directly to collapse as well, as far as I can see. They are not robust enough to stand on their own. Prices of oil and other commodities will fall too low and gluts will occur. Renewables will only last as long as (a) the overall systems can be kept in good repair and (b) governments can support continued subsidies.

The only approach that seems to keep the system going a little longer would seem to be to try to muddle along, despite COVID-19. Open up economies, even if the number of COVID-19 cases is higher and keeps rising. Tell people about the approaches they can use to limit their exposure to the virus, and how they can make their immune systems stronger. Get people started raising their vitamin D levels, so that they perhaps have a better chance of fighting the disease if they get COVID-19.

With this approach, we keep as many people working for as long as possible. Life will go on as close to normal, for as long as it can. We can perhaps put off collapse for a bit longer. We don’t have a lot of options open to us, but this one seems to be the best of a lot of poor options.

Notes:

*The CDC estimates are estimates of future deaths per 1000 cases. Thus, they probably reflect the learning curve that has already taken place. It is unlikely that they reflect the benefit of the new steroid treatment mentioned in Section 3, because this finding occurred after April 29.

**I have been told that disease spread can be a problem when using CPAP machines, however. Using ventilators at very low pressure settings seems also to be a solution.

 

 

 

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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894 Responses to COVID-19 and the economy: Where do we go from here?

  1. Harry McGibbs says:

    “As the recession that will surely explode by the autumn takes shape, [UK] food-bank providers report surges in demand of, in some places, around 300%.”

    https://www.theguardian.com/commentisfree/2020/jun/28/pandemic-britain-hunger-boris-johnson

    • Harry McGibbs says:

      “The coronavirus crisis has led the Office for National Statistics to understate the speed prices are rising, according to a growing body of research during the pandemic…

      “The Institute for Fiscal Studies has also found that the inflation rate in food experienced by households was higher in the first month of lockdown than usually experienced in a year.”

      https://www.ft.com/content/f6b5ce2f-366f-4845-ac94-bb5448159d58

      • Harry McGibbs says:

        “Only 6% of the UK public want to return to the same type of economy as before the coronavirus pandemic, according to new polling, as trade unions, business groups and religious and civic leaders unite in calling for a fairer financial recovery.”

        https://www.theguardian.com/world/2020/jun/28/just-6-of-uk-public-want-a-return-to-pre-pandemic-economy

        • Harry McGibbs says:

          “The UK will sell a record amount of government debt this year, testing the level of demand for gilts as Britain grapples with the economic fallout from the coronavirus pandemic.”

          https://www.cityam.com/uk-debt-office-plans-record-bond-sales-to-help-struggling-economy-recover/

        • Xabier says:

          They will damned lucky to have a functioning economy at all.

          • Harry McGibbs says:

            Xabier, they will. A socialist friend of mine is part of a movement pushing for a four-day week. I believe it was a potential policy of Corbyn’s but apparently this pandemic now offers the perfect opportunity to push for a re-shaping of our working habits.

            • john Eardley says:

              Most people cant survive on six days a week working let alone four.

            • Kim says:

              13 December 1973, Edward Heath introduced a three-day week to conserve coal stocks in response to the “oil crisis”.

              So there’s form in Britain for this kind of nonsense.

              The answer to shutdowns? More shutdowns!

            • Kim says:

              I suppose it’s the rebirth of that old socialist warhorse, the “lump of work fallacy”…”the misconception that there is a fixed amount of work – a lump of labor – to be done within an economy which can be distributed to create more or fewer jobs” Wikipedia.

              I don’t suppose I have heard that old chestnut for at least thirty years. Times must truly be dark to be dragging out that kind of stuff.

            • GBV says:

              “Most people cant survive on six days a week working let alone four.”

              Perhaps because many (most?) people have been convinced they are entitled to a luxurious lifestyle of houses (thanks to 30+ mortgages), new cars every 5 years, consumer goods (many of which are useless or redundant replacements for lower-priced consumer goods they already own) up the wazoo, trips around the world, and public services that practically do everything for them (at ridiculous public cost in the form of pensions and benefits that will likely never be paid out).

              Personally, I’d love a four-day work week (or other job sharing initiatives that help spread out the work – and the incomes – across more individuals). It would be better than my zero-day work week of unemployment, and thanks to the fact I carry no debt and have learned to accept a very modest living standard, I’m pretty darn sure I could live off the proceeds.

              Though I guess that’s just me; others may see it differently…

              Cheers,
              -GBV

            • Xabier says:

              Splendid idea and excellent reasoning: when it all teeters on the brink of collapse, it’s undoubtedly the perfect time to create the longed-for Utopia!

              In reality, they will be on their knees, begging and imploring the gods to give them the pre-COVID way of life back, warts and all.

              Or even dreaming of one of those awful UK govt. emergency food parcels…..

  2. Harry McGibbs says:

    “A disconnect is growing in emerging markets, which have rarely faced such dire economic conditions and yet whose assets are about to round out their best quarter in a decade…

    “The yawning divide between market gains and economic gloom risks a snapback in the months ahead that would add to recovery headwinds.”

    https://uk.finance.yahoo.com/news/reckoning-looms-emerging-markets-economic-210000269.html

  3. Chrome Mags says:

    https://healthfeedback.org/claimreview/covid-19-is-among-the-leading-causes-of-death-worldwide-so-far-in-2020-but-beware-of-incomplete-graphs/

    “A widely shared graph suggests that COVID-19 is a leading cause of death, responsible for approximately 345,000 deaths by 24 May 2020, ahead of well-known causes of death such as malaria (~256,000), malnutrition (~209,000), and homicides (~162,000).”

  4. CTG says:

    TSA Checkpoint Travel Numbers

    28th June 2020 – 633,810
    28th June 2019 – 2,632,030
    % drop – 76%

    Mid of April – % drop is around 95%

    A drop of 95% improve to a drop of 76% does not constitute an improvement in the grand scheme of things. With meetings, conventions, tourism, corporate air travel done to basically nothing, there is no way that a recovery will be coming soon.

    The longer this drags on, the worse it gets. The companies that shutdown in March/April/May are those who cannot sustain at all. Those who can sustain hoped that when the society reopens, they can make it through. However, it looks like that is not possible. The next wave of closures will be just around the corner. Currently, the entire optimistic economist are are banking on “hope”

    Q2 drop in trade is expected to around 18%. Remember that a contracted is not permitted in our debt-based economy and a -18% is beyond disastrous. Will it magically go back up to 0%. Not a chance unless it is fake data.

    Tourism and food services (restaurants, etc) are the two sectors that many people are not forgiving. They will say that tourists sucks and restaurants should be closed because odf bad and expensive food. In a pure capitalistic way, yes, a bad business should close down. Right now, both the good and the bad are closed down.

    All this while, I never believe in the GDP data and I felt that both are totally under-represented (food services and tourism). Both of them play critical roles in the economy because of “interconnectedness”. Like brick and mortar malls compared to e-commerce, the physical malls has many dependencies from janitors to interior designers, electricians, construction workers, the restaurants that feed the workers, electricians, the accounting software that the janitorial company is using and the computers that the interior designers are using. It is a big chain.

    This applies to the tourism industry and the food services as well. The massive hotels, airlines, coaches, printers (tickets, etc), tables, chairs, coffer maker, lighting, etc. You can count multiple layers from the janitorial company, software company, point of sale, the uniform of the workers to the supplier of the cotton that makes the uniform. It is a long long chain of supply and all these are disrupted. If you include the farmers who supplied to the restaurants (be it for tourists or locals), the amount of dependency is enormous. It can rival the supply chain of the tech companies or factories.

    You may not like the restaurant but it has paid salaries to the workers there. It has also paid the salary of the table and chair makers, the point of sale programmers, the electrician and so one. Their salary are used to buy the Nike Sport Shoes that you worked as a product manager.

    Many people just cannot visualize how big a mess we are in when we locked down. As stated earlier in one of my posts, there is a lag in what we do. From taking bad food to vomiting out, it will take 3-4 hours before it happened. You can even die from it. However, there is no sign that you will die from the food poisoning 30-60 mins after you have taken the bad food.

    We have not seen the worst of the lag. There are still people arguing about V-Shaped recovery. Hopium is great

    • covidinamonthorayearoradecade says:

      there definitely will be a lag in the general public perception of how big the economic damage has been.

      here, the “school year” begins around the beginning of September, and I think that will be about when most people begin to realize that the economy is in a depression and a quick recovery is doubtful.

      there could be a lag or a second wave of economic damage also.

      it seemed to me that Q2 would be the bottom and Q3 forward would have small partial recovery, but if the programs/policies to prop up Q2 are not renewed, and that is very possible, then who knows, Q4 could be a disaster.

      banking/debt could implode later this year also, so the worst may be yet to come.

    • el mar says:

      The V-Shape people will attend to a meeting in Minsk!


      Saludos
      el mar

    • Businesses cannot be profitable if they have to run at less than their normal capacity, which is likely close to 100. If they also have to have workers doing disinfection, this adds to the overhead. Businesses of many kinds will discover that they have a problem. Part of it comes from the loss of tourism and restaurant services. Part of it comes from women having to leave the workforce because they no longer have adequate childcare for their children, with schools not providing “free childcare” for five days a week, plus after-school programs until mothers pick them up. Public transportation for workers is increasingly a problem as well, with reports showing that public transport is a source of COVID-19 transmission.

      It is the lack of profitability that will pull the current system down. Lack of profitability will truly bite in the last part of the year. There will be little new investment either, given the poor business climate.

      I see that the GDP NowCast of the Atlanta Federal Reserve now shows a -39.5% GDP decrease for the US for the second quarter. According to the report:

      Latest estimate: -39.5 percent — June 26, 2020

      The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2020 is -39.5 percent on June 26, up from -46.6 percent on June 25. After this morning’s data releases from the U.S. Bureau of Economic Analysis, an increase in the nowcast of second-quarter real personal consumption expenditures growth from -49.7 percent to -38.0 percent was slightly offset by a decrease in the nowcast of second-quarter real gross private domestic investment growth from -54.4 percent to -58.6 percent.

      • Minority Of One says:

        Planning to make the most of summer holidays this year, lockdown permitting. Looking like Christmas won’t be much fun, not for a lot of people.

      • GBV says:

        “Businesses cannot be profitable if they have to run at less than their normal capacity, which is likely close to 100 … It is the lack of profitability that will pull the current system down.”

        Even more worrisome when you consider that the system wasn’t really all that profitable prior to all the predicaments that cropped up in 2020. They likely only appeared profitable due to ultra-low interest rates and unsustainable debt levels (which in recent days have only gotten lower and larger, respectively).

        One might say that Something’s Gotta Give

        Yes, that’s has nothing to do with economic collapse… but who can say no to an early-2000’s, feel-good, PG-rated, Nicholson and Keaton rom-com? 🙂

        Cheers,
        -GBV

  5. Herbie R Ficklestein says:

    This is more about $$$, the biggest bailout in HiStOrY😂👍.
    GAO Can’t Solve the $2.7 Trillion Mystery of Covid-19 Aid
    https://www.yahoo.com/news/gao-t-solve-2-7-103042904.html

    Bloomberg
    GAO Can’t Solve the $2.7 Trillion Mystery of Covid-19 Aid

    Timothy L. O’Brien and Nir Kaissar
    June 29, 2020, 6:30 AM EDT
    23
    (Bloomberg Opinion) — Last week, the Government Accountability Office issued the first comprehensive analysis of how trillions of dollars of taxpayer money is being spent to protect Americans, the economy and public services from the ravages of Covid-19. Its broad conclusions aren’t reassuring.
    The report paints a picture of a federal government that is managing a gargantuan effort, at best, haphazardly. The government is either unable or reluctant to provide enough data and financial information to put clothing on what this $2.7 trillion effort truly looks like — and whether the funds are being deployed in a broadly successful way.
    We’re fortunate to have the GAO at this moment because other watchdog groups meant to keep an eye on the biggest bailout in U.S. history — particularly an inspector general appointed by the president and a special bipartisan committee set up by Congress — haven’t produced any robust public assessments. That leaves the door open to possible abuses. For example, as the Washington Post reported on Friday, the White House has made it easier for government insiders to obtain bailout loans from the Small Business Administration, creating a raft of conflicts of interest.
    While most Americans are aware that the federal government has undertaken this rescue, few know where the money is landing and what impact it’s having because details have been scarce.
    Gone, baby, gone😘…
    The Casino knows this is the end game and grabbing every nickel that it can get…
    Swamp People…got to love them!

    Going in for the catch with the bait…works every time

  6. Herbie R Ficklestein says:

    Ahh, imagine that….there is always a catch….DANG…
    MarketWatch
    Coronavirus vaccine still might not lead to herd immunity in U.S., Fauci warns
    Published: June 28, 2020 at 11:50 p.m. ET
    By Mike Murphy
    Partially effective vaccine may not stop spread if not enough people get vaccinated
    Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, speaks in April. BLOOMBERG NEWS
    The U.S. is “unlikely” to develop herd immunity to COVID-19, Dr. Anthony Fauci said Sunday, due to the likely combination of only a partially effective vaccine and the large number of people who refuse to take it.
    Speaking Sunday night to CNN’s Elizabeth Cohen as part of the Aspen Ideas Festival, Fauci said he would “settle” for a coronavirus vaccine that is 70% to 75% effective. By comparison, a measles vaccine is 97% to 98% effective.
    “That would be wonderful if we get there,” Fauci, the government’s top infectious disease expert, said. “I don’t think we will. I would settle for a 70, 75% effective vaccine.”

    Oh, my bad, the vaccination program is all smoke and mirrors… SURPRISE 😂🤣

  7. Herbie R Ficklestein says:

    Nice read for those with interest in Gold..
    Yahoo NewsYahoo
    FX Empire
    Gold Market Manipulation And The Federal Reserve
    Kelsey Williams
    June 29, 2020, 1:16 AM EDT
    Assertions are made that the manipulation takes place in a shroud of secrecy; and the unexpected lower prices for gold, or prices that don’t meet wildly bullish expectations, are cited as evidence of conspiratorial activity.
    The claim is made that the price of gold would be much higher if this manipulative trading activity were exposed, acknowledged, and prohibited. But…
    ALL MARKETS ARE MANIPULATED
    I don’t disagree that there are forces at work in the gold market that can be disruptive; and may even be described as manipulative. However, the same is true of all financial markets – stocks, bonds, commodities, etc.
    It is worth pointing out that gold and silver bulls are one-sided in their arguments against manipulation and its presumed effect on prices.
    When prices don’t meet expectations on the high side, or an ‘unexpected’ drop in price occurs, finger-pointing at shadow figures is heightened.
    Long-side investors in all assets, including precious metals, ‘benefited’ from the manipulative efforts of the Federal Reserve twelve years ago and again just recently.
    The recent recovery in prices for stocks, bonds, oil, gold, and silver has been almost unbelievable. It is literally jaw-dropping, but nobody is complaining. Nobody cries foul when markets are manipulated for the purpose of driving prices higher.
    Only a couple of years ago, JP Morgan Chase’s accumulation of silver was assumed to be bullish for silver prices. On the other hand, they have also been subject to scrutiny about price manipulation. Would silver bulls care about price manipulation if prices went up?
    ALL HAIL THE FED
    When prices of most assets dropped sharply in 2008, the Federal Reserve stepped in with both guns blazing and pledged incalculable amounts of money and credit creation. Their efforts led eventually to significant increases in previously beaten down stocks and bonds. The benefits to gold were more immediate and more spectacular. Nobody complained
    The condition referred to as runaway inflation is a reflection of an accelerated drop in the purchasing power of the currency in use bordering on repudiation. In this case, negative sentiment for the US dollar increased and its weakness was reflected in higher prices f
    Gold had already increased four-fold between 2001 and 2008 when the credit collapse threatened the integrity of our financial system. Prices of financial assets, including gold, fell sharply.
    During a period of approximately six months from spring to fall in 2008, the price of gold declined by more than thirty percent. After that, it was off to the races again…..
    Of course, after the gold price declined, claims about manipulation and price suppression began anew; and continue.
    The recent year-long bounce in the gold price has again sparked dreams of wealth coming from expected higher gold prices. If someone accepts price suppression of gold as factual and evidential, then they must also recognize that no institution has done more to pave the road to higher gold prices than the Federal Reserve.
    GOLD PRICE VS VALUE
    However, the previous statement is by no means laudatory of the Fed.
    The Federal Reserve has destroyed the US dollar over the past century by continually expanding the supply of money and credit. That debasement of the US dollar has led to a decline of more than ninety-eight percent in its purchasing power; and that decline in purchasing power is the reason for gold’s higher price over time from $20 per ounce to $1700 per ounce.
    Some gold investors are way too price-conscious; nay, price-dependent is a more accurately descriptive term. They seem to be constantly in need of higher prices to justify their predictions for gold.
    The purpose of the article is to point out how each time higher price expectations aren’t met, the price predictors trot out the price suppression argument. If they understood and accepted the argument for everything it implies, then they would already own physical gold and they wouldn’t have to defend their errant price predictions.
    The case for gold is not about price. It is about value. Gold’s value is in its use as money and its value is constant and stable.
    Gold is the original measure of value for all other goods and services. Gold’s price tells us nothing about gold. It tells us what has happened to the US dollar; nothing else.
    https://www.yahoo.com/news/gold-market-manipulation-federal-051600422.html

    • Chrome Mags says:

      Imagine at this stage if gold price wasn’t manipulated. The risk would be gold price skyrocketing with US dollar value dropping precipitously. Then all hell breaks loose. I’m not trying to justify the manipulation, but you’re right, the markets are also being manipulated. It’s likely the only thing holding the edifice of financial holdings together. A lot of huge ongoing financial band-aids until (hopefully) a viable vaccine to quell fear and things building back up organically, provided that’s still viable, and then easing back on the manipulation. I’m sure that’s the hope juice discussed at the FED.

    • offtomadrid says:

      value only exist if there are goods and services.

  8. GBV says:

    “The Global Financial Crisis of 2007-2008 has some similarities to current events – it was slow. It took more than a year from the gating of Bear Stearns structured credit funds, through the collapse of commercial paper markets, the run on Northern Rock, till we got to the collapse of Lehman in September 2008. As banks were bailed out and rescued, there were around three months in 2008 when it felt like financial markets were irreparably broken. Of course, they weren’t – governments and central banks nursed them through. Stock markets were extremely volatile – but were equally swift to arbitrage that support – triggering a rally that lasted 12 years! (Largely on the back of markets being distorted by ultra-low rates and QE.)

    This time it feels different. The crisis started off with a meteor strike – the virus. We’ve never seen anything impact the real economy so dramatically. Normally – it happens the other way around: financial crashes impact the markets and only then does the pain trickle down into the real world. This time it’s real jobs and production that got hit first. That’s fundamentally different.”

    https://www.zerohedge.com/markets/time-it-feels-different-what-if-its-just-begun

    Kind of silly to title this article “This Time It Feels Different”, only to then say it sort of feels like the GFC of 2007-2008… but I like the angle he takes – i.e. the real economy (which has arguably been hurting for a decade or more) taking the hit prior to the financial sector crashing, which the financial sector seems to be ignoring at this point (to their own peril?).

    Cheers,
    -GBV

  9. adonis says:

    attention all finite worlders this is a very important message from adonis the virus is not being used by the powers that be to de-populate us it is being used to try to do wealth distribution from developed countries to poor developing countries if you wish to survive what’s coming invest in precious metals while you still can i do not know how this will play out but hyper-inflation looks extremely possible there will also be a world-wide bail-in so all fiat currency in bank accounts including super-annuation will be confiscated by banks either invest in precious metals or long life food this could all go down in 2020 so time is short.

  10. adonis says:

    Here is an excerpt from a document i read if you read “between the lines” you realise that that what has happened in the first six months of 2020 is summarised in that excerpt here it is .

    “they”The Stabilized Earth trajectory requires deliberate management of humanity’s relationship with the rest of the Earth System if the world is to avoid crossing a planetary threshold. We suggest that a deep transformation based on a fundamental reorientation of human values, equity, behavior, institutions, economies, and technologies is required. Even so, the pathway toward Stabilized Earth will involve considerable changes to the structure and functioning of the Earth System”

    • I am skeptical that there is anything that we humans could choose to do that would change the trajectory. Probably the biggest thing we could do is try to close down the economy in response to COVID-19. This would change energy consumption use and tend to collapse the economy. Perhaps this would fix the problem they are concerned about. Of course, there may not be humans to observe this result.

    • Robert Firth says:

      “The Stabilized Earth trajectory requires deliberate management of humanity’s relationship with the rest of the Earth System if the world is to avoid crossing a planetary threshold.”

      Management by whom? Plato’s Guardians? That didn’t work too well, if memory serves. Might I suggest that the Earth System managed itself pretty well over four billion years, and will likely continue to do so. With us or without us.

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