|
|
Musings Report 2020-4 1-25-20 Don't Underestimate the Coronavirus
You are receiving this email because you are one of the 800+ subscribers/major contributors to www.oftwominds.com.
For those who are new to the Musings reports: they are basically a glimpse into my notebook, the unfiltered swamp where I organize future themes, sort through the dozens of stories and links submitted by readers, refine my own research and start connecting dots which appear later in the blog or in my books. As always, I hope the Musings spark new appraisals and insights. Thank you for supporting the site and for inviting me into your circle of correspondents.
Thank You, Contributors!
Many of the most stalwart supporters of my work renew their support at the beginning of the new year. Thank you, Venkatesh P., Herb S., Richard H. and Judy W. for your renewing your extremely generous support of my work, and welcome new (or returning) patrons / subscribers Jeffrey W.--thank you very much!
Don't Underestimate the Coronavirus
As I noted on the blog yesterday, there's a tremendous reservoir of complacency about the economy and the coronavirus. The general mood is implicit confidence that the coronavirus will blow over like the SARS scare a few years ago and the impact on the global economy will be essentially zero.
I think this is a dangerous underestimation of this new virus. Here are some of the reasons why the assumption that this will all blow over in a week or two may be wrong.
1. Patient One (the first one in which the 2019-ncov was isolated) on 31 December was unlikely to be the person in which the mutation enabling person-to-person contagion occurred.
It's highly likely the virus mutated weeks or even months before and had already spread without attracting official notice. The symptoms of this new virus are not that different from typical flu strains, so why would authorities spend the time and money searching for a novel flu in a patient? The only reason authorities become involved would be a cluster of flu patients dying.
Hundreds of thousands of people die of the flu every year, some 80,000 in the U.S. alone, so the death of a patient with flu-like symptoms is not uncommon enough to trigger an official investigation.
This line of reasoning suggests there was already an expanding pool of virus carriers before officials discovered the new virus and began acting to limit its spread.
If this is the case, then the virus likely spread outside Wuhan before officials reacted.
2. This virus is a new type, and this makes it especially dangerous as humanity may have limited immunity to viruses that are sufficiently different from existing variations.
There are several bits of evidence that this novel flu is extremely contagious and dangerous. One is that health workers have caught the flu from patients despite all precautions and anecdotal evidence that the disease has spread from one family member to everyone else in the household.
The other is the relatively high death rate. Based on data from Chinese authorities (likely incomplete), about 3% of the patients have died. The great flu pandemic of 1918-19 killed about 2.5% of its victims, and since it was highly contagious, it's estimated 50 to 60 million people died in that pandemic--often young healthy people.
3. The incubation period for this flu may be up to 14 days, and someone who has it may be asymptomatic (display no symptoms) for 5 or 6 days. This means screening passengers for fever is essentially useless.
As my friend Chris Martenson wrote in one of his excellent posts on the coronavirus: "This particular virus has a 5-6 day asymptomatic period so 'screening incoming passengers' won't catch a single one of them. None. Not one."
Even more alarming, the new virus doesn't always cause a fever, making screening for fever even less effective.
Despite these data points, the general populace is being assured that screening is effective and so it's perfectly safe to travel as usual. This complacent confidence appears to be unfounded.
4. The Chinese populace is highly mobile within China and the world. Hundreds of thousands of Chinese work in other nations, and a significant percentage of these offshore workers returned home for Lunar New Year and will be returning to their jobs in the U.S., Europe, Africa, Southeast Asia, the Mideast, etc.
To assume that none of these returning workers are asymptomatic carriers of the flu is a stretch.
5. Researchers are busy developing a flu shot to offer some immunity, but if this virus is virulently contagious, the question becomes: can authorities outrace the spread of the virus?
6. The implicit model for this coronavirus in the mainstream is SARS, which was quickly isolated and contained. But this new virus may be much more contagious and so the relatively rapid and successful isolation of SARS may be an extremely misleading model.
7. Authorities seem to prioritize "don't panic" messages, as if fear of this flu is irrational. But fear of a risk that cannot be assessed with any confidence is entirely rational. The smart strategy is to lay low and wait for more evidence on the nature of the risk.
8. The potential economic impact of this virus is grossly underestimated. The Chinese economy is particularly vulnerable now for a number of reasons. In essence, all the low-hanging fruit of development have been picked, and adding more debt to boost building and consumption is no longer as effective now that debt has soared.
The world has depended on China's skyrocketing consumption for growth for the past 30 years. Should China's economy actually contract due to the knock-on effects of the virus, the global economy will soon follow.
How fear triggers a domino-like effect in an economy is poorly understood. In an economy that's already teetering on recession, quarantines, disruption of travel and commerce and a generalized "circle the wagons" response to uncertainty will push the precarious economy over the cliff.
Once tourists cancel trips, incomes plummet and businesses are forced to close. There's no guarantee that they will re-open after months of recession.
If you fear catching a potentially life-threatening flu, you're unlikely to go shopping for a new car or furniture; you'll put that off if at all possible.
Then if you read about layoffs and recession, you decide the car and furniture can wait indefinitely.
This is how the transition from complacency and confidence to fear and caution ripples through the economy, as the initial impact unleashes knock-on effects that increase caution.
9. Confidence in the truthfulness and effectiveness of authorities is already low in China, and this loss of confidence will likely spread to other nations as people awaken to the authorities' obsession with "keeping the economy going" by discounting the risks with false assurances that "everything is under control."
When people realize everything is not under control and they've been misled to grease the wheels of commerce, the legitimacy of the state may come into question: if they downplayed the flu, putting me and my family at risk, why should I trust them about anything else?
10. The potential for a downward spiral of confidence is high as authorities will be pressured to increase their reassurances that all is well at every new wave of evidence that the virus is spreading despite their efforts. Doubling down on "don't panic" as the virus spreads will eventually create the very panic they feared.
11. Global stock markets are at all-time highs or near-term highs, on the euphoric belief that central bank stimulus will push stocks higher essentially forever. The virus has to potential to refocus attention on sales, profits and future risks, and that could change the general mood from complacent confidence to fear.
The virus might be the needle that will pop all the speculative bubbles, regardless of central banks' stimulus.
12. History suggests that this virus may rise in two waves. The initial wave may die down and everyone sighs with relief, assuming it's like SARS: everything's fixed, risk is back to zero. Restrictions are eased, travel bans lifted, etc. Then the second and much more virulent wave rises, catching everyone by surprise.
The potential for this to be a Black Swan of global consequence seems very real.
Here are some informative links on the coronavirus, courtesy of longtime correspondent Cheryl A.:
Another Decade, Another Coronavirus
New coronavirus can cause infections with no symptoms and sicken otherwise healthy people, studies show
Health experts issued an ominous warning about a coronavirus pandemic 3 months ago. Their simulation showed it could kill 65 million people.
Map of Global Cases of Wuhan Coronavirus
CDC Risk Assessment
Highlights of the Blog
Don't Be Too Sure 1/24/20
The Future of What's Called "Capitalism" 1/23/20
If the Martians Teleported the Davos Crowd to a Distant Moon, Who Would Mourn and Who Would Cheer? 1/22/20
Calling Things by Their Real Names 1/21/20
Best Thing That Happened To Me This Week
Did my annual clothes-shopping at Costco: grabbed two pair of Kirkland blue jeans and found a size 11 pair of the cheapest shoes in stock, made sure they fit, done! Relieved that burdensome chore is done.
From Left Field
50,000 Tons Of Non-Recyclable Wind Turbine Blades Dumped In The Landfill
Open And Closed: The result of this is the slow erosion of the social capital that defines and holds together a community.
Expect low oil prices in 2020; tendency toward recession
Shock Cities: The Fate of Social Democracy
Federal Reserve Admits It Pumped More than $6 Trillion to Wall Street in Recent Six Week Period
Germany's Renewable Energy Disaster Part 1: Wind & Solar Deemed 'Technological Failures'
The End Of The "Chinese Miracle"
Robots out of work as automated businesses close in Bay Area (via Thomas D.)
Why self-driving cars may not be in your future
Is This The Beginning Of Amazon’s Meltdown?
Bots Are Destroying Political Discourse As We Know It
They’re mouthpieces for foreign actors, domestic political groups, even the candidates themselves. And soon you won’t be able to tell they’re bots.
How Wages are Linked to Energy Consumption: Data and Theory -- "In essence a debt crisis cannot be analyzed independently of the longer-term context of natural resource consumption."
Is Climate Change Dispute the same as the fall of Rome? (via U. Doran)
US drinking more now than just before Prohibition
"We are so accustomed to disguise ourselves to others that in the end we become disguised to ourselves." François de La Rochefoucauld
Thanks for reading--
charles |
|
|
|
|
|
