More Concerns About China’s Coronavirus Economic and Political Downside

US equities are cheerily unconcerned about the possibility of the Chinese economy taking a serious hit as a result of coronavirus outbreak. But in the last week, several overlapping stories in widely-read mainstream news outlets have taken issue with the consensus, and argue that China downside scenarios are both more probable and more serious than the mainstream view.

In fairness, the more sober-minded bond market is rattled, and commodities, which are heavily exposed to Chinese activity, are already wobbly. So it isn’t as if investors broadly are asleep at the wheel. From Ambrose Evans-Pritchard at the Telegraph today (we’ll be turning soon to his last week clarion call on China coronavirus risk, and the kindred assessments by other analysts):

Safe-haven flight into the Swiss franc, the Japanese yen, and the dollar suggests that some large funds are battening down the hatches. The Australian dollar, a proxy for risk appetite, is plumbing depths last seen during the Lehman crisis.

The US dollar index (DXY) has been rising for several weeks and is not far short of 17-year highs. This creates a self-fulfilling effect of world-wide tightening. It drains global liquidity and squeezes borrowers with $12 trillion of dollar liabilities on the offshore funding markets in Asia and Europe….

“We’re seeing all these signs of recessionary ‘risk-off’ behaviour. Something has to give here,” said Lars Christensen from Markets and Money Advisory….

Few analysts have begun to ‘price’ the implication of a full-blown COVID-19 pandemic across the world…

A pandemic is no longer a scientific tail-risk. It is fast becoming the central risk…We should have a clear idea whether or not the spread is unstoppable within three weeks.

The US Defence Department’s Joint Staff has already activated its pandemic plan, ordering all services to brace for “widespread outbreaks” of the virus, according to Military Times.

We’ll focus on China, since the immediate economic concern is how the progress of the disease and efforts to manage it hurt their citizens and companies, which affects the West directly (supply chain disruption, loss of critical supplies, damage to companies that do a lot of business in and with China) and indirectly (the hit to global demand).

So forgive me a US aside before returning to the China front. Even though the plural of anecdote is not data, I see signs of concern even in the currently low-risk US (my scenario for how things might get troublesome here is that coronavirus winters in the global South, particularly Africa and Australia, and is primed to become US health risk during the 2020-2021 flu season). For instance, a friend in Dallas supplied me with several products, including a hand sanitizer used in operating theaters that supposedly kills nasties for five hours. Interestingly, she didn’t view coronavirus as a current risk but felt it was important to establish protective habits and routines well in advance of a potential threat. This suggests that not only will Americans stay well away from China for some time, but some may already be considering foregoing travel not just to Asia, but potentially even non-essential US trips.

Back to the main event. The fact that gas prices at the pump in low-fuel tax states are increasingly at or below $2.00 a gallon ought to be a wake-up call that serious deflationary forces are at work, even if cheaper fillups provide a short-term boost to consumers.

The apparent reason for continued peppy stock markets is that too many investors are mistakenly comparing the coronavirus to China’s 2002-2003 SARS outbreak. There are plenty of reasons why this is wrong-headed. SARS was easier to contain because China was much poorer then, so Chinese traveled less. Its high fatality rate (nearly 10%) also likely resulted in citizens taking social distancing measures of their own, in addition to official ones. Experts in China also claim the government was faster to address the contagion then. One result was the successful identification of “supertransmitters,” which was a considerable aid in containment.

Economically, China was vastly smaller in global GDP terms. It had just been admitted to the WTO and thus was only beginning to become integrated into global supply chains. And the timing of SARS worked out to be better too. Its major outbreak took place later in the year, as opposed to during a peak travel time.

And the coronavirus has already surpassed SARS in number of deaths and number of confirmed cases.

China has been fragile for some time. It has managed to avoid a downturn but to a significant degree, that has occurred by virtue of increasing risk, particularly private sector leverage. That might not be such a cause for concern if the additional borrowing were going into productive activities. But China bears have been pointing out for years how borrowing is producing less and less incremental GDP growth, as evidenced by often shoddily built ghost cities. China has been trying to curtail bank lending, but the government has engaged in stop and go tightening, relenting and loosening liquidity when growth flags.

China has already taken damage from the swine flu, with more costly pork hitting consumer budgets, and from the Trump trade wars, where many small and mid-sized Chinese companies reporting considerable delays in getting paid, forcing them to belt-tighten to conserve cash.

A South China Morning Post columnist, Cary Huang, has set forth a worst-case coronavirus forecast, which includes widespread bank failures. He argues that the fact that China has more of a consumer economy than it did nearly two decades ago during SARS makes the economy more vulnerable to hits to domestic demand. Some of his other important points:

The country has 288 million migrant workers, who account for about a third of China’s labour force. Many who travelled to rural homes for the holidays will be either unable or unwilling to return to work in the cities….

Many small manufacturers fear foreign customers will shift orders to other countries due to disruptions in production and delivery. In a survey of 995 SMEs by academics from Tsinghua and Peking universities, 85 per cent said they would be unable to survive for more than three months under the current conditions. If the disruption goes on long enough, it could trigger a wave of bankruptcy among SMEs, which contribute more than 60 per cent of China’s GDP, 70 per cent of its patents and account for 80 per cent of jobs nationwide.

Finally, the epidemic will weigh on banks in the form of non-performing loans, adding risk to the banking system and pressure to the country’s towering debt pile…the risk of default on the country’s 99.1 trillion yuan of outstanding onshore bonds is increasing. Corporate bond defaults already hit a record high last year amid an economic slowdown. The lower revenue and land sales income for local governments will in turn hit local government financing vehicles. The disruption will weigh on the capacity of some companies and individuals to repay loans, pushing up delinquency rates. Financially weak SMEs could face additional funding pressure as they are exposed to refinancing risk….

Thus, the worst-case scenario cannot be ruled out. Massive financial collapse, an exodus of foreign companies and large-scale bankruptcies all loom on the horizon if this epidemic cannot be contained soon.

Last week, Ambrose Evans-Pritchard may have outdone himself in terms of apocalyptic-seeming framing, even though his argument is, as always, cogent. He believes China will find the economic cost of continuing to try to contain the coronavirus to be too high, and they will relent and let the virus spread faster globally. The paranoid would argue that the improvement in China’s reported new infection numbers might be a PR artifact to allow China to back off, irrespective of bona fide facts on the ground.

Of course, one can counter AEP by pointing out that even if China lets up on formal restrictions, many if not most Chinese will continue to isolate themselves as much as possible. While officials might be able to require employees outside Hubei to return to work, they can’t require them to go to restaurants and shops. And it seems unlikely that foreigners, particularly tourists, will be willing to visit China until they are confident the infection has been vanquished. How much good would it do to get factories back to normal if, say, shipping company workers and air carriers’ crews continue to be leery of China as a port of call?

Key points of AEP’s case from early last week:

Where do we now stand? Regions making up two-thirds of Chinese GDP have been closed since late January. It appears that few people have actually returned to work this week…

Another is property sales in 30 big cities released every day (amazingly). Sales have collapsed to zero and have yet to show a flicker of life…..

Property is a slow-burn issue compared to ruptured manufacturing supply chains, but by March it will start to bite for developers with dollar debts on Hong Kong’s funding market…

Some 25 provinces and municipalities were supposed to go back to work this week but this clashed head on with virus control measures. Companies may not reopen plants unless they can track the exact movements and medical data of each worker, and comply with a 14-day quarantine period where necessary…

The Guangzhou authorities have ordered plants to remain closed until early March in large parts of the city with warnings of ferocious penalties. Apple supplier Foxconn has yet to restart its core iPhone plants in Zhengzhou and Shenzhen. Just 10pc of its workers have turned up. Caixin reports that Foxconn may wait until March before restarting.

Meanwhile the near complete shutdown of Shanghai’s manufacturing hub in Songjiang belied early claims that 70pc of plants were going back to work…

Global angst is for now largely focussed on the car industry, commodities, and shipping. Hyundai, Kia, and Ssangyong have had to shut their car plants in Korea for lack of components. Nissan has closed two assembly lines in Japan. This will spread to Europe within a couple of weeks if the crisis drags on….

This from Richard Meade at Lloyd’s List: “This health emergency has paralysed ports, it has disrupted schedules across all sectors, led to serious challenges for crew management, and prompted a round of container services to be withdrawn, with lines now forecasting issues well into the second quarter of the year. It has thrown the global gas market into turmoil,” he said.

Mind you, the original has more evidence of distress and more detail.

Finally, Business Insider has a new piece in which Linette Lopez tries to grab readers by the lapels and shake some sense into them. The angle of this piece is that investors expect China to make a fast recovery from any coronavirus hit, a view Lopez depicts as delusional. She points out that liquidity had dried up in the banking sector at the end of 2018 (and the US-China trade row was not a culprit). In May, for the first time in decades, the government bailed out some sick banks. Next came a panic, with inter-bank lending freezing up. Officials knocked heads together but also told banks to cut the value of their investments in each other. That’s a fast way to show that banks aren’t as healthy as they pretended. But those now-exposed-as-sickly capital bases means those banks need to work on retaining more earnings and maybe even shrink their balance sheets. Those are not conducive to a lot of new lending.

But worse, in a case of massive mixed signals, these banks are likely to be pressured to not write down loans that go bad thanks to coronavirus. This is the Japan zombification playbook. From Lopez:

Because of the coronavirus, this weakened banking system — less than one year out from being on a bit of a brink — will now have to forgive loans for companies large and small and continue financing local governments dealing with the fallout from stagnating economies and the effort to fight the coronavirus. S&P research estimated that if this crisis is prolonged, bad debt in the banking system could increase from 2% at the end of last year to over 6%.

In this environment, some kind of liquidity event could be even more disruptive than it was in the summer.

“Banks will all be more sensitive to their exposure to each other. And they don’t really know each other’s risk,” Dinny McMahon, the author of “China’s Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans and the End of the Chinese Miracle,” told Business Insider. “If there was a liquidity event, you might see a flight to safety very quickly, and how the banks define safety may be a bit more severe than it was last year.”

And then, of course, even if the banks could forgive loans and ease credit conditions, that would only do so much. Some businesses simply may not be creditworthy after this economic shock….

China’s other financial-system struggle over the past year was ensuring that private-sector companies, mostly small and medium-size enterprises (SMEs), were getting adequate funding. A lot of these companies used to get financing from China’s shadow-banking system, so when authorities cracked down on that in 2017 and 2018, they got squeezed…

That is why China announced last week measures to support SMEs that have nothing to do with the banks, including asking local governments to waive taxes and administrative fees.

There is one additional wild card: the stability of Xi Jinping’s government. Even though Xi has centralized power, he has also presided over the swine flu, the Trump trade war, and now coronavirus. This Project Syndicate article highlights the fractures in Xi’s fortress (hat tip UserFriendly):

Normally, a single epidemic, even if mishandled, would not break the Chinese regime. Over the past four decades, the CPC has weathered numerous crises, from the 1989 Tiananmen tragedy and the 2002-03 SARS epidemic to the 2008 global financial crisis…

This time is different. Since coming to power in 2012, Xi has tightened political control at home and projected superpower ambitions abroad. These policies have unnerved Chinese private investors, alarmed Western powers, and sharpened tensions with the United States, all of which have contributed to a broader economic slowdown.

The COVID-19 outbreak has added an additional source of stress and unpredictability to the regime’s mounting challenges. As the epidemic persists, China will struggle to reopen for business, bringing even stiffer economic headwinds as small- and medium-size enterprises fail, workers lose jobs, and inflation picks up. While the Chinese leadership is highly adept at solving one crisis at a time, it has rarely had to confront so many near-existential crises at once..Indeed, cracks are already appearing in Xi’s supreme leadership.

For example, at the peak of the public outrage over the government’s initial cover-up of the outbreak, Xi disappeared from public view. After his meeting with the director-general of the World Health Organization, Tedros Adhanom Ghebreyesus, on January 28, he didn’t resurface until his state meeting with Cambodian Prime Minister Hun Sen on February 5. For a leader who normally dominates China’s news cycle every day, Xi’s absence amid a national panic was conspicuous, and led some Chinese observers to speculate that his grip on power may be in peril.

For instance, the government was not able to contain the outrage over the death of coronavirus whistleblower Dr. Li Wenliang, who died earlier this month after being arrested and detained by local police for sounding early warnings. From the Guardian:

On Friday, China’s social media was awash with posts expressing immense anger and grief.

Li’s death became the top-read topic on China’s microblogging site Weibo overnight on Friday, with more than 1.5bn views, and was also heavily discussed in private WeChat messaging groups, where people expressed outrage and sadness.

Even blog posts from state media outlets mourned his death and issued veiled attacks on the Wuhan authorities who censured him…

Fearing that the uproar over Li’s death could spill over onto the streets, the authorities quickly deleted posts calling for action. A post forwarded on Wechat but now deleted said: “I hope one day we can stand on the street holding Li Wenliang’s picture….

The outpouring of grief quickly turned into demands for freedom of speech, but those posts were swiftly censored by China’s cyber police. The trending topic “#we want freedom of speech” had nearly 2m views on Weibo by 5am local time, but was later deleted. The phrase “#Wuhan government owes Dr Li Wenliang an apology” also attracted tens of thousands of views before it too disappeared.

PlutoniumKun noted:

My Chinese friends have confirmed this – it’s all over Chinese social media and the government is struggling to control the message – even official Party outlets are expressing outrage. There is very real anger over his death – this could be a real game changer for the government.

I thus may be reading too much into a Financial Times report today, that Xi knew of the coronavirus outbreak weeks before his earlier claims. To put it mildly, that revelation does not strengthen his position. From the Financial Times:

Chinese president Xi Jinping issued orders to contain the deadly coronavirus outbreak almost two weeks earlier than previously thought, according to an account that appears to contradict the narrative that local officials were to blame for allowing the epidemic to spiral.

The official Communist party magazine Qiushi’s account over the weekend says Mr Xi met the party’s politburo standing committee, China’s most powerful decision making body, and gave instructions on the virus response on January 7, 13 days before the public was warned about the outbreak’s severity.

Previous state media accounts appeared to date Mr Xi’s earliest direct involvement to a January 20 statement. The magazine instead said he was aware and in charge of the response to the virus almost two weeks earlier, potentially implicating Mr Xi in the bungled early response to the outbreak that contributed to its rapid spread.

This means Xi was in charge more than 10 days before the January 18 official banquet in Wuhan, which was a huge affair. Per an earlier Financial Times account:

Long tables in 10 locations were laid out with a total of 13,986 dishes, some bearing patriotic names such as Motherland in My Heart (cucumber and ham), and One Belt One Road (vegetable salad). The platters were prepared by members of some 40,000 families, according to media reports, with many of them showing up to eat the food and smile for the cameras.

Recall that Xi’s term does not end until 2022 and he eliminated constitutional term limits. However, there are ways from him to have his power curbed short of a vicious power struggle. For instance, the Project Syndicate story points out that the formerly all-powerful Mao was pushed into early retirement as a result of his disastrous “Great Leap Forward” even though he remained titular leader. It’s plausible that Xi might quietly cede power, perhaps a lot of power, to stay at the helm and hope for better days.

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  1. OpenThePodBayDoorsHAL

    Maybe I’ve got “Muddle-Through-itis”, believing now that the base system is so resilient that it will weather this storm. Ten years ago we had the engine of the world economy, the USA, get sand in the gearbox and trust in the financial system evaporated. So they simply conjured a tidy $29 *trillion* and we were back to the races. China could simply absorb any insolvent banks, being a communist country with a sovereign currency nobody would/could object. Their stated goal of making the yuan a global currency would have to wait another decade or more but the trains would keep running and the rice bowls would keep filling. And here in the West the Fed could then juice things up on our side, to keep the nominal price of Apple high despite the fact that they had no phones available for sale they would announce a new acronym program, FBFC (Free Bucks For Citizens) and more free trillions would appear.

    This of course assumes the scenario that Covfefe-19 is a run-of-the-mill very bad flu virus. If it’s a global pandemic then these bets would be off.

    1. Steve H.

      : the base system is so resilient

      The financial system can create infinite bucks, but the material world is still constrained. I’m still hearing about saline bag shortages from Puerto Rico getting hammered by natural disasters. Many billionaires were made by offshoring manufacturing; globalization results in factories geared to be single-source for products, maximizing product by minimizing production costs. Limited sources is a systemic vulnerability.

      It’s not phones I’m worried about, it’s medical supplies, fertilizers, and other necessities. IIRC, most ibuprofen and aspirin is coming from China, while some shipping routes are taking a serious hit. A pandemic without fever-reducers is a problem.

      Reflect on that in light of these two quotes from Qiao Liang, in “One Belt, One Road.”:

      : It thinks that Washington will not fight Beijing for the next ten years, but to make sure that in ten years the US doesn’t change its mind, China must set its affairs in order and internationalize its currency, the RMB.

      : As long as the United States does not want a particular place to have capital, a missile can get there in 28 minutes. And when the missile goes down, capital can be still quietly and nicely withdrawn.

      OBOR was published in 2015, which puts active full-spectrum warfare with China around the next election cycle. Qiao Liang is a single source, but an important one for strategic matters in China. When China pulls the ‘off’ lever, it’s more than empty Walmart shelves. There’s simply not time to retool manufacturing in the US for critical goods.

      I find it likely that a real-world crisis would trigger the unrestricted/full-spectrum conflict. Why would China export medical supplies when it needs them internally?

      1. Amfortas the hippie

        in case of emergency, strip bark:

        the reliable symptom of overdose is ringing in the ears.
        and this is for emergency…big time, global pandemic, where supply lines for acetaminophen and ibuprofen dry up(“smartest kids in the room” thought it was a good idea to stop making things here, and that Autarky was a stupid idea. sigh.)
        the inner bark of Salix spp. is steeped in water to make a tea.
        again, dosage is the biggest deal…plus stomach problems: it’s hard on the gut, like aspirin.

        1. rtah100

          Please don’t. One of the theories behind the high and variable death rate of Spanish Flu was that the non-linear pharmacokinetics of aspirin were not understood and well-meaning physicians poisoned their patients trying to reduce their fever with increasing doses of aspirin, which had just gone generic in 1917. The effects of aspirin include increased lung permeability, leading to “drowning”, as well as kidney and liver disease and meningitis (together, Reyes syndrome).

          1. Jeremy Grimm

            I think you are being unfair to Amfortas. He suggested the help of one of the oldest of remedies in its least “unhappy” forms.

            ” the non-linear pharmacokinetics of aspirin were not understood and well-meaning physicians poisoned their patients trying to reduce their fever with increasing doses of aspirin, which had just gone generic in 1917.”

            OK … I’ll buy that. It is NOT what Amfortas commented to AND — it is NOT clear from your comment just how far physicians went with aspirin … though clearly too far.

      2. MLTPB


        Syria has not reported any cases or Yemen.

        What happens to fighting and refugees when bad news reaches those areas?

    2. Ignacio

      10 days ago I was praying for such resilience. I work with a company that builds solar PV installations for industries and commercial/administrative buildings. All PV panels we commercialize are made in China. This company has a large stock of panels but given the pace of contracts signed is increasing fast my guess is that after a year we will have run out of stock. Then what?

        1. Ignacio

          In Spain since 2019 autumn the installation of solar farms has exploded. If the course of coronavirus is not changed it will come to a sudden stop. We have a say “the good, if brief, doubly good” not applicable to this example but for discourses.

          1. GF

            Thanks Ignacio,

            Here in the USA solar farms are also advancing rapidly. Also, some projects here that are supported by various federal government programs must use Made in America products in order to get the government funds. So, there are a few US manufacturers of solar modules but not nearly enough volume to supply the big solar farms. That combined with reduced government solar installation incentives (rebates etc.) may result in a perfect storm of stalled or cancelled projects.

          2. PlutoniumKun

            Its bad news in Ireland too – there is about 2GW of installed capacity with full regulatory permission, awaiting the go-ahead for grid connection (and tax breaks).

            Incidentally, Renault just announced a new cheap EV, probably costing from 15,000 euro to be released in 2021, probably under the Dacia label. The problem? It will be made in Hubei.

    3. Kevin C. Smith

      But, but, but but but but!:
      China close to declaring “coronavirus victory”
      By David Llewellyn-Smith in China Economy at 9:20 am on February 18, 2020 | 20 comments

      The CCP may be close to declaring “victory” over the virus everywhere but in Hubei. The official number of new cases outside of Hubei Province has declined for 13 consecutive days and Premier Li Keqiang sounded almost upbeat in today’s meeting of the leading group on the prevention and control of the novel coronavirus outbreak (Xinhua Chinese, English):

      避免了可能出现的更大范围暴发流行,全国疫情形势出现积极向好趋势 ….
      When you have a lot of COVID-19 cases, is it because you have a poor hospital system? Or is it because you have a really good one. Cases: Versus hospital efficiency: Source: World Health Organisation For reference, Australia rates 32, US 44, China 144. ibid
      It all comes down to how you want to look at it. If you go with the Chinese data, then there is a miraculous straight-line recovery, new cases are falling every day outside of Hubei (helped by a definition change on 7 Feb): If you look at the rest of the world data, then …
      It’s pretty clear now what the CCP plan is. Allow the COVID-19 pre-programmed robot to run the fake numbers to zero then demand the world open up. If the world catches it, that’s all to the good. …

  2. ObjectiveFunction

    Recycling a great Lambert comment from Auerback essay, Dec 2018:

    Xi is riding the tiger of needing to deliver for the working class and the still-massive and still-poor peasantry. If he doesn’t know it, the hive mind of the Chinese elite knows it. A “decline in orders” translates directly and instantly to factory workers not being able to send money back to their families in the village. That’s very bad for Xi. (I don’t think Americans, who don’t have this practice and don’t stress filial piety much, understand this at all.)

    That’s those 288 million migrant workers, mentioned above.

    Add to that the overwhelmed social services safety net, which we’re now seeing in Hubei (whataboutism incoming in 3-2-1), and one does wonder whether a China which seems rather short on friends these days (Russia? you must be joking) can paper this one over. Especially when the rest of what Wolf Richther calls the ‘dirty shirts’ are showing distinct troubles of their own, with advanced cases of voter compassion fatigue.

    1. ObjectiveFunction

      More on the safety net and the Chinese precariat:

      (Dorothy Solinger 2019) Several hundred million rural migrants are still scratching out a livelihood in towns, alongside as many as 80 million older laid off workers and their dependents. Minimum Livelihood Guarantee funds reach only 10.7 million, about a third of those who might qualify owing to poor or corrupt administration. By 2014 pension funds in seventy per cent of China’s provinces were in the red.

      (Lowy Institute) The hukou system restricts access to social benefits for those who migrate to urban areas.

      (Setser, 2019): China has been remarkably slow in building out a modern, national system of social insurance (benefits are still too tied to hukou in many cases ) and has resisted significantly increasing its spending on public health. it also collects too little in income tax

      And our own esteemed Comrade PK, last November: It’s an interesting feature of Asian capitalism that its been able to ‘free ride’ on tight family bonds – extended families have allowed it to avoid the need to provide the sort of social safety net that even capitalists acknowledged was necessary in Europe to prevent social unrest (hence Christian Democracy). As Asian countries follow the west in gradually loosening family bonds (especially in China, where they seem far more delicate than in Japan/South Korea), etc, I’m curious to see how they’ll deal with it.

      You may be getting your answer now.

      1. Amfortas the hippie

        thanks,OF. I was wondering what they meant by “migrant workers”…internal migration, i suppose…from this
        …which points to another recurring wastrel thought: how much, exactly, is peasanthood still a thing, there.

        this is shaping up to be a Great Leap Backward….but not just an interesting item in the international section, this time around.

        China has swans, no?
        apparently Black ones, as well.

        1. xkeyscored

          I watched the first half of A Land Imagined (2018) last night. It’s a movie about Chinese and Bangladeshi migrant workers in Singapore, and thoroughly excellent on many levels so far! Highly watchable, well acted and filmed with a good plot, and sort of reminiscent of American Factory, but without the racism I caught a few whiffs of from the characters, or the droning on about the union – quite the opposite, it revolves around two migrants who break free of their servitude, and there’s obvious solidarity shown in everyday incidents between some of the different migrants.
          I haven’t finished it yet, but I think it’ll give you some insights, and you’ll sure enjoy it (I get the firm impression you’re a bit of a rebel).

      2. MLTPB

        Money was spent on high speed rail, other shining projects, and on buying global assets, but not enough on public health.

        So, as we see pictures of nearly empty shining train stations, the question becomes, if no one passenger is around when a train moves, does it make a sound?

    2. PlutoniumKun

      You make a very good point – the CCP has taken a fundamentally transitional approach to power, both internally and externally. Within China its power is very much based on its ability to deliver increasing living standards and ‘harmony’. Externally, China has not bothered much with either traditional hard or soft power, depending instead on a mix of aggressive nationalism (especially over the South China Sea) and raw cash transfers to neighbouring States in order to buy influence. This has bought allies, but not friends.

      Internally, the CCP is perhaps more vulnerable than it appears if it seems unable to deliver on either prosperity or harmony. Externally, it may find it has fewer friends than it thinks if it needs help. While all international relations are based ultimately on domestic interests, China may find that its neighbours, big and small, will take particular pleasure in sticking the shiv in if it appears weak.

      1. ObjectiveFunction

        Agreed. When China openly flaunted its intent to dominate every last export industry on the the planet, importing only raw materials from we barbarians, along with the gold and silver flowers of tribute, Sun Tzu stirred uneasily in his tomb.

        And I’m no Russia watcher, but I just laugh and laugh every time I hear about the so-called Russia-China alliance. Especially with crude heading back to USD25.

        That’s because numerous educated Chinese I have gotten drunk with have confided that the most crippling result of China’s “century of humiliation” wasn’t opium, treaty ports, famines or the rape of Nanking. It was that the bloody Russian Czarists stepped into the shoes of the Tatar khanates and took control of the vast rich expanses of boreal Asia, and not their (Qing Manchu) cousins. Fine, the clathrate bomb may render all that moot, but… point.

        TL:DR 1/4 of the world’s people ought to by rights control 1/4 of the world’s resources. Not ‘Belgium with nukes’.

        1. Carolinian

          ‘Belgium with nukes’.

          Don’t you mean “gas station” (sez Obama) with nukes? Of course those nukes can reduce that population disparity pretty quickly.

          And when it comes to disproportionate control of the world’s resources where does the US stack up? If some Chinese feel resentful toward the Russians let’s not go all lebensraum.

          Besides aren’t the Chinese getting back some of those resources via Africa, South America and of course America? It seems unlikely that globalization is going to turn on a dime any more than AGW. Sounds like scientists better find a cure for this virus stat.

      2. PlutoniumKun

        Just a correction, in my first line above ‘transitional’ should read ‘transactional’, I’ll blame autocorrect for that error.

  3. PlutoniumKun

    I think this has happened at the worst possible time for China. They’ve already been struggling (politically and economically) to manage a transition to a more consumer based economy, and there is a huge problem with over investment. I wonder if anyone really knows how bad the banking system was. There has been an assumption that the Chinese had learned from the Japanese experience and won’t allow its banking system to zombify, but I do wonder if Beijing would really have the political clout to cull the herd when needed. And also – as several articles on NC in the past has indicated – many foreign investors have already been trying to exit China – this can only accelerate, maybe at a pace so fast the Chinese economy won’t be able to adjust in time.

    One thing to keep a close eye on is the Tokyo Olympics. They are trying to act like its no big deal, but if the virus takes hold in Japan (and there are indications that it already has), then the Olympics are doomed. The knock on effects of this would be enormous – it would be a huge signal to individuals around the world not to travel, no matter what their governments say.

    1. Ignacio

      I agree. It is soon to predict anything but looks quite problematic. This could be a good case to test Hudson’s ideas on forbidding debt or zombify, isn’t it?. And the case for cancelling the Olympic games in Japan will become evident sooner rather than than later. Apart from the absence of visitors, sportswomen and men are, after hard training programs, quite vulnerable to such diseases.

    2. fajensen

      There is one additional wild card: the stability of Xi Jinping’s government. Even though Xi has centralized power, he has also presided over the swine flu, the Trump trade war, and now coronavirus

      Somebody in Xi Jinping’s government must already be adding up ‘2+2’ and probably getting ‘7’ out of it:

      Huawei gets sanctioned, important people arrested. Suddenly there is a huge Swine-Flu epidemic in China killing half the stock – while the USA is urging China to buy more pork from the USA. Before anyone gets on with the patriotic idea of maybe eating chicken instead, a Bird Flu appears out of the random. On top, there is a totally new Coronavirus shutting down China, while USA officials are talking to ‘business’ about moving supply chains out of China.

      On top we have those un-moored blimps, Pompeo and Bannon, ranting off about how “We need to break China and the CCP”. The usual war-like rants we get from people too unfit to Serve in any capacity except as biofuel. Which would be Free Speech and Fine, if only they were not people associated with The President.

      Even if China intelligence services are being only moderately paranoid, as all spooks are, from their side the whole thing could be understood as an implausibly long chain of sudden coincidences, together pointing to a sophisticated and coordinated attack on China from the USA (Which is maybe in any case a ‘better political sell’ than the alternative theory of the CCP not really being the masters of all it surveys. They must have their Boltons peddling War in Beijing too).

      In which case a coordinated response ‘in kind’ against the USA will be seen as totally justified!

      He believes China will find the economic cost of continuing to try to contain the coronavirus to be too high, and they will relent and let the virus spread faster globally.

      That would be the first ‘in-kind’ response! Let: ‘Them’ eat ‘their own bioweapon’ and see how ‘they’ like it!!

      In My Opinion, whatever problems we do have with China and their government, we have better do our best to help them however we can so that the Xi-government does not form the wrong impression of us and does something irreversible. Considering the current crop of sociopaths, shaved baboons, and assorted crazies that we have for government here in our ‘Liberal Democracies’ …. I am not very optimistic about the future right now.

      1. Ignacio

        Yep, there is a lot of room for conspiranoid theories. And I agree that this shouldn’t be seen as an opportunity for regime change and push for it from abroad. No need to accumulate mistakes

      2. PlutoniumKun

        From the very beginning there were rumours flying around on Chinese social media that the virus was an American plot (the reasoning seemed to be a garbled version of the early theory that it originated from a Canadian lab). I noted at the time that the government censors didn’t seem too pushed about squashing those stories.

      3. John Steinbach

        WAPO has a prominent article today about how concerned the Blob is about Trump being too nice to Xi

      4. MK

        OR, more likely- this thing leaked from China’s own bio lab in Wuhan [built partly by the French]. They know they did this [accidently] to themselves. Refusal to allow in CDC all but confirmed that.

          1. xkeyscored

            Thank you for that. I can’t quite make up my mind if it’s delusion, disinformation or fiction, meant to be taken as a parable or something, but it’s certainly bizarre!

          2. djrichard

            These types of creations always have a similar tone: a shared confidence … just between friends. And usually kind of nauseatingly so. It’s almost like they’re manufactured from the some school of writing – OK, now I’m going conspiracy theory, lol.

            Points for creativity on this bit in particular, “Essentially, our undesirables were becoming mildly mentally disabled, which is precisely the effect we wanted to produce in order to pacify the restive population of Hong Kong.“. It kind of leapt out at me as being consistent with an elite mind-set that was suggested in a more serious article, linked in the comment sections this morning “Those feudal orders dominated by hereditary institutions during most of human history placed the “natural order” upside down, with the welfare of the talking cows (aka: peasants) granted to them by the fancy of the master class of land lords.“, from

            Anyways, If I were a sci fi writer I would be mining this territory. Because in my view sci fi does give a glimpse of what the future has in store for us. Just need to figure out a plot line where only the undesireables get infected with mental retardation. And the “desireables” are left as is, as “high performing talking cows”. Who knows, maybe they can even be enhanced into ever higher performing talking cows, lol. [Just need to sell them on credentialed educational systems that open the doors to the promised land. Hmm, this part of the future is already here.]

        1. Shiloh1

          Did the Black Death / Bubonic Plague lead to the Renaissance? Xi has several hundred million in population to find out.

  4. Peter

    To speak of a pandemic in view of the figures presented here is ridiculous compared to the yearly flu pandemic:

    Worldwide, these annual epidemics are estimated to result in about 3 to 5 million cases of severe illness, and about 290 000 to 650 000 respiratory deaths.

    In industrialized countries most deaths associated with influenza occur among people age 65 or older (1). Epidemics can result in high levels of worker/school absenteeism and productivity losses. Clinics and hospitals can be overwhelmed during peak illness periods.

    No compare this: Where is there a pandemic when the overwhelming cases with the worst outcome happen in one province in China? That whole thing smells to me of manufactured hype with really no substance to it except in the place where this disease originated. The Chinese response seems correct when one observes the figures in table 1 and 2.

    It is also clear that the boost of 15k several days ago was due to a change in the method of reporting cases, and that over the last three days the rate of new infections has been going down.
    I wonder if all that has to do to actually being able to assess risk realistically and not being stampeded like a herd of buffalos, just reacting to manufactured panic produced by news media without taking the actual figures and range of spread into account.

    One wonders – is this an attempt by the West to again paint China black and destabilize the Government by outside pressure acting on the population?

    The death rate of the regular flu pandemic when calculating with the figures above comes out to between 5% to a high of 21% depending which combination of figures are being used (3×10^6 to 5×10^6 and 2.9 x10^5 to 6.5×10^5 resp.) , whereas the present estimated rate of covid 19 rests at about 2 – 4% and the figures in the hardest hit Chinese province at present lies at about 3% – where is the beef?

    1. Peter

      PS – let me tell a biological threat that luckily at the time, because it was well contained, did not cause panic – although there was much more reason for it:

      I was as a lab tech trainee in the late 1960s in the labs of the then Farbwerke Hoechst AG when some fellow technician came into the lab and reported of a strange new disease that occured in the lab at Behringwerke, an affiliated of Farbwerke, where he had a friend working.

      The description of the symptoms was very disturbing, and the first hint of a previously unknown disease that was subsequently called hemorrhagic fever – the best known relative being the Ebola Virus. It really sent a chill down our lab tech fraternity working in bio research.

      The Quarantine was swift and thorough and at the time prevented a spread, only 31 people became infected, still resulting in a mortality rate of 22%.

    2. Peter

      Correction – something went wrong:

      I wonder if all that is part of not actually being able to assess risk realistically and being stampeded like a herd of buffalos, just reacting to manufactured panic produced by news media without taking the actual figures and range of spread into account.

    3. Yves Smith Post author

      You are making shit up, a violation of our site Policies.

      China has no idea how many people have the disease. The hospitals in Hubei are overwhelmed and people are being told to isolate at home. Those numbers are not recorded. The new classification isn’t scientific, it adds cases of “exposed to someone who had disease, now in hospital with severe respiratory problems”. And even of the subset of people actually tested, widespread reports of people administering tests doing tests incorrectly and getting false negatives.

      The naive computation of the death rate is clearly incorrect due to the fact that the ailment is spreading and the disease both has a long incubation period and a comparatively long period after someone becomes symptomatic (5-7 days) before the disease can turn dangerous.

      The death rate of the Spanish flu was 2.9% according to a recent well done study. The death rate of a regular flu “pandemic” is 0.1%.

      The disease [Spanish influenza] was exceptionally severe. Case-fatality rates were >2.5%, compared to <0.1% in other influenza pandemic

      A paper our of one of the national labs which tracked actual cases finds the R0 is way higher than anything reported.

      Shorter: you aren’t an epidemiologist and it shows. The experts disagree with you.

  5. Ignacio

    Everybody is doing a lot of analysis in the heat of the moment and doing IMO bad retrospective analysis on what was done or what wasn’t done without having real idea about what happened in ground 0. This little bug being genetically very similar to SARS Cov1 is a very different beast from the epidemiological point of view even if they spread and infect exactly the same way. SARS Cov2 could be considered a stealthy version of the former and for this reason very difficult to control. Most infected simply don’t notice or think it may be common cold. In contaminated cities, It may also be confused with smog-caused allergies so common nowadays. Because it is highly infectious and we lack immune resistance against the virus, one can become infected with a small virus load and simply not notice for weeks while spreading the virus. See the example of the cruise in Yokohama. A single case was detected upon arrival. Everyone was quarantined and a couple of weeks later it results that more than 10% of passengers and crew are infected (most if not all during the journey from HK). Apart from the cruise, confirmed cases creep up slowly in Singapore, Hong Kong or Japan despite strict control measures indicating how slippery is this virus.

    Though common cold high season is winter for a variety of reasons, I wonder if SARS-Cov2, being so infections might have en extended seasonality though being milder in summer when we are less susceptible and viral loads are smaller and one can become infected almost without noticing. We can blame whatever to Chinese authorities but it may be the case that the only way to control this virus would require measures that are too harsh to be acceptable. On this, I agree with Evans-Pritchard. China has already taken those and though the number of new reported cases has slowed down I would be more than cautious to believe it is being controlled once an epidemic has already been settled.

    I wonder if our efforts to control it may only temporarily save lives but result in harder than expected political and economic consequences as these examined in this post. In other words, when would it be wise to throw the towel? We are on uncharted territory with Covid 19. The only good consequence I foresee could be the end of the Orwellian Chinese regime but that could come with many nasty collaterals.

      1. djrichard

        Throwing in the towel in “times of war” would require ritualistic harakiri I would think. Some heads would have to roll, if just figuratively. And maybe the biz principalities have the power to make a “coup” like that happen.

        I see it happening as a rear guard action instead, so the heads don’t have to roll. “Hey look at that, the whole country is now under quarantine. In which case, there’s no point in having a quarantine anymore is there. At least not in China. Seems the only way we can defeat the virus now is to not let it change our way of life. Oh by the way, while force majeure applies to the TBTFs, your individual debts are not forgiven. Back to work.”

  6. xkeyscored

    my scenario for how things might get troublesome here is that coronavirus winters in the global South, particularly Africa and Australia, and is primed to become US health risk during the 2020-2021 flu season
    There’s very little solid evidence for the view that this virus can’t take the heat, and anyway, many people have air-con.
    New Straits Times:
    There is hope that the arrival of spring in the northern hemisphere will bring about the end of the Covid-19 outbreak, said Deputy Health Minister Dr Lee Boon Chye.
    He said looking back, influenza and other coronavirus flu epidemics, including SARS, were at their height during winter, which indicates that they thrive in cold temperature.
    “We also have scientific evidence to show that heat actually kills the coronavirus.
    “(This is) based on Singapore Health Ministry’s chief health scientist, Professor Dr Tan Chorh Chuan, who mentioned recently that with the temperature at about 30 degrees Celsius and humidity at about 80 per cent (which is what you get when you go under the sun in Malaysia) the virus would not survive long…,” he said.
    [Not much scientific evidence there, just a hope that it behaves like SARS or ‘flu.] It was reported that Dr Tan had said that the likelihood of viral persistence outdoors is lower, as most studies indicate that viruses do not persist well in hot and humid environmental conditions. [Ebola?] This refers to a temperature of over 30 degree Celsius and a humidity level of over 80 per cent.

    New Scientist:
    Will the covid-19 outbreak caused by the new coronavirus fade as the northern hemisphere warms up? This has been suggested by some researchers and repeated by some political leaders, including US president Donald Trump, but we simply don’t know if it is the case. “We absolutely don’t know that,” says Trudie Lang at the University of Oxford. “I keep asking virologist colleagues this and nobody knows.” “So when you hear people say the weather will warm up and it will just disappear, it’s a very unhelpful generalisation,” she says.

    1. Amfortas the hippie

      ebola is not airborn(thank the Goddess!)
      coronavirus and flu are.
      so ambient conditions matter.
      cold and dry are conducive to the flu, etc being sneezed out and floating around…or getting transferred from nose to doorknobs.

      still, it would be nice to have some confirmation on this particular virus.
      I’d also like to see more science regarding it’s propensity to mutate and combine.

      1. xkeyscored

        Human coronaviruses can remain infectious on inanimate surfaces at room temperature for up to 9 days. At a temperature of 30°C or more the duration of persistence is shorter. Veterinary coronaviruses have been shown to persist even longer for 28 d.
        “Persistence of coronaviruses on inanimate surfaces and its inactivation with biocidal agents”

        The evaluated studies, which focus on the pathogens Sars coronavirus and Mers coronavirus, showed, for example, that the viruses can persist on surfaces and remain infectious at room temperature for up to nine days. On average, they survive between four and five days. “Low temperature and high air humidity further increase their lifespan,” points out Kampf.
        “How long coronaviruses persist on surfaces and how to inactivate them”

        Yes, more data for this particular virus would be nice, and a great deal of work is being done. It’s definitely mutating, viruses do that every time they replicate. The question is whether any of these mutations change its behaviour.

          1. MLTPB

            Fortunately, we haven’t seen any cases in countries along the old Silk Road (Iran, Uzbekistan, etc.) though it must be freezing there.

            Is it because no trucks or trains are running through the vast region at this time?

    2. dearieme

      “many people have air-con.” I’ve never lived with air con. How high can you turn it up? Frinstance, could you set it to 25 Celsius (77 Fahrenheit)? Would 25 Celsius and 60% humidity be a decent compromise between comfort and viricide?

        1. dearieme

          So, do what? Turn it up to 28 Celsius (can you do that?) and 80% humidity? Or at those levels would you be better off instead just to open the windows and turn on lots of fans? Do people own lots of fans? Could the a/c system be used simply as a fan?

          1. Dirk77

            From the first article that xkeyscored cites, a similar virus lasts longer at a higher humidity. So perhaps you want hot and dry – as long as the heat itself doesn’t stress you. The Taleb et al article cited by PK above said that limiting contacts is very important on a society level for containment – and so also on an individual level. You could then, like Issac Newton during a plague outbreak, go to the country, in your case say Phoenix, and work on your hobbies until things are clear.

    3. Yves Smith Post author

      Wowsers. Did you miss that:

      1. The southern hemisphere has winter when we have summer?

      2. There are part of Australia that get cool in the winter? And even sunny Sydney is regularly the names source for seasonal flus?

      3. East Africa has many ski resorts and tourists visit them.

  7. Keith Newman

    I find the financial meltdown predictions re China unconvincing. If the government has the institutional ability, these problems can be resolved as per the 2008 financial crisis in the West by directly supporting banks and other private businesses. Hopefully the Chinese government would be more people friendly than the Western ones were.
    I have no opinion about the problem re people not showing up for work or buying anything for fear of contracting coronovirus. But surely the danger of contagion will pass in a few months?

    1. Typing Chimp

      I find the financial meltdown predictions re China unconvincing.

      Have you looked at HSBC’s balance sheet?
      Me neither :)

      Also, China’s debt loads are already quite significant. I do not believe the government can so easily just assume ever-increasing amounts of debt anymore. And the leaders do not appear to be willing/capable of transferring wealth to the household sector. And given China’s belligerence over the past few years, I don’t think they can expect much foreign help.

      So for now the country can spend and issue debt, but if this virus gets much worse…


  8. Kristiina

    What concerns me is are the sick getting the treatment they need? Are those in quarantine getting food and necessities? Can the infrastructure serving the sick and quarantined remain functional? How many die in their homes without food and/or treatment? And is there real research being done on the virus? How long does this specific virus remain virulent on surfaces? How long do the sick spread virus? The Diamond Princess showed the spread of virus was really quick and effective – how did the spreading begin there? Did spreading continue even when quarantine was in place?

    So many questions, so little answers. What we will certainly learn is how much we owe gratitude to those lowly chinese workers, for producing so much of what we consume.

    1. Ignacio

      In Wuhan, I read few days ago, when you have symptoms of low respiratory tract infection AND yield positive results by NAT you are hospitalized. This changed when they noticed many false negatives and now, it is said, if someone tests positive for lung lesions by CAT is then hospitalized. This suggests that many developing more or less severe forms of the disease were left unattended and some of them may have died. I read somewhere that about 4% of those developing Covid19 pneumonia in hospitals died. If not in hospital, without oxygen and other treatments that percentage would skyrocket.

      Regarding infectivity of viruses in surfaces: it is a question of minutes-to-hours depending on virus load and environmental conditions (temperature and humidity).

      The cruise: once the first case was detected everyone was quarantined in their cabins. Thus most current cases, if not all, would have been infected before quarantine.

      We are talking only about fast-track spread by train planes and boats but what about local spread to and within rural regions? This prompted me to google earth the state of Hubei and if you do it you see that most rural communities consist on endless streets flanked by houses on both sides with the fields in their backyards. These communicate larger and smaller population nuclei. Amazing.

      1. xkeyscored

        – Regarding infectivity of viruses in surfaces: it is a question of minutes-to-hours
        See my comment above at 7:48 am!
        9 days at room temperature – though that is a kind of guess based on other human coronaviruses. And they may like high humidity.

        And the cruise ship passengers may have become infected while ‘quarantined’ in their cabins – air-con, pipes, food deliveries – nobody knows yet.

        1. Ignacio

          Most of those studies are done with very high viral loads. Virus persistance and viability dramatically falls with lower loads. What usually occurs in sensitive places is that these are frequently re-contaminated by repeated use.

          1. Kevin C. Smith

            There is some experimental evidence that viruses remain infective a lot longer if they are suspended in mucus [as is usually the case in the real world].

            So … experiments to determine the duration of infectivity of COVID-19 on surfaces must use COVID-19 [or whatever virus you are studying] suspended in mucus.
            Application of a pure virus suspended in something like saline will artificially shorten the duration of infectivity, misleading and falsely reassuring us.

            See, for example, and the references.

            1. Ignacio

              Apparently coronaviruses might be more stable than flu and better transmitted through fomites. In the real world, unfortunately, transmission through these cannot be tested scientifically (you test infectivity in culture cells and you don’t do it using bare hands as inoculators, which would be the transmitters in the real world). Our skin is full of RNAses for some reason, and corona are RNA viruses.

        2. MLTPB

          I read of someone on board posting online right after the quarantine about wondering around the cruise ship, observing what areas on board that were empty or nearly empty of people, and what areas were still used by braver souls.

          Additionally, people inside were let out to get fresh air. I imagine they had to use elevators and go through various rooms, touching our opening some doors perhaps.

          And one Japanese health ministry official caught it after being on the ship.

      2. fajensen

        The cruise: once the first case was detected everyone was quarantined in their cabins. Thus most current cases, if not all, would have been infected before quarantine.

        Well, Maybe. Do we know what kind of air conditioning those cruise ships have?

        In buildings in Europe, we usually separate the outgoing and incoming air flows using cross-flow heat exchangers or heat pumps to recover the heat. In other places they may use a rotating drum with pipes that are heated on the hot side, then moved to the cold side, to transfer the heat – and also any germs the surfaces might have picked up – into the ‘fresh air’ side.

        If the ships have the ‘drum-type’ heat recovery system, they will be piping the virus into all the cabins!

        1. Ignacio

          If there is air conditioning through air conducts, air flows from central machines to the rooms and pressures do not favour cabin-to-cabin communication through the conducts. Flow goes in one direction. Exit grilles are usually located in bathrooms and air pressures conduct to pipes outside again following the same rules, communication through exit grilles is quite difficult again because pressure. Quite implausible that droplets from the nose of an infected person travel between cabins.

    1. dearieme

      You’d think that a nation with the huge military and Securitate apparat of the USA might have had Presidents and Congressmen who were adequately advised on this sort of risk.

      1. MLTPB

        Did Beijing need to declare martial law to lockdown millions?

        On reaching X cases in another country, it likely will trigger quarantines and lockdowns, after martial law is declared, depending on the country, I assume.

        At that point, both drugs and respirators are needed. I believe no one country has enough for large numbers of patients.

        On that score, the curious Hawaii case involving a Japanese couple, and the passengers from Westerdam, reroute to various global destinations both are worthy of tracking.

        In the meantime, all nations must guard their borders diligently. Can’t let them be porous.

  9. CletracSteve

    While the supply chain discussion is focused on pharmaceuticals and car parts, one should also consider electronics. Our son works for a US-based electronics firm that may be on the verge of a forced break as their Chinese factory is closed. He has said all resistors and capacitors come from China. Apple/Foxconn is not the only gadget maker at risk.

    My Ali-express hobby supplies have also stopped shipping. My wife’s computer is on the blink. Shucks, we may have to end our winter hermit-period early and start preparing our garden. At least our vegetable seeds aren’t produced in Guangzhou yet.

    1. Samuel Conner

      Clearing out my over-full junk email folder, I came across a 1-2 week-old communication from an Ebay seller. In mid-January, prior to the widespread news of the nCov2019 epidemic, I had ordered some DRAM for a 10-year-old laptop that I am refurbishing (have been doing a lot of that recently, with all the old Win7 machines in my social circle that are now officially obsolete), from one of the numerous sellers of (what I hope are genuine) older Crucial Technology memory modules. It looks to me like most sellers of “new” merchandise (or at least the kinds of new merchandise that I purchase) on Ebay these days are shipping out of China.

      A week later I started hearing news of the outbreak and when, a week later, another package (ordered late December) from a mainland China shipper arrived, I gingerly set it aside until I have a sense of whether the package might be toxic.

      Back to my email clean-out; in my Junk mail folder, dated Feb 6, is a communication from the DRAM seller notifying me that shipment of the DRAM package will be delayed. The email cited the Lunar New Year holiday and public health measures to contain the epidemic.

      As an aside, if readers are so inclined, don’t toss older still functioning (or even broken) PCs. Many failure modes are not hard to repair, components for older machines are dirt cheap used or even new (though new components from small sellers shipping out of China may be problematic for a while), and there are numerous Youtube tutorials, often for exactly the model one wants to repair, and if not exact, frequently a related model with similar layout can be found.

      Older machines that are still functional can be kept running with adequate performance for many basic tasks even if the hardware cannot support recent versions of Windows. Linux runs surprisingly well on old hardware and there is a range of lightweight distributions that can function on very old hardware. I have one of the heaviest of these, Lubuntu, running quite nicely on an underpowered 10-year old Acer netbook (that is notionally capable of running Win10 but that — I tried it — is unacceptably slow). With Lubuntu, email and office-style (LibreOffice) apps are acceptably responsive, though it gets sluggish with multiple browser tabs open to sites with dynamic content.

      Having functional older PCs on hand has come in handy in a redundancy/resiliency sense. When one breaks, one can carry on by putting another back into service.

      For those with some time to spare, and adequate vision, PC hardware repair could be useful for oneself and friends and family. I think these (and many other, food production, for example) skills ought to be widely distributed.


      Depending on your latitude, it may not be too early to start veggies indoors. I hope to get tomatoes and lettuce started this week.

  10. gallam

    If you sum up the reported number of overseas cases, it appears to be doubling roughly every 6 days.

    I would say that we will know if there is going to be a global disaster in about 6 weeks, maybe less. There is nothing so far that suggests our experience will be any different to that of the Chinese.

    1. Samuel Conner

      It appears to me that the “outside of Mainland China” confirmed cases (at the JHU CSSE dashboard) are dominated by the cruise liner currently quarantined off Japan. The numbers on that ship are rising rapidly and the daily change in the “not China” global case count may actually be dominated by this one location, which is currently contained (though I have read that US is thinking about evacuating and repatriating non-symptomatic citizens from the ship. Hmm… me thinks it might be wiser to build an acute-care hospital on board and wait until all on board have cleared quarantine).

      If one backs that ship out of the “not China” global numbers, I think the situation looks to be better controlled.

      Not completely sure about that, as I have not been keeping a record of the daily numbers for the cruise ship and the dashboard does not provide time-histories of the data for individual locations. That would be a nice feature upgrade.

      1. Samuel Conner

        There is, however, something weird just now at the JHU CSSE dashboard.

        As of 2/16, the “cases versus time” plot shows 780 outside of China, of which roughly half would have been on the Diamond Princess cruise liner.

        Today, there is also a 2/17 datapoint that says “1.3k” cases outside of China. But if one adds up the total number of cases in the “cases by country” list at the left, one gets (eyeballing) in the range 800-900, again about half of which are on the DP.

        So I don’t know where the additional ~500 cases implied by the “N(t) for outside China” graph are coming from.

        Maybe a fat finger in data entry?


        I have been checking on a specific province in southern China in recent days, and the reported “confirmed cases” is in the hundreds and basically unchanging in recent days, while the # “recovered” is gradually creeping up and there are no new deaths. Assuming that the reports for this province accurately reflect what the authorities know and that the public health people are doing good surveilance, this suggests the possibility that, at least for the moment, the outbreak may be contained in that province.

        I’ve been following this because of a report through the grapevine of people in a city in this province being afraid to leave their homes to shop for food. It looks to me like the social distancing is working. I hope that no-one starves while awaiting an “all clear” signal.

      2. smoker

        Well actually, as of now:

        Two planes evacuating 340 American cruise ship passengers from coronavirus quarantine on board the Diamond Princess cruise ship in Japan have now landed back in the U.S. after 14 evacuees were placed in isolation chambers when officials realized they had tested positive for the deadly virus.

        The first 747 plane touched down at Travis Air Force Base in Northern California just before 11.30pm on Sunday local time, before the second plane arrived at Lackland Air Force Base in San Antonio, Texas a few hours later.

        Fourteen U.S. evacuees had to be placed in special isolation chambers for the duration of the flights after it emerged they had been infected with coronvirus in the lead up to the evacuation.

        The passengers had all been deemed ‘fit to fly’ and were not showing symptoms before disembarking from the cruise ship. As the evacuees were being taken to the airport in Tokyo, results from tests carried out two to three days earlier came back and showed the 14 passengers had the infection.

        Despite the U.S. earlier saying no infected passenger would be allowed to leave, those who tested positive were still allowed to board the planes because they did not have symptoms. The State Department said they were being isolated separately from other passengers on the flights.

        The current infected count:

        … Japanese officials confirmed 99 additional people had been infected by the virus aboard the quarantined cruise ship, bringing the total to 454. At least 62 Americans are among those infected but it is unclear if that figure includes the 14 who were evacuated.

        There’s a CNN link at the bottom of that piece with more backdrop.

      3. xkeyscored

        And there’s this, about the Westerdam, which may mean it’s a bit late to worry about whether to quarantine Diamond Princess passengers or not, as there seem to be hundreds of potentially infected folk already back in wherever and under the radar, having travelled there unquarantined:

        Several countries were trying on Monday to locate hundreds of passengers who departed the Westerdam cruise ship when it docked in Malaysia, where an American traveler tested positive for the novel coronavirus, the New York Times reports.

        Why it matters: Health experts have expressed concern that the passengers of the Westerdam, operated by Holland American Line, were released without a quarantine order, including the 83-year-old American woman infected with COVID-19.

        Stanley Deresinski, a Stanford University professor and infectious disease specialist at the university hospital, told Fortune magazine, “This woman was on the boat and was infected for a few days — she could have potentially exposed other people on the boat who have now gone home. … It doesn’t require prolonged exposure to be infected.”

        The big picture: The Westerdam was carrying 2,257 passengers and crew when it docked in Malaysia after several ports denied it entry over coronavirus fears, per the cruise liner. President Trump thanked Cambodia for accepting the ship Friday.

        747 crew members and 233 passengers were still on the ship at Sihanoukville, Cambodia, Sunday, Holland American said. The rest had already departed. [several are holed up in a Phnom Penh hotel]

        also, the cruise company’s regularly updated site:

          1. MLTPB

            Cambodia did not protect her border in that instance.

            The ship was in Hong Kong till Feb 1, 2020, I believe. That’s reason enough to keep them for 14 or 24 days.

            Nor did Malaysia in letting some into and through the airport at Kuala Lumpur.

        1. MLTPB

          In Phnom Penn, one can eat spiders, cockroaches, etc.

          If you like silkworms, try Beijing.

          All these are wild animals, except maybe the worms.

  11. Dorian Lucey

    There were rumors the a Chinese lab released this weaponized virus. Given the cascade of Swine Flu and Covid-19 in quick short order, might one not consider the USA may be the prime contributor? The tariffs and sanctions have not been that effective so perhaps escalation was required. This seems much more likely than China stealing a virus from Canada, transporting to China and then weaponizing the virus.

    China has a history of new diseases. Perfect deniability

  12. John k

    In 1988 the cia predicted the Soviet Union would last 50 or so more years. Gone in a blink.
    My conclusion is that dictatorships can last a long time but are brittle, not able to take a major shock.
    This epidemic may be that shock for China bc it is worsened by a combination of factors, including major mistakes by the party:
    Why were wild markets not banned after SARS?
    Why hold that open feast in Wuhan? (How to best spread virus.)
    Why wasn’t Wuhan locked down before 5 million left for spring? (How to best etc)
    Why did China challenge the west while it was still in the catch up stage?
    So Chinese are furious, and with good reason… and they can’t speak or protest. Pressure kettle… and if they go to work the virus spreads, and if they don’t, economy tanks. The deal is, party gets to rule, citizens get better living standards. But standard is falling hard just now…
    The military can hardly be happier than the citizenry.
    Democracies let off steam at every election… well, if they’re seen to be honest.

    1. MLTPB

      Rome was not built in one day.

      Being like water, being soft was not the option favored by Xi during the trade war, when that would have brought China time to build a more solid fountain for the future.

      Did he read too many comments praising him from abroad, or was he flattered by heartland alliance advocates?

  13. Susan the other

    Corona19 virus won’t be contained for at least 18 months and then only by vaccination. (I personally believe it was designed that way… but that remains in the realm of conspiracy). Since there is such a rush to develop a vaccine there is also a good chance it will be defective, even harmful — but never mind quality control for now because it isn’t China developing the vaccine – it is the rest of the industrialized world. The one thing China has going for it is their close control of their economy. That, in fact, they have promoted decentralized, disbursed medium-sized businesses is probably a good thing about now because they won’t all go down at once. The other good thing is that the Chinese Central Bank can do a certain amount of emergency magic. If the piles of “bad debt” get bigger they will just become the insignificant cost of doing business because the businesses in question are now critical to the survival of the economy. The debts will all be written down and off. Because there’s no other choice. China will survive for a while more like an autarky. And all the western investors will have to find other blood to suck. It is a matter now, and for another 2 years or so, of survival for China – literally, and their central bank will pay for it all and just let the expenditure “run off the books” like Ben Bernanke did. The greatest asset of central banks is fiat and that is because fiat trumps time. They can literally buy time whenever it is necessary. Would any of us ever want to be without this treasure?

    1. Yves Smith Post author

      It takes the better part of ten years to approve any drug, including vaccines. Three phases of clinical trials. You need to establish safety, efficacy, and dosage.

      SARS just stopped. No one knows why.

      1. vlade

        EU procedures allow for emergency approval in 70 days if a pandemics is declared. Testing it for efficiency is what takes time. I suspect though corners would be cut

        1. PlutoniumKun

          Its not my area, but from what I’ve read the key issue with vaccines for coronaviruses is that the putative SARS vaccine precipitated cytokine storms, which ended up killing a few of the test subjects. I suspect that a fear of this would slow down the release of any vaccine.

          1. vlade

            neither my turf, but I suspect that if there’s a high enough mortality virus around, there would be tremendous pressure to get something out pronto. It could easily kill more than the actual virus, but the pressure at the moment would be still there.

            WHO released some figures on Covid-19 now, and it seems that 80% of cases are mild, 14% complications, 5% life-threatening complications (including septic shock, multiple organ failure etc, which are all death-door stuff) and 2% death rate (which actually adds up to 101%, so there’s some rounding.. ). It also seems that the numbers are much better on kids (tbh, it could be because it’s under-reported on kids, so I’d be careful here). That is, for complications (which I would equate with hospitalisation required in flu, where it is about 1.38%) etc. about 10 times worse than flu (which kills about the same number of people in the US as car accidents).

            These 5% above and a lot o the 14% above would likely turn into mortality if the health system is overwhelmed (the 5% is basically not survivable w/o intensive care unit). And when you have close to 20% mortality, running untested vaccine become considerable option.

  14. smoker

    Because their integrity is unimpeachable, the Google, Facebook, Amazon and other tech giants spent a day in secretive talks with the World Health Organization to tackle the spread of coronavirus misinformation.

    According to a CNBC report Amazon, Twilio, Dropbox, Google, Verizon, Salesforce, Twitter, YouTube, Airbnb, Kinsa and Mapbox were all at the meeting.

    Because all of those companies are in the Medical Health Profession this:

    WHO shared information with the companies about its response to the virus and attendees gave their own ideas to address the outbreak.

    The Technocracy, Capitalism and Meritocracy™ at its most frightening apex.

    Apparently there may have also been a conversation with the above named devout protectors of humanity’s personal information about evil others using the virus to pilfer personal information:

    Cyber security experts warn that some malicious links posing as innocent articles or videos about the outbreak of the killer Wuhan virus actually contains code designed to pilfer personal information.

    I feel so safe now.

    1. smoker

      messed up my intended strike through html of Medical Health Profession, though I’m sure most got my point.

    2. smoker

      I’m pretty sure, the Technocracy attendees will opt for even more devastating social distancing, censorship, and isolation for the unconnected masses (all of which have already taken an enormous and tragic Technocratic toll on the human species), there are further billiions to be made off of that.

      No more Brick and Morters says the Bezos appointed attendee, etcetera.

  15. VietnamVet

    This comment is intended to highlight the failure of the US government to treat the Wuhan coronavirus as hazardous as a bioweapon. Corporate Media is downplaying the health and economic risk in order to reduce panic. In fact, this virus is infectious without symptoms. Unlike any other flu virus. Instead, yesterday, Donald and Melania Trump circled around the Daytona 500.

    The Diamond Princess quarantine is a disaster. “The quarantine process failed,” Anthony Fauci said. “I’d like to sugarcoat it and try to be diplomatic about it, but it failed. People were getting infected on that ship. Something went awry in the process of the quarantining on that ship. I don’t know what it was, but a lot of people got infected on that ship.” Fourteen Americans infected by the Coronavirus on the ship are now in a hospital in Omaha.

    Approximately 50% of those who were tested on the ship are now infected. Isolating passengers in their rooms and food delivery to their doors with crews wearing face masks did not work. Likely due to the 9-hour persistence of infectivity on inanimate surfaces and perhaps by getting into the ventilation system. Isolating oneself at home in Suburbia with Amazon delivery may not work even for the professional managerial class who can telecommute.

    China has imposed draconian measures that has gave the rest of the world a little more time to prepare. WaPo reports that the one mask factory left in Texas is not a full production because the owner can’t afford to take the financial risk of running full bore if this pandemic fizzles like SARS or Swine Flu before. The US government must start stockpiling medical and personnel protective equipment and preparing emergency ICU beds this minute. The virus is in the USA.

    If 50% of Americans get infected and the death rate is 2% like China, 3.3 million old, poor and already ill Americans will die. The survivors will have unaffordable hospital bills to try to pay off. The USA has about 4 million ICU visits a year. If the virus gets loose in any American city, its healthcare system will be overwhelmed and collapse. If the supply chain to China remains cut, shortages and unrest can only escalate.

    1. MLTPB

      1 When we put in travel bans, Beijing complained we were over reacting, causing fear. It did not ain to buy the works time as much as buying the rest of China time, which would be job number 1 for any government.

      2 speaking of not working out for the managerial class by staying home telecommuting, this will hit not along the line of poor or those not managerial or rich. It will hit hard urban areas, and less hard rural regions, where the Deplorables can be found in large numbers. Outside of Hubei, that’s what we see … megacities are under lockdown.

      3 Superbowl was 15 days ago. I was concerned, but so far so good. That Trump could circle around Daytona 500 yestedday should encourage people the primaries will ahead as scheduled, and even if Tokyo has issues with the Olympic Games, we will likely to have our nomination conventions, though predicting the future is very hard.

  16. Stan Sexton

    As the Chinese economy tanks, more and more Chinese owners of property in the U.S. and Canada will sell to keep their individual economies afloat. Look for more property listings but at the higher prices most Chinese have paid. Watch Out Orange County and especially Irvine !

    1. PlutoniumKun

      I think its far more likely that they will sell domestically, not their foreign investments. They will move to their Californian homes, not sell them.

  17. ObjectiveFunction

    Chen Yixin is a protege of President Xi, known as the ‘guy with the emperor’s sword’.
    After the arrival of the CCDI and Mr. Chen, the clampdown on independent sources of information has greatly increased:

    -Citizen activist Fang Bin has been arrested and disappeared. Note that for China, “disappeared” is a transitive verb, as in Fang Bin was disappeared.
    -Lawyer and citizen journalist Chen Qiushi has been arrested and disappeared.
    -Censorship on all matters related to the Wuhan situation has been made absolute. See China’s online censors tighten grip after brief coronavirus respite. No information comes from Wuhan medical officials. All information is now coming from Beijing, where it is carefully controlled.
    -Chen Yixin has ordered the press issue only “happy” stories, leaving the truth unreported

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