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The Pandemic Will Cause A Global Depression – We Need Demand Side Measures To Counter It
Last week's post on Boeing ended with this line:
The pandemic, and the global depression it will cause, now make it certain that Boeing will have to ask for a gigantic government bailout or go into bankruptcy.
With most flights grounded due to the pandemic Boeing is now thinking about cutting its production and laying off workers.
In the quoted sentence I used the words "the global depression it will cause" with care. I do indeed believe that a sustained, long-term downturn in economic activity in many countries will be one of the results of this pandemic.
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The airline industry is just one of many that will be hit hard. About 70% of the U.S. GDP is generated by the service industry. Travel, entertainment, gyms, restaurants and bars, hotels, education will all be hit extremely hard by the finally coming shutdown. The U.S. will, like Germany did today, soon shutdown churches, brothels and other entertainment outlets. Only a few service industries, like healthcare, online gaming and gun sales, will continue to strive.
The pandemic will be with us as a major danger for probably two or three years during which it will race around the globe in several large waves. Each wave will require another shutdown. To develop a vaccine against the SARS-CoV-2 virus is likely to take over a year but may take much longer. We may be more lucky with a new medication that can reduce the symptoms of the Covis-19 disease the virus is causing.
Restrictions on major parts of the service industry are therefore likely to be with us much longer than the one or two months that are currently anticipated. After the restrictions are over many people will have have changed their habits. The travel industry will not come back for a long time. The cruise industry will probably die. That is personal to me as the place where I learned to work metal depends on it.
There will also be lots of layoffs caused by this crisis which guarantees that demand will fall further off the cliff.
On Sunday's the Fed cut its interest rates to zero. That was a push on a string. Today the stock markets tanked another 10%. Crude is now below $30 per barrel and may well go down to $20/bl. The Fed move was likely demanded by Trump who last week remarked that he has the power to fire Fed chair Powell. The Fed should take care that the credit markets stay liquid as many companies will need additional resources. A credit crunch right now would increase the general damage. But Trump and the Fed should stop to push supply side measures like interest rate cuts and tax relieves. There is no lack of investment or supplies but a lack of demand and that will continue for at least the rest of the year.
Last week the House passed a bill with some emergency help. It was mostly fake. House leader Nancy Pelosi sold it as covering way more than it actually does:
The legislation secures paid emergency leave with two weeks of paid sick leave and up to three months of paid family and medical leave, according to Pelosi. It also enhances unemployment insurance. The legislation also increases federal funds for Medicaid, and bolsters funding for food assistance programs.
Those were a number of lies and even the neoliberal editors of the New York Times called her out:
House Speaker Nancy Pelosi on Friday night celebrated the coronavirus legislation that passed early Saturday as providing paid sick leave to American workers affected by the pandemic.
She neglected to mention the fine print.
In fact, the bill guarantees sick leave only to about 20 percent of workers. Big employers like McDonald’s and Amazon are not required to provide any paid sick leave, while companies with fewer than 50 employees can seek hardship exemptions from the Trump administration.
“If you are sick, stay home,” Vice President Mike Pence said at a news conference on Saturday afternoon. “You’re not going to miss a pay check.”
But that’s simply not true. Sick workers should stay home, but there is no guarantee in the emergency legislation that most of them will get paid.
When even rightwing Republican Senators think that the Democratic leader of the House is not socialist enough something has changed:
Tom Cotton @SenTomCotton – 12:21 UTC · Mar 16, 2020
The House relief bill doesn’t go far enough & fast enough.
We’re going to do everything we can to get cash into the hands of affected workers & families as quickly as possible so we can all get through this pandemic together.
There are way more measures needed than Pelosi's bill allows for. The government must cover all costs for virus testing and Covid-19 care. It must pay sick leave to everyone who has to stay home independent of their job status. Not providing such will prolong the crisis as infected people who need to work because they lack money will otherwise continue to spread the virus.
The U.S. and other economies will also need a fiscal injection on the demand side. Send a $5.000 check to every household which makes less than $100,000 per year and include the homeless in it. The money can be taken from the defense budget. A 355 ship navy will never stop a pandemic.
The last global social and economic shock of this size came after 9/11. The fall of the towers changed the world. It became the justification for militarized policies and large defense budgets. The pandemic will cause changes of a comparable size.
Public demands and political priorities will change. Health crisis preparedness and response will become a new priority issue. Globalization will become more restrained while global cooperation on health issues will likely increase.
This crisis is not the end of the world but it will be the impetus for significant changes.
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Previous Moon of Alabama posts on the issue:
I really do not want to touch the tar baby of this endless wrangle, but after a week of marinating in it, I must venture an opinion.
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First, I am a healthy man in my 70s. I’m not rich; but I have enough income to have options. That said, as a member of the (second) most impacted group, I think what is going on is counterproductive. I have spoken to my family members (all over 70 also), who uniformly say “what is the panic? where are genuine statistics on infection rates?” Some of these people have lung and heart problems, diabetes, cancer; and yet, they are not panicked. All of us oldsters have simply ignored the media propaganda. If my age cohort has tuned out, how seriously do you think 20-somethings take that pile of bloveating clowns?
I’m not saying there is no problem. I’m saying that relying on (and that means quoting and linking by commenters at MoA) the corporate media is going to create more problems than it solves.
I think the exchange below encapsulates the basic sides in the discussion of the health impact:
Paul Bogdanich @ 1
If we merely voluntarily isolated the at risk populations in sterile facilities and let the virus run it’s course through the healthy population the magnitude of the problem would be a lot lower. But noooo.
Rob @ 19
they are, in essence, performing an experiment on their own population to test an unproven hypothesis. Time will tell how it works out, but don’t be surprised if the toll on the young and healthy members of the British nation is much larger than anticipated.
Paul Bogdanich @ 29
I’m from the US and certain blowhard sentors are proposing spending $750 billion on the “response.” Where does all this money go? The healthcare complex. Who are his largest campaign contributors? The healthcare complex.
With proper respect for people who actually are ill and who feel (IMHO, unrealistically) they deserve the absolutely finest healthcare (in a system designed more for profit than patients), we are locking down a huge amount of productive labor and threatening our entire precarious service economy in order to protect what is statistically an already extremely at-risk population. Furthermore, the statistics of the new flu are completely unclear – because we don’t have a widely-deployed, reliable test for asymptomatic patients. Likewise, the statistics on palliatives like vitamin C, or the drug from Gilead are equally sparse. So the tradeoff that is happening is not founded on good data. “The plural of anecdotes is not data.”
My personal attitude is that I would rather die in a week from flu than spend years on chemotherapy, draining my bank account, putting my family through hell, and dying anyway. Why doesn’t someone do a poll of 70+ folks to find out how many of them would object to a quarantine that affected them and not those younger? The standard pushback against this attitude (which is usually supposed to emanate from young people) is that any attempt to put the impact on the elderly in context (e.g., death rates for conventional flu, normal death rates for age groups, pneumonia as an over-reported cause in co-morbidity deaths) is excusing “the cull” or behaving like Malthus. Frankly, the dubious statistics available aren’t anywhere near justifying fears of a “cull”.
Finally, discussion of the origins and nature of the virus quickly lead into CT land, and I’m not going there.
I had hoped to talk more about the macro-economic impact of CV, which I think will be much more deadly than the disease itself; but I found I had nothing but questions, with no hypotheses, proposals, or answers. Instead, let me close with this thought.
People have been immersed in what Ellul called “deep sociological propaganda” about some kind of “apocolypse” for decades. Asteroid strikes, global flooding, plagues, and zombies. People have been ingesting that you should fear everyone, even your friends (who might be zombies). Video games and movies have taught people that empathy will get you dead, and that a gun is your only friend. With that background, it is no surprise to me that people are panicking. They’ve been groomed to have this reaction. Just wait until there are real shortages. In the US, people will shoot first and ask questions later.
Posted by: john brewster | Mar 16 2020 21:54 utc | 57
Well, it really human response to the virus which is just a cold to anyone under 60 that will cause the depression. But as Mnuchin says, its great investment opportunity which is why we have crashes every 10 years or so, usually near the end of a decade
Last in the road to corona, first 3 (2000-2019) in open thread
2020 CORONA ARRIVES, CROWNS TRUMP-END OF HISTORY OR NEW BEGINNING (Jan-Feb)
Jan 3, 2020- After Wuhan Public Security investigation and detention of eight doctors who posted on social media about the virus and were accused of spreading “illegal and false” information, the eight were made to sign a Letter saying that they had “severely disrupted social order.” State media followed this up with reminders from the police that it would pursue anyone else who spread false rumors.
Dr. Li’s subsequent death generated 800 million comments on Weibo by midnight and over 80,000 Chinese have been infected to date (SARS killed 800 people). Lots of 8’s here. 8 is a lucky number in Chinese sounding like father (ba). In fact 8/8 is Fathers Day.
January 11, 2020-china publicly releases gene sequences for new coronaviruses. Inovio’s COVID-19 vaccine, INO-4800, was developed in just 3 hours once the COVID-19 sequence was deposited in data banks for public access
January 13, 2020 Researchers at Moderna and the NIH choose sequence for an mRNA vaccine and began to mobilize toward clinical manufacture
January 13,2020 Former CDC director Julie L. Gerberding sold 102,000 shares of Mercks stock (she is EVP) . The stock was sold at an average price of $90 for a total transaction of $9,119,000
January 15, 2020 China and US sign trade deal
January 18, 2020 -After 16 consecutive days of no new cases being announced new cases explode as China changes diagnostic criteria
January 22, 2020- Davos 2020 held. Greta and Al Gore took center stage. Gore compared the climate crisis to historic events like the 9/11 terrorist attacks. “This is Thermopylae. This is Agincourt. This is Dunkirk. This is the Battle of the Bulge. This is 9/11,”
January 23, 2030 -Wuhan locked down and quarantined. Other cities and provinces follow the next days when New Year holidays begin. Millions were able to travel before the quarantine
January 23, 2020. The Coalition for Epidemic Preparedness Innovations (CEPI) unveiled funding early-stage vaccine programs.
Moderna disclosed that it’s working with federal researchers on a candidate, and now it’ll have financial backing from CEPI.
Pennsylvania-based Inovio Pharmaceuticals scored $9 million in funding for its own program, and CEPI is further expanding a partnership with the University of Queensland.
The University of Queensland is also receiving CEPI funds has ties to DARPA and extensive connections to Chinese Universities including Wuhan Institute of Technology. Backdoor to China?
For Moderna, CEPI’s funding will cover manufacturing for an mRNA vaccine candidate against the new coronavirus strain. The work will be further supported by federal researchers at the National Institute of Allergy and Infectious Diseases (NIAID) who will conduct preclinical tests and a phase 1 study. Moderna’s mRNA treatments, including its mRNA vaccines, were largely developed using a $25 million grant from DARPA and it often touts is strategic alliance with DARPA in press releases.
Separately, the CEPI grant will cover Inovio’s development costs through phase 1 for the biotech’s candidate, dubbed INO-4800. The vaccine is based on Inovio’s DNA medicine platform that the company says enables rapid development of a vaccine against emerging threats. Inovio and CEPI already have some history. In 2018, CEPI awarded Inovio up to $56 million over five years for its work on Middle East respiratory syndrome (MERS) and Lassa fever vaccine candidates.
Inovio was involved in the Zika outbreak response as well and reached human testing with its vaccine candidate in just seven months, CEO Joseph Kim said in a statement.
The company has routinely jumped into emerging disease research, but has yet to take a product through to an approval. Moderna doesn’t have any approved drugs or vaccines, either.
Inovio was also recently awarded over $8 million from the U.S. military to develop a small, portable intradermal device for delivering DNA vaccines jointly developed by Inovio and USAMRIID.
Inovio’s MERS vaccine program began in 2018 in partnership with CEPI in a deal worth $56 million. The vaccine currently under development uses “Inovio’s DNA Medicines platform to deliver optimized synthetic antigenic genes into cells, where they are translated into protein antigens that activate an individual’s immune system” and the program is partnered with U.S. Army Medical Research Institute of Infectious Diseases (USAMRIID) and the NIH, among others. That program is currently undergoing testing in the Middle East.
Inovio’s collaboration with the U.S. military in regards to DNA vaccines is nothing new, as their past efforts to develop a DNA vaccine for both Ebola and Marburg virus were also part of an “active biodefense program” that has “garnered multiple grants from the Department of Defense, Defense Threat Reduction Agency (DTRA), National Institute of Allergy and Infectious Diseases (NIAID), and other government agencies.”
It is also worth noting that Inovio Pharmaceuticals has direct access to the Chinese pharmaceutical market through its partnership with China’s ApolloBio Corp., which currently has an exclusive license to sell Inovio-made DNA immunotherapy products to Chinese customers.
On January 23, 2020 the Shi Zhengli team published an article on bioRxiv preprinted version of the platform titled, “A pneumonia outbreak associated with a new coronavirus of probable bat origin.” The report proposed that the new Wuhan Coronavirus was derived from bats. The paper was subsequently published in the journal Nature on February 3.
The article stated that they found that the sequence of the novel Coronavirus was 96.2% identical to that of the Coronavirus numbered RaTG13 derived from Yunnan horseshoe bats
January 24, 2020 Netflix releases Pandemic docu-series, an eerily timed documentary about pandemics, and obviously production began well before the Wuhan pandemic. As theaters and Cinemas plan to close , and sports entertainment is ended, Netflix should experience a boon in business as people hide in their caved and turn to streaming on Smart TV’s.
January 23, 2020- A report from HK Reuters reports President Xi Jinping has pushed to upgrade the country’s rickety healthcare system, enlisting technology giants including $474 billion Tencent and insurance group Ping An. A unit of the latter has partnered with local governments in Shenzhen and Chongqing to develop an algorithm it claims can predict the transmission of influenza and other infectious diseases with 90%-plus accuracy. Elsewhere, the likes of $50 billion video-surveillance specialist, Hikvision, are helping Beijing develop high-tech, digitally-connected urban smart cities.
The tech will be deployed to detect unusual numbers of feverish people in train stations, while simultaneously cross-referencing healthcare history based on facial recognition and other identification means, travel records and weather patterns.
On Jan 27th, Shi Zhengli submitted the registration information of RaTG13 bat virus referred to in her Jan 23 preprint article, showing that the virus was isolated from the feces of Yunnan horseshoe bats (chrysanthemum bat) as early as July 24, 2013. It was never mentioned in any of her previous papers. Must of been locked away in an ice box for 7 years or something.
On January 28 it was reported the US has charged a Harvard professor and two Chinese researchers based in Boston with assisting the Chinese government. Harvard department chair Charles Lieber is accused of lying about his connections, while the researchers were charged with being foreign agents.
Yanqing Ye, a Boston University robotics researcher, was arrested for concealing the fact that she was in the Chinese army. Ms Ye is accused of falsely identifying herself as a student and also continuing to work for the People’s Liberation Army, while completing a number of assignments in the US.
Cancer researcher Zaosong Zheng was arrested at Boston Logan International Airport with 21 vials of biological samples in his bag. Prosecutors allege he was planning to return to China to continue his research there.
Court documents allege Mr Lieber, who has worked as the head investigator at the Lieber Research Group at Harvard University, received more than $15m (£11.5m) in grants from the US National Institute of Health and the US Department of Defence.
Recipients of these grants have to disclose any conflicts of interest, including financial support from foreign governments or organisations.
January 28 -AbCellera Biologics Inc. has started a program to discover mAbs as potential treatments for patients infected with the 2019-nCoV that was first identified in Wuhan, China, the company’s CEO, Carl Hansen, told BioCentury.
The work is being undertaken via a contract the Defense Advanced Projects Research Agency (DARPA) awarded to AbCellera in 2018 to lead the development of the Pandemic Prevention Platform (P3) program, a rapid response platform against pandemic viral threats.
AbCellera has partnered with the Vaccine Research Center at NIH’s National Institute of Allergy and Infectious Diseases (NIAID) and other researchers “who will test antibody candidates for prophylactic and therapeutic potency against the 2019-nCoV,” the company said in a statement.
Jan 31, 2020 -Trump declares US-China travel ban
Feb 3, 2020-President Trump’s Director of the Office of Science and Technology Policy, Kelvin K. Droegemeier, wrote to the National Academy of Sciences President, Dr. Marcia McNutt, on February 3, 2020, to probe the origin of the 2019 coronavirus. Dir. Droegemeier requested the National Academy of Science (NAS) scientists provide a “Rapid Response Assessment . . . that would help determine the origins of 2019 2019-nCoV, specifically from an evolutionary/structural biology standpoint.
Feb 14, Pandemic Prevention Platform – or P3 set up 2 years ago and funded by the Defense Advanced Research Agency – Defense Advanced Research Projects Agency, announced plans to respond rapidly to COVID-19 until a vaccine is developed. The first part of the plan is to identify antibodies and get antibodies from people who’ve been infected with COVID-19 and recovered. The second part is to develop a drug that can be used based on these antibodies. They plan to try and just take the genetic material that codes for these antibodies and put that into people and let the people’s own cells make the antibody. So the people become the bioreactors by altering their DNA. This technology is still a very early technology.. It’s only been tested in tens of patients, so its experimental. They may have something ready in as soon as 90 days.
Altering a populations DNA with a fast tracked (untested) vaccine. What could go wrong. LOL. Depopulation here we come.
Posted by: Pft | Mar 16 2020 22:00 utc | 60
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