547.5 days. 78.2 weeks. 18 months. “Or longer.”
That is how long the coronavirus scourge may endure. This we learn by way of The New York Times.
It has done us all a capital service by executing a rare feat of journalism.
For its spies have captured a government document “not for public distribution or release.”
A pandemic will last 18 months or longer and could include multiple waves of illness… Increasing COVID-19 suspected or confirmed cases in the U .S. will result in increased hospitalizations among at-risk individuals, straining the health care system… Supply chain and transportation impacts due to ongoing COVID-19 outbreak will likely result in significant shortages for government, private sector and individual U.S. consumers.
Potentially critical shortages may occur of medical supplies and staffing, due to illnesses among public health and medical workers, and potentially also due to exhaustion. SLTT governments (state, local, tribal and territorial), as well as health systems will be stressed and potentially less reliable. Health systems may run low on resources inhibiting the ability to make timely transitions between postures and maintenance of efficacy.
We are precious sick of the coronavirus after four days of home jailing.
How can any man withstand 18 months — “or longer”?
And how can the economy hold?
Consider one week of deadness upon the automobile industry. Reports auto man Eric Peters:
If people stop buying new cars for one week because dealers are forced to close shop – which has already happened in at least one state — or because instantly unemployed people are no longer shopping for new cars — it will cost the car industry $7.3 billion in earnings — and cost 94,400 Americans their jobs. It would also cost the government some $2 billion in taxes.
That’s one week. How about three months?
Indeed… how about 18 months?
We stagger and reel at the prospect.
Meantime, the National Restaurant Association — this organization has actual existence — projects its industry will shed “5–7 million jobs.”
We expect hotels and the tourist trade to withstand parallel holocausts.
In the immediate run…
JPMorgan’s primary U.S. economist, Michael Feroli by name, has hacksawed his second-quarter GDP forecast to a ghastly 14% drop.
The third and fourth quarters may yield a recovery. But that is far from certain if the virus remains amok.
And how about six entire quarters?
“If life doesn’t get back to normal for ‘18 months,’” argues catastrophist Michael Snyder, “we are going to witness a societal meltdown of epic proportions.”
More from whom:
If the entire world shut down for 30 days, this pandemic would quickly be brought under control. If only the U.S. shuts down, it is inevitable that the virus would keep coming back into the country as the pandemic continues raging elsewhere on the globe.
Of course we aren’t going to get the entire globe to agree to shut down simultaneously for 30 days.
So this outbreak will continue to spread and the case numbers will continue to grow.
It is a dismal mathematics.
Naturally the monetary and fiscal authorities are mobilizing on multiple fronts.
The Federal Reserve has executed the largest single market intervention in its hellish history. And the Department of Treasury is clearing for action.
The nation will plunge deeper and deeper into debt’s inky depths.
But how can it come up when chained down with so much debt?
The past 10 years offer high proof that debt does not translate to growth — not after a point, at least.
We may be articled off to prison for merely putting out this question. And the gallows after prison — and hell after the gallows…
But what if they allowed the economy and the stock market to go their own way?
Yes, the way would be down.
The going would be dreadful for a stretch. We will not pretend otherwise. Yet it would clear out much of the rot that presently infests us.
A new economy, strong and youthful and resilient, could come up from the rubble. And healthy shoots of growth could eventually grow into the towering oaks of tomorrow.
That is, what if the authorities did not do something… but merely stood there?
Managing editor, The Daily Reckoning