More on the coronavirus pandemic

Reader feedback at end

Last week’s report on this subject was bleak, and things have gone downhill since then. Herewith an updated report, which focuses on recent developments and refines our initial assessments.

I. Spread of COVID-19 – The number of confirmed cases of this disease grew rapidly during the past week, both globally and in the US. COVID-19 global cases [click US on left side of screen for US statistics], arcgis.com, accessed 3/15/20 & 3/22/20. https://bit.ly/2ILOqFG

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Comments:

A. The cumulative number of cases is probably understated due to the time lag between onset of the disease and receipt of confirmed test results. Also, it has been suggested that many comparatively mild cases are escaping detection because the subjects haven’t been getting tested. Study: 86% of people with coronavirus are walking around undetected, Jackie Salo, New York Post, 3/17/20.

B.
To the extent that the total number of cases is understated, the indicated mortality is correspondingly overstated. The 1% death rate cited by some experts (notably Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases) is basically an educated guess. Also, the death rate will be importantly influenced by the quality of care available, i.e., can be expected to run considerably higher in Italy (healthcare system got overloaded) or Iran (primitive healthcare system) than in the US.

C. The number of “recovered” cases in the US seems very low to date, both in relation to number of confirmed cases and number of deaths. We would expect a big increase in recoveries as the disease profile matures.

D. The reported data for China (where the pandemic originated) appear rather questionable. 3,265 deaths out of a total number of confirmed cases of 81,397 would work out to a death rate of only 4.0%, and essentially all of the Chinese cases are attributed to the Hubei province where Wuhan is located even though the authorities initially acted to suppress reports of the coronavirus rather than attempting to limit its spread. Early and combined interventions crucial in tackling COVID-19 spread in China, Southampton.ac.uk, 3/11/20.

The research also found that if interventions in the country could have been conducted one week, two weeks, or three weeks earlier, cases could have been reduced by 66 percent, 86 percent and 95 percent respectively – significantly limiting the geographical spread of the disease. However, if NPIs were conducted one week, two weeks, or three weeks later than they were, the number of cases may have shown a 3-fold, 7-fold, or 18-fold increase, respectively.

II. ContainmentInstructions to limit travel, cancel sporting events, close universities and public schools, encourage employees to work from home, etc. have been followed by additional measures in many states, such as closing restaurants except for takeout or home delivery services. No doubt the net effect of these restrictions has been to slow the spread of COVID-19.

As a notable exception to the success of containment efforts, many college students who were sent home from school apparently found more enjoyable things to do and may not have complied with recommended “social distancing” (6 feet apart). Some spring breakers are still hitting beaches amid the coronavirus pandemic, Joey Haddon, businessinsider.com,
3/19/20.

Three states (with 70 million residents) saw fit to issue shutdown orders that were intended to close all “nonessential” business operations and encourage people to avoid leaving their homes except for trips to buy food or medicine, seek medical treatment, etc. Illinois joins New York and California to give “stay at home order” affecting 20% of citizens, Kassidy Vavra, the-sun.com,
3/20/20.

Given the tendency for our political leaders to “jump on the bandwagon” when things are moving in a given direction, this draconian policy was soon emulated by a number of additional states (including DE, KY, LA, NJ, OH and various local jurisdictions). The president has said no such edict is under consideration at the national level, but there have been rumors to the contrary. Trump eyes two-week quarantine, only drug and grocery stores open, Paul Bedard, Washington Examiner,
3/20/20.

Senior officials have said that dozens of radical ideas are being considered and that the president and his virus task force are moving quickly to protect the nation. Trump has praised the public for following the rules he has put in place, but the new plans are an acknowledgment that many people are not taking the warnings seriously. In some areas, the National Guard has already been called out to enforce “stay in place” orders, a model of what Trump is considering.

Sorry, but we believe things have gone too far already and blanket shutdown orders should be avoided for several reasons:

A. The more businesses are closed, the worse the already severe economic hit will be – and many Americans are rightly concerned about this reality. Poll: Americans view Wuhan virus as a bigger threat to the economy than to their health, Tristan Justice, thefederalist.com, 3/18/20.

Pew reports that 70 percent of Americans believe that the outbreak poses a major risk to the nation’s economy, while 47 percent say it is major threat to the population’s health. Just 27 percent said they believe that the new virus presents a major hazard to their own personal health and 51 percent say it’s a minor threat.

B. As previously discussed, the rationale for containment is not to prevent the spread of the disease through the population – which probably isn’t feasible – it is to “flatten the curve” to avoid overwhelming healthcare facilities. A respectable argument can therefore be made for allowing the disease to run its course under sensibly controlled conditions – as was done with the “swine flu,” for example, in 2009-2010 (already dealing with a “financial crisis” at the time, our national leaders may not have been up for a second crisis). Should America vote on letting COVID-19 run its course? Doug MacKinnon, townhall.com, 3/22/20.

Here in the United States, over 60 million were infected, approximately 300,000 hospitalized, and upwards of 18,000 Americans lost their lives. And yet life went on as normal [i.e., without imposition of widespread containment measures].

C. Many people won’t willingly stay in their homes for extended periods anyway, so shutdown orders breed disrespect for government directives without creating any clear-cut benefits. The extreme state lockdowns, Wall Street Journal, 3/20/20.

These shutdowns are extraordinary and have costs, not least the harm to small business owners. Americans may simply decide to ignore the orders after a time. Absent a more thorough explanation of costs and benefits, we doubt these extreme measures will be sustainable for long as the public begins to chafe at the limits and sees the economic consequences.

III. Duration - There been some pointed criticism lately of US efforts to fight the coronavirus, which supposedly compare unfavorably to the efforts in China, South Korea, etc. Why Asia now looks safer than the US, Shashank Bengali (LA Times), yahoo.com, 3/20/20.

In Asian countries that initially faced the gravest risk from the coronavirus, the shambolic U.S. response to the pandemic has elicited confusion, horror and even a measure of pity. Suddenly, it seems, the U.S. is the basket case, an aloof, inward-looking power that had already weakened its alliances, failed to lead on global emergencies such as climate change and shrunk in a crisis.

We aren’t inclined to credit such comments for several reasons. As already noted, the initial Chinese response to the coronavirus was badly botched, although subsequent containment measures may well have been effective. The irrelevan t reference to climate change suggests that the comments are colored by political bias. And Chinese officials have suggested that the coronavirus might have come from the US military rather than originating in Wuhan, which appears to be a blatant misrepresentation. China’s foreign ministry accuses the US, Ryan General, netshark.com, 3/13/20.

It remains unclear how long the shutdown mentality will remain in vogue, but some observers maintain that any substantial relaxation of the current restrictions must wait until a vaccine can be developed and made available for the public’s protection (this might take some 18 months).

We continue to foresee a much earlier inflection point, say April 30, by which point the incidence of new cases should be waning and US healthcare resources will be effectively mobilized. When and how does this coronavirus crisis end, Philip Klein, Washington Examiner,
3/17/20.

Relaxation of restrictions will be facilitated by correction of initial shortcomings in testing procedures – augmented inventories of medical supplies – acquired experience of medical personnel on the front line – identification of medicines that can be used to treat COVID-19 even before a vaccine becomes available – and success in flattening the curve of cases that could overtax the healthcare facilities available.

One of the potential treatment options is an anti-malaria drug (HydroxyChloroquine) that was developed in the 1930s and has been in widespread use since 1945. Controlled studies in the US and France have shown HC to be highly effective against the coronavirus, although this conclusion has not yet been established to the satisfaction of the “panic-driven media, the big money-lust vaccine research grant types, and the swampy [US] surgeon general.”

Maybe it’s time to make a decision, start providing HC to medical personnel on the front lines and people in the most vulnerable categories, and if all goes well quickly reverse the containment efforts that have been sweeping the country. The final steps to defeating COVID-19, Kevin McCullough, townhall.com,
3/22/20.

Such an approach might seem rather bold, but what’s the downside? The biggest obstacle is probably that, having committed themselves to a containment strategy, our political leaders won’t want to admit that there might be a better solution. (Update: The president has been an advocate of using HC, and supplies have been provided to New York for use starting on or about March 24.) What victory would look like in coronavirus war, Holman Jenkins, Wall Street Journal,
3/20/20.

Bad decision making, as shown in research, often begins with reducing a complex problem to the single variable with the biggest emotional wallop. That’s what’s happening here. All of us sense the opprobrium and disgrace that would descend on our elites if Italy-like scenes of a health-care system meltdown played out on our TVs. But we may get the bad result anyway and worse if we overtax the willingness of Americans to isolate themselves indefinitely.

IV. Recession – Financial firms are catching up with the situation by slashing their previous economic projections. Ouch! Last week, Bank of America forecast 12% shrinkage (annual rate) in 2nd quarter GDP; JPMorgan Chase said 14%; Goldman Sachs’s figure was 24%.

If Goldman’s economists are right, that means the U.S. is approaching the sharpest single-quarter decline in gross domestic product since the U.S. started measuring GDP in its current form, Barron’s said. The current record for the largest quarterly slowdown was in the first quarter of 1958, the bank says, when GDP declined 10%.

Given that the most important factor in the minds of voters is typically satisfaction (or dissatisfaction) with economic results, political leaders are naturally worried about being blamed for bad results – and anxious to support government measures that will offset the anticipated slowdown or at least soften the blow.

V. Economic stimulus – In early March, the Federal Reserve gave up on cautious monetary policy (to the president’s delight). The federal funds interest rate was cut to nearly zero, and the Fed began preparing to resume its quantitative easing program by buying Treasury bonds and other longer-term debt securities (raising prices/ lowering yields). Fed cuts interest rates to near zero, Sweta Killa (Zack's), yahoo.com, 3/16/20.

Meanwhile on Capitol Hill, two anti-coronavirus bills have been enacted and a third (and much larger) bill was under consideration when we went to press.

•HR 6074 ($8B) – Coronavirus Preparedness and Response Supplemental Appropriations Act ,
3/6/20.

Funds appropriated for Dept. of Health and Human Services (vaccines & other medical supplies, grants for state, local & tribal public health programs); State Dept. (embassy evacuations, foreign aid); and Small Business Administration (disaster loans).

•HR 6201 ($105B) - Families First Coronavirus Response Act,
3/18/20; Trump signs coronavirus relief bill, Washington Times, 3/18/20.

Free coronavirus tests, two weeks of paid sick and family leave, increased funding for Medicaid, and increased unemployment insurance.

•S 3548 ($1T+) – Coronavirus Aid, Relief and Economic Security [CARES] Act, introduced in Senate
3/19/20.

The initial idea for the CARES Act was to provide a stipend for all Americans that would help them to get through the impending economic crisis. The payments were to flow to recipients as quickly and automatically as possible, e.g., payments would be directly deposited to the bank accounts of people who paid their 2018 taxes/received 2018 refunds via direct deposit. There would also be grants or loans to firms in industries with special problems, e.g., airlines and hotels, and to small businesses.

A bill drafted by Republican senators was introduced on the floor of the Senate by Sen. Mitch McConnell. Democratic and/or special interest adjustments were then proposed, which figured to substantially inflate the overall cost. According to economists consulted by the Washington Examiner, the consensus figure for a stimulus package (including outlays and loan guarantees) was on the order of $2 trillion. And some thought that future legislation might be required to provide additional funds. Pandemic will necessitate a deficit of $2T to $5T, economists say, Jay Heflin, Washington Examiner,
3/20/20.

Sen. Majority Leader Mitch McConnell had planned a preliminary vote on the bill at 3:00 PM on Sunday afternoon, but the vote was postponed based on Democratic objections. At last report, the bill (which had ballooned to over $2 trillion) had been blocked, with discussions to continue today. Democrats block advancement of critical economic relief package, Susan Ferrechio, Washington Examiner,
3/22/20.

As we see it, the notion that Congress can provide sufficient fiscal stimulus to fully offset an economic recession of the size that’s brewing is unrealistic. Some people may claim deficits don’t matter citing what they call “modern monetary theory,” but the something for everyone bill that is pending seems on a par with the attempts of alchemists to convert base metals into gold. Perhaps MMT might more appropriately be used as shorthand for “medieval magical thinking.”

The Wall Street Journal editorial board offered somewhat similar reservations. Rethinking the coronavirus shutdown, Wall Street Journal,
3/19/20.

The politicians in Washington are telling Americans, as they always do, that they are riding to the rescue by writing checks to individuals and offering loans to business. But there is no amount of money that can make up for losses of the magnitude we are facing if this extends for several more weeks. After the first $1 trillion this month, will we have to spend another $1 trillion in April, and another in June?

VI. Political action – It can’t have been easy for him, but the president has shown considerable restraint of late in dealing with the coronavirus crisis. Letting medical experts do some of the talking - refraining from accusing his political opponents of exaggerating the situation - avoiding claims of a “perfect” response by his administration. The change in Trump, Dick Morris, westernjournal.com, 3/18/20.

This style adjustment has apparently been paying off. Majority of Americans now say they approve of Trump’s handling of coronavirus, Marty Johnson, thehill.com,
3/20/20.

But if the president was forced to propose a change in course – either to downplay containment of the coronavirus or to concede that the economic results of containment efforts will be prolonged and painful – how would that go over?

Keep your fingers crossed about the plan that is being pursued, and let's see what happens.

**********FEEDBACK**********

# Though I'm sure that some of this is obvious to you, I want to write this anyway. Since the combination of plaquenil and azithromycin seems to be promising as a potential therapeutic option (and possibly a preventative measure), assuming that we can get massive quantities of these and that they work (big though reasonable ifs), we might expect a significant shortening of this whole thing. The study done in France showed good results and was not anecdotal as some say. It was a small study but it had a great degree of statistical significance. Disease breakout with a treatment and potentially a prophylactic option is way different than a disease for which there is no cure and no prior exposure. All the bans should be lifted if this combination of medication works and people should be reassured about things like going to restaurants and the movies and even flying and we can get the economy restarted. The FDA tends to only trust US studies which has been a problem in the past and is one now as well, but doctors will ignore them and treat anyway as long as the medicine is available Docs are already trying to get it but it's been hard to get. In the past. doctors have ignored the FDA and used drugs "off-label" as long as the drugs were approved for other uses. It's legal and docs can use them. It would be nice to have enough medication to treat everyone who gets it. It has the potential to cut both infectivity, morbidity and mortality. I believe both China and S. Korea have used these with success. I appreciate the president's push on these meds and I believe he's right. It might be hard to get the scientists at the top to be on board but hopefully the NY study will show great results. We can pray for that. – Former doctor

Well said! This and other therapeutic options should definitely be pursued, and let’s hope they pay off.

# Stay healthy and be happy with your house arrest starting 0800 tomorrow. So you bars, liquor stores, groceries and lots more businesses are considered necessary. Booze, of course, because going cold turkey would lead up to organize crime becoming your buddy. Or mass revolt, statewide. – SAFE member (DE)


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