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Originally Posted by Orlando
Wow. I disagree. That is such a dire and extreme outlook, IMO. This is just a temporary issue which will only slow things down for a little bit. This is not going to be another 2008 recession.
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I work in an essential healthcare service and while I am not an epidemiologist, I am studying for Medical Laboratory Science and know enough about virology and epidemiology to understand the variables that are at play here. The current economic outlook is VERY GRIM.
1. This crisis isn’t going to end in a few weeks... it will be months from now if we are lucky. Once global transmission is achieved it will take weeks to reach peak caseloads. The problem is that the faster we reach the peak of caseloads the more capacity we have to put in our ICU’s... with a peak in mid to late May with an estimated ICU caseload 30x higher than existing ICU capacity. If we are able to delay the peak and spread cases over a longer period we will still exceed ICU capacity by 5-10x available beds and delay the peak into mid to late june with restrictions in place until august.
We essentially have two choices at this point. Bring the world economy to a standstill and plunge into recession, or cause immeasurable harm to human life and let the pandemic spread.
This is not a regular disease. We are seeing 20-50 year olds with no prior history intubated and on ECMO. It can and will spread quickly, we are starting from 0 progress on developing treatments for this virus, and it will continue to grow. Do you remember how big of a deal SARS was? We are going to exceed SARS in every measure by many orders of magnitude. This is an entirely unprecedented situation and is probably going to become the largest public health crisis in modern history.
50 percent of ICU cases are fatal even within current capacity. These cases WITH advanced life support are dying 50 percent of the time, and we could exceed ICU capacity 30x over. To put it bluntly nobody on earth is prepared for this. I am not telling this to scare you, I am telling you this because it is inevitable that we will face one of the greatest challenges to society in history in controlling this virus.
As far as the economy goes, we are (now were) in the top end of one of the longest and strongest periods of growth in the US economy. When trump got elected he began to lower corporate tax rates and interest rates and pumped the economy full of stimulus at will. We exhausted a large portion of our recession toolkit on paydays for corporations and investors. With the recent cuts we are now heading into a recession with zero percent interest rates (sub zero interest rates are virtually useless) and huge portions of stimulus cash thrown away at corporate welfare and trade wars. We could not be heading into a recession with worse conditions. If the government actually expects to keep the economy afloat they will need to triple, quadruple the national debt to inject enough stimulus into taxpayers and corporations. We can expect the economy to come to a standstill at least until mid summer and the economic consequences could be tremendous at that point.
I personally believe that we could witness the breakdown of at least a few major financial processes and expectations. The market is full of uncertainty and it doesn’t like uncertainty. If coronavirus disappeared tomorrow we would have already exceeded our allotment of “recession” this cycle and the market would pick back up from a very rapid few weeks. But under a worst case scenario, if coronavirus does not create immunity and we must continue quarantine procedures for the ~18 months that it will take to develop a vaccine, we could be stuck in an extended recession for at least that entire time period. With no stimulus options the world economy would be at great risk of collapse.
What I’m saying is that the next 12-24 months will be among the most challenging humanity has ever faced, and that you shouldn’t count on the economy to perform well or for Coronavirus to resolve quickly. Trump’s Mnuchin is saying to expect 20 percent unemployment, double that of the great recession, for an administration built almost entirely out of business-friendliness and the condition of the economy as it currently stands. Nothing will be pleasant for a while.
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