Why didn’t we see this coming?

[Update:  Commenter LC wrote a comment that is much better than this post.  Read that if you only have time for one.]

Some scientists obviously did see this coming. I recall reading articles written in January, with experts claiming that 40% to 70% of the world’s population would eventually contract coronavirus. I knew that was a possibility. When I got back from New Zealand in January, I immediately stocked up on surgical masks and canned goods. But I didn’t sell my stocks, so clearly I didn’t really believe this would happen. The stock market and the general public also missed the boat. Why?

Republican voters might have been misled by the Trump administration, but that doesn’t really explain anything. Democrats and stock traders behaved no differently.

1. We’d never seen anything like this, so it’s hard to wrap your mind around a sci-fi movie coming true.

2. There had been scary warnings surrounding SARS, MERS, Ebola, etc., which fizzled out.

3. For me, the overwhelmingly most important factor was misinterpreting the data out of China. During the month of February, it became increasingly clear that China was getting the epidemic under control. Their data is not perfect, but at this point no one seriously questions the claim that new infections in China have dropped to a very low level and that the epidemic is under control for now (maybe not later.)

During much of February, the US and Europe had just a tiny number of reported cases (in quarantine), and the number was stable.  I knew that it would be 10 times easier for the US and Europe to control the epidemic than it would be for China, a very crowded nation where there were tens of thousands of cases spread all over the country.  And China was also a nation that initially botched the epidemic by censoring and punishing the doctors in Wuhan trying to issue warnings.  We had everything going for us.

So when I say I “misinterpreted” the data out of China, what I really mean is that I misinterpreted the implications of the Chinese data for the West.  I assumed the positive Chinese data meant that we’d also be able to control the epidemic.  Obviously, I was wrong.  I suspect the stock market made a similar mistake.

PS.  People may want to hammer me for buying facemasks when there is much greater need for such masks in hospitals.  Before doing so, keep in mind the following:

1. Back in January, there wasn’t as much chatter in the press about how buying masks is anti-social.

2.  I assumed that the US had given at least a tiny bit of thought to the possibility of a pandemic, and had stockpiled enough surgical masks (an inexpensive item.)

3.  I assumed that if the US had not instituted plans to deal with a pandemic, and had not stockpiled masks, then at the very least they would have instituted a crash program to build masks and ventilators when the Chinese crisis became apparent in January.

4.  I did not know that the US government would spend all of January and February twiddling its thumbs, doing nothing, and not leap into action until the NBA season was cancelled.

I know, how stupid can a blogger be?  Imagine someone who assumed that the US government had an ounce of competence.  Silly me.


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83 Responses to “Why didn’t we see this coming?”

  1. Gravatar of Brian Donohue Brian Donohue
    16. March 2020 at 11:59

    The markets are reacting to uncertainty. When you deal with exponents, you play with fire.

    I suspect uncertainty will be reduced radically in the next few weeks, as the impact of taking this seriously work their way through the system, and markets will recover a lot of ground. Don’t miss it.

    Clearly there has been some economic damage, but it should be limited.

  2. Gravatar of Ray Lopez Ray Lopez
    16. March 2020 at 12:02

    I’ll be the first to say professor Sumner ignores:

    1) some of us did sell stocks before the crash, and some even shorted the market in January

    2) masks don’t help healthy people; Sumner should donate his masks to the needy instead of being selfish

    3) the purpose of social distancing is not to stop the disease but ‘flatten the peak’ so herd immunity happens. Thus, the number of deaths went down in China arguably–as Benjamin Cole has said–due to herd immunity when 60% of a population gets infected (the UK strategy).

    Has it occurred to Sumner that perhaps 60% of the entire 1.2B people in China have already caught some form of Covid-19? Maybe not bad enough to be hospitalized, but some form? I myself, here in Greece (renovating an apartment, I finished in January), caught a slight cold in January and so did my friends I’m staying with; perhaps this was Covid-19, in a mild form? Perhaps Sumner’s ‘cold’ he blogged about a week ago was also some form of Covid-19?

    Finally, UK experts (Chief medical officer for England, Professor Chris Whitty) have said social quarantine has to last much longer than a few weeks. Isn’t B. Cole’s herd immunity proposal, as well as building more hospitals, China-style, a lot smarter than keeping an entire economy dysfunctional for months?

  3. Gravatar of Ray Lopez Ray Lopez
    16. March 2020 at 12:06

    @myself – flatten the peak is a strategy, for those that don’t know, to allow herd immunity to slowly take place without overwhelming the hospital system. Again, it’s NOT to stop the disease.

    @Brian Donohue– you’re quite ignorant, as you ignore Chief medical officer for England, Professor Chris Whitty: “This is going to go on for some time. We should not be under any illusions that ‘if we just do this for a couple of weeks that is sufficient’.”. BD, do you also believe in the tooth fairy? How about the confidence fairy?

  4. Gravatar of ssumner ssumner
    16. March 2020 at 12:19

    Brian, I expect a pretty severe recession.

    Ray, You said:

    “Has it occurred to Sumner that perhaps 60% of the entire 1.2B people in China have already caught some form of Covid-19?”

    No it didn’t. LOL.

  5. Gravatar of dtoh dtoh
    16. March 2020 at 12:21

    “Nobody expects the Spanish Flu.”

  6. Gravatar of Jim B Jim B
    16. March 2020 at 12:28

    I’m fully expecting that shortly after this is over, we’ll find out that some obscure piece of the US federal government has a 10 year supply of surgical face masks for every American in warehouses distributed all over the country. It’ll either be an arm of FEMA that they forgot they had, or something like the “Strategic Facemask Reserve Office”.

  7. Gravatar of Jim B Jim B
    16. March 2020 at 12:46

    My god, I didn’t think I’d be so close…

    https://www.phe.gov/about/sns/Pages/default.aspx

  8. Gravatar of LC LC
    16. March 2020 at 13:22

    Scott:

    I certainly didn’t expect things to get so bad in the developed Western democracies. I totally botched the forecast I made to my Chinese friends 2 months ago that our responses would be much better. (To their credit, none of them mocked me and have instead expressed their concerns for my family’s safety.) Looking back, I believe we (the people of democratic developed world), made the following mistakes that blinded us to this:
    1. We assumed a free and open society always equals a competent government. While we all agree being free and open carries many benefits and China, if it had been open and free, could have handled things much better early on, we now know a free and open society by itself doesn’t guarantee a competent government. In that respect, governments in East Asia (including Taiwan, Singapore, Korea and Japan) have done a much better job than the Western developed governments.
    2. We had too much hubris and pride. We always believed our experts, our scientists and our health systems are the best in the world. Thus, when US demanded Chinese let our CDC experts in, we were affronted when the Chinese initially said no. The press coverage was almost incredulous. How could they not let the “best experts in the world” go and see the situation and give them some guidance? As situation developed and as Donald McNeil from NY Times has since reported, it turns out the Chinese experts are really good and are probably better than our experts. It’s a somber lesson.
    3. We under estimated how pragmatic the Chinese can be. During the crisis, the Chinese repurposed some of their idle workers to be temperature checkers, delivery personnel and data gatherers. We should adapt a similar program to put some of the idled workers into more useful jobs (such as building masks and ventilators as you pointed out).
    Going forward, I hope we have a thoughtful reflection of our short comings and not make these same mistakes again.
    Finally, while the economic damage maybe great in the short term, I believe the important thing that counts is the number of lives we save. If we can keep the global death toll to less than 50K lives lost, it will have been worth it in my opinion.

  9. Gravatar of John Arthur John Arthur
    16. March 2020 at 13:25

    Scott,
    I am much more optimistic than you, as I do not think the crisis will hit more than 100,000 Americans. The death rate of the virus obtained from studies is around 1% in China, and around 1.5% in European countries like Italy. The ratio of deaths to confirmed cases for China is 1:25 and Italy 1:10. This signifies that the coronavirus rate is 4x more prevelant in China than what is said, and around 8x more prevelant in Italy.

    So far, 77 Americans have died to the coronavirus, and 27 of them were from a old age clinic. America’s health care system is not much better than Italy’s and China.

    So we have roughly 77 deaths, and the number of deaths not from vulnerable nursing homes is 50. If you assume a mortality rate of 1%, then you should assume 5000 cases.

    The number of confirmed cases is 4414 as of today. So the number of actual cases to confirmed cases is probably small. It will continue to grow, but the growth will slow down, and we will handle the crisis.

  10. Gravatar of D.O. D.O.
    16. March 2020 at 13:29

    Because this is Prof. Sumner’s bad blog let me float an idea and let ore smart/informed people to shut it down. We have a reasonably good example of everyone tested for the coronavirus on Diamond Princess. As I see on Wikipedia that roughly the number of positive tests is about 1/5-1/6 of the number of tests throughout. Given that everyone on that ship had ample opportunity to get the virus, why cannot we take it for the baseline case for the entire population? It will give us under 20% of susceptible people. Out of people tested positive, roughly 1/2 was asymptomatic, which means 10% of the population will show symptoms. Roughly 1% of people testing positive died. This is a very small sample though, but let’s take that number. Then number of expected death from the 19 is 0.05%. Even in a pretty badly hit Italy, this is way too little. And sorry, if only 20% of the people are susceptible, there would be very little herd immunity.

    Please, show me wrong.

  11. Gravatar of John Arthur John Arthur
    16. March 2020 at 13:35

    The question of interest is Germany, which has a massive amount of cases, but very few deaths. It is totally out of whack of what other countries are reporting. Either the deaths are not being reported, or that cases are being overreported. If the mortality rate of countries of Singapore, HK, and Taiwan is much higher than that, then Germany is either doing something really good, or something really wrong.

  12. Gravatar of bill bill
    16. March 2020 at 13:39

    Feel good about your mask purchase. People buying pre-crisis and having supplies on hand is a plus.

  13. Gravatar of Christian List Christian List
    16. March 2020 at 13:53

    I didn’t see it coming either. I didn’t make the connection that Wuhan will also happen in Europe.

    In the comment section people have said it over and over again, I even said it myself, that Europe isn’t able to react as well as countries like China, Singapore, Korea, Taiwan, Japan but nevertheless the last connected dots have not penetrated deeply enough into my consciousness.

    Even though I have close to zero confidence in characters like Merkel, Johnson, Trump, I wanted to believe that everything will turn out just fine. One never gives up hope. I think we overestimate the competence of our leaders, sometimes considerably.

    Just as one cannot and will not realize death and mortality until the very last moment, so one cannot and will not realize such a crisis until the very last moment. Many poor characters like R&B, I call them R&B now, are still in the stage of denial.

    I mean, I bought the most promising drugs weeks ago, but that’s all. For example, like you, I haven’t sold a single ETF yet, and now it seems a little late.

  14. Gravatar of Scott H. Scott H.
    16. March 2020 at 14:42

    It’s not the disease that’s driving the market. It’s our response. Never in human history have we decided to preemptively destroy a nation’s economy in order to slow a disease.

    There’s no precedence for this reaction. That’s why I didn’t sell.

  15. Gravatar of rwperu34 rwperu34
    16. March 2020 at 14:45

    All, please ignore the number of confirmed cases. It is completely worthless at this point and merely represents the lack of early testing. The death number is much more accurate.

    @John Arthur, you assumptions are very flawed. The people that died today contracted it a month ago. Same with yesterday. Same with the day before that…etc. The overall death number is going to continue to rise by 20% (give or take) every day for at least the next couple of weeks.

    If you assume a 1% mortality rate on 77 deaths (up to 86 now), that means that 7700 people had it 3-4 weeks ago, growing at ~20% per day. If I had to bet over/under 100,000 right now (with omnipotence), I’d take over. The official number may never get that high, but that is simply going to be from lack of testing. We are currently doing zero random testing, which would be the only way to get any semblance of the true picture. Otherwise, we’ll have to use mortality.

  16. Gravatar of Todd Kreider Todd Kreider
    16. March 2020 at 14:50

    “If the mortality rate of countries of Singapore, HK, and Taiwan is much higher than that, then Germany is either doing something really good, or something really wrong.”

    There’s a good chance Germany has been both competent and lucky so far.

  17. Gravatar of ssumner ssumner
    16. March 2020 at 14:54

    dtoh, Spanish flu would have REALLY freaked out Americans. That killed mostly young people.

    LC, Great comment.

    John, You said:

    “I am much more optimistic than you, as I do not think the crisis will hit more than 100,000 Americans.”

    Before saying you are much more optimistic than me, you ought to figure out what my views are. I’ve been saying that my pessimism is about the economy, not the number of Americans who will die. But I do think there will be more than 100,000 infected; the current reported totals are a severe undercount, and rising very fast. We are now seeing lots of famous names with the disease; what does that tell you about the official total (about 4000)? Given the 330 million Americans, I should not know any of those 4000, but I know at least 6.

    BTW, Singapore has zero deaths, so they have no data on their mortality rate. Scandinavia had a low death rate like Germany, until they cut back on testing.

    D.O. Sorry, I don’t follow. The 19 what?

  18. Gravatar of ssumner ssumner
    16. March 2020 at 14:59

    Scott, Agreed, but the response was entirely predictable. I did a post (Feb. 1) that did predict we’d freak out:

    “I wonder if the interaction of increased risk aversion and technology will lead to future “risk recessions”, i.e. economic disruption caused by our unwillingness to accept even small risks from pathogens, or computer viruses.”

  19. Gravatar of Christian List Christian List
    16. March 2020 at 15:03

    @rwperu34
    There might be another way. There are virologists who say they can extrapolate the numbers quite well if they know the total number of tests, or in other words: the ratio of positive to negative results.

    But I don’t know the exact considerations behind this at the moment. I hope they won’t simply apply this ratio to the total population, after all, it’s not a random sample. They will make some corrections, but I don’t know exactly what kind.

    The problem is that countries like Germany don’t even know how many tests they actually perform per day. The negative test results are not registered in a central database so far. Right now it’s fishing in the mud with dynamite, and in the end we blow up our own boat.

    Strangely enough, no country seems to do random sampling. I wonder why would that be? As our Minister of the Interior once said on another matter a few years ago: We rather don’t want to tell you the truth, because it might upset you.

  20. Gravatar of msgkings msgkings
    16. March 2020 at 15:07

    @ssumner:

    An economist I follow, Brian Wesbury, has tried to spitball some numbers on the economic effects. Obviously if we don’t contain the virus and flatten the curve, this will all be much worse than his estimate.

    But he guesses 1Q20 will still be positive RGDP growth (like 1.5%), 2Q20 will be the disaster quarter, like a 10% negative print (annualized) for RGDP, but then 3Q and 4Q will be around 5% positive RGDP growth. He guesses unemployment will only rise to around 4.5-5%.

    Do you have any guesses regarding these numbers?

  21. Gravatar of Christian List Christian List
    16. March 2020 at 15:28

    I did a post (Feb. 1) that did predict we’d freak out:

    I don’t really understand this comment, Scott.

    Where exactly are we freaking out? To me the problem rather seems to be that we didn’t “freak out” much earlier, not to mention that a surprisingly large number of people still hasn’t realized the gravity of the situation.

    I’m also not buying into this risk aversion theory one second. In the past, people were burned at the stake if they looked in the wrong way or coughed in the wrong way. So much about the theory that risk aversion has increased.

    People did not want to die back then and they do not want to die now. But people have become more rational in dealing with risks. Not by much maybe, but at least by a little.

  22. Gravatar of Benjamin Cole Benjamin Cole
    16. March 2020 at 15:32

    I did not anticipate the hysteria we are seeing. When I read that all 1100 crew members of The Diamond Princess had been exposed to coronavirus and not one had died… I thought a modicum of calm might set in.

    I read that eventually 60% or more of the world population will be exposed to COVID-19. So why the hysteria and lockdowns now?

    Here is the plan: pay volunteers $1,000 to be exposed and naturally inoculated to COVID-19. Pay the money as a helicopter drop. If 220 million Americans get inoculated, that will be a $220 billion helicopter drop and a pittance to the cost we face otherwise. At 60% inoculated, the virus retreats naturally. Evidently the virus is a permanent addition to our collection of maladies. Get over it.

    With my plan, you kill two birds with one stone. You inoculate the population against Covid-19 and we can go back to normal, and you stimulate aggregate demand within the United States. It is Tyler Cowen’s “state libertarianism” in action.

    Even Ray Lopez and Donald Trump will recognize the brilliance of this plan.

    In the past, some academics have argued that even straitened poor people should be allowed to sell their kidneys. Now those libertarians are wailing for the government to protect them! Government enforced lockdowns! No travel!

    Well, I have shown you the right plan.

    And remember the new American motto: “Danger, Will Robinson, Danger!”

  23. Gravatar of D.O. D.O.
    16. March 2020 at 15:40

    19 was short for covid-19

  24. Gravatar of Christian List Christian List
    16. March 2020 at 15:44

    @Benjamin Cole
    I trust your great plan if you and R. go first. And don’t puss out on this one. You might not be able to operate for 14 days. This would not be a bug, but a feature. I’d recommend quarantine in Antarctica. I’d even pay the one-way ticket for R.

  25. Gravatar of Christian List Christian List
    16. March 2020 at 15:52

    @D.O.

    Then number of expected death from the 19 is 0.05%. Even in a pretty badly hit Italy, this is way too little. And sorry, if only 20% of the people are susceptible, there would be very little herd immunity.

    I think Scott means that this part is hard to follow. Or to put it more bluntly: It doesn’t seem to make much sense.

    And vulnerability is not 20%. It’s close to 100%, because contrary to what Benjamin seems to believe, everyone gets infected at least once if close enough. There is no immunity. It is not even known whether there is sufficient immunity after a survived infection.

  26. Gravatar of Benjamin Cole Benjamin Cole
    16. March 2020 at 16:00

    Christian List: thanks for the civil sentiments.

    By the way, I’m not sure that I didn’t get COVID-19 a year ago. Lots of people in Thailand had a bad cold-fever-flu thing. Lots of Chinese tourists in Thailand and Wuhan is a transportation hub. Elderly Thai people die all the time, and no one really knows why. This might explain why southeast Asia appears relatively impervious to COVID-19. Idle speculation on my part.

    But here is a great headline to ponder: “Donovan Mitchell has Covid-19 but no symptoms, which shows why you should quarantine”

    Donovan Mitchell is an NBA basketball player. A typical case. No symptoms.

    Meanwhile, sales of guns and ammo skyrocketing in America!

    Don’t worry what I say, Christian list. The fear-mongers have won the day.

  27. Gravatar of agrippa postumus agrippa postumus
    16. March 2020 at 16:00

    didn’t see it coming? china shut down an entire region of over 60m. how hard is it to extrapolate from that to the same situation in the usa upending the economy. maybe you were too focused on something else. it was a plain as the nose on your face.

  28. Gravatar of rwperu34 rwperu34
    16. March 2020 at 16:04

    @msgkings, I would treat those numbers as wild ass speculation. There is one huge variable that we have no idea on; policy response. So far it’s been farts in the wind. If that keeps up we could be looking at worse than The Great Depression. I’d say Wesbury’s scenario is more on the rosy side, like if we get NGDPLT keeping the 2013-2017 trend line.

    It does raise an interesting question though. Are we even going to have a recession? If the response is strong enough and this started late enough in Q1, it’s possible we don’t! On a technical level, at least. I think if the timeline was ~10 days later Q1 would for sure be positive because for the most part, the big effects only started 5 days ago.

  29. Gravatar of msgkings msgkings
    16. March 2020 at 16:15

    @rwperu:

    I don’t see how a recession doesn’t happen now that the country is basically on lockdown. No sports, travel, concerts, all of it.

  30. Gravatar of John Arthur John Arthur
    16. March 2020 at 16:17

    Scott,
    The reason why so many rich and famous people have gotten it is because the virus spread via flights, and those who travel alot and go to many gatherings with international people are likely to get it. Tom Hanks and his wife got the virus in Australia, not America, and I assume that is true for most of the famous people that have gotten the virus, having gotten it from large events with international people.

    Remember, America’s death rate from the virus is in line with China and all the other countries out there, and it only implies around 6000 cases, which is probably an undercount, but I wouldn’t go past 9000 for cases.

    Additionally, given China’s and Italy’s death rate, their amount of coronavirus is much higher than what the offical numbers represent, since the mortality rate is around 1% for the virus in China. But I do agree that the vector for China’s rate of growth for coronvirus is sharply negative.

    The DOW going down makes sense, as any country that tries to restart their economy will have to loosen restrictions, and that would lead to retransmission of the virus. China had to reduce their production by some 20% to stop the virus, and their economy probably contracted some immense number. If China opens up, then they will get retransmission of the virus. So the world economy will have lowered production for some time, until a vaccine can get produced.

  31. Gravatar of D.O. D.O.
    16. March 2020 at 16:23

    Christian List: Ok, if everyone gets infected then why the majority of Diamond Princess inhabitants didn’t get infected?

    The bit that is hard to follow. True, my fault. What I’ve meant is that 0.05% death toll for population of Italy of 60 million translates into 30,000 which is nowhere near what they have now.

  32. Gravatar of rwperu34 rwperu34
    16. March 2020 at 16:38

    @msgkings, In the scenario you outlined above (1.5%, -10%, +5%, +5%), no recession. It would be total happenstance, but within the realm of possibility. I agree with you, mostly because I think Q1 will be negative and Q2 is a lock for negative.

    @Jon Arthur, You are off by a factor of 10 at least. The people dying right now are from the population of people who contracted a month ago. Until you wrap your head around that point, you are going to completely misunderstand everything related to this virus.

  33. Gravatar of Thaomas Thaomas
    16. March 2020 at 17:05

    I have and had no expectation for how bad the diaereses would be and was counter-persuaded by people wearing face masks (= silly overreaction) to believe that it wold not be bad plus not thinking about peak hospital need, just overall low rate.

    What DID surprise me was the Fed’s reluctance to go to NGDP (or its equivalent in PL targeting.) I still find it astounding. Sunday’s blather about “maximum employment” and “symmetric inflation” as if nothing was happening was profoundly depressing.

  34. Gravatar of msgkings msgkings
    16. March 2020 at 17:18

    @rwperu:

    Oh right, technically not a recession (because not two negative quarters)

    I don’t really care about the label, if that’s what happens it will sting. But it won’t last long, hopefully.

  35. Gravatar of Benjamin Cole Benjamin Cole
    16. March 2020 at 17:31

    rwperu34
    16. March 2020 at 16:38

    There are two types of “infections.”

    One, you have COVID-19 antibodies in your bloodstream. That is probably all crew members on the Diamond Princess, but they were never tested in this way. The vast majority of people have no or mild symptoms when exposed to COVID-19. They beat the virus off without losing a step.

    A second type of “infection” is found through a swab or throat culture. An infected person may have the virus in their throat. They may still not have symptoms. A smaller number of people express this type of infection, perhaps the 20% found on the Diamond Princess.

    The good news is, if you are a middling healthy non-elderly adult, probably your chances of dying from COVID-19 are less than 1,000 to one. See the Diamond Princess crew.

    Far more sensible precautions in life: Use seatbelts. Use drugs and alcohol in moderation. Buy high-quality ladders, if you use ladders. If you see thunderstorms, go inside and take off eyeglasses with metal rims snd stems. Avoid lightening strikes. If you have a angry, gun-toting neighbor, do not sleep with his wife.

  36. Gravatar of Benjamin Cole Benjamin Cole
    16. March 2020 at 17:39

    Interesting thought:

    We have, as everyone says, a “globalized economy.”

    So, that means at any time a novel virus can enter the population anywhere on the globe, and thus girdle the globe within a few weeks.

    The new anti-virus rules are we shut down the economy, crush the stock market, and possibly collapse our financial system (the inherently fragile commercial banks).

    So…who will want to own stocks going forward? Will p-e ratios be permanently depressed?

  37. Gravatar of Student Student
    16. March 2020 at 18:29

    Excellent comment from LC indeed. It was absolutely hubris. Coming from the top on down to the people treating school shutdowns like a snow day. Can’t happen here, we are Murca. Weird thing is, is that I did see this coming. I sold all my stocks pre crash, I stocked up on necessities, I still think it’s being underestimated. Then numbers do warrant anything less than rationally released adrenaline. It’s like before you know you are going to have to fight. It’s go time. Sharp mind and tight fists.

    We are just beginning to prepare now, but growth is still exponential, people I know are still having to many interactions, and there is no known treatment. I would be surprised if there is not more than one wave (there were 3 in the Spanish flu and the second was the bad one, not the first). It’s going to catch us off guard again. I don’t see how this ends up not being double h1n1 of 2009… minimum. I don’t see people staying home for a month or more and I don’t see the testing we need to get a handle on this anywhere on the horizon.

    I really hope that I am just an anxious freak and u all are right, that we got this now. We got our minds around this issue 60-90 days late. And we are going to pay for it just like Europe is.

  38. Gravatar of Garrett Garrett
    16. March 2020 at 18:57

    I’d say in my ~4 year career working in public equities the one clear trading signal that I missed that I regret was not selling equities on 2/24/20 when it was clear that the virus had broke containment in China. I followed the news beforehand and understood why the market had been up in February on constructive data out of China, but once it was in Korea I knew it was super bearish and the market was not taking it seriously enough.

  39. Gravatar of Benjamin Cole Benjamin Cole
    16. March 2020 at 19:56

    VOX–

    “Mitt Romney’s coronavirus economic plan: $1,000 to each American adult
    Some GOP senators are calling for cash payments. Democratic leadership has been slower to rally around the idea.”

    —30—

    A step in the right direction…but how about $1,000 for anybody who agrees to be inoculated? Children too, with parental permission.

    And a FICA payroll tax holiday.

    I do not like giving people money for nothing. Tax holidays for people who work, I like.

  40. Gravatar of dtoh dtoh
    16. March 2020 at 20:26

    Scott,

    ” Spanish flu would have REALLY freaked out Americans. That killed mostly young people.”

    It was actually a Monty Python reference.

  41. Gravatar of mbka mbka
    16. March 2020 at 20:46

    Scott, LC,

    not sure whether free, democratic societies “can’t” take drastic steps, seeing that this is now happening in Europe with complete country lockdowns a la Hubei province. Given that the Chinese governments (central and provincial) were able to contain the outbreak in the space of a month and limit the number of deaths in a 1.4B country to just about what Italy will have a week from now, i.e. 3k deaths or so… control is within reach. The US just has this thing about internal bickering, that’s for sure.

    One more thing, S Korea, Taiwan, Singapore… show that a sample of Asian democracies, and quite idiosyncratic ones, was able to contain their outbreaks locally. The biggest threat to Singapore and Taiwan specifically, is now the imported cases. And this was achieved without country-wide lockdowns. It’s the old democracies of Europe which now produce the country lockdowns.

    And finally, yes it is possible that this one is the final nail in the coffin of US international credibility. DT was a hard blow but since the economy worked out, credibility remained intact. Now however…

  42. Gravatar of dtoh dtoh
    16. March 2020 at 21:04

    On a more serious note….

    I think it remains to be seen whether the U.S. response was optimal.

    1. Other than stopping travel, the only thing that really matters is when people decide to start washing their hands and distancing themselves from other people.

    2. From an optimization perspective, this can be too early or too late. In hindsight, it may turn out that Americans were pretty rational and got this about right.

    3. Testing doesn’t really change much except to provide a false sense of control. Japan does minimal testing. South Korea tests everyone. Korean per capita fatalities are 7.5x those of Japan.

    4. I suspect government action is more a result rather than a cause of people changing behavior.

    5. Government rarely gets things right.

    6. Central government in particular rarely gets things right because most human endeavor involves a lot of trial and error and centralized government only tries one thing at a time.

    7. For big countries like China and the U.S., I think the optimal timing of the response varies from region to region. The Wuhan response was clearly sub-optimal from this perspective.

    8. There was an interesting piece on Japanese TV this morning showing the correlation of Covid-19 incidence with a) type of social greeting (bow, handshake or kiss) and b) how frequently people meet with family, relatives and friends.

    9. Everybody seems to be ignoring the role of religion…. Christian whacko cult in Taegu, Mosque in Qum, and Synagogue in New Rochelle.

    10. I like John Arthur’s analysis. Data (which are very accurate and complete) from the Diamond Princess support his analysis.

    11. Benjamin’s Cole’s suggestion does not take into account the cost of death (2.2 million people) and illness (50 million)

  43. Gravatar of Benjamin Cole Benjamin Cole
    16. March 2020 at 21:39

    “11. Benjamin’s Cole’s suggestion does not take into account the cost of death (2.2 million people) and illness (50 million)”–dtoh

    Well…your numbers suggest that the elderly would take advantage of the $1,000 per inoculation offer.

    You could have a law limiting the offer to those under age X, say 68. Bu I doubt the elderly will show up.

    The idea is inoculate most of the population, so that old people (the only vulnerable subset) are safer.

    In the end, I am not sure anything we do does anything but buy time. Evidently, the coronavirus will be a permanent addition to our catalog of maladies. It will crop up from time to time, in unexposed populations, and that will be old people. Who knows, in one or two decades I may succumb myself.

    The question is, do we wreck our economy to fight the tide? The answer: “Yes, let’s wreck our economy to fight the tide.”

  44. Gravatar of Benjamin Cole Benjamin Cole
    16. March 2020 at 21:43

    Add on:

    The 1918 Spanish flu suggests that old people retain immunity to viruses for a long time, perhaps for life. Young people died, but not old people. So, if we give everybody coronavirus now, while they are young-ish, they will not be vulnerable when they are older.

    I should seek out a coronavirus carrier and get exposed. So should Scott Sumner. Otherwise the Grim Reaper may come calling in 10 years hence.

  45. Gravatar of Philip Crawford Philip Crawford
    16. March 2020 at 21:58

    Just checking if folks have read these
    https://nber.org/wp_covid19.html

  46. Gravatar of dtoh dtoh
    16. March 2020 at 22:38

    Benjamin,

    “I should seek out a coronavirus carrier and get exposed. So should Scott Sumner. Otherwise the Grim Reaper may come calling in 10 years hence.”

    I think I will wait for the vaccine. In the meantime, I’m working on all the home projects that I’ve been postponing for the last q

  47. Gravatar of dtoh dtoh
    16. March 2020 at 22:39

    Benjamin,

    “I should seek out a coronavirus carrier and get exposed. So should Scott Sumner. Otherwise the Grim Reaper may come calling in 10 years hence.”

    I think I will wait for the vaccine. In the meantime, I’m working on all the home projects that I’ve been postponing for the last ten years.

  48. Gravatar of Benjamin Cole Benjamin Cole
    16. March 2020 at 22:53

    dtoh:

    Depending on where you live, you may have no choice.

    Fox News

    “Residents in six San Francisco Bay Area counties will be confined to their homes for the next three weeks under a new shelter-in-place order aimed at curbing the spread of the coronavirus.

    The mandate, which goes into effect Tuesday and will affect nearly 7 million people, orders residents to avoid unnecessary travel and only leave their homes for food, medicine and exercise, according to county officials who made the announcement.”

    —30—

    I sense American libertarians overnight have become a confederacy of statist martinets….

  49. Gravatar of South African Fan South African Fan
    16. March 2020 at 23:28

    2018/19 Flu season (an average season) CDC data shows incidence of normal Flu in over 65’s is only 5.6% vs 11.8% for under 65’s. Vaccination programs aimed at the elderly seems the reason.
    It also shows that hospital admission and case fatality rates for normal Flu cases are respectively 9% and 0.8% for over 65’s; and 0.6% and 0.03% for under 65’s.
    Applying these stats to Lombardy’s 10 million population with 22% over 65 I get for a normal Flu season 16500 hospital admissions (+65: 11000, -65: 5500) and 1260 deaths (985 and 275).
    Population mortality rate for normal Flu in Lombardy is 1260/10million = 0.012%

    Assume a new virus with 4 times the normal Flu infection rate for under 65’s applied to the whole population (due to no natural immunity or vaccine) (+-50% infection rate across the age spectrum) but same case fatality rates (0.1%):
    I get for a 4x Flu season 124000 hospital admissions (+65: 99000, -65: 25000) and 10000 deaths (8800 and 1200).
    Population mortality rate for 4x Flu in Lombardy is 10000/10million = 0.1%

    Assume the 7.5x normal cases overwhelms the health services and 20% of the additional 100000 cases can’t be treated resulting in a 20% mortality rate for those = 4300 additional deaths.
    Population mortality rate for 4x Flu + system collapse in Lombardy is 14300/10million = 0.14%.

    This seems a lot like the real disaster in Milan unfolding before our eyes, but the risk of dying for an individual contracting the virus has not gone up in this scenario. Case fatality rate remains 0.1% in both scenarios.

  50. Gravatar of Ray Lopez Ray Lopez
    17. March 2020 at 01:03

    @Everybody, including the dictator loving commie poster “LC” that Sumner fondly cites: https://www.jpost.com/HEALTH-SCIENCE/Israeli-nobel-laureate-Coronavirus-spread-is-slowing-621145

    1. Covid-19 is hard to transmit, it’s NOT a ‘sneezing disease’ but more like spittle from the mouth (reminds me of Sumner or C. List foaming at the mouth, like Hitler, sorry, just a visual that came to mind, on offense meant). Most people got infected from direct contact with Wuhan patients, not ‘secondary’ sources. R0 is lower than initially believed (see link above).

    2. R0 is slowing (see link above).

    3. Most people naturally immune to the Covid-19 virus (see link above).

    From #1-3, we can conclude the “UK strategy” aka the “Ben Cole” strategy aka “herd immunity” which I endorsed and which Sumner laughed at, is the correct strategy. Praising China is false since largely the disease, if reasonable precautions are taken, naturally ‘burns out’. No need for lockdowns, like in China (which anyway did not work to stop the disease, see the above).

    In short, Ben Cole and I were right, and the rest of you Big Government and Panda huggers were wrong. How does it feel to be wrong, losers? BTW I’m worth more than $10M in wealth, how about you? Heh heh.

  51. Gravatar of Student Student
    17. March 2020 at 01:34

    Ray, this is not slowing down. It is in China but so what, that’s one place. The growth factor is still hovering between 1.10 and 1.30. Far from slowing down, that is rapid exponential phase where u can go from thousands of cases to more than 1 billion in < 3 months. And it’s contagion is Ro~2-4. That is pretty contagious. This does spread by airborne droplets. Ray, your article is dangerous misinformation. Keep believing that, you and everyone around will get it. Let’s hope your STDs don’t increase your vulnerability.

  52. Gravatar of Christian List Christian List
    17. March 2020 at 03:03

    Student,

    Levitt avoids making global forecasts, his points were about China. Our greek STD superspreader doesn’t get that. He doesn’t get anything.

    Levitt praises Israel for its extreme measures. “The more severe the defensive measures taken, the more they will buy time.”

    About China he says this: “China did great work and managed to gain complete control of the virus.”

    About the US he says this: “Currently, I am most worried about the US. It must isolate as many people as possible to buy time for preparations. Otherwise, it can end up in a situation where 20,000 infected people will descend on the nearest hospital at the same time and the healthcare system will collapse.”

    Our greek STD superspreader must have syphilis in the cerebral end stage in order to claim that Levitt supports Benjamin’s theory.

    But you’re right, his STDs make him vulnerable to corona. A glimmer of hope on the horizon.

  53. Gravatar of Benjamin Cole Benjamin Cole
    17. March 2020 at 03:13

    Here I am, arm-in-arm with Ray Lopez and Donald Trump.

    The latest edition of the entrancing series, “The Tin-Foil Hat Economist”:

    https://www.youtube.com/watch?v=7FpWjzKO18s&t=187s

  54. Gravatar of Michael Sandifer Michael Sandifer
    17. March 2020 at 03:57

    Not much was known about the virus , particularly while it was mostly still only detected in China. We’ve learned a lot over the past few weeks. I’m not shocked by the shocks.

  55. Gravatar of Student Student
    17. March 2020 at 03:59

    For the record, I was joking about the STDs… I don’t know anything about Ray. For the longest time, I thought he was a character and not a real commenter. Like MF… if you remember that troll.

  56. Gravatar of Tom M Tom M
    17. March 2020 at 04:30

    Scott & Others

    I would highly recommend Michael Osterholm’s podcast with Joe Rogan.

    Instead of listening to politicians/economists/journalists, I prefer to get my information from virologists.

    1) Stockpiling masks is useless unless you yourself have the virus.

    2) The world cannot shut down indefinitely for 6-9 months, once China goes back to work, get ready for a second wave of the virus.

    3) There is doubt still in the international community regarding the severity of the virus in China. Even virologists are unsure and recognize the data is unreliable at best.

    4) The market has continued to go down for many reasons:
    a) Fed Reserve response is poor, without language expressing the willingness to make major asset purchases indefinitely until price lvl is maintained, everything else is filler. Inflation expectations have been trending down for the past 4 months (even prior to Cov-19)
    b) Oil wars between Saudi Arabia/Russia
    c) Probability that Joe Biden wins election

    * Also keep in mind- if the entire world is overreacting to this- it would have been rational for markets to NOT have seen this coming. The expectation would have been this would be a bad flu season, the irrationality is the worlds response which has been causing problems for the market.

  57. Gravatar of Spencer Hall Spencer Hall
    17. March 2020 at 05:13

    There’s a dollar shortage? How could that be if the FED loosens its monetary policy?

    https://www.zerohedge.com/markets/does-any-look-fed-has-anything-under-control

  58. Gravatar of Spencer Hall Spencer Hall
    17. March 2020 at 05:16

    Both John Cochrane and Alan Blinder recommended that the FED target spreads:

    https://fred.stlouisfed.org/series/BAMLC0A4CBBB

  59. Gravatar of Bob Bob
    17. March 2020 at 06:49

    The Fifth Risk, Michael Lewis’ latest book, points out that competency left the US government three years ago:

    “The morning after Trump was elected president, the people who ran the US Department of Energy waited to brief the administration’s transition team on the agency it would soon be running. Nobody appeared. Across all departments the stories were the same: Trump appointees were few and far between; those who did show up were shockingly uninformed about the functions of their new workplace.”

    All of America is getting the same treatment that Puerto Rico got 2.5 years ago with Hurricane Maria. You start cutting corners on hurricane prediction, disaster response, pandemic preparedness, and all of those cut corners start catching up with you much faster than you ever thought possible. Every time the government mitigates a disaster, people forget and move on, and soon they’re convinced the government is wasting money or hoarding goods. It’s only when disaster strikes and we’re unprepared that people realize an ounce of prevention is worth a pound of the cure.

  60. Gravatar of BB BB
    17. March 2020 at 06:51

    Scott,
    The government effectively responded to SARS, the swine flu and Ebola. Trump was briefed by the Obama team on the risk of an Influenza pandemic. The head of the NSC task force that Trump disbanded publicly warned of an influenza outbreak tow years ago. And other nations foresaw the risk. South Korea and Taiwan did not need to shut everything down. The Trump administration is the most inept in modern history. This would have been manageable with decent leadership.
    BTW: Anyone who watched China blockade a city of 10 million people and still thought this was not a big deal is a fool. This was obviously going to be a big deal right from the beginning.

  61. Gravatar of ssumner ssumner
    17. March 2020 at 07:32

    Ben, You can say they all got infected on that ship but it doesn’t make it true. Cruise ships often have viral outbreaks; not everyone gets infected in a relatively short trip of a week or two. It’s not that simple.

    And it was libertarians that mandated a lockdown in SF? LOL.

    msgkings, I don’t have a good read on this, things are changing so fast, but I suspect that Q3 (at least) will still be bad. I originally thought that unemployment might rise less than usual, as firms held on to workers expecting a short recession. Now I have my doubts and think it will go considerably higher.

    dtoh, How did I miss that reference? I’ve been watching a documentary on Monty Python (on Amazon). Great memories for a time like this.

    I like your 12 points, and I’ve generally argued we put too much weight on governments (notably I’ve argued that Trump’s bungling has had only a minor impact.) But consider that Italy’s death total will exceed China’s. Even worse, the challenge faced by Italy was similar to the challenge faced by non-Hubei China, which had only 112 deaths, and perhaps a few hundred more labeled “pneumonia”. If I said a month ago that by March 31 Italy would have far more deaths than China, people would have assumed a major policy failure had occurred in Italy.

    Good point about religion. Some of the recent increase in Singapore is people returning from a major Muslim event in Malaysia. And this is not a dig at religion on my part; any large gathering is a problem, it has nothing to do with religious belief per se.

    Tom, Those podcasts may be fine, but they are just too slow for me. I prefer to read material on the crisis, which I can digest 10 times faster.

    Spencer, I was the one that recommended TIPS spreads to Cochrane.

  62. Gravatar of agrippa postumus agrippa postumus
    17. March 2020 at 07:57

    lopez, list add rulle, and cole too. a gaggle of fools spewing goo. silence say the gods, your voice is like lead. peace grant the serious and get thee to bed.

  63. Gravatar of Tom Brown Tom Brown
    17. March 2020 at 08:09

    $1000 checks
    https://twitter.com/Yamiche/status/1239944530675355649?s=19

  64. Gravatar of Tom Brown Tom Brown
    17. March 2020 at 08:12

    Two greatest tweets ever written by a pundit:
    https://twitter.com/MattWalshBlog/status/1239333205351727105?s=19

    https://twitter.com/MattWalshBlog/status/1239334440482017281?s=19

  65. Gravatar of myb6 myb6
    17. March 2020 at 09:48

    Scott, I for one would love to hear more about targeting spreads as guidance for CB asset stances. Studying a lot of CB history (incl Midas Paradox) the past few years, I’ve been surprised how varied CB asset mix/policy (eg the BOE using the bills market to conduct countercyclical policy despite gold standard constraints) can be and how little that gets discussed WRT the greater economy.

    EG My note on your section on the 32 OMPs, probably a mix of what you said and my reactions: despite technically dropping the gold cover ratio modestly, a move into a safety-asset/near-substitute for gold prob wouldn’t help much, especially as it was mostly at the expense of bills/risk.

    If you’ve already posted a lot on the topic, my apologies and please direct me. Thanks!

  66. Gravatar of myb6 myb6
    17. March 2020 at 09:52

    Ah I was thinking of Spencer’s post with BBB spread, I assumed as guidance for LOLR/stabilization policy, but now I see Scott responded with TIPS spread, I assume as guidance for inflation targeting, I don’t think you guys are talking about the same thing and I probably just confused the issue further.

  67. Gravatar of Benjamin Cole Benjamin Cole
    17. March 2020 at 11:56

    Coronavirus: Scotland braced for 80% infection rate
    Four per cent of cases would require hospital treatment, officials said. This could overrun hospitals
    Four per cent of cases would require hospital treatment, officials said. This could overrun hospitals
    REUTERS/RUSSELL CHEYNE
    Mark McLaughlin
    Tuesday March 03 2020, 12.01am GMT, The Times

    —30—

    Scott Sumner: how can entire nations, such as Scotland, anticipate 80% infection rates?

    Do you really think the 1100 crew members of The Diamond Princess, confined for weeks in common bunk rooms and eating in common mess halls, did not obtain even higher infection rates?

    Put your thinking cap on!

  68. Gravatar of Ray Lopez Ray Lopez
    17. March 2020 at 12:11

    @Student- you’re quite ignorant, you need to go back to school. Your quote about R0 for SARS-COV-2 is far off the mark, it’s not up to R=4 but rather: “The World Health Organization investigative team that visited China in late February, led by Canadian expert Dr. Bruce Aylward, reported last week that it places the R0 of COVID-19 at between 2 and 2.5 – a number it considers “relatively high.”

    In short, Covid-19 is not unlike the Spanish flu (which did not kill 10% but rather about 2.5%, about the same as today’s disease). I say let people decide their own risk preferences. Of course ban public gatherings like parades (as was done in 1918-19) but locking people in their homes, as must be done for ***up to a year*** (see the Guardian article on this, it’s not just 15 to 30 days as pols today want to make you believe) is a recipe for Great Depression 2.0. It’s irresponsible to suggest otherwise (looking at YOU, Student).

  69. Gravatar of dtoh dtoh
    17. March 2020 at 13:37

    Scott

    As I commented above, I think you may need to look at large countries on a regional basis. The more relevant comparison is probably not Italy versus China, but rather Italy versus Hubei

    Population
    Hubei 59 million
    Italy 60 million

    Population over 65
    Hubei 5.5 million
    Italy 14 million

    Looking at the trends and normalizing for age, I suspect final outcomes in Italy and Hubei will look pretty similar, which perhaps supports the view I suggested that other than travel restrictions, government policies don’t have too much impact on outcomes.

  70. Gravatar of ssumner ssumner
    17. March 2020 at 13:42

    myb6, I’m not quite sure what you are asking me.

    Ben, Give up, your arguments make no sense.

  71. Gravatar of ssumner ssumner
    17. March 2020 at 13:53

    dtoh. That makes no sense to me. I’d rather compare Italy to Jiangsu province or some other similar province. Both had a warning that coronavirus was coming, (unlike Hubei), and both had visitors from Wuhan (Jiangsu almost certainly had more). Jiangsu succeeded and Italy failed. Comparing Hubei and Italy literally makes no sense to me, it’s apples and oranges. And you can substitute any other non-Hubei province for Jiangsu, they all did far better than Italy (or Spain or . . . )

    BTW, I think Italy will probably end up doing worse than even Hubei, even accounting for demographics.

    A comparison that might make a bit more sense is Lombardy and Hubei, and Italy vs. China.

  72. Gravatar of Chris Chris
    17. March 2020 at 14:08

    I think the markets missed this event due to a combination of:

    1) A lack of transparency and trust regarding China’s actions.

    2) The risk profile of the virus unexpectedly falling into a range with a much higher (and more novel) economic risk. This was unexpected partly because of #1 and partly because this is unlike most previous pandemics.

    Once we started getting a real picture of the Chinese response it first looked like they might be confronting a situation similar to SARS (high % of people dying, drastic containment measures), in which case the risk of global exponential growth would indeed be very low: no one would let a virus that deadly get out of control, and viruses like that don’t spread as easily anyway.

    But then we started to get information about a fairly quick spread to other parts of China, which seemed too widespread for the initial assessment. Was the initial data wrong? More and more information pointed toward a virus that was much faster-spreading but likely much less severe: more similar to pandemic viruses in 1957, 1968, and 2009 (0.3-1.0% CFR, far less among the working population), none of which presented significant economic harm in the past. Reports of asymptomatic and mild cases appeared to be proliferating, and assumptions were made that China was either not testing nearly enough people or hiding the true numbers. As the published fatality rate fell, and speculation abounded about widespread asymptomatic infection, the CCP response looked increasingly like an opportunistic authoritarian political crackdown, rather than a legitimate response to a public health crisis.

    The trajectory in Iran was similar, but for the same reasons it was difficult to know what to make of the data. Was this a highly lethal disease that would demand containment or a milder one that would eventually become a typical pandemic? But eventually we had enough trustworthy data that the virus appeared to hit a sweet spot between the two scenarios above: a highly contagious disease with an apparent CFR of 1-4%. At this point the market came to recognize this as an economic risk because the fatality rate was low enough that countries wouldn’t throw everything they had at containment, but high enough that failing health systems would eventually lead to sustained costly action. The World Health Organization consistently advocates an economically proportionate response, but what is proportionate isn’t so clear in this instance. So what we get is a lack of drastic short-term measures, followed by no business as usual for up to 18 months.

    Obviously, there will be a high economic hit in the next 2-3 months, but I’m sanguine about the medium to long term for the following reasons:

    1) Countries do appear to be willing and able to bend the curve at a point that was previously thought to be outside the opportunity for containment. It doesn’t appear there will be half-measures all the way down.

    2) Combining #1 with recent optimistic data about the effects of high temps and humidity, the northern hemisphere could well be able to bend the curve back toward low numbers by June.

    3) Despite early failures of testing in most countries, I expect we will have historically unprecedented testing and monitoring capabilities in a few months that will allow for the resumption of most economic activity while detecting and cutting off new outbreaks.

    4) It would not surprise me if, by September, a vaccine will have been deployed in China and/or other countries who will not require 12-month human testing results like the US and Europe. The US began deploying a vaccine for the 1957 pandemic after only two months of testing. If we still face tremendous economic risk this summer the cost-benefit calculation about vaccine testing will change. Any country that deploys an early vaccine would put tremendous political pressure on the US and Europe to do the same and, to be honest, is it really worth having a vaccine that is marginally more safe and effective but only deployed after 2-3 waves of this virus?

  73. Gravatar of Student Student
    17. March 2020 at 15:28

    Just asking… how many of the top 13 single biggest stock market dips are covid19? How many are Great Depression? How many are Great Recession? Take a looksy.

  74. Gravatar of dtoh dtoh
    17. March 2020 at 15:52

    Scott,

    I think there are two aspects of the comparison.

    1. Did the government restrict travel and implement effective containment? Here China did a lot better than Italy, and I think the comparison between Italy and China or between Italy and other Chinese provinces is legit.

    2. Once the virus got a foothold, how effectively was social distancing implemented. Here I think the relevant comparison is Hubei versus Italy. Taking into account age differences, advance warning, different social customs, climate, etc., I suspect the differences in outcomes will be fairly minimal.

  75. Gravatar of Jeff Jeff
    17. March 2020 at 19:13

    Apparently testing is about to increase a lot and will presumably become cheaper as well. Someone, probably CDC or NIH, should start testing a couple of hundred randomly selected people every day. That would be a straightforward way to find out how big the problem is and whether or not it’s getting worse and by how much. Right now we’re having pointless political arguments and making costly policy decisions based on very little actual data.

  76. Gravatar of anon/portly anon/portly
    18. March 2020 at 09:24

    First of all, read this thing:

    https://www.statnews.com/2020/03/17/a-fiasco-in-the-making-as-the-coronavirus-pandemic-takes-hold-we-are-making-decisions-without-reliable-data/

    I think this guy makes a number of good points about the poor quality of the data, and the need to think in terms of “confidence intervals” for the data we have. I haven’t really understood why anyone would was much time trying to extract information from the data we have, which seems almost completely useless to me.

    There is a lot of poor information flying around, and there is also the ongoing tendency of many (most?) people to conflate “negativity” with “seriousness.” (This explains about 85-95% of the “comment stupidity” quotient on any blog, in my view, and maybe as high a rate of “media stupidity” in general).

    If I was president, not only would I have been ordering more testing, I would already ordered the testing of large random samples! Maybe I would have instantly impeached and removed, but I would have ordered it. (I guess I would have given some real experts, of which I am definitely not one, a chance to convince me it wasn’t worth it, first).

    “I did not know that the US government would spend all of January and February twiddling its thumbs, doing nothing, and not leap into action until the NBA season was cancelled. …. I know, how stupid can a blogger be? Imagine someone who assumed that the US government had an ounce of competence. Silly me.”

    Ah… Well, your problem is, you don’t read the one blog that could have led you to understand bureaucratic failure, and appreciate it, in all its twists and turns and complexities. This blog is called “The Money Illusion.” Ha! Ha!

    You’ve become so inured to the failures of the complex “web” of monetary economics and monetary policy that maybe you don’t see it for what it really is, anymore. There, you are happy with “a little less mediocre” – and you should be! That is the best we can hope for!

    A man who is surprised by “thumb-twiddling” in one area when he has spent years and years and years showing us the thumbs and showing us how they twiddle in another area, is a man who may have lost perspective, just a touch.

  77. Gravatar of anon/portly anon/portly
    18. March 2020 at 09:39

    “I’d rather compare Italy to Jiangsu province or some other similar province. Both had a warning that coronavirus was coming, (unlike Hubei), and both had visitors from Wuhan (Jiangsu almost certainly had more). Jiangsu succeeded and Italy failed. Comparing Hubei and Italy literally makes no sense to me, it’s apples and oranges. And you can substitute any other non-Hubei province for Jiangsu, they all did far better than Italy (or Spain or . . . )”

    *All* these comparisons are apples to oranges! You can’t compare Italy with *any* province in China! “Both had a warning that coronavirus was coming” – a totally meaningless sentence!

    Other areas of China had a very different sort of warning, really, than Lombardy, just as other areas of Italy have had a different sort of warning than Lombardy.

    And of course in addition to the quality of the existing “response bureaucracy,” in all its forms and complexities, there may a host of variables that distinguish Italy from China in terms of how the coronavirus will spread. And, we don’t really understand how it *has* spread (in Italy at least) very well yet.

    Why is WA responsible for more than half of the US deaths so far (as least as of a few days ago)? Not because it was any less (or more) prepared than, say, Cleveland or Poughkeepsie, but because one person came in from China on January 19 and got the ball rolling. The null hypothesis would be that is Lombardy’s significant characteristic as well.

  78. Gravatar of anon/portly anon/portly
    18. March 2020 at 09:47

    Just for one example of Monetary Econ thumb-twiddling, consider the story, told on this blog, of the Fed meeting in `37 and `38 where they (I forget the details) realize they’ve just the totally wrong thing, then shrug it off with basically an “oh well” and do nothing to reverse course….

    In addition to the story itself, consider the current state of the Econ profession.

    IS that something the profession chooses to think about, to put front and center in its understanding of the world? No.

    SHOULD it BE something the profession chooses to think about, to put front and center in its understanding of the world? Yes.

    Am I wrong?

    Twiddle, twiddle, twiddle, twiddle….

  79. Gravatar of dtoh dtoh
    18. March 2020 at 13:53

    Jeff,
    You said, “Someone, probably CDC or NIH, should start testing a couple of hundred randomly selected people every day.”

    Ok. So the current confirmed case rate is 25 per million people. Assume reasonably that the real case rate is 10x higher, i.e. 250 per million. Then randomly testing 200 people per day for 20 days will identify one infected person.

    A similar testing regime based on the case incidence as of March 1 would have taken a 7 years to identify a single case.

    Or to put it another way randomly testing 100,000 people on March 1, would have had only a 0.2 chance of identifying even one single person with the disease.

  80. Gravatar of Hubris in the West – Viral News Connection Hubris in the West – Viral News Connection
    31. March 2020 at 10:39

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    31. March 2020 at 11:09

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