Lockdown!

According to AFP estimates, some 1.7 billion people across the world are now living under some form of lockdown as a result of the coronavirus. That’s almost a quarter of the world population.  The world economy has seen nothing like this.

Nearly all economic forecasts for global GDP in 2020 are for a contraction of 1-3%, as bad if not worse than in the Great Recession of 2008-9.  And forecasts for the major economies for this quarter ending this week and the next quarter are coming in at an annualised drop of anything between 20-50%! The economic activity indicators (called PMIs), which are surveys of company views on what they are doing, are recording all-time lows of contraction for March.

US composite PMI to March 2020

This is all due to the lockdown of businesses globally and isolation of workers in their homes. Could the lockdowns have been avoided so that this drastic ‘supply shock’ would not have been necessary in order to cope with the pandemic?  I think it probably could.  If governments had acted immediately with the right measures when COVID-19 first appeared, the lockdowns could have been averted.

What were these right measures?  What we now know is that everybody over the age of 70 years and/or with medical conditions should have gone into self-isolation.  There should have been mass testing of everybody regularly and anybody infected quarantined for up to two weeks.  If this had been done from the beginning, then there would have been fewer deaths, hospitalisations and a quicker dying out of the virus.  So lockdowns could probably have been avoided.

But testing and isolation was not done at the beginning in China.  At first there was denial and a cover-up of the virus risk.  By the time the Chinese authorities acted properly with testing and isolation, Wuhan was inundated and a lockdown had to be applied.

At least the Chinese had the excuse that this was a new virus unknown to humans and its level of infection, spread and mortality was not known before. But there is no excuse for governments in the major capitalist economies. They had time to prepare and act.  Italy left it too late to apply testing and isolation so that the lockdown there was closing the doors after the virus had bolted.  Their health system is now overloaded and can hardly cope.

There were some countries that did adopt mass testing and effective isolation.  South Korea did both; and Japan where 90% of the population wore masks and gloves and washed, appears to have curbed the impact of the pandemic through effective self-isolation without having a lockdown.

Similarly, in one small Italian village amid the pandemic, Vo Euganeo, which actually had Italy’s first virus death, they tested all 3000 residents and quarantined the 3% affected, even though most had no symptoms.  Through isolation and quarantine, the lockdown there lasted only two weeks.

At the other extreme, the UK and the US have taken ages to ramp up testing (which is still inadequate) and get the vulnerable to self-isolate.  In the US, the federal government is still not going for a state-wide lockdown.

Why did the G7 governments and others fail to act?  As Mike Davis explains, the first and foremost reason was that the health systems of the major economies were in no position to act.  Over the last 30 years, public health systems in Europe have been decimated and privatised. In the US, the dominant private sector has slashed services in order to boost profits.  According to the American Hospital Association, the number of in-patient hospital beds declined by an extraordinary 39% between 1981 and 1999. The purpose was to raise profits by increasing ‘census’ (the number of occupied beds). But management’s goal of 90% occupancy meant that hospitals no longer had the capacity to absorb patient influx during epidemics and medical emergencies.

As a result, there are only 45,000 ICU beds available to deal with the projected flood of serious and critical corona cases. (By comparison, South Koreans have more than three times more beds available per thousand people than Americans.) According to an investigation by USA Today “only eight states would have enough hospital beds to treat the 1 million Americans 60 and over who could become ill with COVID-19.

Local and state health departments have 25% less staff today than they did before Black Monday 12 years ago. Over the last decade, moreover, the CDC’s budget has fallen 10% in real terms. Under Trump, the fiscal shortfalls have only been exacerbated. The New York Times recently reported that “21 percent of local health departments reported reductions in budgets for the 2017 fiscal year.”  Trump also closed the White House pandemic office, a directorate established by Obama after the 2014 Ebola outbreak to ensure a rapid and well-coordinated national response to new epidemics.

The for-profit nursing home industry, which warehouses 1.5 million elderly Americans, is highly competitive and is based on low wages, understaffing and illegal cost-cutting. Tens of thousands die every year from long-term care facilities’ neglect of basic infection control procedures and from governments’ failure to hold management accountable for what can only be described as deliberate manslaughter. Many of these homes find it cheaper to pay fines for sanitary violations than to hire additional staff and provide them with proper training.

The Life Care Center, a nursing home in the Seattle suburb of Kirkland, is “one of the worst staffed in the state” and the entire Washington nursing home system “as the most underfunded in the country—an absurd oasis of austere suffering in a sea of tech money.” (Union organiser).  Public health officials overlooked the crucial factor that explains the rapid transmission of the disease from Life Care Center to nine other nearby nursing homes: “Nursing home workers in the priciest rental market in America universally work multiple jobs, usually at multiple nursing homes.” Authorities failed to find out the names and locations of these second jobs and thus lost all control over the spread of COVID-19.

Then there is big pharma.  Big pharma does little research and development of new antibiotics and antivirals. Of the 18 largest US pharmaceutical companies, 15 have totally abandoned the field. Heart medicines, addictive tranquilizers and treatments for male impotence are profit leaders, not the defences against hospital infections, emergent diseases and traditional tropical killers. A universal vaccine for influenza—that is to say, a vaccine that targets the immutable parts of the virus’s surface proteins—has been a possibility for decades, but never deemed profitable enough to be a priority.

I have argued in previous posts that COVID-19 was not a bolt of the blue.  Such pandemics have been forecast well in advance by epideomologists, but nothing was done because it costs money.  Now it’s going to cost a lot more.

The global slump is here.  But how long and how deep will it be?  Most forecasts talk about a short, sharp drop followed by a quick recovery.  Will that happen?  It depends on how quickly the pandemic can be controlled and fade away – at least for this year.  On 8 April, the lockdown in Wuhan will be lifted as there are no new cases.  So, from the emergence of virus there in January, it will be about three months, with a lockdown of over two months.  It also seems that the peak of the pandemic may have been reached in Italy which has been in full lockdown for only two weeks.  So perhaps in another month or two, Italy will be freed.  But other countries like the UK are just entering a lockdown phase, with others still facing exponential growth in cases which may require lockdowns.

So it seems that an end to the global supply shock is unlikely before June, probably much later.  Of course, the production collapse could be reversed earlier if governments decide not to have lockdowns or to end them early.  The Trump administration is already hinting at lifting any lockdown in the next 15 days ‘to get the economy going’ (at the expense of more deaths etc); but many state governors may not go along with that.

Even if economies do bounce back in the second half of 2020 as the lockdowns are ended, there will still be a global slump.  And it is a vain hope that recovery will be quick and sharp in the second half of this year.  There are two reasons to doubt that. First, the global economy was already slipping into recession before the pandemic hit.  Japan was in recession; The Eurozone was close to it and even US growth had slowed to under 2% a year.

And many large so-called emerging economies like Mexico, Argentina and South Africa were already contracting. Indeed, capital was flooding out of the global south to the north, a process than has now accelerated with the pandemic to record levels.  With the collapse in energy and industrial metal prices, many commodity-based emerging economies (Brazil, Russia, Saudi Arabia, Indonesia, Ecuador etc) face a huge drop in export revenues.  And this time, unlike 2008, China will not quickly return to its old levels of investment, production and trade (especially as the trade war tariffs with the US remain in place).  For the whole year, China’s real GDP growth could be as low as 2%, compared to over 6% last year.

With the collapse in energy and industrial metal prices, many commodity-based emerging economies (Brazil, Russia, Saudi Arabia, Indonesia, Ecuador etc) face a huge drop in export revenues.  And this time, unlike 2008, China will not quickly return to its old levels of investment, production and trade (especially as the trade war tariffs with the US remain in place).  For the whole year, China’s real GDP growth could be as low as 2%, compared to over 6% last year.

Second, stock markets are jumping back because of the recent Fed credit injections and the expected huge US Congress fiscal measures.  But this slump will not be avoided by central bank largesse or the fiscal packages being planned. Once a slump gets under way, incomes collapse and unemployment rises fast. That has a cascade or multiplier effect through the economy, particularly for non-financial companies in the capitalist sector.  This will lead to a sequence of bankruptcies and closures.

And corporate balance sheets are dangerously frail. Across the major economies, concerns have been rising over mounting corporate debt. In the United States, against the backdrop of decades-long access to cheap money, non-financial corporations have seen their debt burdens more than double from $3.2 trillion in 2007 to $6.6 trillion in 2019.

A recent paper by Joseph Baines and Sandy Brian Hager starkly reveals all.   For decades, the capitalist sector has switched from investing in productive assets and moved to investing in financial assets – or ‘fictitious capital’ as Marx called it. Stock buybacks and dividend payments to shareholders have been the order of the day rather than re-investing profits into new technology to boost labour productivity. This particularly applied to larger US companies.

As a mirror, large companies have reduced capital expenditure as a share of revenues since the 1980s.  Interestingly, smaller companies engaged less in ‘financial engineering’ and continued to raise their investment.  But remember the bulk of investment comes from the large companies.

The vast swathe of small US firms is in trouble.  For them, profit margins have been falling.  As a result, the overall profitability of US capital has fallen, particularly since the late 1990s.  Baines and Hager argue that “the dynamics of shareholder capitalism have pushed the firms in the lower echelons of the US corporate hierarchy into a state of financial distress.”  As a result, corporate debt has risen, not only in absolute dollar terms, but also relative to revenue, particularly for the smaller companies.

Everything has been held together because the interest on corporate debt has fallen significantly, keeping debt servicing costs down.  Even so, the smaller companies are paying out interest at a much higher level than the large companies. Since the 1990s, their debt servicing costs have been more or less steady, but are nearly twice as high as for the top ten percent.

But the days of cheap credit could be over, despite the Fed’s desperate attempt to keep borrowing costs down.  Corporate debt yields have rocketed during this pandemic crisis.  A wave of debt defaults is now on the agenda.  That could “send shockwaves through already-jittery financial markets, providing a catalyst for a wider meltdown.”

Even if the lockdowns last only a few months through to the summer, that contraction could see hundreds of small firms go under and even some big fish too.  The idea that the major economies can have a V-shaped recovery seems much less likely than a L-shaped one.

41 Responses to “Lockdown!”

  1. ralphiesmom Says:

    Fictitious capital. That’s the ticket!

  2. vk Says:

    China didn’t cover up the epidemic. One single doctor shared in a private chat between friends about some people in a seafood market with symptoms of SARS and had to sign a letter of reprimand in the local police office for “spreading rumors”. China has a harsh anti-propaganda law because it is at war with the USA, which is waging a Cold War-style against it with its legion of NGOs, mainstream media and other astroturf movements.

    By January 3rd, China had already officially warned the WHO and the American government (as the scandal of the Senators who did insider trading revealed). At the end of January, the Chinese discovered the new virus was transmissible from human to human. At this point they realized it was a potential pandemic and enforced a lockdown in the Wuhan region.

    It isn’t easy to spot a pandemic. It’s not like a random doctor in the street can diagnose a random person just by looking at it. People who believe such things are watching too much Hollywood.

    People die from bizarre viruses and bacteria around the world all the time. If we were to do a pre-emptive lockdown everytime someone died from a new virus/bacteria, we would’ve to stop the world economy every year.

    We should be grateful this century’s pandemic broke out in China, which is a socialist country. If it happened anywhere else in Eurasia, you bet we would’ve been talking about more than one million infected by now.

    • chronzo Says:

      Thank you for such a rational summation of the situation. May I ask for a link to the notification from China to the US?

      • vk Says:

        This article has almost the entire chronology:

        China rebuts accusation of cover-up, says it first notified U.S. of coronavirus on Jan. 3:

        https://news.cgtn.com/news/2020-03-19/China-first-updated-U-S-over-coronavirus-on-Jan-3-FM-spokeswoman-OZqjpIohm8/index.html

        China first notified the WHO about the existence of the virus at December 31st. It also warned the Taiwanese local government (which is why Taiwan was so successful in containing it). This report is being used by Taiwan as a propaganda piece to draw the narrative it was it that warned the Mainland first, when the opposite was the case.

        It then notified the USG from January 3rd on. Even if it hadn’t, the CIA already knew about the virus more or less at the same time (see the WaPo piece about Trump’s cabinet apparently “ignoring” the early intelligence reports).

        By January 14th, China still wasn’t sure if the SARS CoV-2 was transmissible human to human or not. This preliminary inconclusiveness resulted in the infamous WHO tweet of the same day. This is the tweet that is being used by the far-right to argue that the CCP hid the evidence, that Xi Jinping tried to pretend it didn’t exist etc.

        At January 23rd, the Chinese finally discovered the SARS CoV-2 was transmissible human to human, and the lockdown of the entire Wuhan region was enforced almost immediately.

        If the Chinese lost time, it was those 10 days between January 14th and 23rd. But that’s just two weeks in the context of more than one month on top of that the Western nations lost.

        Between January 23rd and sometime until mid-Februrary, the American government was officially “in denial” about the epidemic. Except it wasn’t: it already knew, from the beginning of February, that it would be a devastating pandemic, thanks to the intelligence reports the Senate committee was receiving. It was then that the senator from the committee did the insider information trading.

    • jlowrie Says:

      a reader Says:
      March 5, 2020 at 12:03 pm | Reply
      Chuang: ‘Social Contagion — Microbiological Class War in China’:

      http://chuangcn.org/2020/02/social-contagion

      michael roberts Says:
      March 5, 2020 at 12:47 pm | Reply
      Super article – a must read

      ”We should be grateful this century’s pandemic broke out in China, which is a socialist country.” This is not what Chinese Marxists say. Please read the outstanding article referenced above.

      • mandm Says:

        After having read Sorghum and Steel, I was impressed enough to continue on to the four part analytical history of events leading to the Communist Party’s opening to capitalist penetration, from “Precedents “to “Ossification”. For me (I recognize the contradictions in China’s very complex development within a hostile capitalist order, rather than focus on its “betrayal of the revolution”) I observed a marked degradation of the “writer’s” dialectic (which from the beginning took no account of the hostility of China’s western partners). It gradually took on the narrow anti-communist tone of classical anti-stalinism., in which the Party is not only the enemy of the /Russian Chinese people (i.e. Chuang’s absolutlely negative view of the government’s containment of Coronovirus 19)–but the enemy of the West. In an earlier post I asked who Chuang is, but never got a reply regarding my guess about the two Italian fellows in London.

      • mandm Says:

        The hash mark above should be placed: Russian/Chinese. I should also note that my fear in regard our attitude toward China–especially as communists–is an imperial war.

      • stevenjohnson Says:

        The social contagion article has a great deal of interesting material about Ebola and rinderpest and imperialism, but it’s relevance to an attack on socialism is not clear. Much worse, it has rather large gaps in how all of this puts the blame on the Chinese government and socialism, which is the point. When the article does center on China, it centers on epidemic suppression as….tyranny. This seems seriously deranged. My confidence that the writer(s) simply know more is not helped by such oddities as the claim that prisons are “literally” designed for isolating individuals, which is wildly wrong.

        The article seems to think assuming China is capitalist (if not imperialist,) is enough to do the trick. But the premise that China is capitalist is dubious, largely wishful thinking. The rationalization seems to be that China is working better than, say, India, but since only capitalism can possibly work (being the final society and the end of history,) then China must be capitalist.

        There are some interesting remarks on the increasing weakness of the central state, as the effects of the neocolonial SEZs and SARs like Hong Kong take hold. The notion that this might require fighting imperialism rather than Chinese socialism doesn’t seem to be entertained even in the deepest nightmares. I suspect they are regretful that there *isn’t* currently a prospect of civil war to overthrow socialism.

        The general perspective that China is both over-accumulating capital ignores that capitalist roaders want to restrict accumulation and production to profitable issues. The notion there is an excess of physical capital—which the article seems to believe is the fundamental cause of the destruction of nature and the consequent creation of novel diseases—is not quite believable. Yes, PPP statistics show the Chinese economy is well-developed but the kind of in-depth infrastructure that even rural states in the US have strikes me as highly unlikely. The implicit attack on the excessive development of all China is more a moralizing attack on common people for crowding the landscape, which would otherwise be purer.

        The oblivious retort is that “Chuang” is not anti-socialist but wants true communism worth wanting.

      • jlowrie Says:

        ”It gradually took on the narrow anti-communist tone of classical anti-stalinism., in which the Party is not only the enemy ” But did not the great Helmsman himself affirm that ”the bourgeoisie sits on the central committee of the party” and assert that after his death capitalism would be restored in China? A party is an oligarchy. No political party will ever deliver communism in the long term, as history sadly demonstrates. Is it difficult to comprehend that political parties appear with the rise of capitalism and are a political institution that corresponds to that mode of production? The answer is democracy, the institutes of which can be learned from Aristotle’s ”Politics”. I urge all Marxists to read Aristotle forthwith and they will learn why no Leninist party will ever deliver communism.

      • mandm Says:

        Jlowery, I couldn’t agree with you more/

        But both Leninist Russia and Maoist China were not mistakes. They were positive, unavoidable, revolutionary attempts to escape the strangling effects of the finance/industrial imperial stage of capitalism (that is now strangling all). Present day Russia and China exist in a kind of limbo. The Soviets needed and the Chinese need (as do all the other super-exploited periphery states) the support of workers at the center of that system (which is strangling all of us). If were are unable or unwilling to do that, it is we who are betraying our historical task.

      • jlowrie Says:

        ” Goldman Sachs took 60 percent stock in Shuanghui Investment and Development, part of the giant Chinese agribusiness that bought U.S.-based Smithfield Foods, the largest hog producer in the world.56 For $300 million, it also scored out-and-out ownership of ten poultry farms in Fujian and Hunan, one province over from Wuhan and well within the city’s wild foods catchment.It invested up to another $300 million alongside Deutsche Bank in hog raising in the same provinces.” From the current article in Monthly Review online ”COVID-19 and Circuits of Capital” by Rob Wallace and others.

        i.e. capitalist agriculture in China, and as Wallace and co make clear, unless capitalism is overthrown, this capitalist virus is just the start.

      • mandm Says:

        I’ve been aware of the epidemiology of industrialized agriculture , and its inroads in China, and I take your point. But did you take mine?

      • mandm Says:

        Addendum: My position on China remains pretty much Samir Amin’s: that the faustian bargain China made with imperialism was necessary and contradictory, and that sooner or later China (whatever the composition of its leadership) would face another necessary choice: a radically reformed state socialism or “lumpen” comprador capitalism.

        It seems that time has come. Either choice implies some sort of upheaval in China, radical reformist for the former, or revolutionary insurrection for the latter. Marxists should support either, but obviously not the latter when clearly a block-buster imperial production staring local extras fighting to free their people from tyrannical authoritarianism by installing comprador, lumpen democracies.

      • jlowrie Says:

        I am not too sure what your point is. Certainly we must call the virus the capitalist and not the China virus, for as the work of Rob Wallace and others demonstrates new pathogens will appear and just as likely in the U.S. as in China. Wallace says that we have been lucky with Sars-CoV-2. It seems to be far less lethal that either H7N9 – which kills around a third of those it infects – or H5N1, which kills even more. Let us recall that Marx makes the point somewhere that socialism will not aim like capitalism to produce just as cheaply as possible. The Guardian reports, ”Martha Nelson of the US National Institutes of Health and colleagues mapped the genetic sequences of swine flu viruses and found that Europe and the US – the largest global exporters of pigs – are also the largest exporters of swine flu.” So we must criticise both the US and China for their agricultural practices, not defend the one against the other. The Guardian also reports that some posts on Facebook criticising meat production and advocating a vegan diet have been censored as ”inaccurate”!

        The bourgeois response to the virus will I believe give rise to economic chaos and social breakdown. Today I read that in Italy people are organising social groups to break into supermarkets. State functionaries of course blame criminal gangs. But given that so many in Italy work unregistered for cash and will not therefore receive ‘state aid’, what else could one expect. What is disappointing is the feeble response on the left: when I suggested to a leading British socialist last year that in the face of global warming and looming food shortages the left should advocate rationing, he replied that people would not like it. Such timid conservatism! Even our capitalist supermarkets demonstrate a more ‘socialist’ response. The bourgeoisie itself will not hesitate to make inroads into private property rights to save the capitalist system, though I fear that currently the ‘cures’ may prove more deadly long term than the disease itself. On the left we need much bolder policies; is it not pitiable that one of the criticisms from the left is that ‘rescue packages’ are not big enough? The bourgeoisie must be nodding in vigorous agreement.

        I should advocate a wartime economy with planned targets in natura and coupon rationing, a debt jubilee, a law ending dividend payouts on shares, nationalisation of all hospitals and public transport just to start.

      • Lüko Willms Says:

        On the same subject raised in Chuang: ‘Social Contagion — Microbiological Class War in China’, the interaction of humans and animals and virusses — I would like to recommend

        a) the interview with Sonia Resik, chef of virology in the IPK, which is the Cuban “Instituto de Medicina Tropical Pedro Kourí” on cubadebate.cu, who is talking in the mid of the interview also about this area of contact of animals and humans and the virus passing between both, and what this has to do with extending the area we humans use:
        http://www.cubadebate.cu/especiales/2020/03/27/sonia-resik-la-jefa-de-virologia-del-ipk-en-el-epicentro-cubano-del-combate-a-la-covid-19/ Unfortunately I do not yet know of an english translation for those who do not read Spanish.

        b) the work of Jonna Mazet, ” an American epidemiologist and Executive Director of the University of California, Davis One Health Institute” (en.Wikipedia). I recently saw on CGTN a two part interview in the “Full frame” show, which are both available on Youtube, this in English:
        https://www.youtube.com/watch?v=Jym-k44Fg_o
        https://www.youtube.com/watch?v=VRo82CLCNhw

        She also heads the PREDICT project and the Global Virom Project.

        A Google search for “Jonna Mazet” turns out more of her work.

        She said that there are millions of virus around, and we have to learn with them, instead of trying to eradicate them.

    • Anti-Capital Says:

      VK’s version needs to account for this (from livescience.com)

      “They found that following the Nov. 17 case, about one to five new cases were reported every day and by Dec. 15, the total infections reached 27. Daily cases seem to have increased after that, with the case count reaching 60 by Dec. 20, the SCMP reported.”

      By researching into medical reports, the South China Morning Post determined that the first report of a illness with pneumonia like symptoms but of unknown etiology appeared on November 17, and then quickly expanded– so………

      so…all that bit about “a single doctor making a private comment in a chat room”… needs a bit of clarification, the chat room was a forum of medical students, to whom he described the “SARS like virus” which earned him a rebuke from the glorious leadership of the glorious local party delivered by the glorious local police. He gave that warning around Dec 1 or Dec 2, by which time there were at least a dozen cases of the virus.

      So….if the glorious leadership of the glorious party, had learned anything from the previous SARS epidemic when it had done exactly the same thing (censure the doctor sounding the warning), it could have exerted itself just a tad and screened all the medical reports for similar cases. Too big a job? Sure thing. Much easier to simply shut-up the doctor and relieve yourself of responsibility for……public health. But that’s what public health is all about, screening all the data you can get to detect patterns in illnesses, which is why the US is so screwed by its inability, the intentional inability of the US government, to conduct wide scale testing of its population.

      We go Nov 17, Dec 1, and then finally on Dec 31, China notifies the WHO of the unknown pathogen causing the symptoms. That’s 6 weeks, about the same time it took the US govt to try, however feebly, to organize a response after China provided the notification

      There’s nothing anti-communist about criticizing China’s actions regarding this virus, or the previous SARS virus; no more than criticizing the US government’s response amounts to spreading a “hoax” to hurt Trump.

      A single public health conscious doctor or nurse is worth 1000 great helmsmen, or 1000 very stable geniuses

      China is socialist? “Socialist” with “Chinese characteristics”? Right, except the characteristics are all capitalist.

      • vk Says:

        All of these “November” narratives are ex post facto rationalizations.

        Nobody had any idea it was a brand new virus, a potential pandemic. The doctors simply thought it was a particularly strong variation of pneumonia or, worst case scenario, the coming back of the old SARS.

        Flus mutate every year. It is normal for a particular season to have a particular resistent branch of the virus (or reversely, a particularly weak one).

        The doctors couldn’t have knows because, as scientists, they don’t make conclusions based on hints – they have to test and see the virus on the microscope to be sure.

      • Anti-Capital Says:

        Doctors report on their clinical findings as well as analytic findings. The doctor involved with Covid 19 reported a patient with pneumonia like symptoms from a pathogen of unknown origins.

        Neither this doctor nor the doctor who first warned about SARS labeled either a “pandemic” since a pandemic is a social phenomenon, based on the breadth of the outbreak. Both doctors warned of an unusual condition appearing. It’s a that point that those responsible for public health have to step in an arrange for testing, unravel the genome, tracing, etc. all the stuff that was done 4 weeks later.

        We’re lucky it occurred in “socialist” China? Seems to me an equal, and more powerful argument, is that we’re unlucky that it didn’t occur first in capitalist South Korea, who knew to test massively, isolate, and contact trace, and isolate the contacts– thereby avoiding lockdowns.

        If I recall correctly, couple of years ago you were advocating “mass murder” on this site and several of us asked for you to be kicked out of here for such pathological mutterings.

        To the detriment of his site, MR didn’t act on it, and now here you are, channeling the Lt. Gov. of Texas, Dan Patrick, and others like Alex Jones, Jim Baker (of Tammy Faye fame), not to mention the gang at Fox News.

        What’s next a link to the website where you’re offering colloidal silver for sale?

    • Anti-Capital Says:

      “People die from bizarre viruses and bacteria around the world all the time. If we were to do a pre-emptive lockdown everytime someone died from a new virus/bacteria, we would’ve to stop the world economy every year”

      –spoken like a true Lt. Governor from Texas

    • Caleb G. Says:

      It’s crazy how the USA is trying so hard to spin these crazy stories trying to blame China for their own governments obvious failure to contain the virus. I saw today US “intelligence” agencies are claiming China did everything to cover up the virus for weeks if not months, and we all know how reliable US intel is. WMD in Iraq anyone?

  3. jesus Says:

    what does the Fed’s move to set reserve requirements to 0 mean in this context? they’re making more than lowering the interest rates. the banks have been given the right to give loans without any restriction on the assets they hold.

    is that a panic move?

    https://www.federalreserve.gov/monetarypolicy/reservereq.htm

  4. fredtorssander Says:

    Excuse me if this is off topic, but the enormous lockdown on all economic activity because of the Corona virus vill probably make it possible to validate the reports on GHG emissions. The lockdown should make an impression not only on the reported emissions (reports which I se as suspect) but also on the speed of growth of CO2 in the atmosphere. There will of course be a time lag. Nothing seems to have happened yet. And it´s possible that the CO2 growth have passed some tipping point wo that stop for emissions doesn’t give much effect. But anyway it should add quite a lot to our knowledge of the climate-situation. And I think it will expose statistic manipulations in the reporting of emissions.

  5. ucanbpolitical Says:

    Michael, we were right unfortunately. This virus may kill more people through poverty than disease. 400 million Indians not covered by any support. Berndanke says this plague is a snowstorm, that the FED is ahead of things and that the economy will rebound. Hmmm.

    One issue we need to discuss is inflation. A 15% impulse against a 20% collapse in value production should have price consequences for staples. Your thoughts. I was always of the opinion that the MMTeers were wrong. An effective monetisation of the economy was inflationary, not at the end when so called capacity had been maximised but from the outset if spending increased faster than output.

    • Daniel Says:

      I’ve been asking myself the exact same question. I’d be interested in any Marxian economists views on this question of MMT, UBI and inflation in the present situation. Can anyone recommend anything?

  6. fredtorssander Says:

    The lockdown can be used as a general capital strike or rather lockout. In Sweden a big lockout 1980. It was a foreplay for the big restauration 1990-4 and then stagnation. If nothing else it is a demonstration of ownership to lock out workers from work even if the state does it to protect from a virus.

    To continue the Swedish example, the lockout 1980 seemed to be won by the workers, everybody returned to their machines and everything was as usual for a few years. Then the economy lived on loans, there were no investments to speak of. And then the 1990 crisis when the Riksbank blew up the index to 500% and the neo-liberal reform-packet was propagated as the sole solution to the crisis. And then TINA permanented by EU-membership.

  7. Antonio Says:

    This econometric model (dynamic and stochastic general equilibrium model EREMS) confirms its worst recession forecasts in 2020. For Spain, in an optimistic scenario, it forecasts a fall in annual GDP of -4.1%, with a reduction in GDP in Q1 of 4.7 points and of 13.5 points in Q2. I don’t know anything about econometrics, but the authors of the model are high-level, mainstream / social democrat economists with an optimistic bias. Therefore, there will be a recession and it will be hard.
    https://nadaesgratis.es/admin/el-impacto-macroeconomico-del-coronavirus

  8. fredtorssander Says:

    This crisis comes at a time when there are much fewer hours of paid work available for the employed, and still takes as many hours to clothe and feed an average person as the year after the end of the golden era 1970. One could claim that since the end of the golden years, there has been a minimum of productivity growth in the OECD-area and a rather unproductive tug of war between labor and capital. Productivity has grown no doubt, but the result has not been permitted to lessen the socially necessary working time per capita. Only per employed. http://www.fredtorssander.se/fredpress/wp-content/uploads/2020/02/oecdtot.jpg

  9. Lüko Willms Says:

    It is worth while to take a look at Cuba.

    Already in January, the Cuban authorities drew up a plan what to do to and took practical steps to counter the Covid-19 epidemic.
    As a result, the country was prepared when the first infected people appeared in Cuba.

    They assigned three laboratories to do the testing, the “Institute for Tropical Medicine Pedro Kourí” in Havana for the western part of the country, a lab in Villa Clara for the center, and one in (I believe) Santiago de Cuba for the East.

    They prepared sites to quarantine people suspected of being infected.

    They prepared and trained all medical personel and the workers in tourism for how to recognize a possible infection with SARS-Cov-2, so that everybody involved does know what to do without hesitation and without querying authorities around.

    One of the first encounters was the britisch cruise ship “MS Braemar”, which had 4 or 5 infected people on board and which was refused to dock in several caribbian harbours, until Cuba accepted the ship, which then docked at the container port Mariel, after four planes to fly the people on board back to the UK were ready to restart at the Havanna airport. All passengers and crew, except those needed to opereate the ship on its way back to Europe, were then bussed to the airport terminal 5, with entering the buses directly from the ship’s gangway and from the buses direktly on the gangway to the aircraft. For the sick and quarantined, a special aircraft was arranged.

    Cuba has not only world class scientific institutions in medicine and pharmacology, brigades of physicians and nurses in many poor countries (and now also in Italy), but also a dense system of “family doctors” (medico de familia) which know the people they are caring for.

    When participants of a small group of italian tourists where coughing on their way from Havana to Trinidad, their driver and tour guide, after delivering their guests to the hostel in Trinidad, they immediately drove to the quarantine site prepared for that region. The hostel’s manager got their guests to the designated clinic right the next morning. 3 of quarted was diagnosed with Covid-19, one of them, a 61 year old man, had died in the mean time.

    According to yesterday’s daily news briefing by the ministry of health, there are now 57 people identified having the SARS-Cov-2 virus, nearly all of them imported cases, the others being direct contacts of one of the imported ones, and one, the wife of a tourism worker in Varadero, who had contact with the 4 italian tourists hospitalised from Trinidad, go the virus as secondary infection. The bulletin can still describe each and every individual case, with place of residence, when arrived in Cuba, or which contact with one of those imported cases, and when diagnosed and where hospitalised.

    At the time of this latest bulletin, 1’479 patients are under quarantaine in the centers prepared for this purpose, among them 116 foreigners and 1’363 Cubans. Other 36’526 are under close observation in their homes, under the watch of the “Primary Medical Attention” (Atención Primaria de Salud).

    On Tuesday, Cuba has regulated the border (Cuba has, what is an advantage in this case, no land borders with other countries), allowing in only Cuban nationals and foreigners with a title of residence in the county, and allowing only foreigners to leave the country. Yesterday, also the internal passenger transport with buses and railays (and ship to the Isla de Juventud) has been shut down; local public transit is still operating.

    This evening at 19 hours Cuban time (which is 4 hours behind UTC, the same as US Eastern Time) a “Mesa Redonda” (round table) on the Covid-19 issue, which is transmitted via various channels, among them the least burdonsome for the island the “mesa redonda” channel on Youtube.

    permament info on salud.msp.cob.cu and granma dot cu

    Up to now, there is no self driving internal process of infections.

  10. Lüko Willms Says:

    Oh, the typo in “salud.msp.cob.cu” can be fatal, please correct to salud.msp.gob.cu before releasing my comment – if possible. The other typos, well, an intelligent reader will cope with them, I presume.

    “gob” for “gobierno” = “government”

    • Lüko Willms Says:

      Another source which is also available in english is
      cubadebate.cu in Spanish. Find links to various language versions at the bottom of that home page, conforming to the pattern of
      en.cubadebate.cu for english

  11. Chris Paul Says:

    Hi Michael, I bought one of your books (World In Crisis) and I’m trying to make sense of Ch. 1 page 13. I’m new to economic theory. So I have a simple question hopefully you can answer. You say that the rate of profit “of the technologically less efficient capitals – and of the economy as a whole – falls”?

    When the more technologically advanced business produces more efficient, they produce more right? So if everyone is selling at the same price and if there are more things, then the price falls, right? Is that why their ROP drops?

    For example, 10 businesses make 10 loaves of bread at $1 each. One business starts producing 20 loaves and leaves the rest in the dust. Perhaps this causes the price of a loaf to drop to $.90 and now those 9 businesses are only pulling in $9 instead of the original $10. Is that right?

  12. md Says:

    ‘He gave that warning around Dec 1 or Dec 2, by which time there were at least a dozen cases of the virus.’
    No he did not. I suggest you get the facts right first.
    The 34-year-old ophthalmologist posted a message on 30th December. Four days later after many people had seen it he was summoned to Zhongnanlu Police Station. Li was subsequently completely exonerated.
    If you rely on the SCMP and western media you will get very many things completely wrong.
    vk is basically right. It is extremely disappointing to see the frequent repetition of false and misleading information.

    • Anti-Capital Says:

      The Guardian says Dr. Li gave his warning in early December: “https://www.theguardian.com/world/2020/mar/20/chinese-inquiry-exonerates-coronavirus-whistleblower-doctor-li-wenliang

      as does NBC news Boston: https://www.nbcboston.com/news/health/chinese-doctor-sounded-alarm-coronavirus-dies/2073025/

      “Li, 34, was one of eight medical professionals in Wuhan who tried to warn colleagues and others when the government did not. He wrote on his Weibo microblog account that on Dec. 3 he saw a test sample that indicated the presence of a coronavirus similar to SARS, which killed nearly 800 people in a 2002-2003 outbreak.

      Li wrote that after he reported seven patients had contracted the virus, he was visited on Jan. 3 by police, who forced him to sign a statement admitting to having spread falsehoods and warning him of punishment if he continued. ”

      That is not the only report of multiple medical professionals raising the alarm.

      The warning in the chat group appeared at the end of December. My mistake, confusing the two separate reports he made of a SARS-like virus.

      The police action re Dr. Li took place days after China officially notified the WHO of an outbreak of patients with pneumonia like symptoms from a new pathogen in a cluster in Wuhan.

      Nobody thinks covid19 is a “China virus” or thinks the Chinese government is responsible for the outbreak.

      I do think that the police acted as they did in the SARS outbreak, to suppress information that required investigation not warnings or admonitions.

      Don’t tell us how grateful we should be that covid 19 first appeared in China.

      Or that “people die all the time.”

  13. David Forbes Says:

    Michael, I love reading your stuff, it’s really informative, but you seem to ignore Africa. Your last blog has all these graphs etc, but Africa is not even represented! Nigeria, South Africa and Egypt are major economies in Africa, even if they are small globally (due to colonialism and other imperialist actions over centuries) and they deserve to get a better press, esp from someone with your credentials. Thanks, hope to see more Africa in your blogs! Kind
    Regards, David

  14. fredtorssander Says:

    I think the econometric gymnastics in the cover up of the inhuman effects of tax-saving on common health exposes class-society rather well. For the devoted econometricians the economic losses before the herd gets herd-immunity is the only interesting about the different ways to confront the coronavirus. Not quite the good herdsman from the Bible.
    And many of the economists seems to have forgotten their Darwin and the rule that the fittest survives. And that the virus has gotten a very big place to develop in. And the virus generations are short. https://en.wikipedia.org/wiki/Viral_evolution

  15. Ben Malacki Says:

    Very interesting article. We have produced a French translation of it and put it online at this address

    https://lorage.org/2020/04/06/confinement/

    We have quoted, of course, your blog several times. Let me know if this bothers you, as we would like to translate other articles from your blog.

  16. fernando moyano Says:

    Hello Michael. I never read the silly comments on your blog but today I want to make one. I am writing to you from Uruguay, here the water, electricity, etc. services are still state owned, this is a story about a union of public officials that became known today
    “The Coordinating Union Table of Autonomous Entities and Decentralized Services (MSCE) proposes to the government to create a basic basket of essential public services, destined for the most vulnerable sectors, which includes the free and three-month delivery of: a 13-kilogram bottle of supergas, up to 180 KW / h of electric power, 50 gigabytes of Internet, free gigabytes for confined students, and three cubic meters of drinking water and its sanitation lease. ” Have they read your blog?

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