The Wuhan Madness

"Coronavirus Averts INCEL Sparked CIVIL WAR?"--Black Pigeon Speaks (17 min.)

I came to work this morning, checked my email, and had a message from a co-worker in a panic because someone had left spilled coffee on a counter and someone else had coughed into their hand but hadn't immediately ran off to wash. Her justification for her panic is that neither her nor her mother had ever seen a pandemic treated the same way so it must be a lot worse than past pandemics.

      While I've lived through just as bad or worse, the panic is new. (See, "Remember the H1N1 Pandemic? I Don’t Either"--American Thinker; and "Same Panic, Different Century? by Alma Boykin"). While this particular example of panic is small, the aggregate of this panic is going to lead to an economic crash, in my opinion.

      In his article, "COVID-19: the unwarranted panic," Robert Zimmerman looks at some recent studies on the disease and outbreak. Citing an article from Science which examined data from South Korea, he notes that "[o]ut of a population of 50 million, slightly more than 8,000 have been infected, with only 81 dying. This is a death rate of 0.9%, higher than the flu’s 0.1% but not horribly so. And like the flu, most of those deaths have been among the elderly." But even that fatality rate may be exaggerated, as he notes another study that says 86% of people with coronavirus are asymptomatic.

      The final link is to me the most significant, as it describes in detail the situation that unfolded on the cruise ship Diamond Princess when coronavirus was discovered there and the entire ship was placed under strict quarantine. In a sense the ship was a perfect controlled experiment for determining the infection and death rate of this virus.

      One would have thought, if this virus is so virulent and deadly as the press and politicians and too many panicky Americans are claiming, that everyone on the ship would have gotten badly sick, and many many would have died. Instead, 83% of the passengers and crew never got the disease at all, despite being closely confined with infected people for weeks. This despite the fact that the ship’s population was heavily skewed towards older people. In fact, older people were just as likely to not get infected as younger people.

      The total number of deaths was 7, all over seventy years of age, producing a death rate of 1.2%, once again in the same range as South Korea and China.

(See also, "New Study Shows That 86% of COVID19 Cases Are Asymptomatic – This Brings The Mortality Rate From 0.2% To 0.8%"--Conservative US). John Watts also notes, for instance, that on the Diamond Princess cruise ship, "some 83% (82.7% – 83.9%) of the passengers never got the disease at all," raising questions of how well it spreads. The author of the Bookworm Room blog correctly points out:

      This is not 1348 and we need to stop pretending that it is. Back in 1348, when the Black Death struck, no one understood disease transmission. They didn’t know that rats and fleas were a problem. They also had no way to treat the disease. Although people in those days understood quarantining people who were manifestly ill, everything else they did was wrong: They congregated in churches; flagellants dragged the disease with them from town to town; and they had orgies driven by despair.

      Today, we know exactly what the virus is and how it operates. We understand the mechanics of disease transmission and are effectuating social changes that will slow the disease’s spread (and help stop other diseases from spreading). We’ve already got a vaccine trial in the works. We’ve already figured out that there are treatments that help. For example, chloroquine looks promising, as do plasma treatments. While a percentage of sick people, sadly, will die, we know how to minimize some of the worst effects of pneumonia, which is good for most patient outcomes.

    Victor Davis Hansen writes along the same lines in an article at City-Journal. He observes, for instance:

      In our current hours of COVID-19 despair, we must fight both the virus and the panic that the disease instills, given that the two can be equally deadly. All sorts of scary statistics about the coronavirus infection and lethality rates are being publicized, often to show contrasts with annual influenza strains and other viral epidemics. Some make the legitimate point that if the coronavirus has a lethality rate of over 1 percent to 3 percent in the United States, then perhaps 97 percent to 99 percent of those infected will survive the illness, albeit with varying degrees of seriousness. And for the vast majority of Americans under 50, it may be that 99 percent will recover from infection, in contrast with almost every known “pandemic” in history. 

* * * 

       When we put all these diverse criteria together, we are left only with likely parameters, not known facts, other than the conventional wisdom that the vast majority of Americans will likely recover from the infection in the coming days or weeks. So far, we seem to believe that less than four in 1,000 will likely die of those infected younger than age 40. Likewise, coronavirus lethality rates are weighed by much higher deaths of those above age 65, but especially above 80 (nearly 15 percent)—and not just to advanced age alone, but comorbidity from heart diseases, cancer, diabetes, and other chronic illnesses. For the general public, when we talk about supposed degrees of lethality, and then apply those numbers to the population under 40 or 50, the optimistic absolutes that 99 percent will likely recover are seen as more relevant than scary comparisons that far, far more—likely 99.8 percent—will survive the flu. Is that a legitimate concern? Bees and wasps kill about 10 times more people per year than do spiders. Does that mean we should fear walking among pollenating hives (our 40-acre almond farm has about 80 of them), at least far more so than fixing pipes under the house in the spider-infested dark? Or, not at all—given that spiders kill six Americans per year and bees and wasps ten times more so, adding up to about 60 fatalities out of some 2.9 million yearly deaths in the U.S.?  The point is one of perception: to what degree do we inadvertently panic the population and wreck the economy by driving home the fact that a possible 98 percent to 99 percent survival rate still means thousands more dead than a conjectured 99.8 percent survival rate?

The panic will likely be more destructive and kill more people than the pandemic. Hansen continues:

      With new draconian measures of containment, we are entering the realm of cost-benefit analyses, given that for every drastic action there is an equally radical reaction—calibrated by everything from physical and mental health issues to economic, financial, security, legal, and political upheavals. Whether we like it or not, the current sweeping measures to curb the virus come at a huge cost—and the tab isn’t just financial or economic, as is sometimes alleged, by both advocates and critics of quarantines, cancellations, and radical social distancing. It involves health issues as well.

      If the country goes into a serious recession or even depression; if trillions of dollars more of investment and liquidity continue to be wiped out while businesses crash and jobs are lost; if millions of unemployed cut back on their scheduled health care; if they increase their use of drugs, alcohol, or tobacco, and get less exercise and suffer depression holed up in their homes or must borrow or scramble to find daycare for their school-age children; if they even contemplate suicide—then the human toll spikes in concrete terms of life and death. In the long term, arming ourselves against the virus could be as serious as the virus itself, though to suggest that in these dark days of plague is heresy.

In a similar vein, George Parry, writing at The American Prospect relates:

      But before we jump into the heart of the discussion, I commend to you the wise words of the celebrated Dr. Drew Pinsky regarding the media’s execrable coverage of the pandemic. Speaking with host Larry O’Connor on the Washington Examiner’s “Examining Politics” podcast, Dr. Pinsky said, “I don’t claim to know what’s motivating the media, but, my God, their reporting is absolutely reprehensible. They should be ashamed of themselves. They are creating a panic that is far worse than the viral outbreak. The bottom line, everybody, is to listen to Dr. Anthony Fauci [Director of the National Institute of Allergy and Infectious Diseases]. Do what he tells you, and go about your business.… Stop listening to journalists! They don’t know what they are talking about!”

      Strong words, but Dr. Pinsky doesn’t go far enough.

      As you may know, the mainstream news media are staffed by agenda-driven progressive propagandists who have seized on the pandemic as yet another opportunity to bring about the political and societal change that they desire. Not wanting to let a crisis go to waste, they have engaged in an unrelenting drumbeat of doom and gloom regarding the potential impact of COVID-19. In this regard and as you shall see, the facts are far less dire than the panic-inducing apocalyptic scenario being pushed by the mainstream media.

Parry goes on to examine the numbers from prior deadly pandemics such as the Spanish Flu and the more recent Swine Flu, and the much greater number of infected and dead from those diseases than we are seeing now. Parry continues:

      Which is why Dr. Anthony Fauci, one of the architects of the government’s COVID-19 countermeasures, and two equally distinguished colleagues published an editorial in the February 28, 2020, edition of the New England Journal of Medicine in which they opined the following:

If one assumes that the number of asymptomatic or minimally symptomatic cases is several times as high as the number of reported cases, the case fatality rate may be considerably less than 1%. This suggests that the overall clinical consequences of Covid-19 may ultimately be more akin to those of a severe seasonal influenza (which has a case fatality rate of approximately 0.1%) or a pandemic influenza (similar to those in 1957 and 1968) rather than a disease similar to SARS or MERS, which have had case fatality rates of 9 to 10% and 36%, respectively.

(See also, "Scientist with 4 Degrees from MIT Warns 'Deep State' Using Coronavirus Fear-Mongering To Suppress Dissent"--Western Journal).

    Others are taking an even more skeptical attitude toward the sudden spread of "emergency powers" and lock down orders by state and local governments. I noted that other day about San Francisco's issuing a lock-down, and these somewhat curious words from Mayor: "San Francisco Mayor London Breed called it a 'defining moment,' according to the article." California Governor Newsom, when asked, did not rule out the possibility of martial law. Author Sarah Hoyt wonders if the results to the economy and the restrictions on the ability of people to move around and organize is what is intended by these restrictions; otherwise, why the deployment of such restrictions in the absence of anything to justify them?

    Certainly the liberals, at least, are taking the opportunity to not see a good crises go to waste. For instance, Fresno's recently enacted "emergency powers" allows the City to ban the sale of firearms and ammunition. Other cities, including New Orleans, have done the same. And while there was already a movement afoot to cease enforcing misdemeanor crimes, that has accelerated under the Wuhan virus scare with the justification of keeping prisoners safe. Thus, we see local governments releasing criminals or simply not arresting them in the first instance. (See also, "Jail Break: LA Sheriff Releases Inmates, 'Socially Distancing' Them from Jail but Not From Law-Abiding Citizens"--PJ Media). Or, as one author observes:

       The left must see COVID-19 as a fabulous and fortuitous opportunity to accomplish a host of things they’ve been wishing for and hoping for.

      They believe it will destroy Trump, hurt the economy, and convince people that big government and Democrats must take over. A fearful populace is a malleable populace, so fanning the flames of fear is good. And of course, elites know best – and nearly all elites are leftist these days.

     I don’t think this virus was engineered and purposely released, as some people do. Whether it even escaped accidentally from a Chinese lab is very iffy. But whatever happened, the left is purposefully taking advantage of it.

Another author discusses his disgust over how the press are magnifying the panic:

       I hate the press right now.  The words they use are designed to scare.  The stories they highlight are the most extreme.  They do not compare it to previous pandemics, or even to the typical flu.  The misinformation is subtle, and they claim to be giving us the facts, but then they spread rumour and innuendo.  Are the facts there? Kind of. If you look. But not it’s not what they highlight. Look at that opening paragraph again.  Half a sentence of Trump the authoritarian jerk. The rest is dire projections and how we need to ignore him.

      We’re in the midst of a panic.  It’s unnecessary, counter productive, and quite frankly, dangerous.  The press is asking, “Can we handle this?” and then telling us that we really can’t.

    So, let's look at the bright side of things. First, as to tackling the virus directly: I noticed an article that reported the rapid development of the first COVID-19 vaccine and indicated that the Phase 1 Trials have already begun in Seattle; recent guidelines from South Korea and China report that chloroquine is an effective antiviral therapeutic treatment against the Wuhan virus; infectious disease experts at John Hopkins believe that treatment using antibodies extracted from those who have had the disease and survived could be available in as little as two weeks, providing temporary protection while a vaccine is developed; and "White House economic adviser Larry Kudlow said Wednesday that General Motors CEO Mary Barra offered the automakers’ shuttered factories to produce ventilators to address the coronavirus crisis."

      Second, China's reputation has been forever marred and will likely curtail its influence to some degree. For instance, reports have surfaced that indicate that China knew in December 2019 that the virus could be transmitted from person to person, but China concealed this information and ordered the data to be destroyed (see here and here). Michael Auslin explains:

        Regardless of how much some governments and global voices praise China, Xi and the Communist Party care about dominating the propaganda war because the Wuhan virus has stood their nation on a razor’s edge. Xi’s own legitimacy is not merely at stake. His government is ferociously fighting to divert blame and attention, fearing that the world rightfully may utterly reassess modern China, from its technocratic prowess to its safety. Decades of a carefully curated global image may crumble if nations around the globe start paying attention to China’s lax public health care, incompetent and intrusive government, and generally less developed domestic conditions. 

       Xi’s fears are well founded, as a global reconsideration of China is long overdue. Legitimate criticisms and doubts about China’s governance and growth model were long suppressed by Chinese pressure and the willingness of many to buy into the Communist Party’s public line. Public shaming of foreign corporations, global influence operations, and “elite capture” -- all are policies Beijing has deployed to maintain China’s public image. 

       That carefully tended image is now cracked. Those concerned with global health issues may wonder why it is that China is wracked regularly by viral epidemics in addition to coronavirus, such as SARS, African Swine Fever, and avian flu (another outbreak is happening right now). Others may begin to look more carefully at China’s environmental devastation and the hundreds of thousands of premature deaths each year from air and water pollution.  

       On the trade side, many foreign corporations already have been reconsidering their operations in China, due to rampant intellectual property theft and rising production costs; now, they may seriously question how safe it is to continue to do business in China. Not only is the health of their employees at risk, but they no longer can be assured that China will be a stable supplier. If coronavirus becomes a seasonal phenomenon, as some experts predict, then even with a vaccine, new strains of the pathogen will always raise the specter of another out-of-control epidemic overwhelming the party-state’s capabilities and infecting the rest of the world. 

       More broadly, the pandemic of 2020 has brought doubts about globalization into the mainstream. Decades of open borders, unceasing intercontinental travel, study abroad, just-in-time inventory systems, and the like have created unexpected vulnerabilities in populations and economies thanks to unfettered openness. To worry about such weaknesses is not to adopt a Luddite reactionary stance, but to try and salvage the bases of the post-World War II global economic architecture.  

      Those who assumed that global markets were the optimal economic model and would always work, now have to consider whether globalization is the best system for dealing with pandemics like coronavirus, let alone old-fashioned state power plays like China imposed on Japan back in 2010, when it blocked the export of rare-earth minerals over territorial disputes in the East China Sea. Perhaps the biggest long-term economic effect of coronavirus will be on long-standing assumptions about global supply chains. 

    Third, a lot of the left's pet issues will have to be rethought. John Nolte points out, for example, that mass transit and reusable bags have proven deadly during the crises. Michael Walsh notes other issues and entities that will be hit hard once all of this is over, including the European Union (which has shown itself unable to overcome national interests), the concept of open borders, China's role as the "factory of the world," climate change, globalism and free trade, how people watch movies, sports, or even attend classes, and the media (which he thinks will be hit the hardest).

     On the other hand, the virus outbreak will aggravate other tensions that have been plastered over in the past. The Wall Street Journal, for instance, reports that young people are not taking lock-downs and quarantines very well, stating: "As authorities moved to restrict social gatherings last week, bars and restaurants from New York to Berlin filled up with revelers, illegal 'lockdown parties' popped up in France and Belgium, and campuses in the U.S. lit up for end-of-the-world dorm parties." Moreover, "[d]espite the pointed fingers and occasional excesses, many young people bristle at the accusation of selfishness, saying the new social constraints are disproportionate and unfairly target their generation."

     Problems existing within the economy will also be strained. I'm seeing lots of articles about employees being laid off as entire sectors of the economy close down. For instance, the Daily Mail reported this morning that "Famed NYC restaurateur Danny Meyer behind Gramercy Tavern and Jazz Standard lays off TWO THOUSAND workers 'due to near-complete elimination of revenue' caused by coronavirus shutdowns." Nevada's governor has ordered all casinos, restaurants and clubs to close for 30 days to slow the coronavirus spread. Orange County in California has banned all public and private gatherings, including shutting dine-in restaurants. The stock market has shed all the gains since Pres. Trump's inauguration, putting us back in an Obama economy (except with difference that gas prices may sink to as low as $0.99 per gallon in some places, Kentucky being one of the first). John Wilder, writing on the impacts from the Wuhan panic, points out:

      But it’s the people who don’t have money that I’m concerned about.  The theater owner can’t keep the theater going if there are no butts in seats.  The diner waitress can’t make the payments on their car if they can’t bring plates filled with eggs and bacon with a side of biscuits and gravy to Grandpa Verne.  She depends on the tips that pay the bank for that car, since Virgil can’t hold a job now that he’s in the county lockup for fighting Clem again.

      Most people depend on this week’s income to pay this month’s bills.  I’ve been there.  I lived several years of my life one month and one lost job away from bankruptcy.  Thankfully, now I can live without a month of income.  Most people can’t.

      How does that end up?  It’s simple enough to say, “Well, let the banks take a hit on a month of payments.  They’re greedy and don’t need that money.”

       But . . . it’s my money you’re talking about.  My money is in the bank.  How does Hells Wargo® pay me back if my money isn’t collected from the waitress and the theater owner?  For every transaction, there’s another party.  And if you have more money than zero, you’re impacted.  That money of yours that your bank has?  You loaned it to them.  And if the loans that they made don’t pay back?  What happens then?

      Another system failure.  I’m expecting that the Federal government will just pony up several trillion to make it all go away.  They have a printing press, ink, and paper.  Why not?

Consequently, while this is taking the most bearish position I've seen, Zero Hedge reports that "JPMorgan Now Expects A Global Depression In The Second Quarter." (But see, "Famed economist Robert Shiller doesn’t think we are headed for another Great Recession"--Fortune).

     To stem the possibility of an economic depression, the President is going full Keynesian: he has proposed a trillion dollar package, including monthly cash payments to those who financially qualify and relief for small businesses. The proposed package will attempt to prevent the abuse that followed the financial stimulus bill in 2008 by preventing the money from being used to pay bonuses and curtailing executive compensation.

     It could save the country, or it could break it. To me, this appears to be something straight out of Joseph Tainter's The Collapse of Complex Societies. National debt (including future payments) are already too high, and now an emergency has swept in requiring even more debt with no promise that even more spending will be required down the road. Where's the money going to come from? What if another disaster occurs? What happens when it has to be paid back or written off?

    When I originally wrote a review and commentary about Tainter's book, I noted that we had already crossed one of the inflection points for societal collapse, which is that we had already entered a period of negative return on investment for government spending. For instance, we can literally dump billions into education without seeing any meaningful improvements. The final straw will be when public debts simply become unsustainable. We have already gotten in inkling of this as we see states and local governments struggle with pension obligations. It will, eventually, broaden its reach to a national scale. Edward Ring discusses this in a recent article at American Greatness with the title, "Government Pensions Are Dividing Americans and Damaging the Economy." He writes:

       Now that financial markets around the world are experiencing a long-overdue correction, the best we can hope for is that we hit bottom before a deflationary cascade causes a worldwide depression. Those economists who believe in the long-term debt cycle may claim that this time the end has arrived, and they may be right. COVID-19, oil price wars, traders and investors hating Trump—these are just pinpricks. This bubble has been inflating for decades.

       There have been plenty of warnings. Interest rates at near zero in the United States and actually negative in European nations. Record borrowing by the federal government, and, possibly worse, record levels of consumer debt. Corporate borrowing to buy back stock instead of invest in R&D and plant modernization.

      In January 2000, at the peak of the internet bubble, total credit market debt in the U.S. was $27.8 trillion. By October 2007, at the peak of the housing bubble, total debt had climbed to $51.4 trillion. As of October 31, 2019, the most recent period for which data is available, total debt had climbed to $73.4 trillion.

      Debt accumulation is not a sustainable way to stimulate growth. At some point, there is not a mere “correction,” such as what was seen in 2000 and 2008, but a fundamental restructuring of the financial economy of nations, such as happened in the 1930s. Has that reckoning arrived?

     Either way, as of close on March 12, the Dow Jones had given up nearly three years of gains, with no real end in sight.

     Which brings us to public sector pensions, which are among the most socially divisive, economically damaging scams that nobody has ever heard of.

      To get an idea of the financial scale of public pensions, note that the U.S. Census Bureau estimates the total invested assets of pension funds managed on behalf of local, state and federal government employees is $4.3 trillion. Roughly 17 percent of Americans either work for or are retired from a local, state, or federal government agency.

      By contrast, the Social Security Trust Fund, serving all 327 million Americans, and in which many government employees also participate along with receiving their pensions, has a total asset value of $2.9 trillion.

       This is an incredible fact. Taxpayers—who it should go without saying, are paying for both systems—have contributed to a public employee pension system that is 50 percent larger than the Social Security Trust Fund, even though Social Security serves six times as many Americans.

       By now most Americans, most definitely including voters, will have stopped reading. Pension finance is a boring topic. But public sector pensions pose a far bigger threat to America’s government budgets than Social Security ever will.

       For starters, Social Security is adaptable. Lower the benefits, establish means-testing for benefits, raise the contribution percent, raise the contribution ceiling, raise the retirement age; all of these options are but one congressional vote and presidential signature away from implementation. Not so with public pensions, where financially responsible modifications to the pension systems are thwarted by collective bargaining contracts and union power. How bad is the problem?

       Determining just how in the red public pensions are today depends on who you ask. And thanks to lax reporting requirements, good data is typically about two years behind. A Pew Research study released in June 2019 estimated the pension funding gap, “the difference between a retirement system’s assets and its liabilities,” for all 50 states, to be just over $1 trillion. But that’s only the officially reported number.

      A study conducted by the prestigious Stanford Institute for Economic Policy Research put the total at over $5 trillion. ...

He continues:

      Public employee pension funds are among the biggest players, if not the biggest players, on Wall Street. If you want to know where literally trillions of dollars are being aggressively invested in private equity deals, hedge funds, and countless other speculative investments in debt, real estate, and foreign securities including in fascist China, look no further. These funds are under relentless pressure to deliver rates of return that are historically unsustainable, and the reason they are historically unsustainable is intimately connected to the populist discontent sweeping America today.

       Public-sector pension funds, because they involve trillions of dollars, are too big to beat the overall rate of investment returns, and ultimately the rate of investment returns cannot exceed the rate of economic growth. The fact that investment returns have exceeded the rate of economic growth over the past few decades is precisely the reason there has been a widening in the gap between the super-rich and the desperately poor in America. It is the reason for the financialization of the American economy, where asset bubbles create collateral to create debt to create liquidity to create consumption to create profits.

      This can’t go on, but the money managers want it to go on so public sector pension systems can buy another quarter of phony solvency. The alternatives are unpleasant to contemplate.

      A few years ago the largest public sector pension system in the United States, the California Public Employees Retirement System with over $300 billion in assets, announced it was going to double the required payments from participating agencies over the next five years. That process is well underway and is the primary motivation for the hundreds of local tax and bond proposals on every primary and general election ballot in the state. If there is a recession, much less a depression, it won’t be enough.

      Meanwhile, in the rest of America, those private-sector workers who are required to save money in 401k plans to supplement their eventual Social Security benefit, are now watching their retirement security vaporize before their eyes.

      How is this fair? How is it that public sector employees can collect guaranteed pensions that pay, on average, two to three times as much as Social Security and, on average, are collected ten years earlier in life?

      Defenders of public employee pensions point out that investment returns pay most of the cost for these pensions, not taxpayers. That’s only true, however, as long as those investments continue to deliver excellent returns. Once that assumption goes off the table, taxpayers pay for public-employee pensions. This results in higher taxes and lower services, and still doesn’t solve the problem of poorly regulated pension funds rampaging through the financial sector with trillions of dollars and grossly inadequate risk aversion, since they know taxpayers will pick up the tab whenever their schemes falter.

 Ring spends some time discussing why public pension plans support progressive causes like high government interest, open borders, and the exporting of American jobs because the, in the end, it is about the corporate profits they require to stay solvent.

And no wonder public employee unions don’t care if the welfare state implodes when the debt bubble pops and government deficits become unmanageable. Public employees don’t depend on the same network of taxpayer-funded social entitlements as the citizens they serve. To put it in terms that are crude but regrettably accurate, American citizenship is economically irrelevant to public employees. They are a separate class of Americans, exempt from the pitfalls of stressed public services, and exempt from the perils of market crashes.

     It is possible that with low fuel prices and a decoupling from China will allow the American economy to boom after the Wuhan pandemic passes. Or the cost of businesses being shuttered for weeks and months may result in a wave of bankruptcies of both businesses and individuals tipping us into another economic depression.