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Will the fallout from the new virus lead to a global recession

 
 
 
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southernhybrid

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https://www.nytimes.com/2020/02/28/business/economy/coronavirus-economy.html


Investors, fearing that the spread of the coronavirus is tipping the global economy into a recession, handed the stock market its largest weekly loss since the 2008 financial crisis on Friday amid worries that one of the longest economic expansions in history may be coming to an end.

With the virus now detected in at least 56 countries, companies are readjusting their annual profit expectations, economists are lowering their forecasts for global growth and policymakers have signaled that they are ready, if needed, to act to stabilize the economy.
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At first it appeared as if people were over reacting and panicking without good reasons, but I've been doing a lot of thinking about the economic impact of this virus and I now believe it has the potential to cause a global recession, perhaps a severe one.

Considering how Trump has done so much damage to the CDC and other agencies that were expanded under Obama to safe guard our health, it may take a lot longer to find the resources necessary to limit the impact of this illness. Plus, the global economy is very interconnected and many drugs and other necessary items are not able to be manufactured without ingredients or parts from other countries, who are also suffering economically from this virus.

Still, there were stark signs that the economic fallout from the virus had started to take hold, as retailers and home builders reported delays in shipments from China, Amazon was running low on hand sanitizers sought by a jittery public and financial regulators began monitoring whether American businesses were starting to have difficulty borrowing money.
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“This feels different than the other market crisis in that it involves disruptions to daily life,” said Mark Zandi, chief economist at Moody’s Analytics. “This isn’t financial. This is not some obtuse thing on a screen. Schools may close. I may not be able to get pasta or oatmeal.”

What began a few weeks ago as relatively tepid concerns on Wall Street about disruptions to global supply chains has mushroomed into deep worries about the possibility that millions of people around the world may have to cut back on shopping, travel and restaurants to avoid contracting the virus.
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David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, said the way to think about a supply shock was “suddenly every factory and office produces 10 percent less than it did last year.”

That’s a far harder thing to fix than a demand shock, Mr. Wessel said, since simply putting more money into people’s pockets won’t make up for the fact that stores are closed, factories aren’t operating and trips are canceled.

“There is nothing the Fed can do to offset the lost production if no one is taking trips and factories aren’t making parts,” he said.

So far, the response from the Trump administration to the outbreak has only seemed to intensify Wall Street’s worries.

Early on Friday, Larry Kudlow, Mr. Trump’s chief economic adviser, said markets were overreacting and suggested it was a good time to buy stocks — statements that some investors said were not helpful and perhaps even irresponsible.
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Well, I've watched Kudlow for years and years when he was on CNBC. The man is an idiot. He's almost always wrong about any of his prediction, so.....

I'm never one to panic, but I'm starting to freak out a little bit because the one Rx. drug that I take that is potentially life saving, is already in very short supply. The FDA just said that there is one drug that is in extreme short supply but it refused to mention which drug. That seems crazy. If I knew I couldn't get the drug that I need, I'd ask my provider to order me something else and hope it was available.

I also am concerned about Americans who are barely making it from paycheck to paycheck. If their work places are temporarily closed down, how will they survive? There are talks of some cities closing down schools etc. Maybe this thing will be like seasonly flu, but if it becomes a long lasting pandemic, we may all be fucked! I know that those of us who have IRAs and 401K are already losing significant value of our assets. The market could bounce back or it could get worse and take years for the markets to rebound. Okay. Is that enough ranting to concern anyone? :eek:
 
There were already some serious supply chain issues developing as a result of rapid climactic shifts in agricultural growing areas, and more immediately as a result of the simultaneous trade wars with China and Europe; the Coronavirus hysteria is adding fuel to an already growing fire. I visited a Fry's Electronics over the holidays that looked like it had been hit by a hurricane. Almost nothing of value remained on its shelves, just random remaining objects that were either priced too high or desired to obscurely to have survived their ill-managed season. I should have taken pictures! Now, a lot of things had gone wrong with the Fry's situation, and not all of them were consequences of the national economy. But it was still a shock to see one of the oldest and earliest victors in the Silicon Valley superstructure looking laid so low at the busiest time of the year. And I feel that it won't be the last time this year I walk into a store with that same shattered and looted look about it.
 
Yeah, the market impact has hit me more meaningfully than the health impact (for the moment, because I live rural and therefore have less risk). I've been watching the health numbers with some geeky fascination on how they count, what they count, what inflection points are identified. But there has also been implications in our economy with respect to supply chain disruptions, and that has been less reported. When a factory closes for two weeks, it is a Big Deal. When many of them do, it is a Big Disruption with a Big Ripple Effect. There's the disruption in supply, and there's the disruption in income for those workers. When I think about the vast impact on Airline revenues alone.... wow. But now add car sales - China is a big part of the auto sales market, and they are not earning and thence not buying. But parts for manufacture are slowed as well, so... yeah, I am definitely watching closely!
 
I'm concerned. This will not be a blip.
The effect upon global supply chains will persist for years even if a full-blown pandemic doesn't materialize and the virus fades in six months. It's going to depress markets and restrict growth, neither of which is a bad thing unto itself IMHO. But the fact that it's the people on the bottom who will suffer from those effects is truly a shame.
The best that can be hoped for is that it causes the Trump regime to lose power in November, and the subsequent effort to blame its effects on "the Democrats" is unsuccessful.
 
Elixir said:
The best that can be hoped for is that it causes the Trump regime to lose power in November, and the subsequent effort to blame its effects on "the Democrats" is unsuccessful.
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"Think how much worse this would have been if everyone had access to medical care!"

"Wind farms were a key factor in the spread of this contagion."
 
Just think how much worse the virus spread would have been without those, er, 5 miles of wall Trump built.
 
Rhea said:
Politesse said:
"Wind farms were a key factor in the spread of this contagion."
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Crap - don’t give them ideas!
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You think I'm exaggerating? This morning the conservative radio was trying pass the Muslim travel ban off as a preventative quarantine measure for pandemic disease, which the Democrats opposed and now look what's happened.
 
https://www.washingtonpost.com/world/2020/03/01/coronavirus-live-updates/#link-RH4FEFPSL5ABVPBX3GT3GTG6PA

Governments across Europe were pushing ahead with plans to contain or slow down the spread of the coronavirus on Sunday, with British Health Secretary Matt Hancock and Germany’s Interior Minister Horst Seehofer both refusing to rule out more extreme measures.
Hancock told the BBC that no measures were “off the table.”
Among discussed measures, said Hancock, were road closures or a plea to recently-retired nurses and doctors to return to work.
Putting entire cities with large outbreaks under lockdown, said Hancock, would pose “a huge economic and social downside,” but he added that “we don’t take anything off the table at this stage.”
Germany’s interior minister similarly indicated that lockdowns could be considered, even though they “would be the last resort,” according to the Bild am Sonntag newspaper.
France on Saturday banned all public interior gatherings with over 5,000 individuals as well as some outside events, forcing the cancellation of numerous upcoming conferences and races, including a half marathon that was supposed to take place in Paris on Sunday.
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A major travel trade show in Berlin, ITB, which was set to begin next week, was abruptly canceled. Airlines are now required to report the health status of all travelers from South Korea, Japan, Italy, China and Iran. Some companies have asked their employees to work from home until further notice.
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Plus, American Airlines just said it's suspending all flights to Milan. It's pretty certain that anything related to tourism or leisure is going to suffer economically. And, there is already a shortage of health care workers in assisted living facilities and nursing homes in the US. There is currently a nursing home in Washington, near Seattle, I think, that has some active cases of the virus among both residents and staff. Who is going to be willing to take the low paying jobs in these places, if this becomes an epidemic in such facilities?

It's not so much people dying, as it is people who can't get to work, and people who will stay away from places like restaurants, movie theaters and stores, other than for necessities. I think this could have a very big negative impact on the global economy. Schools are closing in some places, which can impact the parent's ability to get to work, if their children are too young to be left alone all day.


I did ask about my one Rx that I need to take. It's already in short supply but my pharmacy said they could have a 90 day refill ready for me by Monday night. I'd encourage anyone who takes important medications to get them filled soon if possible. The FDA already has a list of drugs which are in short supply. The list seems to be getting longer over the last couple of years. I think that part or maybe most of the reason is because the drugs in short supply are older cheap generics. Since just about everything related to healthcare these days in the US is about profit.....you get the idea. But that's a topic for a different discussion.
 
Could have made America great if our government considered more medical supplies and pharmaceuticals as critical and ensured their manufacture in the US. But nooooooo. Anything to make a buck.

Isn't there a defunded federal agency with a Trump toady in charge of this? The National Risk Management Center perhaps. What's up with that Bob Kolasky?

Monday should be an interesting day on Wall Street. Let's see how long it takes for investors to regain confidence in our hollowed out government. Or we could just cut taxes and slash regulations to a happier tomorrow.
 
Buying hand sanitizer... to protect you from a virus. Wearing masks that don’t cover your face well.. to protect yourself from viruses.

We are heading for a recession. It’d be poetic Trump is held accountable for a pandemic he wasn’t responsible for starting. Yes, he did fuck the nation over though by introducing it to the US because he and his goons are fucking idiots.
 
Just returned from our cruise vacation to Singapore, Cambodia, and Vietnam. Very few tourists are out and about now. Without Chinese tourists, businesses and locations appear almost deserted. Even Changi Airport in Singapore was undercrowded. The United flight back from Singapore to San Francisco was only half full, but the flight from San Francisco to Seattle was jammed with ever seat occupied. We put on our masks as people started coughing and sneezing around us (although masks are almost useless to prevent catching the illness). Apparently, United has been cancelling flights, so I suspect that the seats were filled with quite a few standby passengers.

We returned to learn that the medical facility that we used to use a lot--Evergreen in Kirkland--had the first US death from the virus, and that toll has risen to 5. With another death in Snohomish County, the death toll now stands at 6 in our state. A nursing home has been contaminated, and the state is buying a motel to house quarantined patients.

See 6 people have now died from coronavirus disease in Washington state; King County buying a motel to house isolated patients
 
southernhybrid said:
I also am concerned about Americans who are barely making it from paycheck to paycheck. If their work places are temporarily closed down, how will they survive? There are talks of some cities closing down schools etc. Maybe this thing will be like seasonly flu, but if it becomes a long lasting pandemic, we may all be fucked! I know that those of us who have IRAs and 401K are already losing significant value of our assets. The market could bounce back or it could get worse and take years for the markets to rebound. Okay. Is that enough ranting to concern anyone? :eek:
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If your workplace closes down you're laid off--and thus eligible for unemployment. Hopefully the government would have the sense to waive the normal look-for-work requirements and the like.

If it becomes a long-lasting pandemic we are simply going to have to live with it the best we can and accept the death toll that results. Note, though, that China seems to have managed to basically stomp it out with their shutdown.

I do see some things that the government could do to reduce the harm: Put a temporary hold on late payment penalties of all types. Accrued bills are treated as current so long as they are paid back over a period of 4x the shutdown duration. Since it hits basically the whole financial chain equally the disruption shouldn't be too great.

The stock market is certainly going to take a substantial hit but even a pandemic will not do serious damage to our economic potential except possibly for senior-targeted industries (if it goes pandemic expect the nursing home industry to be devastated), the market should recover once it's over.
 
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