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Comment by allovernow | Hacker News Reader

I just don't see how these closures aren't going to ripple through the global economy. The market is down 25% YTD after two desperate stimulus measures - $1.5T injection and interest rates cut to zero.

What are you going to prop up when world travel and trade is shut down? And domestic regions are locked down too?

The kicker is that we had been seeing negative long term indicators for a while before this - inverted yield curve, and long overdue for the approximately 7 year recession cycle, among other indicators.

I would love to be convinced otherwise but, regardless of the outcome of the 2019ncov situation, this is shaping up to be a trigger for a global recession, possibly a depression. Modern society cannot sustain itself indoors without radical measures. The vast majority of people probably work at jobs that cannot be performed remotely.

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> I just don't see how these closures

It almost certainly will. But there's a reason virtually every macro-economist is forecasting a rapid V-shaped recovery after the quarantine eventually ends.

At the end of the day, 90% of the population will still be working through the quarantine. And most of the rest will still receive unemployment benefits. Think about all those people collecting a paycheck, and just sitting at home. Now what happens when the quarantine ends?

They take all that money they've built up, and unleash it all at once. All those big-ticket purchases, vacations, and events, that got deferred happen in a short burst. All those people cooped up at home, will flood into restaurants, stores, and concerts. Think Chicago on the first warm day of spring. It's likely to be the greatest one-time surge in consumer spending in all of recorded history.

That's virtually guaranteed to jump-start the economy near instantaneously. And unlike 2008, the chance of systemic financial contagion is extremely low in today's environment. Banks are extremely well capitalized, and the vast majority of risky investment has been moved to non-bank entities, like corporate debt markets, private equity funds, and CLOs.

What if businesses realize that they can do without a lot of business travel? Won't that have a permanent impact on airlines at least?

Sure, but business travel only accounts for 1.5% of GDP. And it's pretty unlikely that it permanently falls by more than 50%. Then you have the fact that if company's spend less on business travel, they'll have more to spend on other things. In particular expect to see products like Zoom and Slack get much more spending as virtual meetings become the norm.

Finally even if business travel falls, expect consumers to make up a lot of the reduction in demand. The capacity exists and isn't going anywhere. Those airline seats and hotel rooms aren't going to sit empty. The price may fall, but tourists will take more trips when given discounts on the prices they're used to.

In general you can extend this reasoning to most of the pessimistic scenarios. First, real productive capacity will still be the same after the quarantine as it was before. Second, money spent in some sector isn't just going to get thrown into a hole if people stop consuming those products. One industry's loss is almost always another industry's gain. Finally, when demand contracts that means falling prices. When prices fall that enables new consumers and business models in the market.

In Europe many industries, including air travel are at or over capacity. Airlines operate at razer thin margins. We might see some consolidation in the market which could decrease the overhead costs, but not by much. There is simply no room to decrease prices that much. And there is not much evidence that the demand is very price-elastic either. Air travel has more competition by other forms of travel with less safety restrictions, less climate impact stigma, etc.

An impact that is long overdue. There is nothing wrong with adapting to a new normal.

Detuche Bank is inching toward bankruptcy.[0]

All indications are that this virus will take more than two months to deal with - you should carefully monitor China for the next few weeks because their self reported recovery may not be genuine.

How long can businesses hold out? What's stopping authoritarianism from taking hold, left and/or right, if this drags on for 3-6 months? We don't even know if you build lasting immunity to this virus yet. It could become endemic.

0. https://www.macroaxis.com/invest/ratio/DB--Probability-Of-Ba...

> What's stopping authoritarianism from taking hold, left and/or right, if this drags on for 3-6 months?

On a different planet this topic would be discussed, at length, along with measures to contain the virus. Once we're in lockdown mode worldwide with only the shiny screen to tell us what is going on, it is game over, and rather too late to discuss and set the ground rules for "emergency" regimes.

> What are you going to prop up when world travel and trade is shut down?

Pretty much all restrictions only apply to people, not goods. Trade is going to continue.

> I just don't see how these closures aren't going to ripple through the global economy.

I can see it not rippling if (a) a vaccine comes out in time, or (b) people just give up and work anyway, accepting coronavirus as a risk of life. Unlike sacrificing everything for the sake of not getting coronavirus, that can actually go on indefinitely.

"Unlike sacrificing everything for the sake of not getting coronavirus, that can actually go on indefinitely."

Not even remotely true.

If people go back to normal (against the advice from every agency with experience handling communicable diseases) the disease will spread at an exponential rate. Healthcare systems across the globe will be overwhelmed (like Italy and China but vastly worse) and people start suffering and dying from curable illnesses due to lack of capacity.

Then, once people start dying by thousands, everyone will quarantine themselves anyway.

There is no scenario where this doesn't ripple.

> There is no scenario where this doesn't ripple.

We can argue (b), but did you just ignore my (a)? How would that ripple like this?

The vaccine will take like 1 year to test and be sure that it is effective and that it is safe and cause no nasty side effects. So for 2020, let's ignore (a).

I don't know why this is being downvoted. A year is actually a fairly aggressive schedule. Of course there may be certain elected officials who will push to certify anything at all before November but nothing will be proven safe in that little time.

It might not take that long. If the vaccine candidate is viable, Stage 1 trials could be completed in a few months since there's already tons of patients with COVID-19 going to hospitals where they can be monitored for a maximum safe dose trial. The FDA might be able to waive most of Phase 1 similar to some oncology drugs and once it hits Phase 2, they just needs enough data about efficacy and safety to declare it a breakthrough therapy. The reality is that many clinical trials take time because of how long it takes to set up the infrastructure, get patients, and coordinate with an understaffed and underfunded FDA. If the entire agency is ordered to focus on COVID-19, I think it could happen a lot faster.

That's only if the vaccine works though. If do that process and it turns out it doesn't, it could make the situation a whole lot worse.

There is a high probability that at least many candidate vaccines could have induce a deadly autoimmune reaction upon exposure to the virus, because of antibody dependent enhancement (ADE), which is shared by other coronaviruses like the previous SARS. At least one paper I read trialing multiple vaccine candidates on animals reported failures in all cases due to autoimmune damage to lung tissue.

https://www.sciencedirect.com/science/article/pii/S0006291X1...

Can a vaccine be released in such a short timeframe? I don't think anyone is suggesting a vaccine can be released in less than several months. But it is suggested that the pandemic itself could subside within that timeframe.

The minimum amount a vaccine has ever been made is over a year. A vaccine just gives you the virus but in a damaged state.

Viruses aren't curable

It sounds a little too serious for b.

If you develop symptoms you may need serious medical attention (intubation) in order to survive regardless of age.

Wether or not you develop symptoms you can develop serious organ damage that results in life long chronic health problems (due to damage to lungs, kidneys and testes.)

It sounds to me like this virus is in fact much more serious than most people thought even with the hype.

Whether or not it's too serious for b depends on the alternatives. When the alternative is you don't make any money or have anything to eat, coronavirus might seem like the inevitable alternative, especially for younger/healthier folks.

I didn't want to write it out again but you took the words out of my mouth.

All of the worst [pending] peer reviewer papers are gradually being confirmed, it seems. The news has been getting consistently worse for literally two months now and we now have at least a dozen countries on lockdown, and growing.

vaccine take a year more more to develop people should stop saying this. Whats gonna happen is the same thing that will happen with chickenpox. Everyone will get it and you'll be ok unless you have a underlining condition

IMHO it’s futile to try to keep the economy “on the up” at a time like this, we’re basically throwing good money into a fire. Just take the hit and try to keep people alive; as soon as the emergency phase is over, the market will rebound on its own. Humanity existed before capitalism, surely it can live a few months without it.

I think the point is that the measures are overblown in relation to the hazard COVID-19 actually constitutes. It is a pandemic, and relatively virulent.

However, symptoms and mortality rate have been exaggerated by the media, causing more panic than necessary. If a wave of Influenza would get the same attention and monitoring, it would expose similarly shocking stats ("exponential" growth, and around half a million deaths yearly). Yet there are very few measures actually taken by governments there, because it's difficult and basically an uphill fight.

For what it's worth, note that alleged mortality rates for COVID-19 are in fact just very rough upper bounds, since there is no systematic testing happening yet on a large scale. The closest to that is probably South Korea, where deaths make up less than 1% of confirmed cases. In contrast, Influenza mortality rates are always based on estimations, not just on documented infections.

> symptoms and mortality rate have been exaggerated by the media

Dude, believe what you will, but in the most affected areas, they can't even bury bodies fast enough, they are literally filling up churches with coffins. This does not happen with influenza, because we have vaccines and mitigation techniques that we do not have with Covid19. We don't even know for sure if or when reinfection can occur.

In a regular year, influenza in Italy kills 400-500 people, and simple pneumonia kills another 6,000 to 8,000. We've had 2,000 deaths from covid19 in 2 weeks, and concentrated in 20% of the country. Do we really want to "let it run its course" for a full year over the whole of Europe? At this rate, in two months we'll have broken all records.

You underestimate this at your peril.

>In a regular year, influenza in Italy kills 400-500 people

Data is literally one query away.

>We estimated excess deaths of 7,027, 20,259, 15,801 and 24,981 attributable to influenza epidemics in the 2013/14, 2014/15, 2015/16 and 2016/17, respectively, using the Goldstein index.

https://www.sciencedirect.com/science/article/pii/S120197121...

My data does not agree with your data: http://www.assis.it/dati-istat-sui-decessi-da-influenza/

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