Theme: Crisis

PREDICTION OF THE ECONOMIC CONSEQUENCES OF #CORONAVIRUS (#COVID19, #WUHANVIRUS )

—“Curt … this is off topic but … have you given any thought to the likely path for the Coronavirus? Been reading non-stop about this for weeks. It’s an interesting problem. No obvious answer I can see, though one could reasonbly throw darts at a chart of distributions of likely outcomes …”— Michael

I have worked on it a little bit every day – but I’m in the same position everyone else is – it’s extremely transmissible (R2.5-3.8), and almost impossible to eradicate because of its carrier capacity (invisibility), carrier duration(weeks), and durability on surfaces, but it’s not fatal often enough or fast enough (2.3%).

The problem with the illness is the duration – it keeps people out of the work force for at least two to three weeks, and up to six weeks or more including recovery. It requires hospital beds, medication, and ventilators (space and equipment) to keep them alive for weeks. So as ‘information’ the virus really, really difficult to quarantine. And difficult to eliminate because of that. And costly and time consuming. But it’s not that deadly.

(Aside: Gross Horror Category: ““While a sneeze or a cough by someone infected with a “respiratory disease” can only infect others within a few meters, the virus-laden gaseous plume from an infected person having diarrhea can infect others up to 200 meters.“)

This whole thing is rather interesting because its NOT as fatal as the Spanish flu. It’s not clear it’s even as fatal as the seasonal flu. The economic disruption we’re seeing is largely from the quarantine efforts, not from the disease itself. And I expect the drop in consumer activity as it spreads. But again, it’s just not that deadly. So, given that the death rates are low, it’s kind of questionable whether we are creating a scare, a crisis, an economic recession or depression, because of an overreaction.

My current, and conservative. prediction is that unless we soften our efforts at containment and shut down the drama, it will cause long term interruption of economies because of its durability rather than deaths, and that it will just go on for years, dragging us down.

So, I have a hunch that we will see a propaganda effort by the cdc and governments to say this is just going to go through the world population like any other flu, and that it’s no deadlier than any other if we take care of it. So “go about your business’, and go to the hospital if it gets bad. We are already seeing this. Look for the phrase “switch from containment to mitigation”. In other words it can’t be contained so we just have to get better at treating it.

So, at present, its a bad case of the seasonal flu that for a minority of patients puts them in hospital care for a long time, and for an even smaller minority of patients with comorbidities it puts them at risk of mortality.

If it continues at present rates, with present rates of expansion, at present rates of infection, it will definitely affect the world economy – which is what the markets said today.

But at present, unless there is some dramatic increase in deaths, I expect cooler heads to eventually prevail.