So, this little virus problem...I’ve been following stuff, cus I do that, and I’ve been projecting stuff into the future, cus I do that, and it’s come to an interesting place. Emotionally, I’ve reached a ‘holy shit’ level, but because I’m lazy and ‘holy shit’ is work, I’ve put that away and pulled out math, and assumptions and followed where they went - all in an emotionless way, to try and shut the ‘holy shit’ up. I have a weakness for drama, so I’m trying to keep it real.
Numbers from China show a two percent fatality rate and that’s probably way high. The reason it’s way high is a good news/bad news thing. There look to be lots of people who get mild or asymptomatic infections. Hey, less than two percent of infections die, yay! Wait - lots of people carrying the virus that don’t know it - boo! The more than two new cases from every infection number is low (2.4 last time I saw one, from somewhere Chinese-ish). The California case that didn’t link to anybody traveling is the one to watch in the US. There is a reservoir of cases someplace in the area.
News somewhere reliable-ish (probably the NYT or CBC) was reporting a severe shortage of test kits in America, with the first ones not working, so very few people are being tested. Watch next week as test kit production starts catching up to demand in the US, and as the ‘next generation’ of virus takes hold in China. The longish dormancy period should have the next ‘generation’ of the virus kick the China numbers up a bunch next week. If that happens, then a dictatorship with a mostly compliant citizenship can’t stop it from spreading. The Chinese lost most of their pig population from an out of control disease last year, but I’m hoping they do better with people. Closer to home, the western world doesn’t stand a chance - and it’s likely spreading freely in possibly California, certainly Italy, and South Korea. Add all that up, carry the three, and...this thing is out of the barn no matter how big a door you’re using. Iran is showing warmer weather isn’t a big natural control (it is winter, so not hot yet, but into the twenties celsius on a good day). The numbers from China next week will be key.
Math. Staying with unemotional numbers. The next number to look at is twenty five percent, and another good news/bad news thing. CO2 emissions are down twenty five percent in China, yay! In the Chinese mostly industrial economy, that means output is down twenty five percent-ish...Boo!? The Chinese economy is, using round numbers and rounding stuff off liberally, cus the numbers are iffy anyway, ten-ish trillion, call it thirty billion a day. Twenty five percent is seven and half billion a day. The missing output is about a quarter trillion a month. You can get to that by dividing the ten-ish trillion by twelve and dividing that by four in a straighter line, but I did it the way I did it. Whatevs.
Anyway, if the numbers go up in China again next week, it’s going to be around for a lot of months. About five ten thousandths of their population has been reported as infected, but that’s low and doesn’t include asymptomatic or mild cases. Call it two tenths of a percent. 0.2%. Their economy is shedding a quarter of a trillion a month with a teeny percentage of their population directly affected. Approximately everyone is going to be directly affected by the end of the year. At a two week doubling rate, it’s nine two weeks, or eighteen weeks to everybody in China. Call it July-ish. Watch next week’s numbers in China, and pray they have it under control. Vice President Pence is praying along with you, so there is a chance!
The western world won’t be as successful limiting their population movement. People will tend towards, ‘It’s just a sniffle. No biggy. I don’t have it. I don’t have it! No, I don’t have it, damnit, get away!’ and spread it all over the place. Optimistic bias in cognitive science and a pandemic in a society with trivially easy movement don’t go well together. Do we, in the western world, just shrug, say ‘everybody is going to get it.’ and just keep on like nothing is happening, so no real change except a few more funerals? No. We will freak out and do all sorts of things that aren’t helpful. The global economy shrinking at China kinds of numbers is around ten times as big. A couple trillion a month. You could get a lot of health care for that kind of money. Medicare for all would look cheap!
Oh, incidentally, it’s eighty million premature deaths and a loss of, say, four to eight billion people years of life. In the brutal numbers stuff, it’s likely not a major directly disruptive episode, economically in the lives of the survivors, and having your elderly parents/grandparents die a few years prematurely - it sucks, but less than some stuff in life sucks, and life will go on. I’m struggling finding good numbers on subpopulation effects, but I’ve got the sense it’s mostly people already in poorer health that are dying. There was one report about kids, but I don’t want that one to be real, so I’m ignoring it. I’m near saturation with unpleasant indicators and that one is a bridge too far. Anyway, politically it’s a big deal and the necessary economic disruption to vainly struggle to limit contagion is probably a bigger deal. The panic is where the real risk, politically and economically sits, but we are all too profoundly unemotional and well centered as a species to have that be a big deal. HA!! We’re screwed! ‘Boo!’ seems hopelessly inadequate. How about ‘Holy Shit!’?
On to the really fun stuff where math struggles, but it still adds up in bad ways. Global politics! Keep an eye on the recent converts to authoritarianism-light. Hungary, Poland, Brazil, Turkey, USA, and the big one, India (and assorted others, but whatevs). You think the mess in Syria is a crisis? It is, so you should, but the world will stop watching, distracted by more local concerns, soon. Public attention is helping to keep that one only really, really horrible. That attention will start drifting any day now. I’m going to put a freeze on following that consequence where it goes, too. More unpleasant indicators.
For everybody, how popular will using this virus crisis to help out ‘their’ people be, and how will governments distract attention from the government’s inability to keep everyone safe? I don’t expect any government is going to have a lot of success at that task, and lots of them are going to be looking for distractions. Big shiny distractions.
Is Pakistan going to sit easy as Muslims flee India into Pakistan to avoid ethnic violence stirred by preferential treatment of Hindus - at least the upper caste ones? That was already a problem, and that’s not factoring in the two hundred million Dalit rioting in place. India has not eliminated public defecation in most of the cities remember. Infection control is hopeless. Modi’s triumphant meeting with the orange on that shall not be named (oowsnn) last week is an ironic moment to watch as it becomes ironic in real time. There is nukes in them thar hills, and China is in that border area as well, persecuting Muslims of their own. Bangladesh doesn’t have a lot of spare space for in-migration, with the whole climate thing, and Kashmir is already a potential flash point - it’s a whole bunch of building pressure without a lot of room to bleed the pressure down. The rest of the world will be busy with their more domestic crises so the lid might come off. There’s another path with unpleasant indicators...
The American health system is carefully designed to just collapse under the strain of a pandemic. The required insurance paperwork will require...carry the two and divide by four...the entirety of the annual American workforce - monthly. Insurance, usually the safest business in the world - is toast. They don’t have reserves to cover these kinds of losses, and will be selling stock and investments like crazy to make payments. There will be government bailouts, but probably half-hazard and most successful in the Blue states (where the money is). It should be peaking worldwide just before the American election (using a 2 week doubling of cases. I think it’s a bit faster than that, so you can use the math to hit max global exposure in July if you want. Whatevs. It doesn’t change anything much). Does oowsnn cancel the election because of the general break down in civilization amongst the well armed population? That isn’t a light hearted question. Really. Is there a break down of civilization in the well armed population? You can already find announcements about how this is a plot between the Chinese and Democrats to steal the election. Pockets of breakdown are guaranteed. Medicare for all looks awfully good in September. It’s democrats in a landslide unless oowsnn does something dramatic. Does he do something dramatic? Is the secession of California coming soon? If only there was a trusted source of reality based information you could rely on down there, to shape opinion and help maintain calm. Fox? Limbaugh? The world is looking at you…Ha! - and ‘Holy Shit!’. The utter ruin of oowsnn is a more pleasant set of indicators to follow down a path, if that suits. I’ll be spending some time with that one, myself.
Anyway, I started this trying to avoid the ‘holy shit’ stuff and even the less ‘holy shit’ math stuff is pretty ‘holy shit’. The politics stuff is straight to ‘holy shit’ and worse. Do not pass go. Do not collect two trillion dollars (a month). Let’s look at some more unpleasant things. Brazil has a new strongish man who can use the emergency to consolidate control. The nationalistic parties in Europe can ‘fear the other’ their way to political leadership all over the place - Germany and France included. I’d put it at thirty/seventy that the EU starts to come apart on the continent this year and next. Brexit ends up looking like getting ahead of the trend! Boris is an accidental genius, but not a stable one, by all accounts.
It’s been a hundred years since the Spanish Flu. Our systems aren’t designed for this, and haven’t been tested. At all. The global political situation was pulling away from ‘getting along’ already, and focusing on the ‘blame the other’ - and that’s without factoring in the macroeconomic thing. How does the recent global bank recapitalisation react to this disruption? I mean the writers of this real world reality show are getting a bit carried away throwing this particular grenade into the mix. I mean, give the participants a break!
Let’s shift the view to that last thing. No, the macroeconomics, not the reality show thing. Ignore the reality show thing - it was a joke. The macroeconomics - sigh - and you thought tariffs were bad! Oowsnn’s tantrums just meant people started looking at alternative suppliers, and maybe keeping a few resources on hand prior to ‘just in time’, before this crisis - it was a stable genius at work! Just in time manufacturing breaks down badly here. It’s tied into global supply routes. Global supply routes don’t do well when all travel is stopped, and factories for intermediate products are shuttered. Check out the number of flights in China map the NYTimes had yesterday. https://www.nytimes.com/interactive/2020/02/21/business/coronavirus-airline-travel.html I think it’s behind a paywall, but you get a few views for free.
There is very little time spent shopping during a pandemic, using China as an example. Doggy daycares suffer when everyone is staying locked in their homes. Same with cafes and restaurants. Tourism is screwed already, even if it doesn’t get worse. Even drilling for oil or mining isn’t a high priority when everyone is sitting at home, away from the factories, and the telecommunications infrastructure can’t handle everyone working from home. The western economies are service economies. People stuck at home don’t require a lot of service. Twenty five percent drop in CO2 doesn’t come from lots of people driving cars around, shopping and visiting friends. Some of this will merely put off expenditure until after the crisis, but the longer and more successful the crisis is at crisising, the less that’s true. Anyone planning for business expansion is having second thoughts - or shouldn’t be the person making those decisions (in most cases, whatevs). In Economics terms, the demand side can’t afford this, and was already under strain. There is nothing to fund a rebound after the slowdown, so spending needs to wait for paychecks to catch up.
Do the banks relax payments a bit? Does the government encourage them to? Can they afford to? Do the firms that control the stock market stay liquid to keep it functioning smoothly...or at least dropping smoothly? Yes, the market is panicking just now, but it might not be panicking enough this time. There are times when a panic is totally warranted (full disclosure, the short I got into last summer, and was losing tons, is back in the money - but I’m not really happy about that). Does the rollback of the ‘financial crisis’ constraints on bank-like entities get tested before they’ve even finished rolling them back? At least some of it is still in place.
Do people get temporary layoffs during the heart of the crisis/demand drop? Permanent layoffs? Does that keep firms solvent? Do they use saving to get them through? Canada doesn’t do savings. It does borrowing. The governments and people are all leveraged to the hilt. How are we set up to have a simultaneous slow down over a protracted period (months) in literally the entire economy? OK, not the entire economy. Netflix is sitting pretty! Disney, HBO...Amazon might have a delivery problem, or have to supply hazmat suits to drivers...who makes the hazmat suits! There’s a sure thing investment, unless they also make a bunch of other things that won’t be in demand at all. Clothing sales will drop for sure with everyone staying home in their ‘home clothes’. The people that had the capital to swoop in and take over struggling companies are either low risk tolerance types, or they are rapidly losing their liquidity. The low tolerance ones aren’t about to buy risk after they watch everybody else get cleaned out - just saying. Oowsnn’s trillion dollar deficit might double...cut taxes on the rich to keep it in control! It’s the only answer! Wait. The rich will have piles of capital losses to write off. They won’t be paying taxes for years! Decades even!
Ok, my attempt to get away from this without going all ‘holy shit’ has crashed and burned. I’m stopping now, without even getting into the mutation potential of a virus in a brand new host. I might be extrapolating too much in places, but if China has a bunch of new cases next week - I’m not. I’d make some joke about being in poor health so at risk from the infection and might not see a bunch of the bad stuff come to fruition, but that’s too close to the truth to be funny - in that bad news/badder news kind of way, even for me...HOLY SHIT!