The Coronavirus Disease 2019 (COVID-19) has now reached more than 45 countries in Europe, where (as of March 12) more than 30,000 people have tested positive for the disease, according to a Gatestone Institute tally based on calculations from European health ministries.
The disease is spreading fast: more than 28,000 coronavirus cases (93% of all cases) in Europe were confirmed during just the first twelve days of March. The number of new cases has been doubling, on average, every 72 hours.
Italy is Europe’s worst-affected country, followed by Spain, France and Germany. Twelve other European countries have reported coronavirus cases in the triple digits: Switzerland, Norway, Sweden, Denmark, the Netherlands, the United Kingdom, Belgium, Austria, Greece, the Czech Republic, Finland and Iceland.
In Europe as a whole, more than 1,200 people — 4.0% of those confirmed as having been infected — have died from COVID-19.
The European Center for Disease Prevention and Control (ECDC), in a risk assessment, warned that the actual number of COVID-19 cases in Europe could be far higher due to under-detection, particularly among mild or asymptomatic cases that do not lead to a visit to the hospital.
In an interview with Britain’s Channel 4 news, Dr. Richard Hatchett, Chief Executive Officer of the Coalition for Epidemic Preparedness Innovations, a Norway-based international alliance for developing vaccines against infectious diseases, explained the long-term dangers of the COVID-19, not only for Europe, but globally:
“The threat is very significant… There are many epidemiologists who talk about the potential of the virus in terms of attack rates globally that could be between 50% and 70% of the global population.
“It is important to recognize that the virus is here and that it has tremendous potential to be disruptive, to cause high rates of illness and even high rates of death….
“I don’t think we are dealing with the flu here… this is a virus that is now circulating in a population that has absolutely no immunity to it…. You might have an attack rate that is three times higher than seasonal flu with a mortality rate that is ten times higher.
“The most concerning thing about this virus is the combination of infectiousness and the ability to cause severe disease or death. We have not since 1918 — since the Spanish flu — seen a virus that combined those two qualities in the same way. We have seen very lethal viruses — Ebola’s mortality rate in some cases is greater than 80% — but they don’t have the infectiousness that this virus has. They don’t have the potential to explode and spread globally….
“I think that what we are seeing is a virus that is many, many times more lethal than the flu, and a population that is completely vulnerable to it, and we are seeing its ability to explode. It has increased in some countries over the last two weeks by one thousand-fold and many countries are seeing ten-fold or one hundred-fold increases in cases. There is nothing to stop that expansion from continuing unless those societies move aggressively, engage their publics, implement multiple public health interventions, including introducing social distancing….
“We need to modify our behavior. We need to start practicing that now. We have to modify our behavior in ways that reduces the risk of transmitting the virus…. One challenge that we face is that people who are young and are generally healthy won’t perceive personal risk and they will govern their behavior based on what they perceive their personal risk to be. I think we need to start thinking in terms of the social risk. If I have a cold and I go to work and shake hands with my older colleague who has a chronic medical condition, I could be responsible for that colleague’s death. We all need to think about our responsibility to each other as we govern our behavior. We can’t view the epidemic in terms of our personal risk, we need to act collectively in a cooperative manner….
“I don’t think it’s a crazy analogy to compare this to World War 2… I think this is an appropriate analogy and the mindset that people need to get into….
“We don’t see any way that a vaccine can be available much more rapidly than 12 to 18 months, and even it if were to be available in 12 and 18 months, that would literally be the world record for developing and delivering a vaccine. We would not have seven billion doses of that vaccine in 12 months.
“This is a virus that is going to be with us for some time. There are many epidemiologists who believe that this virus is likely to become globally endemic and be with us in perpetuity…. I think this is a virus that we are going to be dealing with for years.
“This is the most frightening disease that I have ever encountered in my career. That includes Ebola, MERS and SARS. It’s frightening because of the combination between infectiousness and a lethality that appears to be many-fold higher than flu.”
After months of complacency, European leaders are beginning to acknowledge the scale of the unfolding crisis.
In Germany, Europe’s most populous country, Chancellor Angela Merkel, in her first public comments on the coronavirus, warned that more than two-thirds of the population — 58 million people — could get infected. During a press conference on March 11, nearly three weeks after the crisis in Germany began, she admitted:
“The virus has arrived in Europe, it is here, and we must all understand that. As long as there is no immunity in the population, no vaccines and no therapy, then a high percentage of the population — experts say 60% to 70% — will become infected.”
Merkel said that her government’s top priority was to slow down the contagion to prevent a collapse of the German healthcare system. Nevertheless, Germany has not implemented social distancing measures such as those in other European countries, including Italy, Spain and France.
In Britain, a leaked government report estimated that in a worst-case scenario, up to 80% of the population — 53 million people — could become infected with the coronavirus, and that half a million Britons could die from COVID-19. A survey conducted by The Doctors’ Association UK, a trade association for British doctors, found that only 1% of doctors in the country believe that the National Health Service is prepared to deal with a major outbreak of coronavirus.
In Ireland, one of Europe’s smaller countries with only 4.8 million inhabitants, healthcare officials said that 40% of the population — 1.9 million people — will almost certainly become infected with the coronavirus. Most of those would become sick within a three-week concentrated burst, which would place “intense pressure” on the healthcare system. Those figures were effectively confirmed by Paul Reid, CEO of the Health Service Executive (HSE), which manages the delivery of all public health services in Ireland.
In Spain, where the number of confirmed cases of coronavirus has increased exponentially in recent days, hospitals are overwhelmed and the healthcare systems in the most affected regions are in danger of collapse. In Andalusia and the Basque Country, hundreds of doctors and nurses have been quarantined to prevent hospitals from becoming centers of infection.
In Madrid, the head of the regional government, Isabel Díaz Ayuso, said that medical professionals expected a significant increase in coronavirus cases this coming weekend and that the spread of the virus would peak over the next three weeks.
In France, President Emmanuel Macron said that the coronavirus epidemic was the country’s worst health crisis in a century and announced that schools throughout the country would close indefinitely beginning next week. “We are just at the beginning of this crisis,” Macron said. “In spite of all our efforts to break it, this virus is continuing to propagate and to accelerate.”
In Italy, more than 12,000 people are infected with coronavirus. On March 9, Prime Minister Giuseppe Conte ordered a nation-wide lockdown. The quarantine of Europe’s third-most populous country, with 60 million inhabitants, bans non-essential travel to, from and within Italy; prohibits all public events; and requires that people maintain a distance from each other of at least one meter (three feet). The restrictions were subsequently extended: all restaurants and bars, as well as all stores, except for grocery stores and pharmacies, have been ordered closed.
Dr. Daniele Macchini, who works at the Humanitas Gavazzeni hospital in Bergamo, ground zero of the coronavirus crisis in Italy, warned about the dangers of complacency:
“After thinking for a long time if and what to write about what is happening to us, I felt that the silence was not at all responsible. I will therefore try to convey to people more distant from our reality, what we are experiencing in Bergamo during these pandemic days from Covid-19.
“I myself looked with some amazement at the reorganization of the entire hospital in the previous week, when our current enemy was still in the shadows: the wards slowly ’emptied,’ the elective activities interrupted, the intensive therapies freed to create as many beds as possible. All this rapid transformation brought into the corridors of the hospital an atmosphere of surreal silence and emptiness that we still did not understand, waiting for a war that was yet to begin and that many (including me) were not so sure would ever come with such ferocity.
“Well, the situation is now nothing short of dramatic. No other words come to mind. The war has literally exploded, and the battles are uninterrupted day and night. One after the other, the unfortunate people come to the emergency room. What they have is much more than the complications of a flu. Let’s stop saying it’s a bad flu.
“Now, however, that need for beds in all its drama has arrived. One after another, the departments that had been emptied are filling up at an impressive rate. The display boards with the names of the sick, of different colors depending on the operating unit they belong to, are now all red and instead of the surgical operation there is the diagnosis, which is always the damn same: bilateral interstitial pneumonia. Now, tell me which flu virus causes such a rapid tragedy?
“An epidemiological disaster is taking place. There are no more surgeons, urologists, orthopedists, we are only doctors who suddenly have become part of a single team to face this tsunami that has overwhelmed us.”
On March 11, U.S. President Donald J. Trump announced a 30-day ban on continental Europeans traveling to the United States. “The European Union failed to take the same precautions and restrict travel from China and other hotspots,” Trump said. “As a result, a large number of new clusters in the United States were seeded by travelers from Europe.” The restrictions, which will go into effect at midnight on March 13, will not apply to the United Kingdom, and exemptions will be made for U.S. citizens. “This is the most aggressive and comprehensive effort to confront a foreign virus in modern history,” he said.
With everything that’s happening about the Coronavirus, it might be very hard to make a decision of what to do today. Should you wait for more information? Do something today? What?
Here’s what I’m going to cover in this article, with lots of charts, data and models with plenty of sources:
How many cases of coronavirus will there be in your area?
What will happen when these cases materialize?
What should you do?
When?
When you’re done reading the article, this is what you’ll take away:
The coronavirus is coming to you.
It’s coming at an exponential speed: gradually, and then suddenly.
It’s a matter of days. Maybe a week or two.
When it does, your healthcare system will be overwhelmed.
Your fellow citizens will be treated in the hallways.
Exhausted healthcare workers will break down. Some will die.
They will have to decide which patient gets the oxygen and which one dies.
The only way to prevent this is social distancing today. Not tomorrow. Today.
That means keeping as many people home as possible, starting now.
As a politician, community leader or business leader, you have the power and the responsibility to prevent this.
You might have fears today: What if I overreact? Will people laugh at me? Will they be angry at me? Will I look stupid? Won’t it be better to wait for others to take steps first? Will I hurt the economy too much?
But in 2–4 weeks, when the entire world is in lockdown, when the few precious days of social distancing you will have enabled will have saved lives, people won’t criticize you anymore: They will thank you for making the right decision.
Ok, let’s do this.
1. How Many Cases of Coronavirus Will There Be in Your Area?
Country Growth
The total number of cases grew exponentially until China contained it.
But then, it leaked outside, and now it’s a pandemic that nobody can stop.
As of today, this is mostly due to Italy, Iran and South Korea:
There are so many cases in South Korea, Italy and Iran that it’s hard to see the rest of the countries, but let’s zoom in on that corner at the bottom right.
There are dozens of countries with exponential growth rates. As of today, most of them are Western.
If you keep up with that type of growth rate for just a week, this is what you get:
If you want to understand what will happen, or how to prevent it, you need to look at the cases that have already gone through this: China, Eastern countries with SARS experience, and Italy.
China
Source: Tomas Pueyo analysis over chart from the Journal of the American Medical Association, based on raw case data from the Chinese Center for Disease Control and Prevention
This is one of the most important charts.
It shows in orange bars the daily official number of cases in the Hubei province: How many people were diagnosed that day.
The grey bars show the true daily coronavirus cases. The Chinese CDC found these by asking patients during the diagnostic when their symptoms started.
Crucially, these true cases weren’t known at the time. We can only figure them out looking backwards: The authorities don’t know that somebody just started having symptoms. They know when somebody goes to the doctor and gets diagnosed.
What this means is that the orange bars show you what authorities knew, and the grey ones what was really happening.
On January 21st, the number of new diagnosed cases (orange) is exploding: there are around 100 new cases. In reality, there were 1,500 new cases that day, growing exponentially. But the authorities didn’t know that. What they knew was that suddenly there were 100 new cases of this new illness.
Two days later, authorities shut down Wuhan. At that point, the number of diagnosed daily new cases was ~400. Note that number: they made a decision to close the city with just 400 new cases in a day. In reality, there were 2,500 new cases that day, but they didn’t know that.
The day after, another 15 cities in Hubei shut down.
Up until Jan 23rd, when Wuhan closes, you can look at the grey graph: it’s growing exponentially. True cases were exploding. As soon as Wuhan shuts down, cases slow down. On Jan 24th, when another 15 cities shut down, the number of true cases (again, grey) grinds to a halt. Two days later, the maximum number of true cases was reached, and it has gone down ever since.
Note that the orange (official) cases were still growing exponentially: For 12 more days, it looked like this thing was still exploding. But it wasn’t. It’s just that the cases were getting stronger symptoms and going to the doctor more, and the system to identify them was stronger.
This concept of official and true cases is important. Let’s keep it in mind for later.
The rest of regions in China were well coordinated by the central government, so they took immediate and drastic measures. This is the result:
Every flat line is a Chinese region with coronavirus cases. Each one had the potential to become exponential, but thanks to the measures happening just at the end of January, all of them stopped the virus before it could spread.
Meanwhile, South Korea, Italy and Iran had a full month to learn, but didn’t. They started the same exponential growth of Hubei and passed every other Chinese region before the end of February.
Eastern Countries
South Korea cases have exploded, but have you wondered why Japan, Taiwan, Singapore, Thailand or Hong Kong haven’t?
Taiwan didn’t even make it to this graph because it didn’t have the 50 cases threshold that I used.
All of them were hit by SARS in 2003, and all of them learned from it. They learned how viral and lethal it could be, so they knew to take it seriously. That’s why all of their graphs, despite starting to grow much earlier, still don’t look like exponentials.
So far, we have stories of coronavirus exploding, governments realizing the threat, and containing them. For the rest of the countries, however, it’s a completely different story.
Before I jump to them, a note about South Korea: The country is probably an outlier. The coronavirus was contained for the first 30 cases. Patient 31 was a super-spreader who passed it to thousands of other people. Because the virus spreads before people show symptoms, by the time the authorities realized the issue, the virus was out there. They’re now paying the consequences of that one instance. Their containment efforts show, however: Italy has already passed it in numbers of cases, and Iran will pass it tomorrow (3/10/2020).
Washington State
You’ve already seen the growth in Western countries, and how bad forecasts of just one week look like. Now imagine that containment doesn’t happen like in Wuhan or in other Eastern countries, and you get a colossal epidemic.
Let’s look at a few cases, such as Washington State, the San Francisco Bay Area, Paris and Madrid.
Washington State is the US’s Wuhan.The number of cases there is growing exponentially. It’s currently at 140.
But something interesting happened early on. The death rate was through the roof. At some point, the state had 3 cases and one death.
We know from other places that the death rate of the coronavirus is anything between 0.5% and 5% (more on that later). How could the death rate be 33%?
It turned out that the virus had been spreading undetected for weeks. It’s not like there were only 3 cases. It’s that authorities only knew about 3, and one of them was dead because the more serious the condition, the more likely somebody is to be tested.
This is a bit like the orange and grey bars in China: Here they only knew about the orange bars (official cases) and they looked good: just 3. But in reality, there were hundreds, maybe thousands of true cases.
This is an issue: You only know the official cases, not the true ones. But you need to know the true ones. How can you estimate the true ones? It turns out, there’s a couple of ways. And I have a model for both, so you can play with the numbers too (direct link to copy of the model).
First, through deaths. If you have deaths in your region, you can use that to guess the number of true current cases. We know approximately how long it takes for that person to go from catching the virus to dying on average (17.3 days). That means the person who died on 2/29 in Washington State probably got infected around 2/12.
Then, you know the mortality rate. For this scenario, I’m using 1% (we’ll discuss later the details). That means that, around 2/12, there were already around ~100 cases in the area (of which only one ended up in death 17.3 days later).
Now, use the average doubling time for the coronavirus (time it takes to double cases, on average). It’s 6.2. That means that, in the 17 days it took this person to die, the cases had to multiply by ~8 (=2^(17/6)). That means that, if you are not diagnosing all cases, one death today means 800 true cases today.
Washington state has today 22 deaths. With that quick calculation, you get ~16,000 true coronavirus cases today. As many as the official cases in Italy and Iran combined.
If we look into the detail, we realize that 19 of these deaths were from one cluster, which might not have spread the virus widely. So if we consider those 19 deaths as one, the total deaths in the state is four. Updating the model with that number, we still get ~3,000 cases today.
This approach from Trevor Bedford looks at the viruses themselves and their mutations to assess the current case count.
An update about what we’re able to infer about the Washington State #COVID19 outbreak from screening and viral sequencing by @UWVirology and @seattleflustudy. 1/12
The conclusion is that there are likely ~1,100 cases in Washington state right now.
None of these approaches are perfect, but they all point to the same message: We don’t know the number of true cases, but it’s much higher than the official one. It’s not in the hundreds. It’s in the thousands, maybe more.
San Francisco Bay Area
Until 3/8, the Bay Area didn’t have any death. That made it hard to know how many true cases there were. Officially, there were 86 cases. But the US is vastly undertesting because it doesn’t have enough kits. The country decided to create their own test kit, which turned out not to work.
These were the number of tests carried out in different countries by March 3rd:
Turkey, with no cases of coronavirus, had 10 times the testing per inhabitant than the US. The situation is not much better today, with ~8,000 tests performed in the US, which means ~4,000 people have been tested.
Here, you can just use a share of official cases to true cases. How to decide which one? For the Bay Area, they were testing everybody who had traveled or was in contact with a traveler, which means that they knew most of the travel-related cases, but none of the community spread cases. By having a sense of community spread vs. travel spread, you can know how many true cases there are.
I looked at that ratio for South Korea, which has great data. By the time they had 86 cases, the % of them from community spread was 86% (86 and 86% are a coincidence).
With that number, you can calculate the number of true cases. If the Bay Area has 86 cases today, it is likely that the true number is ~600.
France and Paris
France claims 1,400 cases today and 30 deaths. Using the two methods above, you can have a range of cases: between 24,000 and 140,000.
The true number of coronavirus cases in France today is likely to be between 24,000 and 140,000.
Let me repeat that: the number of true cases in France is likely to be between one and two orders or magnitude higher than it is officially reported.
Don’t believe me? Let’s look at the Wuhan graph again.
If you stack up the orange bars until 1/22, you get 444 cases. Now add up all the grey bars. They add up to ~12,000 cases. So when Wuhan thought it had 444 cases, it had 27 times more. If France thinks it has 1,400 cases, it might well have tens of thousands
The same math applies to Paris. With ~30 cases inside the city, the true number of cases is likely to be in the hundreds, maybe thousands. With 300 cases in the Ile-de-France region, the total cases in the region might already exceed tens of thousands.
Spain and Madrid
Spain has very similar numbers as France (1,200 cases vs. 1,400, and both have 30 deaths). That means the same rules are valid: Spain has probably upwards of 20k true cases already.
In the Comunidad de Madrid region, with 600 official cases and 17 deaths, the true number of cases is likely between 10,000 and 60,000.
If you read these data and tell yourself: “Impossible, this can’t be true”, just think this: With this number of cases, Wuhan was already in lockdown.
With the number of cases we see today in countries like the US, Spain, France, Iran, Germany, Japan, Netherlands, Denmark, Sweden or Switzerland, Wuhan was already in lockdown.
And if you’re telling yourself: “Well, Hubei is just one region”, let me remind you that it has nearly 60 million people, bigger than Spain and about the size of France.
2. What Will Happen When These Coronavirus Cases Materialize?
So the coronavirus is already here. It’s hidden, and it’s growing exponentially.
What will happen in our countries when it hits? It’s easy to know, because we already have several places where it’s happening. The best examples are Hubei and Italy.
Fatality Rates
The World Health Organization (WHO) quotes 3.4% as the fatality rate (% people who contract the coronavirus and then die). This number is out of context so let me explain it.
It really depends on the country and the moment: between 0.6% in South Korea and 4.4% in Iran. So what is it? We can use a trick to figure it out.
The two ways you can calculate the fatality rate is Deaths/Total Cases and Death/Closed Cases. The first one is likely to be an underestimate, because lots of open cases can still end up in death. The second is an overestimate, because it’s likely that deaths are closed quicker than recoveries.
What I did was look at how both evolve over time. Both of these numbers will converge to the same result once all cases are closed, so if you project past trends to the future, you can make a guess on what the final fatality rate will be.
This is what you see in the data. China’s fatality rate is now between 3.6% and 6.1%. If you project that in the future, it looks like it converges towards ~3.8%-4%. This is double the current estimate, and 30 times worse than the flu.
It is made up of two completely different realities though: Hubei and the rest of China.
Hubei’s fatality rate will probably converge towards 4.8%. Meanwhile, for the rest of China, it will likely converge to ~0.9%:
I also charted the numbers for Iran, Italy and South Korea, the only countries with enough deaths to make this somewhat relevant.
Iran’s and Italy’s Deaths / Total Cases are both converging towards the 3%-4% range. My guess is their numbers will end up around that figure too.
South Korea is the most interesting example, because these 2 numbers are completely disconnected: deaths / total cases is only 0.6%, but deaths / closed cases is a whopping 48%. My take on it is that a few unique things are happening there. First, they’re testing everybody (with so many open cases, the death rate seems low), and leaving the cases open for longer (so they close cases quickly when the patient is dead). Second, they have a lot of hospital beds (see chart 17.b). There might also be other reasons we don’t know. What is relevant is that deaths/cases has hovered around 0.5% since the beginning, suggesting it will stay there, likely heavily influenced by the healthcare system and crisis management.
The last relevant example is the Diamond Princess cruise: with 706 cases, 6 deaths and 100 recoveries, the fatality rate will be between 1% and 6.5%.
Note that the age distribution in each country will also have an impact: Since mortality is much higher for older people, countries with an aging population like Japan will be harder hit on average than younger countries like Nigeria. There are also weather factors, especially humidity and temperature, but it’s still unclear how this will impact transmission and fatality rates.
This is what you can conclude:
Excluding these, countries that are prepared will see a fatality rate of ~0.5% (South Korea) to 0.9% (rest of China).
Countries that are overwhelmed will have a fatality rate between ~3%-5%
Put in another way: Countries that act fast can reduce the number of deaths by a factor of ten. And that’s just counting the fatality rate. Acting fast also drastically reduces the cases, making this even more of a no-brainer.
Countries that act fast reduce the number of deaths at least by 10x.
The problem is that items such as ventilators and ECMO can’t be produced or bought easily. A few years ago, the US had a total of 250 ECMO machines, for example.
So if you suddenly have 100,000 people infected, many of them will want to go get tested. Around 20,000 will require hospitalization, 5,000 will need the ICU, and 1,000 will need machines that we don’t have enough of today. And that’s just with 100,000 cases.
That is without taking into account issues such as masks. A country like the US has only 1% of the masks it needs to cover the needs of its healthcare workers (12M N95, 30M surgical vs. 3.5B needed). If a lot of cases appear at once, there will be masks for only 2 weeks.
Countries like Japan, South Korea, Hong Kong or Singapore, as well as Chinese regions outside of Hubei, have been prepared and given the care that patients need.
But the rest of Western countries are rather going in the direction of Hubei and Italy. So what is happening there?
What an Overwhelmed Healthcare System Looks Like
The stories that happened in Hubei and those in Italy are starting to become eerily similar. Hubei built two hospitals in ten days, but even then, it was completely overwhelmed.
Both complained that patients inundated their hospitals. They had to be taken care of anywhere: in hallways, in waiting rooms…
From a well respected friend and intensivist/A&E consultant who is currently in northern Italy:
1/ ‘I feel the pressure to give you a quick personal update about what is happening in Italy, and also give some quick direct advice about what you should do.
I heavily recommend this short Twitter thread. It paints a pretty stark picture of Italy today
Healthcare workers spend hours in a single piece of protective gear, because there’s not enough of them. As a result, they can’t leave the infected areas for hours. When they do, they crumble, dehydrated and exhausted. Shifts don’t exist anymore. People are driven back from retirement to cover needs. People who have no idea about nursing are trained overnight to fulfill critical roles. Everybody is on call, always.
Francesca Mangiatordi, an Italian nurse that crumbled in the middle of the war with the Coronavirus
That is, until they become sick. Which happens a lot, because they’re in constant exposure to the virus, without enough protective gear. When that happens, they need to be in quarantine for 14 days, during which they can’t help. Best case scenario, 2 weeks are lost. Worst case, they’re dead.
The worst is in the ICUs, when patients need to share ventilators or ECMOs. These are in fact impossible to share, so the healthcare workers must determine what patient will use it. That really means, which one lives and which one dies.
“After a few days, we have to choose. […] Not everyone can be intubated. We decide based on age and state of health.” —Christian Salaroli, Italian MD.
Medical workers wear protective suits to attend to people sickened by the novel coronavirus, in the intensive care unit of a designated hospital in Wuhan, China, on Feb. 6. (China Daily/Reuters), via Washington Post
All of this is what drives a system to have a fatality rate of ~4% instead of ~0.5%. If you want your city or your country to be part of the 4%, don’t do anything today.
This is a pandemic now. It can’t be eliminated. But what we can do is reduce its impact.
Some countries have been exemplary at this. The best one is Taiwan, which is extremely connected with China and yet still has as of today fewer than 50 cases. This recent paper explain all the measures they took early on, which were focused on containment.
They have been able to contain it, but most countries lacked this expertise and didn’t. Now, they’re playing a different game: mitigation. They need to make this virus as inoffensive as possible.
If we reduce the infections as much as possible, our healthcare system will be able to handle cases much better, driving the fatality rate down. And, if we spread this over time, we will reach a point where the rest of society can be vaccinated, eliminating the risk altogether. So our goal is not to eliminate coronavirus contagions. It’s to postpone them.
The more we postpone cases, the better the healthcare system can function, the lower the mortality rate, and the higher the share of the population that will be vaccinated before it gets infected.
How do we flatten the curve?
Social Distancing
There is one very simple thing that we can do and that works: social distancing.
If you go back to the Wuhan graph, you will remember that as soon as there was a lockdown, cases went down. That’s because people didn’t interact with each other, and the virus didn’t spread.
The current scientific consensus is that this virus can be spread within 2 meters (6 feet) if somebody coughs. Otherwise, the droplets fall to the ground and don’t infect you.
The only way to truly reduce that is with social distancing: Keeping people home as much as possible, for as long as possible until this recedes.
This has already been proven in the past. Namely, in the 1918 flu pandemic.
Learnings from the 1918 Flu Pandemic
You can see how Philadelphia didn’t act quickly, and had a massive peak in death rates. Compare that with St Louis, which did.
Then look at Denver, which enacted measures and then loosened them. They had a double peak, with the 2nd one higher than the first.
If you generalize, this is what you find:
This chart shows, for the 1918 flu in the US, how many more deaths there were per city depending on how fast measures were taken. For example, a city like St Louis took measures 6 days before Pittsburgh, and had less than half the deaths per citizen. On average, taking measures 20 days earlier halved the death rate.
Italy has finally figured this out. They first locked down Lombardy on Sunday, and one day later, on Monday, they realized their mistake and decided they had to lock down the entire country.
Hopefully, we will see results in the coming days. However, it will take one to two weeks to see. Remember the Wuhan graph: there was a delay of 12 days between the moment when the lockdown was announced and the moment when official cases (orange) started going down.
How Can Politicians Contribute to Social Distancing?
The question politicians are asking themselves today is not whether they should do something, but rather what’s the appropriate action to take.
There are several stages to control an epidemic, starting with anticipation and ending with eradication. But it’s too late for most options today. With this level of cases, the two only options politicians have in front of them are containment and mitigation.
Containment
Containment is making sure all the cases are identified, controlled, and isolated. It’s what Singapore, Hong Kong, Japan or Taiwan are doing so well: They very quickly limit people coming in, identify the sick, immediately isolate them, use heavy protective gear to protect their health workers, track all their contacts, quarantine them… This works extremely well when you’re prepared and you do it early on, and don’t need to grind your economy to a halt to make it happen.
I’ve already touted Taiwan’s approach. But China’s is good too. The lengths at which it went to contain the virus are mind-boggling. For example, they had up to 1,800 teams of 5 people each tracking every infected person, everybody they got interacted with, then everybody those people interacted with, and isolating the bunch. That’s how they were able to contain the virus across a billion-people country.
This is not what Western countries have done. And now it’s too late. The recent US announcement that most travel from Europe was banned is a containment measure for a country that has, as of today, 3 times the cases that Hubei had when it shut down, growing exponentially. How can we know if it’s enough? It turns out, we can know by looking at the Wuhan travel ban.
This chart shows the impact that the Wuhan travel ban had delaying the epidemic. The bubble sizes show the number of daily cases. The top line shows the cases if nothing is done. The two other lines show the impact if 40% and 90% of travel is eliminated. This is a model created by epidemiologists, because we can’t know for sure.
If you don’t see much difference, you’re right. It’s very hard to see any change in the development of the epidemic.
Now what did researchers think the impact of reducing transmission would be?
The top bloc is the same as the one you’ve seen before. The two other blocks show decreasing transmission rates. If the transmission rate goes down by 25% (through Social Distancing), it flattens the curve and delays the peak by a whole 14 weeks. Lower the transition rate by 50%, and you can’t see the epidemic even starting within a quarter.
The US administration’s ban on European travel is good: It has probably bought us a few hours, maybe a day or two. But not more. It is not enough. It’s containment when what’s needed is mitigation.
Once there are hundreds or thousands of cases growing in the population, preventing more from coming, tracking the existing ones and isolating their contacts isn’t enough anymore. The next level is mitigation.
Mitigation
Mitigation requires heavy social distancing. People need to stop hanging out to drop the transmission rate (R), from the R=~2–3 that the virus follows without measures, to below 1, so that it eventually dies out.
These measures require closing companies, shops, mass transit, schools, enforcing lockdowns… The worse your situation, the worse the social distancing. The earlier you impose heavy measures, the less time you need to keep them, the easier it is to identify brewing cases, and the fewer people get infected.
This is what Wuhan had to do. This is what Italy was forced to accept. Because when the virus is rampant, the only measure is to lock down all the infected areas to stop spreading it at once.
With thousands of official cases — and tens of thousands of true ones — this is what countries like Iran, France, Spain, Germany, Switzerland or the US need to do.
But they’re not doing it.
Some business are working from home, which is fantastic.
Some mass events are being stopped.
Some affected areas are in quarantining themselves.
All these measures will slow down the virus. They will lower the transmission rate from 2.5 to 2.2, maybe 2. But they aren’t enough to get us below 1 for a sustained period of time to stop the epidemic. And if we can’t do that, we need to get it as close to 1 for as long as possible, to flatten the curve.
So the question becomes: What are the tradeoffs we could be making to lower the R? This is the menu that Italy has put in front of all of us:
Nobody can enter or exit lockdown areas, unless there are proven family or work reasons.
Movement inside the areas is to be avoided, unless they are justified for urgent personal or work reasons and can’t be postponed.
People with symptoms (respiratory infection and fever) are “highly recommended” to remain home.
Standard time off for healthcare workers is suspended
Closure of all educational establishments (schools, universities…), gyms, museums, ski stations, cultural and social centers, swimming pools, and theaters.
Bars and restaurants have limited opening times from 6am to 6pm, with at least one meter (~3 feet) distance between people.
All pubs and clubs must close.
All commercial activity must keep a distance of one meter between customers. Those that can’t make it happen must close. Temples can remain open as long as they can guarantee this distance.
Family and friends hospital visits are limited
Work meetings must be postponed. Work from home must be encouraged.
All sports events and competitions, public or private, are canceled. Important events can be held under closed doors.
Then two days later, they added: No, in fact, you need to close all businesses that aren’t crucial. So now we’re closing all commercial activities, offices, cafes and shops. Only transportation, pharmacies, groceries will remain open.”
One approach is to gradually increase measures. Unfortunately, that gives precious time for the virus to spread. If you want to be safe, do it Wuhan style. People might complain now, but they’ll thank you later.
How Can Business Leaders Contribute to Social Distancing?
If you’re a business leader and you want to know what you should do, the best resource for you is Staying Home Club.
It is a list of social distancing policies that have been enacted by US tech companies—so far, 328.
They range from allowed to required Work From Home, and restricted visits, travel, or events.
There are more things that every company must determine, such as what to do with hourly workers, whether to keep the office open or not, how to conduct interviews, what to do with the cafeterias… If you want to know how my company, Course Hero, handled some of these, along with a model announcement to your employees, here is the one my company used (view only version here).
4. When?
It is very possible that so far you’ve agreed with everything I’ve said, and were just wondering since the beginning when to make each decision. Put in another way, what triggers should we have for each measure.
It enables you to assess the likely number of cases in your area, the probability that your employees are already infected, how that evolves over time, and how that should tell you whether to remain open.
It tells us things like:
If your company had 100 employees in the Washington state area, which had 11 coronavirus deaths on 3/8, there was a 25% chance at least one of your employees was infected, and you should have closed immediately.
If your company had 250 employees mostly in the South Bay (San Mateo and Santa Clara counties, which together had 22 official cases on 3/8 and the true number was probably at least 54), by 3/9 you would have had ~2% chances to have at least one employee infected, and you should have closed your office too.
[Updated as of 3/12] If your company is in Paris (intramuros), and it has 250 employees, today there’s a 95% chance that one of your employees has the coronavirus, and you should close your office by tomorrow.
The model uses labels such as “company” and “employee”, but the same model can be used for anything else: schools, mass transit… So if you have only 50 employees in Paris, but all of them are going to take the train, coming across thousands of other people, suddenly the likelihood that at least one of them will get infected is much higher and you should close your office immediately.
This math is selfish. It looks at every company’s risk individually, taking as much risk as we want until the inevitable hammer of the coronavirus closes our offices.
But if you’re part of a league of business leaders or politicians, your calculations are not for just one company, but for the whole. The math becomes: What’s the likelihood that any of our companies is infected? If you’re a group of 50 companies of 250 employees on average, in the SF Bay Area, there’s a 35% chance that at least one of the companies has an employee infected, and 97% chance that will be true next week. I added a tab in the model to play with that.
Conclusion: The Cost of Waiting
It might feel scary to make a decision today, but you shouldn’t think about it this way.
This theoretical model shows different communities: one doesn’t take social distancing measures, one takes them on Day n of an outbreak, the other one on Day n+1. All the numbers are completely fictitious (I chose them to resemble what happened in Hubei, with ~6k daily new cases at the worst). They’re just there to illustrate how important a single day can be in something that grows exponentially. You can see that the one-day delay peaks later and higher, but then daily cases converge to zero.
But what about cumulative cases?
In this theoretical model that resembles loosely Hubei, waiting one more day creates 40% more cases! So, maybe, if the Hubei authorities had declared the lockdown on 1/22 instead of 1/23, they might have reduced the number of cases by a staggering 20k.
And remember, these are just cases. Mortality would be much higher, because not only would there be directly 40% more deaths. There would also be a much higher collapse of the healthcare system, leading to a mortality rate up to 10x higher as we saw before. So a one-day difference in social distancing measures can end exploding the number of deaths in your community by multiplying more cases and higher fatality rate.
This is an exponential threat. Every day counts. When you’re delaying by a single day a decision, you’re not contributing to a few cases maybe. There are probably hundreds or thousands of cases in your community already. Every day that there isn’t social distancing, these cases grow exponentially.
Democratic watchdog organization Freedom House has released its annual ranking of the world’s most free and the world’s most suppressed nations.
As Statista’s Niall McCarthy notes, for the 14th year in a row, global freedom has been found to have declined. 64 countries experienced a decline in freedom with only 37 making a move in the right direction. In a particularly worrying development, Freedom House found that 25 out of 41 “established democracies” have also experienced net losses in democracy since 2006.
The United States enjoyed similar levels of freedom to Switzerland and the United Kingdom a decade ago but it has experienced a decline and is now ranked behind Greece and Slovakia while it remains marginally ahead of Argentina and Croatia. Freedom House blamed the policies of the Trump administration for the slide, stating that it has failed to exhibit consistent commitment to a foreign policy based on the principles of democracy and human rights.
The highest-ranked countries this year are Finland, Norway and Sweden while the the Netherlands, Canada, Ireland, Australia and New Zealand were also among the top scorers.
In total, 49 countries fell into the “not free” category with Syria at the very bottom. Turkmenistan, Eritrea, North Korea, South Korea and Somalia are also among the worst-ranked countries.
Psychologist Robert Epstein says that Big Tech is planning to use “subliminal methods” in the upcoming election that could shift up to 15 million votes and cost Trump the presidency.
After the 2016 presidential election, Epstein surmised that search engine bias shifted 2-3 million votes in Hillary Clinton’s favor, and he warns that the number in 2020 could be five times that amount.
The author says that Google and other social media giants “can shift opinions and votes in numerous ways that people can’t detect” via “a wide variety of subliminal methods of persuasion that can, in minutes, shift the voting preferences of 20 percent or more of undecided voters without anyone having the slightest idea they’ve been manipulated.”
A leak of Google emails to the Wall Street Journal back in 2018 already exposed how Google engineers had sought to investigate how they could manipulate a user’s “ephemeral experiences” to change their mind on the Trump travel ban.
“Ephemeral experiences are those fleeting ones we have every day when we view online content that’s generated on-the-fly and isn’t stored anywhere: newsfeeds, search suggestions, search results, and so on,” writes Epstein.
“No authority can go back in time to see what search suggestions or search results you were shown, but dozens of randomized, controlled, double-blind experiments I’ve conducted show that such content can dramatically shift opinions and voting preferences. See the problem?”
Google, Twitter and Facebook have complete control over what is seen and what is allowed to go viral, Epstein emphasizes, making it completely pointless to produce political ads if you cannot prevent algorithmic manipulation.
“If our own tech companies all favor the same presidential candidate this year—and that seems likely—I calculate that they can easily shift 15 million votes to that candidate without people knowing and without leaving a paper trail,” warns Epstein.
He also notes how the the “technological elite” Eisenhower warned about in his 1961 farewell address is now in control, underscored by the fact that “95 percent of donations from tech companies and their employees go to Democrats.”
Epstein says the only way to prevent all this is aggressive monitoring of algorithmic manipulation.
“When bias is detected that has the potential to shift votes, it needs to be reported immediately to the media, the Federal Election Commission, members of Congress, and other authorities,” he writes.
“That will force the tech execs to back off; if they don’t, they’ll be risking humiliation, fines, and, quite possibly, criminal prosecution.”
Despite highlighting the issue for years, Republicans have done next to nothing to address social media censorship and algorithm manipulation. Numerous major boosters of President Trump during the 2016 election have also been completely banned on social media.
Pointing out that the margin of victory in many nationwide races is as little as 5 per cent, Epstein cautions, “Republicans, in general, are likely to lose.”
Epstein also emphasized that given his knowledge about what Big Tech are planning, he is “not suicidal.”
This is particularly noteworthy given that the psychologist previously suggested that his wife’s fatal car crash may not have been accidental.
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“It’s Terrible”: NYC Restaurants Shocked With “Mass Event Cancellations” As Virus Fears Grow
We already wrote weeks ago about how the coronavirus was wreaking havoc among Chinese business owners in various cities across the U.S.
Since then, fear of the virus has been ramped up significantly, and so it should come as no surprise that people are starting to cancel events at NYC restaurants en masse, according to Eater.
Restaurants across NYC are reporting that parties are being cancelled and business is “seeing dips” since the first confirmed coronavirus case in NYC last week. And if we were willing to bet, those would not be “dips” you’d want to buy. It’ll likely get worse.
As of Monday, there were 19 confirmed cases in the city and many corporate offices are encouraging employees to work from home. Hotels and restaurants are getting hit the hardest. One restaurant owner, Tom Colicchio, says his revenue is down “as much as 70%”. The NYC Hospitality alliance says it’s seen a “big drop” in business.
Another restaurantuer, Michael Sinensky, founder of Simple Venue, a hospitality group that runs Sushi by Bae and Sushi by Bou, says sales have dropped off by as much as 25% and he’s expecting it to continue for “several weeks”.
Additionally, fewer companies are booking events for the spring. Colicchio said: “It’s terrible. It’s just an unknown here. You have no idea how long it’s going to last. It’s hard to get in front of … who knows when things will go back to normal?”
Restaurants that rely on large parties are also seeing declines in foot traffic. Xi’an Famous Foods’s CEO Jason Wang saw a 20% drop in his locations in Flushing and Chinatown last month. He also says customer foot traffic is lower.
Owner of East Village Korean restaurant Nowon, Jae Lee, said business started falling about three weeks ago, but has tapered since then. The restaurant group behind Japanese spots like Sobaya said that foot traffic is “visibly lower”.
And things aren’t looking optimistic. Not unlike the market itself, this is a dip that may not be getting better anytime soon. Ravi DeRossi — who owns 15 restaurants and bars, said: “Over the weekend, a quarter of reservations canceled day-of, with some saying they’re concerned about being in public places and others worried about not feeling well. This was the first weekend. My feeling is every weekend, it’s going to get worse and worse.”
Many restaurants are now dealing with extra precautions for hygiene. More things are getting disinfected, more frequently, according to Eater. One owner says the “unprecedented” situation has them training their staff on how to deal with “fear and panic”.
Colicchio’s restaurants are keeping less inventory on hand and holding off on larger purchases for the time being. The Sushi by Bae and Sushi by Bou restaurants are developing a delivery box to try and “balance the business we expect to lose due to the virus panic.”
DeRossi concluded: “I’ll be honest, I’m a little scared. I’m in the East Village. All it takes is one case. If one restaurant in the East Village says, ‘This person at this restaurant got that,’ and the entire East Village will shut down overnight. I honestly don’t know what to do, other than take every serious precaution that we can.”
“I think we’re in for a long period of uncertainty right now,” Colicchio added.
Elon Musk, the head of Tesla, wants to build an electric car factory in Brazil. He was supposed to meet Jair Bolsonaro, the president of Brazil, in Miami in early March, but he was too busy; instead, Musk will go to Brazil sometime this year. All eyes are on the southern Brazilian state of Santa Catarina, whose Secretary of International Affairs Derian Campos is in direct contact with Musk. Two automobile manufacturers – BMW and GM – already have factories in Santa Catarina. Marcos Pontes (Minister of Science, Technology, Innovation, and Communications) held a video conference with Anderson Ricardo Pacheco, a senior Tesla official. They were joined by Daniel Freitas, a congressman, and Claiton Pacheco Galdino, who is the business development director for Criciúma, a city in Santa Catarina. They are eager for Tesla to open a Gigafactory – Tesla’s name for a big factory – in South America’s largest economy.
It helps that Brazil has considerable lithium deposits – mostly in the southeastern states of Minas Gerais and Paraíba and in the northeastern states of Ceará and Rio Grande do Norte. The production of lithium is limited, largely having been used for ceramics and glass production.
The Bolsonaro government is interested in increasing the production of lithium, including as a key raw material for the lithium-ion batteries that power electric cars such as those made by Tesla. But Brazil’s lithium will not be sufficient. Tesla would need to import lithium from elsewhere.
The Lithium Triangle
Over 50 percent of the world’s known lithium deposits are in the “Lithium Triangle” – the lithium concentrated brine sources in Argentina, Bolivia, and Chile. Bolivia’s high mountain deserts – the Salar de Uyuni – have by far the largest known reserves of lithium.
In a bizarre tweet, the Bolivian entrepreneur Samuel Doria Medina wrote that since Elon Musk and Jair Bolsonaro will discuss the Tesla plant in Brazil, they should add to this initiative the following: “build a Gigafactory in the Salar de Uyuni to supply lithium batteries.” Doria Medina is not just an entrepreneur. He is the vice-presidential candidate alongside the “interim president” Jeanine Áñez for the May 3, 2020, Bolivian presidential elections. Áñez came to power only because of the coup d’état against Evo Morales in November 2019. Doria Medina’s welcome mat to Tesla should, therefore, be seen as having the full authority of the coup government behind it.
Morales’ government had been very cautious with these lithium reserves. It had made clear that these precious resources were not to be turned over to transnational corporations in deals favorable to the firms; what gains come from lithium, Morales had pointed out, must be properly shared with the Bolivian people. The point that Morales’ government made is that any deal must be done with Comibol – Bolivia’s national mining company – and Yacimientos de Litio Bolivianos – Bolivia’s national lithium company. The monetary gains from the mining would come into the Bolivian exchequer and then fund the social programs so necessary for the country. This sensible socialist policy was too much for three major transnational firms – Eramet (France), FMC (United States), and Posco (South Korea) – all three of whom turned tail and went to Argentina.
The Lithium Coup
It was Morales’ socialist policy toward Bolivia’s resources that doomed his government. The oligarchy, which was angry with Morales’ government and its socialism, used every mechanism to undermine the election of 2019. Forest fires in the northern and eastern regions of Bolivia provided the oligarchy’s media with the weaponry to suggest that Morales had abandoned his commitment to the environment and to Pachamama (Mother Earth), and that he was now working to benefit the cattle ranchers; it is important to point that this is not only ridiculous, but that as soon as the coup government of Áñez came into office, it passed legislation that allowed the ranchers to extend their lands into forested areas.
Morales’ opponent – Carlos Mesa – and other senior leaders of the oligarchy’s political parties openly said long before the election that Morales could only win by fraud. A self-proclaimed Council for the Defense of Democracy said that Morales was an illegitimate candidate because he had lost the 2016 constitutional referendum. The media – backed by these corporate and neofascist interests – banged the drum of fraud, while Carlos Mesa – on the night of the election – said that there was “monumental fraud” in the election. These provocations from Mesa, the neofascists, and the corporate elites resulted in street violence; in the midst of this, the police – sections of whom were angry with Morales for cracking down on police corruption – mutinied. The 36 Bolivians who died in the immediate post-election aftermath are victims of Mesa’s incendiary language. The Organization of American States (OAS), egged on by the U.S. government, came up with a “preliminary report” of fraud in the election; the hard conclusions in the report were not substantiated by the data in it. The OAS report played an important role in legitimizing the coup against Morales.
It is important to point out that there was no controversy about Morales’ election in 2014; in that election, Morales won 61 percent of the votes to defeat the entrepreneur Samuel Doria Medina, who won 24 percent (Doria Medina is the same person who is now running for vice president and welcomes Tesla to Bolivia’s lithium). Morales’ term, from the 2014 election, had not yet expired in November 2019; the removal of Morales then violated the mandate of 2014, a point that has received almost no discussion either inside Bolivia or abroad.
John Curiel and Jack Williams of the Election Data and Science Lab of the Massachusetts Institute of Technology (MIT) went over the Bolivian election data and found no fraud: “There is not any statistical evidence of fraud that we can find,” they wrote conclusively in the Washington Post. Curiel and Williams contacted the OAS, but they note, “We and other scholars within the field reached out to the OAS for comment; the OAS did not respond.” By their assessment, Morales won the election in November 2019 and should have been inaugurated this year to a new term.
Terrible pressure by the coup government against the party of Morales (the Movement for Socialism, or MAS) – as well as the presence of USAID monitors and a U.S.-backed head of the election commission, Salvador Romero – suggests that this election on May 3 is not going to be at all fair; it will likely favor the coup government, including the entrepreneur who wants to turn over Bolivia’s lithium to Elon Musk’s Tesla and Jair Bolsonaro’s Brazil.
A World of Lithium
In 2019, the benchmark Bloomberg New Energy Finance’s “Energy Storage Outlook 2019” report anticipated that by 2030, the price of the lithium-ion battery would drop dramatically, and that – as a consequence – renewable energy (solar and wind) plus storage of energy in batteries will expand exponentially. By 2040, there is an expectation that wind and solar will produce 40 percent of world energy consumption, rather than the 7 percent it now produces. For this, demand for energy storage will increase.
“The total demand for batteries from the stationary storage and electric transport sectors is forecast to be 4,584GWh (Gigawatt hours) by 2040,”write the Bloomberg analysts, “providing a major opportunity for battery makers and miners of component metals such as lithium, cobalt and nickel.” The current use is merely 9GW/17GWh.
The key point to emphasize here is that this will provide “a major opportunity” for “miners of component metals such as lithium, cobalt and nickel.” When Bloomberg’s analysts use a word like “miners,” they do not mean the Bolivian miners or the Congolese miners, but the transnational firms, such as Tesla and its chief, Elon Musk. As far as Bloomberg and Áñez are concerned, South America is no longer to follow the resource nationalist project of Evo Morales; this is Elon Musk’s South America, a place for the neo-conquistadors to make money and leave behind them social carnage.
Federal Reserve Turns To Big Data To Monitor Business Cycle
Federal Reserve officials are increasingly turning to big data to provide them with a more accurate snapshot of the economy, AP News reports.
The first evidence of this was during a government shutdown last year when officials turned to First Data, a payments firm that processes $2 trillion in transactions per year, for credit card data to gauge the health of the consumer, as it was evident the Fed was flying blind with most of its consumer datasets halted because of the shutdown.
“It was a big deal for the Fed in terms of having information about the economy when the retail sales data did not come out,” said Claudia Sahm, a former Fed analyst who compiled the First Data consumer data for officials during the shutdown. Officials were “extremely interested in what those readings were.”
The Fed is becoming aware that government data to assess the status of the business cycle is not as accurate as thought, and the 106-year old central bank must leap into the 21st century and embrace big data to stay relevant.
“We have been working with big data … with the purpose of better understanding the current position of the economy,” Chairman Jerome Powell recently said. “It’s an area of real interest for us.”
Billions of financial transactions are digitized and compiled by private firms and could be a solution for the Fed to monitor more accurately the business cycle for future policy adjustments.
The deployment of artificial intelligence, monitoring private data financial transactions, searching for anomalies, could be a new tool for the Fed to pre-emptively fight downturns.
“These data are becoming of increasing practical importance for figuring out the state of the economy for policymaking,” Matthew Shapiro, an economist at the University of Michigan who studies economic data, said at a conference last year. “The quality of official statistics is going to deteriorate without help from big data.”
Most government datasets are a long lag and rely on surveys, not helpful when trying to gauge current conditions of the business cycle, and maybe explains why the Fed is sometimes late to the game in terms of policy action.
Big data could allow the Fed to view the economy through a looking glass that is more real-time, as opposed to outdated surveys, which could also give the Fed tools to drop precise stimulus where it is needed the most, in terms of geographical region or a specific industry, a move that could thwart contagion.
Economists have pressured the Fed to adopt big data and private datasets as part of tools to monitor business conditions. It would make the Fed more accurate in policy deployment, considering they’ve been flying blind since December 23, 1913.
“Consumers shop online, summon cars for hire with an app, watch ‘TV’ without television stations or TVs, and ‘bank’ without cash or checks,” Shapiro wrote in a paper last spring. “Data could, in principle, be available with a very short lag.”
The rise of alternative data has allowed hedge funds to place bets on the economy more accurately. For example, Yelp takes its customer data, packages it up, and sells it to hedge funds for a costly premium. Those hedge funds use artificial intelligence to find trends in Yelp’s consumer data, which then allows them to trade on it.
In other examples of using alternative data to guage real-time economic conditions, we showed readers the collapse of China’s economy weeks before official data printed:
The Fed got a taste of big data last year during the government shutdown, it remains to be seen if the Fed will continue adopting alternative data as part of its monitoring toolkit.
Our society is now transitioning into panic about the coronavirus.
Universities and schools are being shuttered, sports activities and public gatherings are being cancelled, individuals are hoarding toilet paper and supplies, travel is being severely constrained, the stock market has crashed, and business activity is nose-diving. Major businesses are forcing their employees to work at home.
This blog will try to summarize the coronavirus threat, suggest that some of the panic-driven actions may not be well-founded, and that there may be a far better, more effective approach to deal with the virus.
Before I begin, let me note two things. I am not a medical doctor, epidemiologist, or viral expert. But I am a scientist with some facility with statistics and data, and my specialty, weather prediction, is all about helping people react appropriately to estimates of risk. And I have talked to a number of doctors about this issue. But don’t read any more if my background bothers you.
How Bad is the Situation Today?
If one steps back and looks at the actual numbers, particularly against other threats we face, the situation is far less apocalyptic than some are suggesting. As of today, the Centers for Disease Control and Prevention (CDC) notes 1215 cases and 36 deaths in the U.S. since January 1. This is a very, very small percentage of the U.S. population of 331 million. The number of U.S. cases no longer appears to be going up rapidly, as noted by the latest CDC graphic (see below). Note the drop after the peak in early March.
In China, where the problem started, the number of cases is rapidly declining (see below).
According to Washington State’s Department of Health, the state has had 457 coronavirus cases and 31 deaths. Most (23) of the death’s in Washington have been limited to one nursing facility in Kirkland with a large number of elderly, chronically ill patients. In fact, according to the NY Times, this facility would typically lose 5 patients a month.
This facility also represents about 50 of the coronavirus cases in Washington, since several first responders and staff were sickened (with no fatalities) due to exposure at this site. In many ways, the Kirkland facility represented an unfortunate random event–the random exposure of a group of extremely vulnerable patients. If this random exposure had not happened, Washington State would probably not be getting headlines as a center for this virus outbreak.
An extremely important element of this coronavirus outbreak is that it hardly sickens young people, and healthy individuals of middle age or younger generally do not face a life-threatening illness. To illustrate, here is the age distribution of cases in King County. Few folks under 40 are sickened and none of them died. The problem is with the sick and elderly. This age distribution is going to be very, very important. Similar statistics are found in China.
There are undoubtedly many, many cases of coronavirus infection in the younger, healthier members of society, many of which are not aware of their infection. But without testing, we don’t really know other than by indirect statistical approaches. Thus, the “death rates” are clearly far too high, and highly deceptive.
Comparison to the Flu
It is important to note that the coronavirus numbers are extraordinarily smaller than those of the flu.
Below is a flu graphic I got from CDC and added the coronavirus cases (see the gray dot). In fact, the gray dot should be much smaller. For example, we had 36 coronavirus deaths nationally so far compared to 61,000 flu deaths in 2017-2018. 45 million cases that year compared to 1200 coronavirus cases so far this year. In WA state, 75 have died of flu through the end of February and several years have brought 200- 300 deaths from influenza.
Coronavirus is not even in the same league as flu, which also kills the youngest among us. We did not close down universities, businesses, and more for flu.
Interestingly, many who are panicking about the coronavirus today, refused to get a flu shot in past years, or to practice reasonable hygiene when flu is around (e.g., washing hands carefully). Coronavirus is also not in the same league as auto accidents, which kill 1.25 millions a year (3287 deaths a day), with 25-50 million injured or disabled for the worldwide statistics, while about 38,000 die in the U.S. each year from auto wrecks.
Are our political leaders shutting down society for the flu or stopping auto travel because of deaths on the roadway? The answer is no. So why are they willing to close down society to deal with the coronavirus, which has represented only a small smaller risk to the general population? Life is full of risks that must be considered, mitigated, and dealt with. But society must continue to function.
Poor Response and Lack of Testing
As the virus began to spread in China, the U.S. needed to develop a coherent plan for understanding and dealing with the crisis. This did not happen. President Trump probably made the right call about cutting off travel to China, but the lack of coherent planning beyond that is apparent. The lack of testing is a major failure of his administration and others.
A key capability is to develop sufficient testing resources to determine the progression of the disease in the U.S. This was sorely lacking, and the flawed testing developed by the CDC was one example of it. Other countries have tested vastly greater numbers of individuals. Importantly, the U.S. has not begun randomly test the general population to determine the extent of spread among U.S. residents.
The Extreme Cost of the Current “Social Distancing” Approach
Currently, the “social distancing” approach is being stressed by politicians and others. The idea is that by canceling schools and large public gatherings, coupled with workers working online from home, there will be a reduction of coronavirus community spread, reducing the peak in the number of cases and put less stress on the limited resources of the medical community. This is illustrated by the figures below. You notice the number of cases doesn’t change (the area under the curve). And it has another issue: it greatly extends the period in which society is affected by the disease.
The cost of social distancing is immense, something many politicians do not seem to have thought through. The stock market is in free fall, the economy is tanking, colleges are poorly educating their students through questionable online learning, K-12 students aren’t being taught, business is contracting, and workers are losing salaries and being laid off. The lowest income folks are hurt worst, making “social distancing” highly regressive. I have read estimates that that the world economy could lose trillions of dollars and that recession is now becoming more likely in the U.S.
Social distancing may be attractive for a short period to slow the virus, but in the end it is not sustainable. It is also inefficient. In an attempt to prevent the virus from getting to elderly people with health problems, a huge population that does not have the disease or unlikely to get very sick from it is restrained from normal activity. Something more effective is needed, something I would call “smart quarantine.” More on that later.
A number of the local politicians and others have been motivated to try massive social distancing based on a modeling study completed by several local researchers, suggesting only extreme social distancing can prevent a massive increase in cases and up to 400 deaths in our region. This is a relatively simple model approach, which from my reading does not consider the variation of death rate with age, or the varying social interactions with age. It assumes a uniform death rate of 1.6 %. I think it would be useful to test an alternative strategy, based mainly on testing those that are not ill, and removing those people from social interaction.
Media, Politicians, and the Web: How and why they can promote panic
The tendency for stampeding the population into panic and promoting actions that are in the end counterproductive is a real risk of the current political and media landscape.
For politicians, there is the potential for endless attention, with opportunities to give sober pronouncements and promote increasingly harsh measures. Resources become freely available from a worried citizenry. And the situation provides fuel to attack political foes, as is apparent with the attacks on Trump for virtually every action he takes (and some have been reasonable, like the China ban). That said, President Trump is certainly guilty of underplaying the seriousness of the situation and providing inaccurate information. The lack of testing is a massive failure. There is, however, plenty of bipartisan blame to go around for ineffective responses.
For the media, the situation is a bonanza, with huge increases in attention, which promotes more “clicks” and revenue. An increasingly isolated and home-bound populace is glued to the constant media barrage, promoting fear and anxiety.
A highly connected population, unlike any population before, is unable to escape the incessant coronavirus coverage that is constantly featuring the latest death and shut-down.
Another Way
So it there another way to deal with the coronavirus epidemic that could be more effective and far less cost to society? I suspect there is. This approach would take advantage of several unique and new aspects of the current situation:
The fact that young and healthy people, the bulwark of our nation’s productive capacity, are only minimally affected by the coronavirus.
That most of the mortality is among the sick and elderly.
That the technology to test millions of individuals quickly is available.
Perhaps these facts allow us to deal with the situation in a dramatically new way. If a rational actor was running the response, perhaps they would:
1. Protect the most vulnerable with all available resources. All nursing facilities, retirement homes, and the like would be essentially quarantined, with all patients and staff tested for the virus, with those testing positive isolated from the remainder. All visitors would have to be tested. All individuals who are over 60 and possessing serious health problems would be asked to self-quarantine, with food and other assistance provided to allow them to reduce contact with the outside community.
2. Extensive random testing of the general population would be initiated, with millions of tests available for this purpose. Such general testing would allow a determination of the extent of COVID-19 spread and the isolation of affected individuals and their close associates. This is what I call “smart quarantine”– the use of massive testing to identify the carriers and currently sick and to take them out of circulation.
3. A fund to provide salaries for quarantined individuals would be initiated. This would encourage all individuals to be tested and encourage financially marginal individuals to isolate themselves.
4. Social distancing would end and all schools reopened within a month.. It is poor public policy to cripple education and the productive capacity of individuals that are the bulwark of the U.S. economy, particularly since most of them are not at risk for serious impacts of the coronavirus. Sustained social distancing is not a long term solution.
5. Federal grants will be initiated to support additional hospital costs, the acquisition of additional medical supplies and equipment, and the huge testing program.
This measures would help pull the nation back from the brink of economic disaster, effectively restrain the crisis, and restore normal life to most individuals.
The American people have a long history of panicking when they are threatened, at enormous financial and human cost. After 9/11, the American people agreed to loss of privacy and civil liberties, and allowed a tragic invasion of Iraq. And after the attack on Pearl Harbor, fears of a third column led to the internment and loss of liberty of over 100,000 Japanese Americans. Hopefully, fears of coronavirus won’t lead to the unnecessary destruction of our economy and the undermining of the prospects of many Americans. A creative solution to this crisis may be possible, acting as bridge to the situation a year from now when hopefully a vaccine will be available.
With the flood of virus announcements developing in King County, Washington; Santa Clara, California; Los Angeles; and the Tri-state area, Americans are still not taking the pandemic seriously.
Americans are perplexed by the severity of the virus outbreak, which was seen in the most recent Hollywood Reporter/Morning Consult poll, suggesting that many were split on whether movie theaters should shut down to prevent further transmission of the virus.
The poll found 38% of US adults believe shuttering movie theaters to contain the virus outbreak is a good idea, and shockingly, 44% opposed the containment measures. The survey was conducted from March 5-7 among 2,200 adults across the country.
Earlier this week, we noted the virus could stay airborne for 30 minutes and travel up to 14 feet, implying that movie theaters are significant breeding grounds, sort of like cruise ships.
The reason Americans feel indifferent about virus prevention measures is that the government and mainstream media downplayed the severity of Covid-19 for months, calling it no worse than the flu, which, by the way, ended on Wednesday, when Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID), said the fast-spreading virus is “10 times more lethal than the seasonal flu.”
So now, major cities have community spreading and are past the point of implementing containment measures to control the outbreak, such as closing down 41,000-plus movie screens across the country.
What’s astonishing is that the rate of US containment measures is happening at such a slow speed compared to China earlier this year, who immediately shut down 70,000 movie theaters as confirmed cases in the country started to rise.
Despite the US government and corporations acting at snail-speed to protect their citizens, all because it would crash the economy and stock market, people are starting to recognize that maybe Covid-19 is more than just the flu. Theater stocks, such as AMC, Imax, and Regal owner Cineworld, have plunged in recent weeks on fears that consumers will stay home. About 46% of respondents in the study said they support the future “postponing all upcoming movie premieres.”
Some 40% of respondents said theater chains should do more to help in the fight to combat the virus. And in our view, that means theaters should be closed for the next two months, similar to what Carnival Corp. announced on Thursday morning by suspending its Princess Cruises Line. But again, in America, profits over human safety – so we’ll see if shutdowns actually come, or maybe people will follow the Centers for Disease Control and Prevention’s (CDC) guidelines of “social distancing.”
Roughly 43% of respondents said they agreed with the decision to postpone the new James Bond flick No Time to Die. We noted earlier this week that movie premiers and filming productions are being delayed or canceled across the world for the first half of the year.
There’s some evidence that the virus outbreak could greatly benefit online streaming platforms, such as Netflix and Hulu. About 21% of respondents in the new THR/Morning Consult survey signed up for streaming services since the virus crisis began, and 43% said they would be watching more movies at home during the pandemic.
And just like that – after a magnificent 11 year run – the bull market in U.S. stocks is dead. From its peak close of 29,551 on February 12 through yesterday’s [Thursday] close of 21,200, the Dow Jones Industrial Average (DJIA) has dropped over 28 percent – in just 30 days! RIP.
Death may mark the end. The completion of the circle of life. But it also marks the beginning of something new.
The death of the bull market, for example, marks the birth of a new bear market. By our estimation, the DJIA must fall an additional 30 percent – approximately – before the bear market dies and a new bull market is born.
Between now and then, the central planners in command at the Federal Reserve and the U.S. Treasury will do anything and everything to jumpstart the old bull market back to life. On Thursday, Fed Chair Powell grabbed Hank Paulson’s bazooka and fired off a cumulative $4 trillion repo bailout. But, alas, Powell’s bazooka was loaded with blanks.
After a brief paring back of losses, the DJIA resumed its downward trajectory, closing the day down 2,353 – or nearly 10 percent. The stock market, you see, knows something that Powell doesn’t know. That is, the damage being done to businesses, in an effort to control the spread of coronavirus, is destroying the economy.
Layoffs. Shuttered doors. Empty ports. Quiet railroads. Suspended sports and entertainment venues. No Disneyland. Oil price collapse. No March Madness. More layoffs. Tom Hanks. Bankruptcies. Empty shelves. Panic. Sovereign debt crisis. And soon to be empty bellies…
The ultimate impact, in terms of GDP contraction, will tailspin the economy into a depression…perhaps, The Great Depression II. The stock market, regardless of what Powell wants, is pricing this reality accordingly.
There’s no escaping it…
Can’t Run, Can’t Hide
You can’t run. You can’t hide. Remember, no one here gets out alive. Though you aren’t totally helpless…
You can tempt fate. You can rage against the forces of destiny. By this, you can place bets that are at odds with the madness of crowds. Of course, this must be done before the inflection point; before the herd runs off the cliff…not after.
For example, during periods of economic chaos, physical gold and silver and arable land are proven vehicles for wealth preservation. No doubt, those with the means and fortitude to do so have already diversified some of their savings into these established crisis hedges.
Those who haven’t can only blame themselves. There have been ample warning signs over the last year – or more – that financial markets were ripe for a crisis. It didn’t take half a brain to clue in on this.
And it didn’t take much in the way of resources to place a bet or two that something ‘might could’ go wrong. Even the lowly working stiff, with a small inkling of what was coming, could have taken a pass on shares of Apple and traded a small wad of paper bucks for a junk silver bag or two.
With a little luck, these proven wealth preservation vehicles will safely traverse the valley of the shadow of death to whatever economic order emerges when the crisis abates. At that point, we suspect paper dollars will trade at par with fire kindling, whereas silver and gold will retain their stored value.
Indeed, gold and silver have gotten shellacked this week. But, as night follows day, once this panic liquidation episode subsides, and the implications of fiscal and monetary currency debasement are realized, gold and silver will take off. You can count on it.
In the interim, escaping to a country house or a mountain cabin is an appealing option to ride out the depression – assuming you have one to escape to. If not, the months ahead may validate the wisdom of having freeze dried food storage and a productive vegetable garden. Assuming you’re prepared with a little food storage and gold, you can calmly hunker down and avoid large crowds.
Other than that, the best thing to do is to try and stay out of the way as the traveling circus blows through town. Hence, what follows are several proven, practical ideas, including a 12-Point Great Depression II Survival Guide, that anyone can follow to avoid taking this crisis square on the chin…
Your 12-Point Great Depression II Survival Guide
On November 21, 2008, when the sky was falling, and following many reader inquiries, we attempted to offer – from the heart – practical, discretionary advice on what to do to survive the economic crisis. At the time, it served our readers well.
For your benefit today, and by reader request, we’ll revisit it…with some minor touch ups. We recommend printing this out, and tacking it to your office corkboard, so you can refer to it during the darkest of days, which are headed our way.
Your 12-Point Great Depression II Survival Guide:
Always take what’s yours…plus a little bit more. You’ll undoubtedly need it with Donald J. Trump running riot during an election year.
Never shake hands with your right hand, without first crossing the fingers of your left hand securely behind your back. You never know when you’ll need a do-over.
Always look out for No. 1, save stepping in No. 2.
Never give a beggar your pocket change, except when to do so is to buy them a drink.
Know the difference between honesty with yourself and honesty with others. The former must be rigorous; the later must be flexible…especially when applying for insurance.
Never kick a man when he is down; so too, never hasten to help him up.
Never stiff your barber. He’ll be your last resort for relief via bloodletting and fire cupping, should things get bad enough.
Never con widows and orphans; all others are fair game.
Do not worry about money; what you don’t have should be of little concern.
Never forget that there’s a fool on every corner and a sucker born every minute. Avoid being one of them when at all possible; for it is both demoralizing and expensive.
Do not take it personal when you lose your job. This economy’s circling the toilet bowl; before this is over a lot of other good people will lose their job too.
Remember, always, that this too shall pass; though never fast enough. So keep your head up. For even during a depression the birds still sing, the flowers still bloom, and those of sound mind and body get through it a little wiser…if not a lot slimmer.
