Sunday, April 12, 2020

The crisis is over, but at terrible cost

To date, the most consequential result of this novel coronavirus has come from the hand of government, thanks to multiple decrees from governors, mayors, and public health officials mandating the closure of a broad swath of the US economy. Arguably, the cost of shutting down the economy in terms of jobs, living standards, and money has been far greater than the cost of virus-induced deaths, which have turned out to be orders of magnitude less than initially predicted, even by models which factored in severe social distancing. As I like to put it, "The shutdown of the US economy will prove to be the most expensive self-inflicted injury in the history of mankind.™"

Earlier this year. headlines were screaming that millions would die and hospitals would be overflowing with desperately ill patients. Early estimates (mid-February) pegged the fatality rate at 2-4% (20 times more lethal than the common flu!). More recently, better-informed analysts, including Dr. Fauci, have estimated the lethality rate to be 0.2%, only double that of the common flu. Several other estimates of lethality can be found here, many of which say it is far lower than most have thought, but do read the entirety of this linked page as it will amaze you. Some speculate that covid-19's lethality could be much less than the flu, based on the (still unproven) theory that it began to spread rapidly through areas such as the California economy beginning in October of last year, and has thus left millions with protective antibodies. One curious fact about this virus is that the majority of people infected never even realize they have it, while for the unlucky few (mainly the elderly and those already besieged by another grave illness) it is quite deadly. We are now learning that only 0.9% of US deaths from coronavirus correspond to people who were younger than 65 and had no pre-existing conditions!

The IMHE—which has repeatedly and greatly over-estimated the dangers of the coronavirus—now predicts that we have seen the peak in daily US deaths, and they should begin to decline. Further the IMHE now predicts total deaths in the US will be a little over 60,000, which is somewhat more than the 45,000 or so deaths we would expect from the seasonal flu. All of the current predictions are significantly lower (about one-third lower) than the IMHE predicted just one week ago.

In Europe, the evidence is strong that the worst of the viral contagion has passed. Daily new cases and daily new deaths have been declining in almost every major European country for the past week or two. Nearly every country in the world is experiencing a flattening curve; the rate of growth of daily new cases is steadily decreasing.

Meanwhile, there are multiple vaccines in the pipeline and therapeutics aplenty, most notably hydroxycholoroquine, which I noted in a post over two weeks ago.

Regardless, and unfortunately, the millions-of-dead nightmare scenario was enough to persuade public officials to take the most drastic course of action ever contemplated, with the result that at least 17 million American workers have lost their jobs in just a few weeks and economic activity has plunged so drastically that the world is awash in unwanted petroleum. To make matters worse, our federal government had no choice but to offer extraordinary unemployment benefits to tens of millions of workers who could no longer work, and many hundreds of billions in loans to otherwise suddenly-insolvent businesses. Estimates of what is deceptively called fiscal "stimulus" start at $2 trillion and the final tab could easily reach $4 trillion. The problem with all this, of course, is that it is not stimulus, it's just an attempt to compensate people who lose their jobs and businesses who were forced to shut down.

If we had known at the outset that the virus would end up being far less lethal than it was predicted to be, and instead only somewhat more lethal than the ordinary flu, would we have agreed to surrender our liberties and allow the government to order tens of millions to stop working? I seriously doubt it, and that leads to the inevitable conclusion: this shutdown was a terrible and tragic mistake.

Ultimately, the cost of this mistake will be borne by all of us. The rich will pick up a goodly portion of the tab because they always end up paying the lion's share of taxes, thanks to our very progressive tax code. Everyone will pick up part of the tab in the form of reduced living standards (and lower-than-otherwise incomes), since it will likely take many years for the economy to make up for all the ground lost as a result of the shutdown. We will also pay an invisible price in the form of less social interaction, less travel, less community, and more government control of our lives, and that is far from insignificant.

Another cost: government is likely to find it difficult to persuade itself and the public of the need to re-open the economy (which it should do now, asap), if only because the public has come to understand that the shutdown is necessary to avoid deaths. It's not. The only justification for the shutdown was to "flatten the curve," because otherwise our healthcare system would suffer a meltdown. We now know that this will not happen, as hospitals around the country have ample unused beds, and the rate of infections is declining. The virus will run its course regardless of whether we shut down the economy. It won't end until we have sufficient herd immunity, and that will be acquired only through illness (which produces antibodies and future immunity) and through vaccines (which induce the production of antibodies, but which are still many months in the future). For more details on this, see the anonymous FT reader's comment at this link. Failing to understand that more deaths are inevitable is likely to prolong the (now unnecessary) shutdown.

Bondholders might be the biggest monetary losers. They will be funding many trillions of dollars of "stimulus" at historically-low interest rates. If and when the economy recovers, interest rates are bound to rise, if only because right now they are well below the current rate of inflation. But with so much money being dumped into the economy—money which now is desperately needed and wanted—it might be difficult for the Fed to withdraw it when things improve and the demand for money returns to normal. There could be a significant excess supply of money at some point which would almost surely result in rising inflation.

A quick and dirty, back-of-the-envelope calculation:
Suppose Treasury sells $3 trillion of bonds with an average duration of about 7 years (equivalent to an average maturity of about 8 years) at the prevailing rate of roughly 0.5%. Suppose further that inflation rises from the current 2% to 4%. Bond yields would have to rise to at least 5% in a 4% inflation world (and a world that is once again growing), and that rise in yields would depress bond prices by almost one-third. That, in turn, would represent about a $1 trillion loss born by bondholders and a $1 trillion gain which would accrue to Treasury, because the effective burden of the debt—and the purchasing power of the bonds—would be reduced by inflation. Even if nothing changed, 0.5% Treasury yields represent a 1½% annual loss of purchasing power to bondholders in a 2% inflation world. Bondholders will pay an inflation tax to Treasury even if inflation and interest rates don't rise. Memo to investors: if you think this scenario is likely, you should buy assets (e.g, houses) that will benefit from rising prices, and fund the purchase with fixed-rate debt.
And now it's time for some charts, followed by some conclusions:

Chart #1

As Chart #1 shows, stocks have rebounded—recovering almost half of what they lost—and investors' fears have declined. But fear is still quite palpable: 10-yr Treasury yields are extremely low, far lower (currently 0.7%) than at any time in the past century, and the Vix, currently at 40+, is still exceptionally elevated. Conclusion: the stock market is looking across the valley of despair and seeing an exit from the shutdown and a taming of the virus, but the market has yet to conclude that much good will come of this. The road to recovery is going to be slow and bumpy, but the worst is over.

To what degree the stock market will continue to recover, and by how much, is above my pay grade. But looking out over the long-term horizon, it seems clear that the economy will recover and growth will resume. So I won't be selling. Cash is paying almost nothing and most risk-free bonds ensure you will lose significant purchasing power for years to come (see below for more about this). Stocks, distressed debt, commodities and real estate are the only sensible asset classes at this point, since they give you exposure to rising inflation and/or a growing economy.

Chart #2

Chart #2 compares private sector jobs (blue) with public sector jobs (red). Wow: almost overnight we have wiped out all the net job gains of the past 14 years, and the losses aren't over yet. Private sector jobs have dropped more than 13% to date. Here's a thought: to my knowledge not a single public sector employee has lost his or her job. Some or many may have been sent home, but have any been forced to endure a visit to the unemployment office? Would politicians have been so quick to decree a shutdown if that meant that 13% of public sector employees were fired along with 13% of private employees? Doesn't fairness demand that the public sector share in the pain of the shutdown? There is potential for great anger here.

Chart #3

As Chart #3 shows, consumer confidence has been shattered, and it's likely to fall further in the next survey, probably coming close to what happened at the depths of the Great Recession. It could take years for confidence to be rebuilt, just as it did in the wake of the Great Recession. And don't forget the younger generation, which has been traumatized by fears of catching or passing on a deadly virus. Our grandchildren won't come any closer than 10 feet from us, and they haven't had any contact with the outside world in weeks. When I see a person walking on an empty street in Southern California and wearing a mask, I see a person who won't lose his fear of social interaction for years.

Chart #4

As Chart #4 shows, the Fed wasted no time in responding to a sudden increase in the demand for money by supplying the banking system with more than $1 trillion in additional bank reserves. 

Chart #5

The virus panic, the shutdown, and the one-third drop in stock prices combined to produce a tremendous demand for the safety of cash, money, and money equivalents. The last time this happened (late 2008) global financial markets were on the cusp of collapse because there was a sudden and drastic shortage of cash and liquidity. Without functioning financial markets, which absolutely require liquidity and safe assets, there is no hope for an economic recovery; cutting off the free flow of money would be like shutting off the oxygen to a desperately ill economic patient. So it's a very good thing that the Fed has responded forcefully to the coronavirus crisis. Chart #5 shows the 3-mo. annualized growth in the sum of demand deposits and savings deposits at US banks: it's explosive, and the Fed has successfully accommodated this.

Chart #6

Chart #6 gives you the big-picture view of money, as measured by M2. Demand and savings deposits now represent about 75% of M2. As the chart suggests, about half of the recent increase in M2 was to make up for the unusually slow growth in money in recent years, and the other half was likely the result of a massive flight to safety. You may think we are in uncharted monetary territory, but we're not there yet.

Chart #7

Chart #8

As Charts #7 and #8 show, banks have been quick to expand their lending to small and medium-sized business.  C&I Loans are up more than $500 billion in the past 3 reporting weeks, and more is sure to come.

Chart #9

Chart #9 shows that 2-yr swap spreads in both the US and the Eurozone have risen of late. But they are not excessively high. Indeed, at 20+ bps in the US, they are smack in the middle of what might be called a "normal" zone. They were exceptionally low not too long ago, and I speculate that was due to a shortage physical bonds that could be used as collateral for hedges (i.e., the market had to resort to buying swap spreads instead of buying Treasury notes). Swap spreads today tell us that systemic risk is low liquidity is abundant, and that is a very good thing.

Chart #10

Chart #10 shows Credit Default Swap spreads, which are highly liquid and generic proxies for corporate credit risk. Spreads shot higher as the crisis deepened (and in particular as collapsing oil prices threatened the solvency of indebted oil producers), but the Fed's aggressive actions of late have reversed this. Today's recently-announced deal to cut oil production will surely help. The market has pulled back from the edge of the abyss, and thank goodness!

Chart #11

Chart #12

Chart #11 shows actual corporate credit spreads, which have behaved similarly to CDS spreads. Chart #11 makes the point that the energy sector has been the principal driver of higher spreads. Wider spreads are mostly about extremely low oil prices, which ought to improve as producers slash production and the economy begins to re-open.

Chart #13

Chart #14

Charts #13 and #14 show that energy prices are the principal source of fluctuations in the CPI. As Chart #13 demonstrates, if we subtract energy prices from the CPI, inflation has averaged 2% for the past 17 years. In the absence of tight monetary policy (and there is no evidence right now that the Fed is too tight), it is reasonable to expect inflation to average about 2% or a bit less in coming years.

Chart #15

Chart #15 compares 5-yr Treasury yields with ex-energy consumer price inflation. Yields are far below the current level of inflation, and that is unsustainable for the long term. Inflation is unlikely to decline significantly, given the Fed's aggressive accommodation of soaring money demand. Once the economy stops contracting and returns to growth mode, all interest rates should rise, and by a significant amount.

Chart #16

In their traditional roles, both gold and TIPS are hedges against rising inflation. As Chart #16 shows, the prices of both are quite elevated, suggesting a market that is very worried about the potential for rising inflation. This runs contrary to the relatively low expected level of inflation (about 1%) that can be inferred by comparing the yields of nominal and real yields in the Treasury market, but it is possible that Treasury prices are being skewed by the current level of panicked demand for anything deemed safe.

Conclusions:

Whether we experience a near-term recovery, and whether it's V-shaped or U-shaped or strong or weak will depend on how soon and how rapidly the economy is allowed to re-open. If it were up to me, I'd start the re-opening tomorrow. Unfortunately, I don't think the current political climate would support that, and it's doubly disappointing to hear so many people talking about a May 15th re-opening. The worst has passed, but it's going to be an agonizing wait for good news, which means continued volatility.

The Fed has done what it needed to do. It hasn't been "stimulative" because monetary policy can't create growth on the printing press. The Fed has accommodated the sudden increase in the demand for money and money equivalents, and that's their job. 

Fiscal policy to date has helped, to the degree it has attempted to compensate economic actors for their enforced losses. But it hasn't been stimulative. Stimulative fiscal policy involves something that gives workers and companies an incentive to work harder. Paying out larger unemployment checks for longer doesn't do that. A payroll tax holiday lasting through year-end would (which is what Art Laffer has been recommending), because it would increase the after-tax reward to work and reduce the cost of labor for what is left of the current calendar year. (Workers would see an immediate increase in their paycheck if they were working, and employers would see an immediate reduction in the cost of paying salaries.) If we see that policy emerging from the current mess that would be very positive. 

Even if the current mess continues for too long, the stock market should be able to look across the valley of weak-to-zero earnings and focus instead on the long-term, since eventually we will get back to something close to normal. A one-year cessation of earnings does not materially affect the present discounted value of decades of positive earnings.

The current elevated level of gold and TIPS prices is, among other things, symptomatic of a market that worries about higher inflation in the future. And as I've explained above, that is not unreasonable at all. Thus we should disregard the risks of deflation and focus instead on what will benefit from steady to higher inflation (e.g., commodities, emerging markets, distressed debt, real estate, nominal wages, and federal finances—through rising tax revenues and reduced debt burdens). The losers, of course, will be those things negatively affected by rising interest rates.

Above all, pray for a speedy re-opening of the economy.

UPDATE, as of market close April 14. I just love tracking the evolution of this chart (Chart #1 from above):


(note: you can make any chart much larger just by clicking on it.)

59 comments:

  1. Hi Scott,


    Thanks for your comments.

    What about Japan all the money printing has not moved the inflation numbers?

    Also don't you think that the amount of credit destroyed by the private is just replaced by the Government spending.

    Also our ageing population and population makes it highly unlikely scenario for inflation.

    Still your scenario is also probable.

    Being a bond investor I will have to get out of my positions if your scenario plays out.

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  2. Jay: government spending cannot replace private spending, since the money the government spends has to come from the private sector via taxes and/or loans. Government spending is just a way to take money from one pocket of the private sector and put it into another pocket.

    An aging population can suppress inflation only to the extent that older people have a greater demand for money than younger people. Inflation is everywhere and always a monetary phenomenon, as Milton Friedman taught us.

    The absence of inflation in Japan is evidence that there has not been massive monetary printing. Whatever monetary expansion there has been has obviously been matched by an increased demand for money.

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  3. Your trademarked statement is SPOT ON.

    "If we had known at the outset that the virus would end up being far less lethal than it was predicted to be, and instead only somewhat more lethal than the ordinary flu, would we have agreed to surrender our liberties and allow the government to order tens of millions to stop working? I seriously doubt it, and that leads to the inevitable conclusion: this shutdown was a terrible and tragic mistake."
    AMEN, AMEN, AMEN

    "Here's a thought: to my knowledge not a single public sector employee has lost his or her job. Some or many may have been sent home, but have any been forced to endure a visit to the unemployment office? Would politicians have been so quick to decree a shutdown if that meant that 13% of public sector employees were fired along with 13% of private employees? Doesn't fairness demand that the public sector share in the pain of the shutdown? There is potential for great anger here."
    AMEN, AMEN, AMEN

    Scott, thank u for the links to the FT comment, and the Swiss Propaganda Research. Outstanding.

    The only point in your article with which I disagree is the "fear" that will linger over a virus.
    I just dont see it. I know several people who have it, or have had it, and not one is afraid of it.
    I dont think working people ever believed the hype, and I think they are about to get very angry that the Government Health Bureaucrats have destroyed so much wealth and opportunity.
    People are ready to get on with it....NOW.
    People are ready to go out to eat, and get back together with their church families.
    Governors who insist on punishing the public for a flu outbreak are going to suffer at the polls, if they are up for re-election.

    America should never have put up with this idiocy.
    The diminutive Doctor is about to be the most hated man in society. Deep State snake. He knows better.

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  4. Hi Scott,

    While the fatality rate MAY end up being similar to the flu, it may also NOT. No one knows. I read many of the Propaganda links, and found nothing compelling. The data is currently far too limited to reach a robust conclusion. Nate Silver has a good article, and spreadsheet which goes to show how impossible it is to calculate true infections (denominator)
    https://fivethirtyeight.com/features/coronavirus-case-counts-are-meaningless/

    The IMHE projections are based on social distancing till May/June. If you remove the social distancing the projections shoots way up. In this light the comparison to 45k flu deaths is misleading.

    While a case can "now" be made that the virus is not as deadly as first feared, this is not a basis to say the actions of social distancing were a mistake at the time they were made. Situations with exponential growth required fast decisions. Current data was not available at the time.

    The rate of infections is currently plateauing (always low numbers on Sunday/Monday, and this weekend is a holiday), which allows the hospitals to largely operate within capacity. This is ONLY due to social distancing (only essential workers, stay at home etc).

    I hope you are not under the illusion numbers will decline if people go back to work?

    Left to run wild Covid would meltdown the US healthcare system. The lockdown has bought time, so there is now more capacity in the system than originally. While herd immunity is the obvious way to get through the crisis this should only be achieved by drip feeding infections to the hospitals. That means slowly opening up the economy and workers. Not all in.

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  5. PS
    Trevor Bedford seems to have debunked the October California spread.

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  6. Re David MacInnes

    Given what we now know, it’s not true that “Left to run wild Covid would meltdown the US healthcare system.” We didn’t know much at all back then, and that is one of my points. A decision to shut down the US economy should never be made in the absence of solid information.

    Plus: I’m under no illusion that opening the economy will result in fewer infections. It will most likely result in more, but given what we now know, only a small fraction of those infections will result in deaths. Meanwhile, reopening the economy will bring a host of benefits. And fortunately, the shutdown has bought us time to come up with vaccines, etc. But at what cost?? The cost is almost unimaginable. That is my point. We dont’ have the luxury of “drip feeding infections to the hospitals.”

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  7. I agree JDG.
    Especially the diminutive doc IS a deep state snake. Does anybody google this ghoul?
    Why anyone would trust his Moderna concoction injected deep into their muscle as saviour and imagine that is a private market solution to immunity? huh!?!?

    IF left to run wild COVID would meltdown the US healthcare system is true, THEN COVID is a bioweapon.
    IF COVID is a typical mutation of the current 500+ corona sequences, THEN immunity will occur in every non-immunocompromised person.

    I do not believe that the nefarious bioweapon fiends are competent enough to concoct a virus so powerful to destroy mass populations of average Joe's. Bioweapons based on virus's are stupid (UNLESS injected). People are tougher than that.

    Most of us -- our inner workings notice when tissue is undergoing damage somewhere -- send clean up crews to clear the debris so the tissue will repair itself.

    IF one is a little more under stress (any kind really) of not perfect health (some level of inflammation, low level infection, sluggish liver, low thyroid, low vit D status, lousy diet, bad environment, existing scar tissue (fibrosis), build up of cellular debris, etc etc, we'll respond to COVID with an IgG antibody. Okay fine. That's probably just about everybody. And they don't notice anything.

    But it is incorrect to say that antibody is THEE proof of immunity.
    IF no antibody is found, it may very well prove excellent robust response to this COVID in that particular person. I think it would be depraved to force this person to produce antibodies in order to partipicate in daily life. (the Gates/Fauci protocol).
    In a super healthy body, the clean up crew just makes a memory snapshot and moves on.

    The worst thing anyone can do is create an every man for himself situation. I.e., the lockdown/shutdown. Well, put people in enough stress, they'll give you antibodies alright. Their adaptive alt "immunity" will be launching all kinds assaults. We don't want to fire up our immune systems. No. We want a calm environment of quorum signaling.

    This happens at the micro level. (inside us)
    And the macro level. The lockdown absolutely severs the quorum signal of damage to our societal and community tissue.
    The healthy quorum signaling would have naturally repaired whatever it could get to.
    Let local doctors actually perceive, think and act.

    Herd immunity is not given to us by our government.

    Look at shingles in nursing homes. The stress of aging, being away from everything they've ever known, and other underlying physiological stressors cause the retro-herpes to explode into the blood.

    Virus live in us commensally. Our healthy immune systems are alert to see who's causing damage. They go clean it up and take a snap shot and remember it.

    And they actually start to coevolve to help our quorum signaling.

    It is so critical that we do not turn our health and prosperity over to a medical cabal.

    Scott. You are among the smartest people I have ever encountered. You've got all of this spot on. But if we can't recognize that we are being disempowered if we are to believe our immunity ONLY comes from government.

    As Ron Paul says, why are we listening to this Fauci?
    https://www.unz.com/video/ronpaullibertyreport_fauci-s-coronavirus-numbers-collapse-why-still-listen-to-him/
    I am saddened to see my President walking around the stage with that ABBOTT box like a pharmaceutical salesman. He's being pressured. I get that.




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  8. "If we had known at the outset that the virus would end up being far less lethal than it was predicted to be, and instead only somewhat more lethal than the ordinary flu, would we have agreed to surrender our liberties and allow the government to order tens of millions to stop working? I seriously doubt it, and that leads to the inevitable conclusion: this shutdown was a terrible and tragic mistake."

    This admission completely negates your entire argument. OBVIOUSLY, IF we knew that Covid was only slightly more deadly than the flu we wouldn't have shut down. A) We did not know that and B) we STILL don't know that! I have no idea where you get the idea that had we not isolated that the numbers would not be much worse than they are or that IF we go back to business as usual now everything will be hunky dory.

    This post has a serious dose of 20/20 hindsight and it's easy to be a critic looking backwards.

    I DO agree that the fact that the public sector has probably lost ZERO jobs is complete BS but is anyone surprised?

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  9. Here in Ontario, Canada police are dishing out $880 fines to anyone they deem not to be following strict "social distancing" rules. This includes families going rollerblading in a park with no one around.

    https://globalnews.ca/news/6810568/coronavirus-oakville-ontario-rollarblading-fine/

    If it's impossible to calculate true infections and the data was always speculative then why was it reasonable to shut down the world economy and change life forever? Can you imagine being a young child during these times, you can't go outside and play, no more sports, and gods know how long it will us to get fans back in the seats of sporting events.

    It's sad that we live in a world where everyone accepts what the mainstream media and government spew. God forbid we question the death rate and cite resources from credible doctors, scientists and economists and only accept social distancing as our one true saviour because the lady with the microphone tells us too.

    Yes, death is sad but it's going to happen to all of us one way or another. Let's all enjoy life in our plastic bubbles now before. Poor children.

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  10. Respectfully disagree with this not being a pandemic or a normal flu in terms of its morbidity and mortality.

    Enthusiastically agree that we would be better served with different medical leadership, like Dr. Sarah Fortune. Our approach makes little sense in many ways. Antibody testing has been unnecessarily delayed and misunderstood for a long long time.

    I have been confused with why my bonds have done so poorly. Thank you for your help with that.

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  11. This comment has been removed by a blog administrator.

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  12. @ Scott, @David, Good discussion.

    1. The sad part is that if we had had a stronger testing/tracking/surveillance infastructure, had we stronger action earlier, this terrible dilemma could have been avoided (vis a vis South Korea). Short of a vaccine, stronger testing/tracking/surveillance will be the answer out of this mess.

    2. Again, the danger of this virus is *not* the mortality rate, but rather it's capability to very quickly spread undetected among the population. On the infamous USS Roosevelt, about 500 have tested positive. Of those, 2/3 were asymptomatic (numbers skewed due to young ages, but still quite impressive). These carriers had no idea they had CoVid-- allowing the virus to exponentially spread very quickly undetected. That ship shows you what would happen in schools, NBA games, Congress,churches etc without social distancing. Even if mortality is as low the flu, say 0.1%, if 60% of the US population gets it within a few months, which is certainly possible with the exponential growth capability this virus has already demonstrated, that is still a lot of deaths! Remember, this spreads so much more quickly than flu, and that is the true danger, not the actual death rate. That still a lot of deaths: (330 mil x 60% x 0.1% = 200,000!).

    3. Statistics can be misleading. The statistic Scott and Gateway pundit referenced say you have 0.9% chance of dying if you are healthy, but a 5-10% chance of dying if you have one of the listed conditions. However, for context, we need to look at the prevalence of the diseases. the prevalence among US adults of HTN is about 33%, cancer about 5%, asthma about 8%, smoking about 15%, diabetes about 10%. Even if you account for overlap (some will have HTN and smoke,etc) that's a lot of people playing 5-10% CoVid Russian Roulette. However, the reality is that even those early case fatality numbers quoted are probably high.

    4. "0.9% dying under 65 with no comorbidities" The source, the Gateway Pundit https://tinyurl.com/sk3s2b2, is misinterpreting the data. The chart pulled, from worldometer.com, clearly says in boldface that the number doesn't represent the share of deaths from the pre-existing condition. It doesn't mean 0.9% of deaths are from those with no comorbidities. Yet, that is the headline of the referenced blog entry. (Even if it that number is true, though, that's kind of what we thought to begin with--that most that die will be sicker and older. See data pre-US lockdown: https://tinyurl.com/v5wovob). Rather, it is saying that if you have no health conditions, your risk of dying is 0.9%. If fact, because we know that there are so many asympomatic carriers and we are not even testing people with mild disease who can stay at home, this 0.9% number is probably *overstating* the true death rate! Isn't it more like 0.2%, like Fauci says? According to CDC https://tinyurl.com/w6nr7dz as of 4/4 there were 4984 US CoVid deaths, 1098 (about 20%) of these were from people less than 65 (CDC doesn't say, however, how many of these were healthy). This is not the first time Gateway pundit has misinterpreted statistics: https://tinyurl.com/ttclfjy

    In sum, the danger is not in how lethal it is for any one person, but for how quickly it could overtake a population. A very small percent of 330,000,000 is still a large number. Stats need to be used properly and in context. We are in an unfortunate dilemma. Even with stats the proper course of action is not easily agreed upon.

    The answer out of this will be partly improved treatments but aggressive tracking and containment bridging to a vaccine.

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  13. Steve, sorry I accidentally removed your comment. As for being a revisionist, that was not my intent. I'm essentially repeating the argument of John Ioannidis (https://www.statnews.com/2020/03/17/a-fiasco-in-the-making-as-the-coronavirus-pandemic-takes-hold-we-are-making-decisions-without-reliable-data/). We should never make decisions affecting the entire economy so drastically as a shutdown without more facts. We were make gigantic decisions in a panic, and that is the wrong thing to do. We knew at the time it would hurt the economy, but we never stopped to think just how much it would hurt, and we didn't know if a major hurt was actually necessary. It was a self-inflicted wound with good intentions (to bend the curve and save the hospitals) but it turned out to be horribly expensive and probably unnecessary.

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  14. It will take me a while to read this link.

    But I read enough already to say a huge THANK YOU. And if you ever come to San Diego, lunch is on me!

    It has been lonely intellectually finding so few articles like this one.




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  15. Hi Scott,

    Is there data to support the assertion that Japan didn't expand their money supply sufficiently? I think the implications for deflation/inflation might be the most important outcome for investors, any data you have about Japan would be welcome.

    Thanks.

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  16. I disagree with Scott Grannis about COVID-19.

    "If it were up to me, I'd start the re-opening tomorrow."--Scott Grannis.

    No, not tomorrow. Today.

    And not "start the re-opening." Wide open, right now.

    You want subsidies? I'll show you subsidies. I think everyone should be given free tickets to baseball games.

    Inflation? Maybe. Who cares? Right now the biggest job is to get millions of Americans back to work where they belong.

    The Federal Reserve Bank of St Louis has released a report to the effect that if the lockdowns are extended through June, we could see 50 million unemployed Americans.

    That is simply unbearable, and close to one out of two private-sector employees.

    The federal government has had the War in Vietnam, the War on Poverty, the War on Drugs, and the War on Terror. Add to that woeful roll call, the War on COVID-19.





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  17. re Japan, money supply: Japan's M2 money supply has grown at an annualized rate of 2.2% over the past 20 years, whereas the US M2 money supply has grown at a 6.1% annualized rate over the same period. Japan's CPI has been essentially flat (0% growth) over that same period, while US CPI has increased at an annualized rate of 2.1%. Japan' real GDP growth has been a bit less than 1% annualized, while US GDP growth has been 2% annualized.

    All those numbers seem consistent in my view. Our money supply has grown faster and our inflation rate has been higher and our GDP growth has been higher than Japan's. No evidence of "explosive" money growth in Japan.

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  18. where are us very old codgers going to invest? real assets? most of us don't have the expertise to invest in homes, farm/ranch land. we may have to shorten our duration way up and be satisfied to lose a little purchasing power every year. and anyone who thought he could live off the income without invading the principal, well, he better have a very large portfolio. interesting times....thanks Scott, for sticking your neck out and not playing the two handed economist role..."well on one hand, blah,blah blah. and on the other....."

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  19. And Benjamin, all the wars you mentioned were abysmal failures. The only thing they all have in common is we can't form a consensus as to the fact that they are/were failures. I'm afraid all were funded for the benefit of the Deep State at the expense of the American people. Covid is proving to be no different. Ugh.

    Already we're discussing virus certification cards, forced testing, forced vaccination, etc. I don't like where this is going...

    Scott, that we haven't already suspended the payroll tax is very telling, don't you think? With all the trillions the Fed is backstopping, less than 10% is going to what a reasonable man would say is for Main Street. Shocking. Or, perhaps not.

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  20. Scott,

    Thanks for the reply, and the link to the Ioannidis article and his perspective.

    If coVid was as bad as first thought - was it the right decision to shut the economy down?

    Surely humans should be risk adverse to death? Granted, insufficient data was available, but the perspective of "lets wait and see how this plays out until we have sufficient data, so we can make the right decision" seems absurd. Waiting to gather data would have melted down / overwhelmed the US healthcare. It's ok we disagree, but given the reproduction number of 2.5+, left unabated, I can't arrive at any other conclusion.

    I read a lot of opinions along the lines of "its the old and co-morbid that are dying, so those deaths don't really matter as the rest of us are suffering economically". Who is to say if someone with diabetes, or is obese, or a smoker was going to die this year. Why can't these people live many more years, if not for coVid? Why did the value of their life suddenly become worthless? I find that to be a shocking ego-centric point of view. Having said that, clearly there is a balance between economic cost and human cost. But given what we know now we still don't have the data to make the correct choice. That will only ever be known in hindsight.

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  21. exactly what Boris Johnson thought
    until he didnt

    some people take long to learn the truth
    some never do

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  22. So, about one-third of apartment renters are not paying the rent alteady and 50 million Americans, or about one-third of the labor force, will be unemployed by the end of June, if lockdowns persist, or so predicts the St Louis branch of the Federal Reserve.

    But it has been worth it because, according to our top credentialed epidemiologists, we might have saved an unknown number of lives.

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  23. The S&P 500 is down about 15% year-to-date. I am surprised it has held up so well.

    My guess as of now, and I might diametrically change my view in the next half hour or so based on emotions and not evidence, is that the S&P 500 is predicting that the government will back down from its lockdowns. That the public and public officials will begin to sense the threat of COVID-19 is overstated.

    I hope the stock market is right. However, sensible investors may be under- estimating the tenacity of government to pursue the wrong policies.

    In the private sector, if you pursue wrong policies you go out of business. In the public sector, that reality does not always apply.

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  24. Benjamin:
    The market knows this was pure idiocy, and We The People are going to open back up.
    We wont be down 15% for all that much longer.
    Some of us are already up substantially in the past couple of weeks.
    I am down 5% ytd in a 80% stock portfolio. And that is because I screwed it up.

    David MacInnes:
    This has absolutely nothing to do with valuing one person's life over another.
    You have embraced a false choice.

    The correct policy is to shelter, protect, and fund the elderly and infirm who are the only ones at risk of death.
    Isolate the carriers.
    Let the rest of us get on with life, and build herd immunity required to crush the virus spread.
    If my way were policy, 90% of the virus spread would be over already, and we would have have had less deaths.
    SCIENCE.

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  25. "Here's a thought: to my knowledge not a single public sector employee has lost his or her job. Some or many may have been sent home, but have any been forced to endure a visit to the unemployment office?"

    But they are eligible for the CARE Coronavirus relief checks. And so are social security recipients. A bipartisan gesture. I'm sensitive to the needs of those affected - mostly service workers. But I'm scratching my head a little trying to understand why those whose income is guaranteed by government are described as high need recipients. Not really.

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  26. This comment has been removed by the author.

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  27. JBD - I will only say that the SCIENCE to "isolate the carriers" isn't sound and can lead (as Benjamin notes) to the tenacity for governments to pursue wrong policies. And it gives them the alibi to never cease total intrusion and interference.

    We are all full of viruses. Look up % of populations with HSV and epstein-barr to scratch the surface. You'd have to permanently isolate the entire workforce if we are to believe retrovirus carriers are a threat. Dig deeper and see how viruses are the coevolution material we are made of for 1000's of years. They are part of the clean-up crew that help maintain cell quorum signaling. They show up AFTER assaults on the organism and clean up cellular debris. That process can induce "flu-like" symptoms. (Not talking the cytokine storm. Just something foggy for a day or two).

    I don't expect anyone to just trust me on this. But we(humans) are at such a serious state with regards to allowing Governments to mandate cocktails they are goofing around with into all of us. (her interview starts around 13 min in. 39 yrs in; she knows where the bodies are buried).
    https://www.youtube.com/watch?v=4FgweoEC1b4&feature=youtu.be&fbclid=IwAR2bJGKmY_j2Ua4SMeFhlpFF870T0xFCJsA8KDVkyrrElyb-mTtO8SQ9pec
    This is not partisan or anti this or pro that. We have to be able to really look at this and talk freely about it as fellow humans. That's exactly what Trump wanted to do. Gates admitted that on both occassions he met him, Trump pressed him to look at this through a commission. Gates said, "you don't want to do that." I just don't remember voting for this person or remember him running for any kind of office. Why are we asking his permission to inquire into our own selves? Why is BG the giver or taker of our daily life; our sense of agency and personal moral compass. Why are we expecting a different result?
    https://www.ncbi.nlm.nih.gov/pubmed/22536382?fbclid=IwAR0g57FIbECMGVui66Yvrm6rzuqPmwbsWW-yefu9XkdcyMxfOvFA9WHm61w

    The word SCIENCE has been hijacked to mean something fixed and settled. (follow the money). How oxymoronic. Science needs to be in a continuous state of inquiry without the unholy strings attached. We need a deeper optimism in ourselves and the maker of our universe. Instead of the learned helplessness of, "I'm so little and schizoid and powerless. Whatever reality powerful people show me, I'll obey. Please approve of me."

    Why are we so rushed, rattled, stripped and silenced if it's SCIENCE? Healthy intelligent people calmly look at the whole picture without a boot on their head.

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  28. randy said:

    >"Here's a thought: to my knowledge not a single public sector employee has lost his or her job."...I'm scratching my head a little trying to understand why those whose income is guaranteed by government are described as high need recipients.

    First of all, many government employees don't get paid when they are not working. I don't know what the exact rules are for federal, state, and local government employees during the coronavirus thing, but I'm pretty sure a lot of them are not getting paid.

    Second, if you are going to say that government employees should not be getting relief checks because they have not lost their jobs, then you'd have to do that with the private sector, too. In other words, reserve relief checks just for those people who lost their jobs. How would you do that? Wait until someone has filed an unemployment claim before sending out the check? What about gig workers and contractors who simply lost work...would they get checks? How would they make their case?

    In situations like this, sometimes it's better to just get it out there as quickly as possible and accept some inherent unfairness than it is to spend days and weeks trying to come up with a system that ensures no one gets more than they deserve.

    Social security recipients? I tend to agree with you there. My wife and I get social security, and we don't need the relief checks. I'd much rather see younger people in the work force get more than see old farts like us get them. So we're probably just going to donate ours to Joe Biden.

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  29. Go Johnny Bee Dawg.

    Hey watch this: https://www.youtube.com/channel/UCwaZBCJ_xRdunmRgxXhVN-w

    Subscribe! It's free!

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  30. This comment has been removed by the author.

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  31. The Darwin Awards are starting to roll in...

    Here's a story about a pastor who vowed to hold services until arrested or in the hospital.

    Short story: He died from coronavirus, and his wife is sick with it.

    On a more somber note, Smithfield Foods announced it is closing its processing plant in South Dakota until further notice. The plant employs roughly 3,700 people in Sioux City, which has become a hot spot for infections. Apparently 293 of the 730 people who have been diagnosed with COVID-19 in South Dakota work at the plant. The Smithfield plant is one of the largest pork processing plants in the U.S. It supplies nearly 130 million servings of food per week, or about 18 million servings per day.

    Governor Kristi Noem has insisted that a statewide stay-at-home order wouldn’t be worth the disruption it would cause even though she acknowledged it would help slow the spread of the disease.

    Smithfield Closes South Dakota Pork Plant Due to Coronavirus

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  32. This article almost seems to be written by someone more interested in the value of his stock portfolio than in the lives lost, and still being lost, from COVID-19.

    The stay at home directives slowed the COVID-19 growth so that urban hospitals in "hot spots" could keep up with the patient load.

    Political decisions were made with little scientific and economic data / experience available -- this is a unique very fast spreading virus, with many patients showing no symptoms -- that's why it spreads so fast.

    Whether or nit staying at home was a good decision is not known at this time -- there have been a lot of deaths even with social distancing.

    The biggest problem, in my opinion, is that state governors have seized a lot of power over the private sector, and have no idea when they should let the economy return to normal.

    In this election year, keeping the economy partially closed would likely hurt Trump's chances of reelection -- maybe Democrat governors are thinking about that?

    A friend went to a wedding in early 2020, before we knew of COVID-19 in the US, and many in the wedding party came home with a "nightmare flu" -- the friend is a retired emergency room doctor, and was surprised at how many people in the wedding party went home and became very sick for several weeks.

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  33. I agree that closing down the economy might have been overkill, but given the level of Chinese lying about the whole thing, we didn't have any data worth a hoot until we had our own. By then, it was too late to stop most of the madness.

    Our other problem, I think, stems from the change in business models for the news media. Unlike the old days when there were 3 networks, no Internet competition and sufficient revenues to retain experienced staff, the modern news media is bent towards hysteria and rage by their constant need for clicks and viewers.

    That means we really have to work hard to find what is reality and most people aren't going to do that. Hence, political decisions are made on the basis of hysteria and rage.

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  34. Okay. Little good news here:

    "Surgeon General Jerome Adams explained in an interview on live XM radio, that the Coronavirus Task Force has, effectively, dumped the Bill Gates/CDC/WHO predictive contagion model,..."

    https://www.fort-russ.com/2020/04/major-plans-to-re-open-u-s-surgeon-general-adams-dumps-gates-predictive-contagion-model/?__cf_chl_jschl_tk__=006b4171e0fac29fe2cddca3c84b6b8f8117ba5b-1586896527-0-AaTKH7RefbjHaMcKD-kLPhO7NBjbI1ip1yzom6-sg4AwbUj1h1Gzpx6hBEZCMCrLRco06HmlZYMKgx3wvEbvgYAG9hKpbhHIlbKw4TvFhYDzTfOl6JOX2zAUgMC5CHlji0eF3QrN9On6riWvF01BsRpDtw0TP0npqeE_ue8S0pjjKeLuvKFfmouDI2HfdAz76gFLuzaXWbvN8gDehxF1Xw_sJQS5EwVjli_UyVua182wrN5l8f10guiR0_9IAphWbSH79kn7tiKKOS4byos74DCATYz4StWnXElRxQejXLCo_ElIT5LRWGWRlQ3bhuailYHVzyZzahremunkcNd9f8tP0XZsjiByqq1g98Mj88p_9pR1usYGv7XJT_Ef1Gk6cD4cptqaYeD3iQEdGjs1MAQ

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  35. A cascade of news and opinion in support of re-opening the economy has now begun which will prove impossible to stop. In the past few days, the news re new cases and new deaths shows dramatic improvement in almost every part of the world. The shutdown of the US economy helped flatten the curve, but it in retrospect it was clearly not necessary. The paucity of data that existed until a few weeks ago is not justification for adopting hugely drastic measures such as shutting down the largest economy in the world.

    To repeat:

    The shutdown of the US economy will prove to be the most expensive self-inflicted injury in the history of mankind.™

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  36. Speaking of massively wasted resources... I'm a partner in a small company - 25 employees. We are doing the math on the Coronavirus Aid, Relief, and Economic Security (CARES) Act. We can apply for an almost $500,000 loan, much of which would be forgiven if we just don't fire anyone.

    "Most importantly, borrowers are eligible for loan forgiveness equivalent to the sum spent on covered expenses during the eight-week period after the loan is originated. Those covered expenses include the bulk of a typical business’s fixed operating costs: payroll, rent, utilities, and mortgage interest obligations. The forgivable nature of these loans in effect turns them into grants, meaning that qualifying businesses will not see a significant increase in their debt burdens. But to qualify for forgiveness, employers must maintain their pre-crisis level of full time equivalent employees"

    We are very fortunate that we have very, very limited reduction in business due to the crisis, and no one is at risk of losing their jobs. But it's free money. I know what other small business owners have told me... take the money.

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  37. I've always valued conviction and voices in the wilderness....

    "The shutdown of the US economy will prove to be the most expensive self-inflicted injury in the history of mankind.™"

    Reminiscent of words from one of my early mentors toward the end of 1998.

    "The Y2K bug will prove to be a non-event. The problem is well defined and there's a tremendous amount of resources working toward a solution." (or something like that!)

    Appreciate your perspective - thank you



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  38. According to you,if JCB and Fed do QE then it does not cause inflation as it does not increase net money supply?
    Do you think an emerging market's central bank can do QE in similar way without causing a run on its currency. What are your thoughts on ability of EMs to do QE?

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  39. This blog followed by WSJ James Freeman:

    https://www.wsj.com/articles/what-would-we-do-without-experts-11586891072

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  40. Scott Grannis said:

    >When I see a person walking on an empty street in Southern California and wearing a mask, I see a person who won't lose his fear of social interaction for years.

    Man, there's so much wrongness packed into this statement that it's hard to know where to begin...

    First, as most people know by now, unless you're wearing an N95 mask or something equivalent, you aren't really protecting yourself. Maybe marginally, but not substantially.

    No, when a person is wearing something like a surgical mask, they are protecting others from the possibility that they -- the wearer -- might be unknowingly infected.

    So the first think you should do is think, "Thank you for being considerate of old people like me who stand much more of a chance of getting killed by this than the general population."

    Second, when someone is wearing a mask, they are demonstrating sound decision analysis. Because the cost of wearing a mask and being wrong is minuscule compared to the potential cost of not wearing a mask and being wrong.

    What are the assumptions a person wearing a mask is making? That they might be unknowingly infected. That the virus is as bad as everyone says: to wit, it's highly contagious and it can be deadly.

    If they're wrong in those assumptions, what's the cost? A little inconvenience from wearing a mask? Being looked down upon by people like you? It's a trivial cost.

    What are the assumptions a person not wearing a mask is making? That they are not unknowingly infected. That the virus is not nearly as contagious or deadly as some would have us believe.

    If they're wrong in those assumptions, what's the potential cost? Continued spread of the virus? Perhaps death to an old guy like you who is in the wrong age group to be getting infected?

    I taught probability and decision analysis to undergraduates at a university a few years ago. The class was for sophomore and junior business majors, and we only lightly touched upon six or seven decision making models. But I can tell you, there was not one of those models in which wearing a mask in today's knowledge environment re: the coronavirus would be the wrong decision.

    And finally this...

    I spent 23 years on active duty in the military. Three of those years were as an enlisted Army paratrooper, and 20 were as a Navy SEAL officer. I know a little bit about fear, as do all of my former colleagues. Out of curiosity, I reached out to a handful of those colleagues to see how they're coping. To a man, they wear masks whenever they leave the house (as do I). All of us understand the vast amount of uncertainty that still exists regarding this virus, and all of us have ample experience in dealing with uncertainty in dangerous environments. For us, wearing a mask is no different than the myriad small steps we took to give ourselves an edge just in case something went wrong anytime we were in the field. None of us are afraid of social interactions, but we're not stupid. We're doing our part to slow the spread.

    In Bayesian probability there is something known as Cromwell's Rule. It comes from something Oliver Cromwell wrote to the General Assembly of the Church of Scotland in 1650:

    "I beseech you, in the bowels of Christ, think it possible that you may be mistaken"

    I so, so wish that people like you would think it possible that you may be mistaken, and what the potential consequences might be.

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  41. neme amber - I don't know if you are a serious poster, but lysine and methylene blue will keep viral load down.
    Keeping estrogen low through diet as well: cooked mushrooms, bamboo shoots; shredded (and rinsed) carrot salad, marmalade. Those foods help keep the intestines clean in a healthy way and inhibit the enzyme that synthesizes estrogen.
    Foods high in arginine should be avoided.
    It will go away.

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  42. I disagree strongly with Scott and others about opening up today or tomorrow or yesterday. Why? Our testing capabilities and our tracking capabilities are going to get much better in a few weeks, particularly with the roll out of the Apple/Google app.

    Our initial testing capabilities were an absolute failure, and they still haven't gotten to where they need to be--about 140,000 per day as of 4-15-2020.

    Do you all understand what our "tracing technology" currently is? It is an extremely labor intensive and slow process that is not designed to deal with a widespread pandemic like covid-19.

    To a large extent, the current COVID-19 challenge is an information problem. The roll-out of testing that gets near immediate results (Abbot, Cepheid) on a much larger scale and the Google/Apple detection/tracing system (ready in early May) significantly change our ability to operate in a pseudo normal economy, with the gained ability to respond to local outbreaks quickly and effectively. We did not have such capabilities last week or next week, but will have them in another few weeks. To re-open without such capabilities is to invite significant and uncontrolled outbreak that quickly overwhelms the healthcare system and causes a large percent of the population to VOLUNTARILY isolate and shutdown, causing a deep and prolonged recession.

    But the technology and capabilities have and will change by early May. In my opinion, this makes the shutdown easily worth it. But we should be looking to cautiously reopen in May.

    Respectfully,

    Dan

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  43. Dan re opening the economy. No one is proposing to re-open the entire economy today or tomorrow or next week, and I'm certainly not. It can be phased in, starting with those under the age of 50 or 60, and starting with places that are not currently "hot-spots" (eg, NY, NJ). Re-opening need not be mandatory. Let businesses and people use their best judgment and sanitary habits.

    Reopening soon is essential, otherwise the unanticipated consequences (which are likely to be so many it's impossible to even guess) will mushroom with terrible consequences. Every day we stay closed millions more jobs will be I lost (I'm guessing wildly), hundreds of billions of output and income will be lost, and millions will become desperate. It's imperative we act quickly to avoid a true catastrophe.

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  44. Rick,

    Re: risk. I happened to be thinking about that quite a bit yesterday. It's entirely understandable that politicians and health care leaders HAVE to act with an eye towards the worst outcomes. No decision maker / influencer wants to get caught under-estimating and have a catastrophe.

    Still, I was pondering the continuum of paranoia among my friends and family, and how that relates to their political persuasions, other life choices, and reliance on - and expectation of - government or someone else to take care of them. A few notions came out of that. Number one, I don't want to live in fear. I also want to be an example for my 20s kids to NOT over-react in a crisis, and to not be afraid to accept risks in life. I don't want to too easily cede freedoms trusting I can count on someone else to take care of me. I don't want the government making decisions how I live my life. To do so greatly reduces the opportunity to live a full life.

    As has been much discussed elsewhere, fear has always been the easiest tool for controlling people. Religious traditions and secular autocrats of course. The last few decades our liberal democracy with a media desperate for headlines has very much moved in that direction. Ironic (before Covid) that we live in elevated fear when, historically speaking, there is far, far less to be afraid of.

    All that is abstract, but our world has been moving the wrong direction in this regard, and the crisis is accelerating that massively. It's a shame and I agree with Scott that it's not likely the populace will quickly recover from that mindset.

    No question - your military service (thank you) has exposed you to risks most of us will never know (thankfully). What you say about taking reasonable precautions is also very right. Yes, distancing, face masks, protecting those most at risk are all the right things to do.

    What's the point of all that? That we should view it as very healthy for thinking people to strongly question leaders that try to control with fear; to resist the movement to cede freedoms. Not every push back on climate change makes one a science denier. Neither does resistance to excessive government control over our personal lives related to Covid. Hence, not every disagreement with those policies can fairly be argued with "you just don't understand the risks you idiot".

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  45. Scott,

    I normally like your analysis but this time I have to say that the tripe of "proof" that that virus was not that deadly really show that you were looking for evidence to support your bias.
    Some key points from your proof.

    The article discussed Sweden's rates vs. the UK as comparison of lockdown but did not compare Denmark or Norway it's closest neighbors and similar cultures.
    Sweden had 11,927 cases, 1203 deaths or 10% death rate and did 7,387 tests per million.
    Denmark had 6681 cases 309 deaths or 4.6% death rate and did 13414 tests per million.
    Norway had 6740 cases 145 deaths or a 2.15$ death rate and did 24,020 tests per million. One of the highest testers.

    You support mentioned low death in highly tested countries,
    Iceland with 1727 cases 8 death and the highest and most randomized test rate of 109558 does show support but with such a small population it can easily be skewed.
    South Korea now has 10591 cased and 225 death for 2.12% death rate. It also only tests 10426 per million and is now a testing under performer.
    Switzerland has 269339 cases and 1239 deaths for a 4.7% death rate and did 22993 tests per million.
    Even Germany with 133154 cases, 3592 deaths & 15730 tests per million has a 2.7% death rate & it's prior immunity seems to be evaporating since it's death have not plateaued.

    Just for perspective. Italy has 165155 cases, 23645 death and a 18481 test rate per million.
    While the number of asymptomatic cases are certainly under counted so are the number of death. NYC has been having 200 dead bodies per day then last few weeks. Last year it was 35.

    While you can logically claim that over reaching governments are causing more issues than the disease, you don't do you argument any favors by claiming that this pandemic is not really serious. Part of the reasoning behind a lock down is to give time to get support measures in place so that the economy can continue to function without frequent future interruptions due to illness outbreaks one of the key items needed to get a V shapes recovery that everyones hopes will happen.

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  46. Scott,

    I normally like your analysis but this time I have to say that the tripe of "proof" that that virus was not that deadly really show that you were looking for evidence to support your bias.
    Some key points from your proof.

    The article discussed Sweden's rates vs. the UK as comparison of lockdown but did not compare Denmark or Norway it's closest neighbors and similar cultures.
    Sweden had 11,927 cases, 1203 deaths or 10% death rate and did 7,387 tests per million.
    Denmark had 6681 cases 309 deaths or 4.6% death rate and did 13414 tests per million.
    Norway had 6740 cases 145 deaths or a 2.15$ death rate and did 24,020 tests per million. One of the highest testers.

    You support mentioned low death in highly tested countries,
    Iceland with 1727 cases 8 death and the highest and most randomized test rate of 109558 does show support but with such a small population it can easily be skewed.
    South Korea now has 10591 cased and 225 death for 2.12% death rate. It also only tests 10426 per million and is now a testing under performer.
    Switzerland has 269339 cases and 1239 deaths for a 4.7% death rate and did 22993 tests per million.
    Even Germany with 133154 cases, 3592 deaths & 15730 tests per million has a 2.7% death rate & it's prior immunity seems to be evaporating since it's death have not plateaued.

    Just for perspective. Italy has 165155 cases, 23645 death and a 18481 test rate per million.
    While the number of asymptomatic cases are certainly under counted so are the number of death. NYC has been having 200 dead bodies per day then last few weeks. Last year it was 35.

    While you can logically claim that over reaching governments are causing more issues than the disease, you don't do you argument any favors by claiming that this pandemic is not really serious. Part of the reasoning behind a lock down is to give time to get support measures in place so that the economy can continue to function without frequent future interruptions due to illness outbreaks one of the key items needed to get a V shapes recovery that everyones hopes will happen.

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  47. "Dan re opening the economy. No one is proposing to re-open the entire economy today or tomorrow or next week, and I'm certainly not. It can be phased in, starting with those under the age of 50 or 60, and starting with places that are not currently "hot-spots" (eg, NY, NJ). Re-opening need not be mandatory. Let businesses and people use their best judgment and sanitary habits."

    Actually Scott, that sounds very reasonable and I strongly suspect you would have had much less pushback had you expressed this from the outset. I also strongly suspect that our illustrious POTUS and several commentators on the blog would advocate a more draconian approach to a reopening of the economy.

    "The shutdown of the US economy will prove to be the most expensive self-inflicted injury in the history of mankind.™"

    This statement was made AFTER we had locked down and the spread of Covid was largely contained. Had we NOT isolated we would likely be going through what Sweden is and will continue to be going through. 20/20 hindsight of an scenario that would have unfolded completely differently had a different course of action been taken-and this is your trademark? Been reading your blog for ten years now and I know you can do better than that.

    Despite Trump's outrageous contention that he has "total authority" to reopen the economy we all know the governors are going to ignore this dopey assertion and that we will indeed slowly reopen. But DanQ is spot on; we need far better testing and in far greater numbers than we have now. Speaking of which, what the HELL is taking so long?

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  48. I would much rather be going thru what Sweden is going thru.
    Or Taiwan.

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  49. Those in favor of re-opening the economy today or tomorrow - Should lead by example...

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  50. End the government lockdowns immediately, completely and totally.

    Those who wish to sequester themselves are at liberty to do so.

    For the elderly I would support paying higher taxes for Meals on Wheels and other activities to protect them. Though I would much prefer shutting down parts of the military and using that money, for one year, to fund such social welfare programs. Or simply funding such programs through monetary helicopter drops.

    But whatever we do, end the lockdowns now.

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  51. is100:
    In my state, one will face arrest if one re-opens a forbidden business today or tomorrow.

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  52. Benjamin, having watched about one minute of those dumbass "tinhat" economist videos you posted, you abnegate all credibility for me.

    Covid related deaths in the US and the world for that matter are at new highs on a daily basis. Yesterday, 2500 covid related deaths in the US which would be factors higher had we not isolated. What number would you like to see to admit that isolation was the painful but correct move? 5000? 10,000 deaths a day? Does Covid need to hit you personally before you realize the stupidity and callousness of your position?

    The US came into this almost incredibly unprepared. We "game" war but had ZERO preparation for a virus that has brought economies worldwide to their knees. We spend hundreds of millions of national defense that we will probably never use and pennies on healthcare defense. Unfortunately, we are getting our due comeuppance.

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  53. For those interested in an example or re-opening the economy: Here in Quebec (you know North of NY!), it started already -- residential construction is starting up on Monday, after a 3-week shutdown, as it landscaping. Many many businesses with very limited customer contacts have remained opened and have been very careful.

    What I am trying to say is that up here the shut down has not been dogmatic, it has been pragmatic. Sure restaurants were closed -- but take out took off like you would not believe, and while the restaurant didn't make profits, they could at least cover their costs. We anticipate that many businesses will start reopening in the next few weeks.

    Commercial and government offices are another story -- already the open plan concept is dead as a dodo! Friends are saying that they are changing their office plans to take into consideration permanent social distancing.

    My friends in the service industry are really starting to like video conference calls as a very efficient way (rather than catching a flight).

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  54. Also you should note that total death in Canada was around 1,000 (as of 15/04) Vs. nearly 30,000 in the US. The implication is that the death rate in the US is nearly 3x that of Canada -- if you take into consideration the difference in population size.

    Stay safe

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  55. So here's something interesting. Our residence from mid May to mid October is our home on Lake Winnipesaukee in NH. In the off season the population of the town we live in is about 4,000 which typically swells to 25,000 during the summer. I don't know what will happen this summer but I do know the "Lakes Region" has been largely spared Covid cases so far BUT MA has been hammered AND most of the people who visit are from-you guessed it, MA. So I am expecting a significant increase in cases in NH. Problem is we have an absolutely abysmal healthcare system in the Lakes Region. The closest real hospital is in Concord, one hour away. Moreover, almost all businesses except restaurants are OPEN. Cleaners, landscapers, painters, builders etc...all open for business even though NH is technically "shutdown". So "shutdown" means something different depending on where you live. The GOOD news is our supermarket (22 minute drive from my house) is doing a curbside pickup which once July 4th is upon us is going to get CRAZY. Oh, marinas are also open so we'll have our boat on the water. I suppose you can buy gas and still separate by 6' easily enough. Aside for not going out for meals-which kinda sucks, it should be almost "normal". We are going to fly from Fort Myers, FL home direct flight mid May which is a bit dicey but it beats driving 25 hours! My wife and I are fitness fanatics so we "should" be safe. Fingers crossed and extreme vigilance.

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  56. Steve - we travel between the Roaring Fork Valley in CO and TX. It's much more pleasant to "distance" in the smaller CO community with endless outdoor venues and activities. We returned to TX just last week, stayed in hotel halfway but brought our own bedding to put on top of bed, and clorox wipes for bathroom. Still creepy. We sometimes just drive direct (16hrs) except in dead of winter. The CO community relies heavily on seasonal residents, skiing and fishing - and anything in the mountains. They are devastated right now. It wouldn't surprise me to see half or more of the restaurants fail and the seasonal employees all lost. Nothing to be done... just sad. The Covid experience may result in many people rethinking how fast and furious they want their lives to be. No doubt I'll have staff now working remote that will not find it easy to go back to office hours. Me too.

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  57. Mitigation saved exactly zero lives. The bell curve was "flattened" as well as lengthened however total number of infected is exactly the same in "un-flattened" bell curve. Yes, it may have bought some time to develop some therapies which may have saved lives, but the trade off is 22 million unemployed Americans and without a doubt an increase of drug and alcohol abuse, spousal,child and elder abuse as well as malnutrition, depression and suicide. Does it feel better to mitigate? To coastal elites evidently. Is it effective? Evidently not

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  59. Psychologically, unrealistic expectations are unhealthy and the enemy of realistic solutions.

    Mindlessly promoting “Test Trace” neglects creative solution thinking that might actually work.

    My own pet idea -Covid dorms, with ample $, for the most vulnerable AND their providers

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