The Big Lockdown by Raúl Ilargi Meijer for The Automatic Earth
Hi, it’s me again, with more virus stories. I know you may think it’s enough now, but I do want to do this one. Actually, I haven’t written all that much about it, just two essays, 2019-nCoVand The Party and the Virus, but the topic has become a staple of my daily Debt Rattle news aggregators lately. So much that I find I need to remind myself all the time that it’s been a news item for only two weeks, going back to January 20 or so.
Through those two weeks, I’ve seen a number of studies, simulations, models, of where the virus can be expected to go going forward. And I want to take a look at some of them. I said early on that I didn’t like people talking about the economy as soon as the first people died, but 2 weeks later, given the growth of the epidemic, that doesn’t appear avoidable anymore.
People are starting to wonder what’s going to happen to society at large, and in “the markets” -or what’s left of them after central bank manipulation- if and when the virus remains an issue for an X amount of time. I think I can explain some of the parameters, though I want to make clear predicting what viruses do is, even for virologists, crystal ball material, and I ain’t got one of those.
China injected $242.74 billion into the markets via reverse repos on Monday and Tuesday, and stocks seem to have made up for their $445 billion losses on Monday. But what exactly is that optimism based on? Is it that “investors” think the PBOC will have their backs no matter what? Is it the reports of companies like Gilead testing possible solutions, vaccines?
I’m not an expert, but I do know it takes a sophisticated drug company about a year to develop a drug/vaccine for a novel disease, as “WuhanCorona” is. From what I can gather, the Gilead drug (co-)tested by the Chinese is basically an anti-viral developed with Ebola in mind, which may or may not work. Ebola is somewhere related to “WuhanCorona”, in a third cousin twice removed kind of way, but that’s it. HIV drugs could also perhaps work to some extent, but that’s a big question.
So what the optimism in the “markets” is based on, you tell me. Are people so afraid of what might be coming that their minds switch off, are they afraid to get informed, or do they genuinely think it’ll all soon be over? Me, I hope it’ll turn out fine, but I wouldn’t put any money on it. And that’s based on what I’ve been reading.
When reporting on the Wuhan situation started for real in the west, let’s say January 20 (that’s just 16 days ago!), there were 291 registered infection cases. There are 27,648 now, and 564 people have died. Those are “official” Chinese numbers, and there are plenty doubts about their accuracy (see today’s stories about Tencent posting 10x higher numbers), but let’s roll with the official ones for the moment. I’m going to hop through time a little, but please bear with me, there is a logic.
First, there’s this from January 28 in the SCMP (South China Morning Post), a major Hong Kong news outlet owned by -very Chinese- Alibaba. Zhong Nanshan is a scientist working for the government. My first reaction when I saw this was: it looks like he’s doing damage control for the CCP.