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‘There Is Quite An Evident Contagion’: Korea, Italy, Iran Outbreaks Stoke New Virus Worries

Stimulus efforts aren't going to matter if people are confined to their homes or otherwise frightened of engaging in economic activities.

Stimulus efforts aren't going to matter if people are confined to their homes or otherwise frightened of engaging in economic activities.
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5 comments on “‘There Is Quite An Evident Contagion’: Korea, Italy, Iran Outbreaks Stoke New Virus Worries

  1. Why is anyone surprised that a contagious virus is spreading?

  2. Random thoughts from an admitted non-expert:
    1. WHO is wonderful, but also has to be diplomatic in order to be effective. They need cooperation from China. So when WHO sees the virus in Iran, they have to act puzzled. Are we supposed to believe that the exact same virus might have developed independently in Iran? I think the highly probable answer is that there are plenty of contacts between China and Iran that are not advertised in public while the US is on a sanctions rampage. I get why the WHO has to speak that way, but have been surprised that Bloomberg and other media outlets simply repeated their statement without questioning it. And, by the way, if we want to contain the virus, the rest of the world cannot sit idly by, offering no help to Iran.
    2. For me, I’m realizing the message on growth in China has been slow to sink in. I am so accustomed to articles in the US referring to the “slowing” Chinese economy really meaning growth rates below 5%, something we could never achieve. But we are really talking about a reduction in GDP in China. Yikes! China grew in 2008. I don’t know what numbers China will report, but an actual contraction in the Chinese economy could spread more easily than the virus.
    3. Another danger is the greater reporting about morbidity. I’ve been guessing or assuming that the death rate might be lower in developed countries, and that still might be true. Early reporting seemed to suggest that most deaths were associated with other medical conditions. But there is increased reporting about otherwise healthy individuals taking a turn for the worse in the second week, and dying after receiving the best current standard of care. That might be enough to keep people in the developed economies cautious about going out.

    • I don’t think there’s any chance China reports recession numbers unless the CCP is no longer in control (the actual truth of course might be different). And that to me is the ultimate savior for the markets if the virus spins out of control. Xi and friends are going to throw everything they can at economic growth (and the Fed will too), not necessarily for the benefit of the average Chinese worker, but to save themselves. I don’t think that means they have to throw the “kitchen sink” at the problem to save their government, but why chance it?

    • Nice post. Random thoughts on your random thoughts: 1) obvious, once someone actually says it out loud; hat tip; 2) the hit to the Chinese economy is going to be worse than the CCP is willing to admit, and the Xi and the party won’t be able to put lipstick on that pig; the truth will out in lower profits for multinationals that rely on China-based supply chains; 3) I could totally imagine a scenario in which the media runs with a couple of stories about healthy millennials getting really sick or worse and — voila — empty subway cars in NYC. In which case you want to be long ZOOM.

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