The economic impact of coronavirus

Differences in strong unified national response, vs not: In Japan, everyone listened to the government. If they say wear a mask, everyone wears a mask. If they say engage in social distancing, everyone engages in social distancing. In South Korea, too - enables effective response.

In the US or Italy, there's much more individualism, irrespective of liking government. In Italy, mayors are pleading and shouting obscenities at citizens because they're not listening. Authority doesn't matter. In France, too. Contrast in Germany, strong support for the German government; in Western countries, one of the best response functions we've seen.


A reason you need consistent shutdown early: avoid overwhelming the health care system. If people can't get needed intensive care, fatality rates around coronavirus go up 5 - 10 times. There are knock on implications of a health care system not functioning: cross infection. People with chronic and severe conditions unrelated to coronavirus unable access critical medical care. That has knock on effects on the economy. You need to surge on available tests and ability to test, before discussing when to open up the economy.

Good news, this is a top priority in the developed world; surging on test capabilities, masks, ventilators is moving fast. US companies like Roche making hundreds of thousands of test kits per week, will get us to a place that medical systems will not. We'll be in a position not to be overwhelmed, probably within a month in many localities. There's danger that systems get overwhelmed before then - possibility in New York and other municipalities in the next 2 - 4 weeks. That's the biggest danger zone for the US. Parts of Europe, e.g., Spain. Possibly Paris.

In emerging markets, bigger problems: bad, late governance. In Mexico, in Brazil, leaders refuse to accept reality, providing fake news to their people. Not like Trump exaggerating when a cure might come or suggesting medicines could help to respond, that lead to a run on those medicines. Even with Trump's press conferences, which have replaced his rallies, you're getting real news from Pence, the surgeon general, the NIH, Tony Fauci. In the US, general information around the crisis is not great, but it's not godawful. In Mexico, in Brazil, in certain emerging markets, people are getting fake news. That it's not really a danger. It's not really a crisis. You can't get it. Don't worry. Act normally. Disaster for countries that can least afford a failed response.

Lack of coordination globally makes it harder to address crisis. If you can shut down borders effectively, doesn't matter as much. The economic hit is much greater. Restarting supply chain in China. In Malaysia, supply chain is shut down for a minimum of two weeks - going to be longer. Malaysia has a lot of components of electronic goods. Supply chain across Asia, rolling hits. True in Latin America. No global response, nor an equal global rollout of this crisis.

It takes time to restart the economy. Laid off workers won't be immediately available. Restaurants needs to hire, integrate. That's the case with many different components of our interconnected economy. Supply chain & labor disruptions, people that are ill, all make it harder to get the economy going.

Second quarter will be the worst quarter we will have experienced in our lifetimes. Third quarter will be bad. That implies that we're in a heavy recession right now. Potential for further outbreaks forcing a 2nd round of economic closures is significant. That would be the worst economic and market outcome for this crisis. Despite the political pressure to get markets open and get the economy open again - if you have to shut down the economy again and reestablish quarantine, confidence will be shot.

People aren't suddenly going to feel comfortable going to restaurants, malls. It's going to take time to get back up to speed. Even with strong stimulus, 2 trillion dollars in the US (could be bigger than that). Congress goes away, a lot of them already have tested positive for coronavirus or are under self-quarantine. Getting them back together to negotiate a new bill is probably a minimum of 4 weeks away. If we get major market crashes in the interim, don't look to Congress for help. That is an issue.

Demography is destiny. That ominous-sounding pronouncement, credited to French philosopher Auguste Comte, is today taken to mean that a nation's fate depends on the youthfulness of its population. For a poor country to become rich, it needs lots of young people ready to work, to support those too old or too young to work, and to pay taxes. This is called the "demographic dividend."

That's an important part of China's success story. Over the past 40 years, more than one billion people have emerged from poverty in China. Waves of young people surged from the countryside into cities to work in factories. The state invested in education, and wages helped young workers, and then their children, go to school. The state also began a drive to develop the technologies of the future, by any means necessary. In China, once dirt-poor, hundreds of millions have created a middle class.

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Not everyone thinks that President Biden's decision to pull all US troops out of Afghanistan by 9/11/21 is a good idea. Conservative Congressman Mike Waltz (R-FL), a combat-decorated Green Beret with multiple tours in Afghanistan, thinks that the US still needs to maintain a small presence in the country to avoid incurring "massive risks." In a spirited discussion with Ian Bremmer on GZERO World, Waltz, who served as counterterrorism advisor in the George W. Bush administration, argues, "The next 9/11, the next Pulse Night Club, which is right on the edge of my congressional district, the next San Bernardino, that's now on Biden's watch. He owns it with this decision." Their conversation is featured in the upcoming episode of GZERO World, which airs on US public television starting Friday, April 23. Check local listings.

Vaccines are the best hope to end the COVID-19 pandemic. But rich countries are hogging most of the doses, with more than 83 percent of shots administered to date having gone to residents in high- and upper-middle-income countries. Most poor countries will have to wait years to achieve widespread vaccination, according to one study.

To address this inequity some stakeholders are pushing hard for waivers to intellectual-property (IP) rights through World Trade Organization trade rules so that manufacturers in poorer countries can make their own vaccines locally. India and South Africa have been leading the charge, which would essentially mean that deep-pocketed pharma companies like New York-based Pfizer, for instance, would have to hand over the keys to the kingdom, allowing local companies in New Delhi and Johannesberg to make generic versions of their vaccines.

Unsurprisingly, the debate has gotten fiery, with passionate arguments emerging both for and against.

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Carl Bildt, former Prime Minister and Foreign Minister of Sweden, shares his perspective on Europe In 60 Seconds:

What are the Russians up to against Ukraine?

We simply don't know, except the fact that they're concentrating a huge amount of military forces. And you don't do that for nothing or for fun. They are there for a purpose, to have pressure or to undertake limited to larger operations. We simply don't know. And when Putin delivered his State of the Union speech the other day, he didn't say a thing about this. They are now talking about withdrawing the forces. But let's wait and see. They have talked about withdrawing forces from Syria for a long time, but we haven't seen that as of yet.

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Australia rips up Belt & Road deal: Australia cancelled two 2018 deals signed between Victoria, Australia's wealthiest state, and the Chinese government, that committed the two sides to working together on initiatives under China's Belt and Road infrastructure development program. Foreign Minister Marise Payne said that the agreements "were adverse to our foreign relations." Similar deals between Victoria and institutions in Iran and Syria were also abandoned by the Australian government this week, under a 2020 law that allows Canberra to nullify international agreements struck at local and state level. (Australian universities say the "foreign veto bill" amounts to "significant overreach.") Meanwhile, Beijing hit back, calling the move "unreasonable and provocative," and accusing Canberra of further stoking divisions after a series of escalatory moves by both sides that have seen China-Australia relations deteriorate to their worst point in decades. Chinese investment in Australia dropped by 62 percent last year, a massive blow for Australia's export-reliant economy.

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50: The US will aim to cut its greenhouse gas emissions by 50 percent from 2005 levels by the end of the decade. The Biden administration's commitment, double the goal set by Barack Obama almost six years ago, was announced to coincide with a virtual Earth Day climate summit attended by dozens of world leaders.

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Russian president Vladimir Putin on Wednesday threatened an "asymmetrical, rapid, and harsh" response for anyone that dares to cross a "red line" with Russia.

What's the red line? Putin says he'll decide on a case-by-case basis. And the cases at the moment are growing: the US has sanctioned Russia over cyber crimes; Putin critic Alexei Navalny is near death in a Russian prison; the Czechs say Russia blew up a Czech munitions depot; and as many as 120,000 Russian troops are reported to be massing along Russia's border with Eastern Ukraine.

Which is to say: there's potentially a Sol Lewitt's-worth of red lines to ponder now.

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