Economic implications of a SARS/Coronavirus outbreak

Now we are in for keeps. It looks as if we will have a shut down society for probably at least 6 weeks.
In my view if we got away with that we would be laughing.

The measures taken to control/slow/stop the spread of the corona virus will collapse our current economic system. Our entertainment and sports industries are virtually shut down. All the staff required the business owners, the shops the purchases just disappeared.

The beauty industry is on its knees. Hairdressing salons, beauticians, nail salons, massage places (legal and otherwise) will be closed

Almost all retailers bar food places and say hardware stores will find it exceptionally hard to stay open or have more than skeleton staff.

If schools and universities have to close suddenly a huge part of the work force will have to stay home to mind the kids. And I suggest that keeping a bunch of restless energetic children/teenagers from destroying the house and everyone sanity will be a monumental effort in itself. Unfortunately the most challenging children will generally be in the homes of the most challenged parents. Lets see how that works out.

So this will have to be one of the biggest learning curves we have ever faced. I seriously wonder what support, tips, structures , incentives, are being planned to help this huge social necessity succeed in preventing all sorts of mayhem ?

Any ideas ?

basilio said:

Any ideas ?

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Yep, it makes CC look pi$$ant at the moment.

This is what a successful lockdown looks like


The last of a dozen makeshift hospitals in Wuhan, where the coronavirus outbreak began, officially closed on Tuesday in a sign that authorities' efforts to curb the virus are working.

On Tuesday, China reported 19 new coronavirus infections, down from 40 a day earlier

More vids on the virus. Factual, useful

A look inside Wuhan quarantine ward for seriously ill

The coronavirus pandemic: visualising the global crisis
The WHO has declared the global outbreak a pandemic. Take a look at the data behind the spread of the virus
https://www.theguardian.com/world/2020/mar/13/coronavirus-pandemic-visualising-the-global-crisis

How Taiwan has controlled the spread of the virus. This can be done.
Well worth a read.
How Taiwan and Singapore Have Contained the Coronavirus
https://slate.com/technology/2020/03/countries-contain-coronavirus-spread.html

https://www.voanews.com/science-hea...t-42-coronavirus-cases-while-neighbors-report

basilio said:

Our entertainment and sports industries are virtually shut down. All the staff required the business owners, the shops the purchases just disappeared.

The beauty industry is on its knees. Hairdressing salons, beauticians, nail salons, massage places (legal and otherwise) will be closed

Almost all retailers bar food places and say hardware stores will find it exceptionally hard to stay open or have more than skeleton staff.

If schools and universities have to close suddenly

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It's hard to say exactly what's going to happen with all this but it seems very clear to me that the economic damage will be massive and largely unrecoverable. Looking at the examples you've listed:

Entertainment and sports - there's zero ability to recover what's lost in practice. Yes we'll go back to having crowds at AFL games and we'll go back to running car races and so on. There won't be two Grand Prix's in Melbourne next year though each with a full crowd. They won't play an extra however many AFL games in order to make up for the lost crowd numbers. Etc. It'll go back to normal but what's lost is gone, it won't be recovered as such.

Salons of all kinds much the same. Nobody's going to get their nails done and extra however many times to make up for the ones they missed. They'll get them done once and that's it. Same with hairdressers and so on, people aren't going to get their hair cut twice in a day once it's over, the activity that's lost is mostly not going to be recovered.

As for the massage places, well if you mean the anonymous variety that use the word "massage" only because brothels aren't legal in that state, I'm told by someone who'd know that there's a major divide in terms of who's doing well at the moment and who's not. I won't say why as the subject may cause offence to some.

In the US

Boeing has drawn down on its $13B bank revolver.
Wynn has drawn down on its Bank revolver.

Blackstone has issued instructions to companies that it controls to draw down on Bank revolvers.

Federal Reserve is to expand its Balance Sheet (over time) to $5T on liquidity concerns. Remember the Repo crisis last year? An early warning sign re. liquidity.

jog on
duc

S&P500 closing at -20.1%

That seems more in line with typical levels before a recession is accepted opinion.

For the people advocating we shut down - what is your solution to underwriting the government in that time? You’re assuming a democratically elected government will stay in power and that they even have said power.

I think anyone seriously advocating for it is not thinking of the second order effects of what you’re suggesting. A government can’t underwrite its entire population for an indefinite period.

The only real honest solution is to live with the consequences of potentially catching the virus imo and get on with it. Societies lived in worse conditions in war time settings, and even peace time settings, and still found the resolve to go on, shutting down is mind boggling simple and not very well thought through.

For a shutdown to be effective, enough people have to be infected and develop immunity, so that after the shutdown there is enough herd immunity to stop the cross contamination then the virus dies out.
Well that is my understanding, so no doubt the Government will wait until the optimum time.

CBerg said:

For the people advocating we shut down - what is your solution to underwriting the government in that time? You’re assuming a democratically elected government will stay in power and that they even have said power.

I think anyone seriously advocating for it is not thinking of the second order effects of what you’re suggesting. A government can’t underwrite its entire population for an indefinite period.

The only real honest solution is to live with the consequences of potentially catching the virus imo and get on with it. Societies lived in worse conditions in war time settings, and even peace time settings, and still found the resolve to go on, shutting down is mind boggling simple and not very well thought through.

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What do you think they will hold a referendum?
I'm just trying to deal with what I think will happen
Give it a shot

Humid said:

What do you think they will hold a referendum?
I'm just trying to deal with what I think will happen
Give it a shot

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Not saying referendum but after 2 weeks of shut down people will be getting antsy, let alone anything longer in duration.

Who’s delivering food and medications to the supermarkets/pharmacists which aren’t presumably closed? And who’s paying for people to stay home when businesses aren’t operating. Sick/personal/annual leave is premised on the fact the business is still operating.

Good luck keeping control if people aren’t fed, watered and paid.

CBerg said:

The only real honest solution is to live with the consequences of potentially catching the virus imo and get on with it.

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That is ultimately what is being done but it has to be done slowly due to the limited capacity of hospitals. Breach that and then the death rate soars to a point that few would consider even remotely acceptable.

There’s a tradeoff between efficiency and reliability always. If we had more hospitals and doctors for the same population then that would be less efficient but more reliable. That is, we could let the virus run through more rapidly and get back to normal sooner.

Reality though is that we’re stuck with what we’ve got so a slow burn it must be.

When it’s all over it’s time to reconsider - should we aim to deliberately drop the efficiency of our hospitals, have some spare capacity, and thus partly mitigate this risk?

Or do we aim for efficiency and just accept that the severity of a once in a lifetime shutdown is the price to be paid for that?

Same applies to quite a few areas of society’s infrastructure. A human virus isn’t the only thing which could bring about a widespread shutdown of society and the other risks are similarly mostly ignored but will bring outright panic if they happen.

Smurf1976 said:

That is ultimately what is being done but it has to be done slowly due to the limited capacity of hospitals. Breach that and then the death rate soars to a point that few would consider even remotely acceptable.

There’s a tradeoff between efficiency and reliability always. If we had more hospitals and doctors for the same population then that would be less efficient but more reliable. That is, we could let the virus run through more rapidly and get back to normal sooner.

Reality though is that we’re stuck with what we’ve got so a slow burn it must be.

When it’s all over it’s time to reconsider - should we aim to deliberately drop the efficiency of our hospitals, have some spare capacity, and thus partly mitigate this risk?

Or do we aim for efficiency and just accept that the severity of a once in a lifetime shutdown is the price to be paid for that?

Same applies to quite a few areas of society’s infrastructure. A human virus isn’t the only thing which could bring about a widespread shutdown of society and the other risks are similarly mostly ignored.

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My ex was a nurse in the emergency department, from what I understand from conversations with her and her colleagues over the years is that the hospitals are chronically short of capacity even during times you’d think would be a low time.

At the rate they’re clamping down on events it’s not much longer till those consequences will be felt in the general business community.

I really get the feeling the medico’s are saying shut everything down to contain this and we’ll sort it out later. I think the problem they’ll face is later there might not be much to salvage once it’s all said and done.

I agree about this isn’t just the virus thing, I always cringe when I read something you post about AEMO and critical infrastructure. It’s such bone-headed shortsightedness to not make critical repairs & maintenance(and upgrades for that matter) on the basics. Stealing from your future self to make the present self whole is not sustainable.

Smurf1976 said:

That is ultimately what is being done but it has to be done slowly due to the limited capacity of hospitals. Breach that and then the death rate soars to a point that few would consider even remotely acceptable.

There’s a tradeoff between efficiency and reliability always. If we had more hospitals and doctors for the same population then that would be less efficient but more reliable. That is, we could let the virus run through more rapidly and get back to normal sooner.

Reality though is that we’re stuck with what we’ve got so a slow burn it must be.

When it’s all over it’s time to reconsider - should we aim to deliberately drop the efficiency of our hospitals, have some spare capacity, and thus partly mitigate this risk?

Or do we aim for efficiency and just accept that the severity of a once in a lifetime shutdown is the price to be paid for that?

Same applies to quite a few areas of society’s infrastructure. A human virus isn’t the only thing which could bring about a widespread shutdown of society and the other risks are similarly mostly ignored but will bring outright panic if they happen.

Click to expand...

On the money Smurf containment or current actions and future ramping up actions closing schools etc is about controlling the infection rate and numbers not stopping it.

For northern hemisphere countries thats about getting to summer where its hoped infection rates will slow and containment measures can be loosened how ever the virus isn't going away still need a vaccine.

For Australia coming into winter its really bad news particularly combined with a normal flu season so measures will have to get aggressive to hold the peak down and getting through to our next summer.

If they can contain the rate skewer the numbers so infections are spread over a longer time frame then there is a greater chance everyone gets the treatment required then you lower the death rate dramatically.

Note in Italy it has been reported in some areas they had to give oxygen to 65 year olds and below as there wasn't the capacity to supply older people with the same measures.

This is the result of a slow and blaise approach somewhat similar to the US Federal Government response which is a real concern as the US really is the worlds economic engine room.

https://www.independent.co.uk/life-...ine-flu-pandemic-that-never-came-1974579.html

Yet predictions that the global death toll from swine flu could reach 7.5 million were well off the mark. At most, the virus killed 14,000 people, and some of those had pre-existing conditions or had been infected by other dangerous bugs as well. Against a background death toll from seasonal flu of up to 500,000, the new H1N1 strain was invisible.

https://www.globalresearch.ca/who-scientist-swine-flu-pandemic-was-completely-exaggerated/17292

“With SARS, with avian flu, always the predictions are wrong…Why don’t we learn from history?” Keil said. “It [swine flu] produced a lot of turmoil in the pubic and was completely exaggerated in contrast with all the really important matters we have to deal with in public health.”

CBerg said:

I really get the feeling the medico’s are saying shut everything down to contain this and we’ll sort it out later. I think the problem they’ll face is later there might not be much to salvage once it’s all said and done.

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I see a similarity here to other things in any crisis.

Get all the relevant people into a room and it's inevitable that between the technical experts (doctors, engineers, whoever is appropriate to the situation), finance people, public relations people, experts in other impacted fields (eg economics, natural environment, anything else that's going to suffer in some way) won't all agree.

Whatever the technical experts say is best will scare the absolute crap out of some of the others and for perfectly valid reasons. They'll see it as the apocalypse staring them in the face and from their perspective that's true.

Whatever some of the others suggest will likewise see jaws drop among the technical experts.

Agreed that simply shutting everything down as the medical people want to do will bring about a disaster in other ways. That's bit about what the technical experts want to do scaring the crap out of everyone else who sees other problems with the idea. Likewise though, just letting the virus run will seriously scare the doctors and for good reason.

As a society we're in a situation from which there's no easy way out. I'd liken it to an aircraft pilot who suddenly finds themselves with no working engines - the focus is now on trying to bring about the most orderly crash but a crash landing as such is now inevitable, all that remains to be seen are the details of how it pans out.

As a society I do hope we learn from this. I don't advocate having people standing around all day just in case, that would be silly, but stretching everything too thinly does come at a huge risk. It's widely done however in everything from finance through to how we run critical infrastructure through to hospitals. All stretched to just below breaking point with no room to move when anything goes wrong.

Hospitals = barely coping with normal demand and there's a backlog of "elective" surgery much of which is realistically rather important to the person needing it.

Infrastructure = I won't name them on a public forum for commonsense reasons but there are single critical points of failure in some systems (power, water, gas etc) in some parts of the country and millions of people will be affected if those things do fail badly as they could.

Finance = excessive leverage, high valuations, automated trading. What could go wrong......