Bloomberg: "The central bank said Sunday it will use reverse repurchase agreements to supply 1.2 trillion yuan of liquidity on Monday, with the figure coming to 150 billion yuan ($21.7 billion) on a net basis, according to Bloomberg calculations."
One needs to look at this on a seasonal basis. Typically they inject a large amount of cash before the Chinese new year and start draining it afterwards. So the effect is larger than the net amount though maybe less than the gross number.
They already extended the holidays and I know a lot of manufacturers rely on pre and post Lunar production cycles. We are going to find out what happens when China goes offline which is not going to be pretty. I fully expect some products to run short and prices to double within days.
I also think the Chinese govt is trying to throw money at this problem. They got caught mismanaging the epidemic and injecting money into the market isn’t going to calm public panic. It will do the exact opposite.
At this point, small foreign business operating in China will go out of business due to supply chain shutdown and illiquidity. Mid sized businesses will have a huge one time cost/write off moving operations out of China. Large multinationals will move more parts of Chinese supplies to other countries.
>Large multinationals will move more parts of Chinese supplies to other countries.
The joke is, there is perhaps no point in the next 2 weeks. If the virus so far is as virulent as it seems, there's going to be alot more shutdown countries coming once the incubation periods run down.
My wife asked me at breakfast why the new virus is such a big deal: hundreds dying vs. the 5K to 10K babies and infants who die everyday in the world from dehydration and/or starvation.
My response was exponential growth of viruses and mutation into something very deadly.
China is taking the outbreak seriously, locking down large and high population regions. I wondered if some of that is PR since after a previous outbreak they were accused of covering up (if I remember correctly).
The most important thing to remember here is that we have ZERO idea how many people are truly infected in China.
The Chinese gov't is publishing totally unreliable numbers on "confirmed". ...but the fact that confirmed cases are popping up all around the world, there is ZERO chance that the true number of infected people is 15,000 in China.
The healthcare system in Wuhan is overwhelmed. The hospital are turning away patients with symptoms without evening screening unless their deathly ill due to a lack of resources:
"Coronavirus Pummels Wuhan, a City Short of Supplies and Overwhelmed" https://www.nytimes.com/2020/02/02/world/asia/china-coronavi...
which means that the statistics are going to badly off at this point.
It’s the potential for exponential growth. The flu and world hunger are mostly known, contained quantities. While there’s a low probability that the coronavirus will become a pandemic, there is an extremely high downside if that happens. The danger comes not from the probability of the event but from the payoff.
Uncertainty and economic fallout. There's a non-zero probability this outbreak will not be contained, and if so would spell disaster for contemporary globalism.
The problem is that the numbers we have are those published by the Communist Party of China. They're taking the outbreak seriously ... now ... but they were putting whistleblowers in jail at the start of the epidemic.
Having lived in Beijing for 9 years, I’m glad I’m not there right now. Not because of a fear of getting sick, but of the sheer boredom of being stuck in my apartment, nowhere to eat, drink, or even walk without an appropriate face mask. Heck, even going to the office is probably off limits right now.
White collar workers are working from home in Guangdong. The police have also locked down all the urban villages - local residence (via ID card) and temperature checks are mandatory. I cannot even get back into my own apartment without a temperature check. Some restaurants are open, but it's such a pain to get to them it's not really worth the effort. Definitely not a fun way to bring in the new year.
> being stuck in my apartment, nowhere to eat, drink, or even walk without an appropriate face mask
As someone who never been there (or in China for that matter), is "face mask" a synonym for something or you mean literally a face mask? Don't think it's mandatory to wear face masks, just that a lot of people do it, right?
No, literally a face mask, so that people know that you aren't going to give them the virus. I don't know if it's mandatory to wear a face mask.
But it doesn't seem like it would be too different from what always happens in Chinese New Year in Beijing. All the shopkeepers aren't from Beijing originally, so they close shop for two weeks and go back to their hometown. There's pretty much no restaurants open, except maybe chains. And people are shooting off fireworks all day, so the air is just as polluted as always (generally well above the level of an airport smoking lounge in the winter), so you want to be wearing an N95 mask anyway. (Generally if you can't see the mountains around Beijing, you should consider wearing an N95 mask)
There is usually something open, and the main closures are just for a couple of days during the thick of it, and then afterwards there are lots of CNY sales going on. But that isn’t the point: we usually get out for a few days anyways during CNY, but we are more than a week after CNY-eve, so things should be returning to normal.
In general Beijingers have a higher income while running a shop pays low income, so migrant workers are the ones that mainly fill demand for such labor (including shop keepers, waitresses, cooks, etc...).
Consider that Beijing has 21 million residents but less than 14 million hukou holders, there is a lot of migrant labor to go around.
It's your official place of residence paperwork. It can be used to limit internal migration as many official government activities like voting or paying taxes or whatever have to be done in the area for which your hukou is for. Housing is also suppose to verify you have a hukou for the place you are trying to buy/rent....that sort of thing.
There really is no call for this sort of vitriol, especially when it isn't really paired with any information that we might learn from what you said. If you gave some actually tangible examples, perhaps this anger could at least be intellectually interesting.
I'm not angry. As they say in America, "I have no dog in this fight."
It does not bother me in any way that the government in China gets to decide whether and where people can travel or work or live.
I'm glad they don't do it where I live, but I am sure the average Chinese citizen is glad they don't have to suffer many indignities and strange quirks of western life.
I cannot, for instance, let my child play with a water gun at the public park for fear he will be shot and killed by a police officer. I do not need to pretend that's unquestionably good. It is certainly not the way I would prefer to live. It is just a fact of life.
I'm never going to understand why people love bagels. It's not even the second best bread my people have made. Laffa and Malawach both kick bagel bottom.
1) Beigels don't have as much variety here, and I've only found them on Brick Lane or Chapel Market. Presumably there are some more places in Tottenham.
Synonym is the wrong word here. A synonym means another word that means exactly the same thing. So the synonym of a face mask would, by definition, also have to be a literal face mask.
You mean to ask if this is slang for something else.
Which, in this case, it is not. It's a mask over your face which is extremely common in China.
Not only did your response fail to capture the actual definition of synonym, but you also ignored any nuances. It is most certainly _not_ used linguistically for words with _exactly_ identical meanings.
Here's the definition from Merriam Webster: "one of two or more words or expressions of the same language that have the same or nearly the same meaning in some or all senses."
But, even more importantly, words can have nuances! Here's a nuance: "a word or phrase that by association is held to embody something (such as a concept or quality)."
In both cases, the notion of identical meaning is absent. It would also completely vitiate its common usage. Synonym is best thought as simply a similarity in meaning.
Is it fake? I don't think being posted to tiktok tells me whether it's real or fake.
Even if it is fake, @globaltimesnews is run by the Communist party, so either they actually are sending drones out to tell you to put on a mask, or they want you to think they're sending drones out to tell you to put on a mask.
I was there for a week in November (from NE USA) and our group had respiratory issues with the air there. Shanghai later in the trip was much better. I know it used to be worse, but it still isn't what I'd call good.
Some cities it is required right now (eg Guangzhou). I’m not sure about Beijing, but I could imagine them doing that. The problem is that in those same places face masks are sold out, and you’d have to go out and buy one even if they weren’t. Not only that, but given their scarcity people aren’t probably replacing their face masks as much as they should be, making them actually more unsanitary.
No one will shoot you if you go out without a face mask. However, people will think you are being rude, you might get a lot of stink eye.
I would not be surprised how quickly things might turn from "mandatory home quarantine strongly recommended" to "mandatory home quarantine enforced by military force". This is China after all. If you decide to stay, be prepared.
At this point this is just vacuous propaganda being repeated while adding very little of value. Give us some examples, why do you think this? While you are reconsidering your message, perhaps you can recognise why repeating the ideological messages of your own government overseas might not be the right move for humanity as a whole.
People are downvoting the parent, but he/she is correct. So many people misunderstand these masks.
Surgical masks protect other people from your coughing / breathing -- they do nothing for you.
N95 masks are notoriously difficult to actually fit correctly. A mask with a filter needs to be completely sealed around your face. You should not be able to get any airflow in from the sides. The elastic is usually too weak, the masks themselves are too lightweight, and they rarely have anything but paper touching your face, so you're not going to be able to get any sort of seal with them.
The only mask that has any hope of protecting the wearer against inhaling airborne particles is a 3M-style cartridge respirator that's fitted properly. The mask should be heavy, the part around your face should be silicone or rubber, and you should be sweating enough to lubricate the mask so that it acts like a suction cup around your face.
As I understood it their primary purpose was to get the wearer to not absent-mindedly touch their face, which is a much higher vector of infection than airborne inhalation of disease.
I agree with you, but if people in China are spending hours in line trying to get a mask, they're almost certainly not altruistically trying to improve the public health situation -- they've been misinformed about what the mask is going to do for them.
Let's be realistic here -- when the public is in a panic, their behavior gets worse, not better.
Isn't there also a shortage of masks because everyone's snapping them up and hoarding them? If people who're actually ill can't get a hold of any because of that then I'd argue they aren't even doing the right thing period.
"Surgical masks protect other people from your coughing / breathing -- they do nothing for you."
But the mandate to wear masks in crowded public places is to protect others from the wearer. Note there have been few if any reported cases of transmission on long flights from China. This may have something to do with mask wearing by carriers of the disease.
The parent is wrong. I understand why they might think that since the popular media is spreading misinformation by writing stories to discourage people from hording masks and in the process saying they aren't effective but that is false. The masks aren't a fool proof solution by themselves but in conjunction with other common sense hygiene they do reduce risk greatly.
not in medicine / physics, but wouldn't they still reduce airflow and so, while not entirely blocking things, still reduce dispersal / inhalation range?
agree people should not deceive themselves, however.
This is false. If used right along with other common sense measures like washing your hands regularly and not touching your eyes / nose / mouth they reduce your risk of catching and spreading infection. [0]
> We performed a systematic review of both clinical and surrogate exposure data comparing N95 respirators and surgical masks for the prevention of transmissible acute respiratory infections.
That it didn't find a difference between N95 and plain surgical masks isn't surprising:
> Participants in clinical studies were health care workers in a health care setting. We defined health care worker as any worker in a health care setting who might be exposed to a patient with an acute respiratory infection. [...] Acute respiratory infections may have been acquired during the study from community exposures rather than nosocomial exposure.
It's not obvious (and wasn't discussed) that such a broad definition of 'health care workers' identifies people who are exposed to categorically more respiratory infections than, say, elementary school teachers. Indeed, one of the studies was actually halted due to the H1N1 outbreak in 2009.
So... of the people in the study who did get sick, we don't know how many of them caught it from their kids at home or on the bus to work when they weren't wearing .
Interestingly, one of the two randomized studies they looked at, having by far with the largest number of participants (1669), concludes:
> Continuous use of N95 respirators was more efficacious against CRI than intermittent use of N95 or medical masks.
(The other study with 1441 participants concludes that N95 respirators are more effective in preventing multiple simultaneous infections.)
A more specialized mask, known as an N95 respirator, can protect against the new coronavirus, also called 2019-nCoV. The respirator is thicker than a surgical mask
Actually, there is a whole class of face masks that "work". N95, N99 and N100 are statistically effective against 95%, 99% and 100% of dust particles, respectively. Assuming proper fit.
Then you have P95, P99 and P100 that look exactly the same but also work against oil-based aerosols (e.g. if you're spraying paint). These are frequently what you get from a hardware store.
Now all these are actually filtration efficiency classes. So you can get a P100 mask that looks like this [1] or one that looks like this [2]. Obviously [2] gives better protection, even though they are the same class.
For the big full face or half face respirators, you can also get rectangular multi-gas filters (e.g. for organic vapors, acid gases etc) that you can also get pink rectangular aerosol filters for.
Edit: forgot to mention that all these are US NIOSH class numbers. In Europe you'll find mostly-equivalent ratings to P95/P99/P100 specified as P1/P2/P3 (or FFP1 etc.).
The NIH study I linked says that they found "no significance difference" between N95 Respirators and surgical masks. LiveScience.com looks like some kind of popsci website. Not sure I would take their word over a study published in a medical journal.
Edit: For the unfamiliar N95 is a NIOSH standard that dictates the percentage of particulates that are filtered and if the filter is rated for environments with presence of oil. The letter which can be N, R, or P tells you if the filter is good in the presence of oil. N=Not Oil Rated, R=Oil Resistant, P=Oil Proof. The number following the letter tells you the percentage of particulates filtered and typically come in 95, 99, or 100. Both surgical style masks and respirators can be N95 rated.
According to my wife, the medical professional, surgical masks do protect you - if you change them every few hours. Wearing the same one all day, much less for days in a row, is worse than no mask at all, when it comes to protecting you. Of course, wearing a mask protects other people from you.
A friend of mine is leaving HK today - he lives there, so this is not a casual trip abroad. He said the level of fear is making it impossible to live there as a single person. The shops and restaurants are closed. Even his own employer shut its doors indefinitely - and they’re just a video production company.
The virus won’t be what ruins China. It’s the panic itself.
Interesting, China's absolute control of media within the country turns into a double edged sword, people don't trust what they're being told on the subject and go with the worst possible scenario's instead.
It's not bad at all. CNN showed its incompetence again with headlines like "Hong Kong turned into a ghost town".
And then I went out and people are playing in the park, doing sports, going shopping, eating at restaurants - all the same except the horrifying crowds of tourists, which are gone.
We do work from home though, something that a Hong Kong employer wouldn't usually allow.
>The real number of coronavirus cases is more than 75,000, according to a scientific model that says the outbreak will double in size every 6.4 days (businessweek)
Doubling every 6.4 days gets big fast. If it kept up that rate, which it won't, the world's population would all have it within 4 months. While it won't be that bad it has the potential to quickly run amok and kill many millions.
The protests died out as soon as the as outbreak started. Protesters avoid congregating to avoid transmission, and the news cycle has moved on. Carrie Lam must be breathing a sigh of relief.
Quite the opposite regarding Carrie Lam. There is a lot of anger towards the government over how they are handling the virus, specifically the insufficient mask supplies and not closing the border with China. Even the pro-Beijing supporters are angry with the government, and pro-Beijing parties are criticising the government in order to gain support in time for the September LegCo elections.
The "normal" stuff, HK Government continues to give benefits to all Mainland Chinese, sending all the Face Mask reserve to China instead of giving it to Hong Kong people, ( Or only giving it to its own supporter in HK), refuse to shut its border with China.
If you bought a bunch before it was sold out. You can certainly resell some for a large multiple of what you bought them. Shops themselves started doubling price before they sold out.
I’m saying HK is not on mandatory lockdown. People are going outside and there are shops that are open. I’m sure there are some closures but it’s not government mandated.
Why would that panic be limited to China? They are the world’s second largest economy, there’s no way to isolate the economic impact. Can’t quarantine dollars.
I have a friend in China right now who wants to leave but can't due to not having a reasonable way to make it to the airport. Apparently they're not allowing anyone to leave the city atm.
> The virus won’t be what ruins China. It’s the panic itself.
We should be so lucky. Prior to this I feared the only thing capable of such a halt would be something like WW3, but if the Corona Virus makes an China incapable of being a Human Right violating power, than all the better.
I can cope with less trinkets and cheap products from there, I already by used or repair most of what I use that made me reliant on China. Everything else I have or want comes from Japan and to a lesser extent (that isn't food/water/housing related) US/EU/Korea.
What is the typical return date for Chinese living in Europe and the US regarding CNY?
It is my understanding that the CNY was not cancelled and many will have gone back to visit family in China, at least outside the highly affected areas.
The Chinese government's response to this situation (after some initial dithering) has been to move swiftly with big moves. I suspect that the force that overcame the initial delays in local response were powerful central government actors who could some in and simply shut cities and entire areas down and not fool around. There appears to be at least one emergency prefab hospital with about 1600 beds under construction and foreign disease experts have been invited in to help with the situation. And now large liquidity injections into the markets.
Compare this to the previous recent epidemics that came from China, SARS, H7N9, some variants of Swine Flu and so on. This response feels very different.
I work near some people who are providing some analysis of the disease and the evaluation from that community seems to be that the Chinese government has been doing a really strong job in their response and it seems to reflect a turning point in how the government deals with these things.
In the past it appears that even having a rampant disease epidemic was considered so embarrassing that it was everything that could be done to hide it. Now it appears that hiding it and acting like its not happening is so embarrassing that a muscular response is warranted. I suppose that's an improvement.
What people also should realize is that China is likely the only country of this size and might in the world that is even able to pull off a response like this anymore -- perhaps Russia could also be a candidate -- just in terms of handling the population. The same approach would likely fail in Western democracies starting with logistics and then individuals being too much out of line.
I suspect the fear comes from the fact that the response in the past was so poor...
While the central government likes / makes grand gestures... they've proven to be reactionary only, slow, and can't be trusted to be honest, and to some extent the local government isn't honest with the central government.
The track record is well established and I don't see much reason to believe that they've changed / the incentives for everyone are all wrong / aren't likely to change quickly in a non transparent system.
This kind of analysis I'm seeing everywhere is so misguided. The reason the local government didn't report on the situation accurately and even punished some journalists for speaking about it is a flaw of how their country is run and how their command structure incentives are poorly set up. This isn't a new problem and it's why we have converged to a different system in most of the West.
The government coming in later after the situation is already out of control and responding aggressively is only a sign of their failure, given that it wouldn't be necessary for this to happen in a country that wasn't so authoritarian. This should be a wake up call to people in the West who think that banning "fake news" and "misinformation" is a good idea, given that the local government used this exact same excuse to punish journalists speaking about the outbreak early, when it could have been controlled properly.
I actually don't disagree with you. But I'm of the opinion that the authoritarian nature of the Chinese central government is both a blessing and a curse. As you've correctly pointed out, central authoritarian governments seem to end up with local administrations that are fairly incompetent and corrupt as their measure of success if not in good local governance, but by pleasing the central authority. On the flip side, when the proverbial "Eye of Sauron" of a central government decides to do something without reservation, this style of governance can get a lot of stuff done very quickly.
Ultimately the problem for these series of epidemics is the poor conditions and practices of many Chinese citizens that results in unsanitary conditions, especially around food animals. It's easy to look at China as a whole, take a point sampling for a given location and time, and come to a negative evaluation of the entire place. What's harder to do is to recognize that in absolute terms, China today is in much better shape than it was before the '78 reforms. China today is in much better shape than it was before 2000!
The structural problem within China, with respect to how local governing happens, is most certainly a problem. However, I think it's very easy to lob complaints across the Ocean when the West is certainly not in a present state of good order at the moment.
While I'm not saying you're wrong, I think it's worth pointing out that the reason the 1918 flupandemic was called the "Spanish flu" for many years, was that Spain was the first nation to admit that there was a problem. They weren't the first, or even second or third nation to get it, just the first to admit it. So the problem of not admitting the seriousness of the situation, is not a new one.
Which is not to say that it's not a bad thing, just that it's not in any way unique to China, or even to non-democracies.
You're right, it's not an argument, it was a thing to point out, that this problem is not specific to non-democracies. The reason the example is from 100 years ago, is that we haven't really seen as serious a threat as that since then.
The closest we've had in the western world since then, was AIDS in the 80's, and I don't think the response was all that top-notch in the first few years. But then, the disease speed of mortality was much slower. We haven't really seen what a western democracy would do in a case like this, since 1918.
"it is a flaw of how their country is run" and "it's why we have converged to a different system in most of the West."
The parent is making some kind of argument that China is uniquely susceptible to this kind of situation. Saying "no this isnt unique" isnt whataboutism, its refuting the claim being made.
I am noticing a trend where people claim whataboutism any time a counter example or analogy are used, despite them being directly relevant to the premise.
> Which is not to say that it's not a bad thing, just that it's not in any way unique to China, or even to non-democracies.
You would have a point if the debate was about the relative moral standing of China. It's not, as much as the Communist Party wants to call opponents racist or anti-Chinese which is pure deflection. From an objective point of view, Communist China's authoritarianism is putting the whole world at risk.
Shortsighted politicians exist everywhere, but the political system determines what their short-term goals focus on.
In a centralized top-down system like China's, politicians advance their career by currying favor with their superiors by demonstrating plan fulfillment, and if they fail they'll try to fake the numbers to make it look like they succeeded. This affects mostly nationally visible metrics like GDP, poverty rate etc. I guess epidemics also fall into that category.
In a localized bottom-up system, politicians advance their career by currying favor with voters by distributing handouts, like farming subsidies, tax cuts or artificially low prices. The Flint water crisis was at least partially caused by politicians not wanting to improve the infrastructure, because the cost would have to be recouped by raising the water price, which would have been unpopular.
That's true, but my point is that the "Emperor is far away" problems can be found in any type of governing model. Some may limit it, but even then, there are tradeoffs.
One advantage of a centralized top-down system is that when an issue becomes sufficiently prioritized at the top, everyone below falls in line. The primary advantage here is speed and the ability to see through long-term plans. You see this in China's rapid rise in certain industries/technologies, and of course, in their response to the 2019-nCoV epidemic.
> In a localized bottom-up system, politicians advance their career by currying favor with voters by distributing handouts, like farming subsidies, tax cuts or artificially low prices.
I agree with this statement, generally, but there are many exceptions. Speaking only about politicians the US, at a certain level, further career advancement is also very dependent on currying favor with superiors (sometimes, even more so than currying favor with constituents, especially if one has national and not just local ambitions). This is equally true at the national level--see: the internal politicking within the DNC and RNC in terms of fundraising, toeing the party line, etc. to receive endorsement and campaign funds--as it is at the local level--see: "machine" politics like in Chicago, where advancement is equally, if not more, predicated on currying favor with your local party leadership and senior city politicians than it is with voters. Or course, this problem (in the US, at least) might also just be the results of our two-party dominated system, where party-endorsements trumps almost everything else when it comes to getting votes. To your point though, this can be overcome if you curry enough favor with the local voters (Trump himself vis-a-vis the RNC is a good example of this).
You're getting knee-jerk downvotes, but I think your reply is more thoughtful than some are giving you credit for. My original comment more or less agrees with you. However, I'd also temper it by saying that one of the downsides of a highly central government is that it falls prey to the negatives of the "Eye of Sauron". This means that where the relatively few people at the top can focus, and for however long they can focus, incredible things can be accomplished -- sometimes far in excess of what might otherwise be expected.
But due to the lack of a distributed or delegated authority, it greatly limits how many important topics can be focused on at once as the apparatus of government is designed around pleasing the core power holders, who can only focus on a few things at a time. This results in massive efforts like raising armies or building spaceships or whatnot being possible, but efforts that aren't worth the time of the central power keepers (e.g. minding hobbits) fall entirely off the radar.
If the Chinese government can ever arrive at a good solution to local, delegated authority (and I'm not hopeful it will), these smaller issues can be attended to. But as a practical matter they simply get ignored until they become national problems with national priorities.
> But due to the lack of a distributed or delegated authority, it greatly limits how many important topics can be focused on at once as the apparatus of government is designed around pleasing the core power holders, who can only focus on a few things at a time.
A little off-topic, but this is an interesting point. Made me wonder if our corporations fall prey to the same problem as well, since they're basically authoritarian states in structure. But I guess it's because they have such one-dimensional goals that this structure is so effective, as you said.
> If the Chinese government can ever arrive at a good solution to local, delegated authority (and I'm not hopeful it will), these smaller issues can be attended to
Do you think it's possible for delegated authority to exist under an authoritarian system at all?
Maybe? I think military systems are interesting to look at when thinking about this question. The German military was famously centralized in WW2 leading to all sorts of chain of command issues while many of the Allied militaries like to push decision making authority down to more local units while providing overall strategic direction.
However, in governance, its much harder to measure "effectiveness" -- and every measure ends up becoming a target/goal of those being measured. Is it GDP? Sentiment analysis of social media for indicators of social discord? I don't really know, and neither does anybody else.
So some authority simply sets some desired set of strategic goals (2% GDP growth, 3% increase in high school graduations, average household income up by 2.3%, etc.) and then works to create conditions such that those are met.
But with more of a diversity of goals seems to require a diversity of executors of those goals since human attention is limited. This implies again an ability to delegate and so on and I'm not really sure if authoritarian governments can spare the attention to make sure each of the delegated executors can work on such a plethora of goals.
In business, the number of direct reports to the CEO, COO, VP and so on seems to indicate the number of strategic goals an organization can pursue at once. In most companies it seems to be only a handful as the ability of the CEO to direct many reports diminishes as there are more of them.
In the U.S. this need to spread focus works in the executive branch by appointing department heads (cabinet secretaries) who basically have a single overriding raison d'être for their existence (e.g. commerce, housing, transportation, etc.) with a set of strategic goals that those executives can focus on. In the U.S. that's something like 15 departments (plus a very large number of independent "establishments and corporations) which are more or less treated like a company might treat a subsidiary rather than a department. [1]
China also has a complex system as well, much more complicated than I think outsiders give it credit for. It's not a surprise though, the ancient Chinese practically invented the idea of a bureaucracy [2]. I think the primary structural problem for China is not the simple notion of authoritarianism per se, but the parallel bureaucracy of the party structure.
> In a localized bottom-up system, politicians advance their career by currying favor with voters by distributing handouts, like farming subsidies, tax cuts or artificially low prices. The Flint water crisis was at least partially caused by politicians not wanting to improve the infrastructure, because the cost would have to be recouped by raising the water price, which would have been unpopular.
The flint water crises was caused by state emergency powers being abused to take the action of switching to a more acidic water source. The corrosion inhibitors the state-appointed emergency manager neglected to install were necessary because of the lower quality of the new water source. If the water source hadn't been changed, I don't know of any evidence that the corrosion inhibitors would have even been needed.
In other words, your counterexample to a centralized top-down system is in fact centralized top-down corruption of a localized bottom-up system.
It’s not a matter of uniqueness, but scale and frequency. People are still people in any system, and no system is perfect, but that doesn’t mean some systems aren’t clearly far, far better than others.
Let’s take the Australian bush fires. The response of the PM has been widely criticised and the fire chief and regional governments have taken the lead and been very effective, even heroic in their efforts.
In an authoritarian system it would be impossible for the most effective and organised arms if government to push in and get things done, even if I’n theory they lack the ultimate authority. Competence and public support matter. In an authoritarian system the only thing that matters is authority. Competence doesn’t even get you a seat at the table.
Great point. The Original Comment seems to have forgotten that journalists were getting locked up for spreading "rumors" less than 2 weeks ago during a vital time in the spread.
It seems to me that China can only make wrong in your eyes.
If it takes time to act it is because the system causes this failure.
If the government acts swiftly, it is because they are in panic.
If it does not solve the situation, of course because they have a terrible oppressive culture.
If the problem is fixed. Of course, because these are one of the few advantages of having an authoritarian system.
No matter what China does, you will say something bad.
I know this makes me sound like CCP shill, but I am not. I only want to read an assessment made with the same level of rigour and sympathy, if, instead of China was Denmark or Australia.
This is the first comment I've made on this forum about China, so whoever you're speaking to is clearly not me but a collective "you" instead. Responding as myself, I simply added balance to the comment above me. Many people are making the exact same argument the person I responded to is making, and while that argument isn't false, it's clearly misleading.
China does get credit for responding to the situation as they did after the central government got involved. However, we must remember that the situation would likely not have occurred in the first place if the people speaking out about it early on weren't punished, which wouldn't happen in most western countries as local governments have way less power and way less incentives to make that kind of thing happen. This situation is a good example of the problems of their authoritarian system, and a good reminder of why we value (or why we should value) the things we value in the West, like free speech.
> However, we must remember that the situation would likely not have occurred in the first place if the people speaking out about it early on weren't punished, which wouldn't happen in most western countries as local governments have way less power and way less incentives to make that kind of thing happen.
I'm not saying the Chinese government doesn't have problems, nor am I saying free speech is bad, but I have no idea how you could come to this conclusion that free speech would somehow limit the spread of this disease. We have free speech in the US and that's literally led to the rise of anti inoculation advocacy.
Restricted spread of information caused about of month of delay for proper action, as facts were concealed and suppressed by local authorities. If proper action could have been taken in mid-December instead of mid-January, then the spread of the infection could be heavily limited back before it had grown to such large scale as it has now.
Exactly. I read on twitter around Dec 31 that there was such a virus spreading in Wuhan. Around Jan 1, the Wuhan police dep publicly condemned 8 person (the origin of the twitter news) for spreading this information and called it a rumour. Then the gov did everything to hide info and did nothing to prevent its spreading before around Jan 2x. They behaved even like they want to spread it as much as possible because just about two to five days before they made the announcement of the virus outbreak, the Wuhan gov organized a so called 40k family new year banquet -- around 40k Wuhan local families were concentrated together to have a banquet to celebrate the coming Chinese new year. All the events I cited here can be found on China's own newspaper and tv recordings.
Anti-vaccination advocacy exists because some kids do get problems from vaccines. I'm not an anti-vaxxer but it's an inherent feature of how vaccines work that a very small percentage of kids will have some serious things happen as a result of being vaccinated. When you have a big population and the Internet, this small percentage of parents will logically come together to cope with their problems. The fact that those people exist and they can talk about it is evidence that our system is working, not that it isn't.
That is a very charitable portrait of the anti-vaccination movement. No, they aren't parents of vaccine-allergic children banding together "to cope with their problems". They are people spreading serious misinformation about vaccines, advocating that they are risky and best forgone, and causing real damage by doing so. I think silencing these people is wrong, but that doesn't change the fact that their speech is clearly making the world a worse place.
> I'm not saying the Chinese government doesn't have problems, nor am I saying free speech is bad, but I have no idea how you could come to this conclusion that free speech would somehow limit the spread of this disease.
In this particular instance, early warning would have gained precious days if not weeks to study and respond to the disease. In an emergency, every second counts, but the saving face mentality of the Communist Party cost weeks.
> We have free speech in the US and that's literally led to the rise of anti inoculation advocacy.
Even if you were right, that would have absolutely no bearing on the situation at hand.
... and also the widely held belief that anti-vaxing is quackery. I’d argue that free speech actually combats this type of mindset, rather than encourage it. Maybe the Chinese govt. can use it’s authoritarian tools to dispel the bullshit beliefs behind traditional medicine and bizarre “bush-meat” consumption in China that likely caused this mess.
How would the situation have played out in the west? The symptoms are flu-like. Would the situation have been contained on the theory that people will self-diagnose after watching the evening news or hearing about it over Facebook?
Also, if any situation explodes, would the west be as capable in quarantining a huge urban population or building a quick hospital?
Would emergency aid be tossed around like a political game?
Considering the rapid efficient response to Katrina in New Orleans and the Hurricane Dorian in Puerto Rico (catastrophes which, unlike a new virus, are completely unpredictable in their timing of appearance and scope of impact) it's pretty clear that the US would have rapidly deployed infrastructure and supplies exactly where they needed to prevent any casualties.
I think the point is that the Chinese government didn't act swiftly, arrested people who initially spread information about the disease in Wuhan, failed to contain the situation, and has now allowed it to become a global problem.
Due to the way China's government has lied in the past, I am hesitant to believe their numbers or their narrative until it can be confirmed by outside parties.
Then does the fact that they're responding much more quickly and much more heavily this time mean nothing at all?
You say "didn't act swiftly". What is swift to you? A month went by since the first case before they started getting their act together, true, but how quickly do you think other nations could have acted? Compared to SARS, where it took them months, 1 month is a major improvement. It's still not good enough because the virus is that ruthless, but Rome isn't built in one day. I have reason to believe that they've learned a great deal from how SARS was handled, and that they'll respond even better in a future outbreak event.
Are there any government whose narrative you trust? It seems to me that never trusting anything a governments because they have once [0] lied is a little extreme. In fact, I'm not sure I can name a country whose government hasn't lied in recent times.
This would then extend to academia as well, since most research is in some way funded by the state.
[0]: I know they have lied more than once. I'm not sure what a more appropriate word would have been.
I would trust the CDC’s numbers because I know of no incentive for them to lie and their numbers have generally been truthful in the past. In addition, any doctor at the CDC is free to say “these numbers are fraudulent” publicly without worrying they will be arrested.
I would not trust a political party’s economy numbers without external verification, however, because a party has an incentive to lie.
So it is the US Gov bribing the CDC to "hurt" China? No. While the CDC is tarnished by the events surrounding the 2015 scandals, and the US is in opposition to many Chinese initiatives, these things are not related. Hurting China via misinformation about a legitimate contagion hurts the world. There are levels of trust and Chinese officials are about as reliable as US candidates running for office (ie I have 0 trust).
> Are there any government whose narrative you trust?
I can only speak for my country (France), but the precedent of the AIDS epidemic and particularly that of contaminated blood transfusion makes it pretty clear that any government official caught having lied in such a situation would be in deep trouble. And I'm pretty sure they're all keenly aware of that.
> because they have once [0] lied is a little extreme
But it is not that they have once lied that it is a problem. It is instead, that just right now, a couple weeks ago, china was arresting journalists for this stuff.
If you want to say that we should ignore bad behavior from 20 years ago, because it is no longer relevant, thats fine. But we are not talking about stuff from 20 years ago. We are instead talking about behavior that china does all the time, right now.
The reason people don't trust governments is because of a constant, never-ending stream of lies. They didn't lie once. They hardly ever not lie. This applies to China, the US, and other governments. A more appropriate phrase is "continually lying" rather than "once lied." The difference is huge enough that you don't even have an argument to stand on. And for the record, I wouldn't trust then even if they did literally only lie once. And neither would most people as most people value trust. One lie or a million, either way the trust is broken. The insane thing is that so many people trust governments even when they continuously prove over and over and over again that they can't be trusted. Lying continuously is only one of many ways they do that. Trusting governments is illogical, unreasonable, and frankly bordering on insane. What other person or entity that constantly lies and breaks trust would be trusted?
Denmark is nothing like china besides being a country. If china wants to be compared favorably to other contries, the need to act favorible to most countries. Full stop.
This sort of what-about-ism doesn't address the core point. That top-down command and control systems are vulnerable to precisely this type of outcome. Providing a single western example of a much milder localized circumstance doesn't address anything except deflect attention from the main point.
Flint was a local event. This is consuming all of China.
"Wuhan's Communist Party chief Ma Guoqiang acknowledged that before mid-January, samples had to be sent to the Chinese Center for Disease Control and Prevention (China CDC) in Beijing. From mid-January, Wuhan was able to test about 300 cases a day"
Think about that one, does this sound like taking it seriously? "test about 300 cases a day" is a good way to doctor the number of infections.
Liquid injection needs to happen but the hard part is knowing where. Micro injections around the whole economy would be better than huge injections into one-door banks. Bailouts do more for citizens directly than for corporations, as is shown time and time again. Liquid injection is basically another name for bailout, no? And where is this money going? Probably not to the best node where it will make the most travel
> U.S. Secretary of Commerce Wilbur Ross said last week that the virus could force companies to re-evaluate their supply chains, potentially returning some jobs to the United States.
The outbreak comes at a time of high vulnerability for the Chinese economy. This is almost certainly just the start of a very aggressive money pumping episode.
This whole disease and infection comes down to a fundamental breakdown of sanitary practices of a society. Things like 1) cutting up and selling wild animal meat with your bare hands, 2) not washing your hands, 3) eating uncooked meat from wild animals like frogs, cats, rats, mice, "bat soup", 4) having open air "squat toilets" like latrines where when someone shoots their diarrhea, it turns into a mist and everyone in the room gets infected... If these conditions were improved, these viral outbreaks either wouldn't happen or wouldn't happen as often as it does in China. All I know is if you try to get away with that kind of stuff in the U.S., you will have the health department, dept of agriculture, the cops would all show up and shut you down and/or get arrested for it.
it can prevent flash crash which can rollover everywhere, and instead levels will be lowered gradually until fresh news can spread everywhere and prevent panic
For anyone wanting an accurate perspective on the risks of This virus I'd highly recommend watching the Youtube videos MedCram is doing. Their first two esp explain the basics and they have been putting out a daily update.
Citing the fatality rate really buries the lead. The issue is that in a high percentage of cases (~29%), including perfectly healthy people, the virus causes ARDS which is a serious condition that requires hospitalization and putting the patient on a ventilator. Combine that with the highly contagious nature and it isn't hard to imagine a scenario where the number of people that require intensive care overwhelms the healthcare system. There are also other concerning factors like people being contagious for several days before the onset of noticeable symptoms and this could be very serious if not taken seriously.
Given what appears to be exponential growth, the calculation seems to ignore potential future deaths in the currently known cases. Pardon the morbidity and cynicism, but maybe some of these 14628 people haven't had the time to die yet?
Wouldn't it be more appropriate to compare deaths (305) to the number of people successfully recovered (348 as per the same page)? This gives the survivability rate of 53%, which does sound scary (and I'd love to be proven wrong here).
In addition to recovery taking much longer, there are likely far more than 15k people who have been infected but haven't been to the hospital since the majority of cases aren't serious.
Now, it's too early to say if survivability rate is as high, but here's an observation:
In the rest of China, D/C count is 40/10000, however, in Wuhan, it is 240/4000. Which essentially means Wuhan patients are 12 times as likely to die. A simpler explanation would be Wuhan hospitals has been overwhelmed and there are actually ~12 times as many patients there.
It depends. NB there are only 300 confirmed recoveries as yet, and figures from China are likely underestimates. It’s probably too early to tell mortality in the initial wave and often viruses mutate as they spread and become more virulent.
Still, hopefully mortality will be low and this will pass quickly, we are quite good at dealing with epidemics now. I suspect the economic impact may be important though if things worsen even a little and the lockdown continues.
People don't die or survive at the time of infection confirmation, you need to put the time dimension into your calculations. From 14628 conformed cases, we only know that 305 died and 443 survived. For the 13880 people, the outcome is undefined.
I have made a little reactive app to illustrate the fact that those curves number don't allow to infer much about the virus parameters, because there are quite a lot of freedom in other parameters we don't have good prior about.
My interpretation would be that the rate of survival is 53%; 348/(305+348). People don't die immediately, the ones currently infected can go either to the "Recovered" figure or the "Deaths" figure.
From the link above:
14628 are currently infected(?)
305 were infected and died
348 were infected and recovered
If you look at the case study of the first patient in the US from New England Journal of Medicine the patient didn’t get to a poor condition until day 11 of the illness https://www.nejm.org/doi/full/10.1056/NEJMoa2001191 at which point they tried an experimental antiviral and he recovered. 11 days ago, there were 527 cases. Patient in study didn’t come in until 2 days after having the sickness so if you look at -9 days infected was at 943. Currently at 305 deceased and 443 recovered, total of 748, so it seems like the infected between 9 and 11 days ago are the ones recovering or dying. The number of infected goes up rapidly from that point (now we are at over 16x number of infected from 9 days ago), so we’ll see the numbers get more accurate soon. Although number of cases rapidly increases, the antiviral treatments seem to help dramatically and they have just begun to start experimenting with them. Currently sitting at 40% mortality using D/D+R, but I imagine we’ll see more recoveries as antivirals are used.
Keep in mind, this is a self-selected group of people. There could be 10x more asymptomatic, or low impact cases who thought they had the flu, but didn't feel bad enough to go to the hospital. Imagine if I tried to capture the survival rate of the flu, but chose my population of patients from the ICU. Would the numbers be right?
I think this is born out by the really small number of children showing up in the mortality numbers. Proportionally, kids usually over-represent transmission, I think, from kid-level hygiene and being crowded into small classrooms. They seem under-represented in the study population, which makes me think there could be a lot of selection bias being captured.
Additionally, the standard for recovery is really high and is built in a way that it will severely lag deaths (which have no waiting period). I think it was something like total clearance of the virus, not "feels good, now surfs reddit all day."
There could also be many X more cases that haven’t been confirmed because they can’t get access to transportation to a hospital, or because the hospitals are overwhelmed, or because they are running low on test kits or behind the schedule on testing. I wouldn’t assume that the unreported numbers are strictly positive.
I appreciate you linking this - I've read at least a books worth of panicked news coverage over the past week and had not seen a single story about potentially successful application of antivirals. I guess fear sells better.
The number of cases is growing exponentially. If it takes a few weeks for the disease to kill a person, then the low number of deaths relative to the number of infections is indicative of that lag time.
You might do better to compare the number of deaths to the number of infected from a few weeks ago, which was a much lower number than today.
>there would already be much more deaths than there is now
Why? People can be sick for quite some time (in this case, a month, maybe?) and then ultimately die from the disease, this is actually like ... the most common scenario ...
I have been unpleasantly surprised by how much people struggle to understand this simple concept. Recovered / (recovered+death) is how you do it. It's common sense, come on ...
Since we are in early days and it probably takes longer to recover than to die of it, and the reporting of infections and recoveries and deaths coming out of China is likely undercounting all three due to different systematic factors, I think it's too early for the results of that formula to be taken at face value.
In the end, when everything is tallied up, sure. But in the meantime, in the presence of so much uncertainty, "common sense" is only going to lead you astray.
> I have been unpleasantly surprised by how much people struggle to understand this simple concept. Recovered / (recovered+death) is how you do it.
The mistake that you are making in your "simple math equation" is as follows. It is easier to count the number of deaths than it is to count the number of recovered. This messes up your math.
If you miscount a large amount on your recovered numbers, then this will make the death rate look worse than it actually is.
> People can be sick for quite some time (in this case, a month, maybe?) and then ultimately die from the disease
Usually, not from a viral infection. The usual scenario from a viral infection is that if you are not dead in 2 weeks, you will almost certainly recover.
There are exceptions, but nothing I've read about this virus leads to the conclusion that it is one of those.
Well, that delays things from the infection point. But doesn't change anything from the point where people notice they are sick.
Anyway, this is a disease that spreads very widely very quickly. We are arguing about the known numbers when the most likely scenario is that it is already everywhere but not reported, so the known numbers are only noise.
This outbreak just started in earnest weeks ago. It has a 2 week incubation period and the illness may take 1-2 weeks before recovery or death. That's why you must look at dead/recovered. I agree that 53% for the general population is pessimistic because as usual there is a selection bias towards those with weakened immune systems, not by as much as you may think.
As a thought experiment, if you infected an entire city with the flu, the ones to show up at the hospital are the worst cases, and if you just built your data from those people, you'd get a really really skewed perspective.
Infections are doubling every few days, so yes most infections occurred very recently. If it takes a month from initial infection to declare someone "disease-free", then there might only be ~300 people to that point.
Thank you. I simply do not understand how calm and relaxed everyone is. The correct mortality rate is terrifying. People should be stocking up on more than just masks.
I'm not trying to fearmonger and I realize this is potentially in the same league as screaming fire in a very crowded theater. But we all are aware of the numbers, and even ignoring the fact that they're underreported, the current correctly calculated mortality rate is grave.
Now, given that this is still unfolding, it's possible that only those with weakened immune systems are dying, as usual. But even then at this point dead/recovered is a severe indicator. Plus rumor is R0 1-4 and it is likely more contagious than SARS - hell, look at what we do know about China's response; far more comprehensive and restricted than outbreaks past.
It's early for panic, but not too early to prepare. As soon as the public heard catches wind of just how significant this is, I guarantee stores will empty overnight.
I submitted an Ask: HN to propose designing an open source ventilator. It was invisi-modded.
From watching videos from inside wuhan, there seem to be hints that this thing is somewhat similar to the flu and I think it is possible, even likely, that there is a massive swath of unregistered infected, and the hospital based study is an extremely self selected group of people--as in there is a high mortality rate and ventilator usage among people who felt bad enough to check themselves in, and were bad enough to admit.
These data are likely a product of garbage in / garbage out.
Hospitals are turning away patients - most patients aren't having samples sent for DNA verification - many patients are too afraid to go to the hospital - etc...
We likely will not have a clear picture of survivability for some time.
Even assuming the numbers are right and the virus does not evolve, survival may be that high for people who can benefit from intensive care. What happens when the healthcare system is overflowing with patients?
I'd like to see some more granular status e.g. out of 15k cases 1000 are 25-35 years old males that were healthy. The survivability rate is X for that group.
When economic activity is temporarily unexpectedly reduced, companies start running out of cash / working capital.
Injecting extra liquidity means that companies are able to get short-term loans to cover expenses and continue functioning, instead of going bankrupt during the chaos (which would also facilitate bankrupting their suppliers and creditors).
It's standard Keynesian monetary policy. There's bound to be some impact on the economy from the coronavirus, but sudden shocks to the system cause the economy to overreact, and far more people get thrown out of work. If the government overstimulates, then you get inflation, but in a crisis unemployment is a bigger problem.
Adding liquidity (aka printing money) just kicks the can down the road. Supposedly the US GDP last year was up close to 4%, but they failed to account for the 6% increase in the money supply, which means an actual 2% contraction instead which is a huge difference. In the US at least this has been ongoing since 2009. In the long run it causes more losses to the people overall while creating/propping up the upper echelons of a monetary cast system. An analogy could be getting hit on the hand with a hammer. It might be scarier to get a single hard blow but repeated medium energy blows are overall going to cause a lot more damage.
If US or China stock market was to go down, govt will immediately infuse such massive cash that things would be back up in no time. I'm wondering this is why there had been no recession past the entire decade and very likely none ahead. Somehow we have arrived at economic prosperity level where enough wealth is "buffered" to smooth out downturns.
> I'm wondering this is why there had been no recession past the entire decade and very likely none ahead.
I'm taking your "we've solved the business cycle!" comment as my sell signal. Everything is rosy until it isn't. I have a very opposite, pessimistic view, that this great fear of even the slightest downtown means we're just putting off the day of reckoning until it really comes crashing down.
The fact is the prosperity of the past 10 years has come with huge and growing imbalances that can't continue ad infinitum. Deficits are gigantic, and at some point all this money we've been lending will require higher interest rates for people to buy our bonds. When that happens, watch out.
You're absolutely right. You don't have to believe me but I called the last recession. It's not bad news that's frightening. It's a disproportionate government and market reaction. Governments making a lot of noise to protect weak hands. There are a lot of weak hands, many created since we "survived" the last scare, and it's not going to take much to bust them. Stay safe everybody and enjoy living history as usual.
I think the biggest counter-argument to this is the problem of "mal-investment". In a lot of ways the business cycle operates as an explore-exploit optimizer.
During boom periods, credit conditions are loose. Which allows for a large degree of innovation with new and speculative business models. This is important because as conditions and technologies change, the frontier space of what's viable needs to be explored. Tomorrow's economic titans are today's wild-eyed entrepreneurs.
However most of these crazy ideas turn out to be just that. That's where the importance of recessions come in. Credit crunches and market downturns impose economic and efficiency disciplines. Firms that were coasting by on good conditions without delivering real productivity gains are culled by the downturn.
The entire phase of the cycle is important to maintain a healthy economic ecosystem. My fear is that if we banish recessions to the dustbin of history, we'll find ourselves increasingly burdened with bad investments as a larger and larger share of the capital base. Instead of getting written off during a downturn, jubilant markets will just keep throwing good money after bad managers, broken business models and overhyped vaporware.
This is like an argument that we need epidemics like plagues once in a while to shake out the weaklings. It turns out that epidemics are neither effective and also they take out strong as well as weak just like recession kills many good longer-term startups.
On a broader view, the amount of cash that governments like US and China able to infuse in the system at moment's notice is unparalleled. The big 5 tech alone harbors cash of $0.5T and capable to weather any storms. If you think of US or China as one organism, they have achieved enough of collective wealth and enough cash just sloshing around that any new recession can be absorbed away.
Fantastically put! Just as periodic wildfires are necessary to clear the flammable brush and enable new growth, recessions will trim the fat and close down our least successful businesses. This creates more resources to pour into stable, or at least more promising, companies.
Ask HN: Should I be worried about the PANIC around the current situations, will they act as a rescission trigger? Can I assume a proportional impact on crypto-currency market as well?
More importantly, I'm considering a move from a Bn$ organization to a safety concerned mobile-app product startup, How to access whether a start-up can survive if the situation end-up on the negative side, in the next 6 months.
People have been saying they expect a recession in the next 2 years for the last 2 years and now is no different. If it was easy to predict when the least risky time is to make a risky decision, then it wouldn't be risky, gambling wouldn't be a thing, and life would be forever boring.
2016 was supposed to be the year the bubble crashes. "They" also said their would be a double dip in 2012. I've heard so many doom and gloom predictions in the past - but the one thing they all have in common is a complete lack of specifics.
WHAT is going to cause the crash? Which industry has a fundamental imbalance? It's always just some vague notion that "something" isn't right.
A black swan, like coronavirus shutting down China.
>Which industry has a fundamental imbalance?
Consumer debt and financial services.
How has our economic output been growing without much inflation or wage growth? How did we sell 17 million vehicles domestically last year when the average American has less than $1k in the bank? How are people buying phones for $600-700 every two years?
Debt. Lots of it. And what's going to happen when consumer prices get driven up? Are people going to make their payments?
You think a $600 phone every 2 years is a big purchase? People used to buy desktop computers every few years, now they don’t. The mobile phone generates such a great improvement in efficiency (no more getting lost, always available GPS), instant information access (no need to go to a library or spend time finding it in leaflets/books/traditional sources).
$600 every 2 years is an absolute steal for the most economically beneficial piece of personal technology ever created.
If you don't make enough money to have any savings, any purchase of $600 at any time is "big."
Like yea I can afford it because I make 3x what my friends and family do outside the Bay Area tech bubble, but I don't pretend that I'm not special because throwing a few hundred around doesn't cause me any stress about next month's rent, or credit card, or car payment, or health insurance bill.
So is paying for food and rent. You have to balance the alternatives of not paying. Not having a capable smartphone in today's world will cost you far more than the price of the device.
You're not wrong, but considering other indicators, yield curve in particular, this could be a viable trigger. Depending on how this virus plays out, the only question is not if or when but how long the Chinese industrial complex will be suppressed. Those are the raw and finished manufacturing goods that power a substantial proportion of the world economy, and there will be cascading effects.
Wilbur Ross's comments come off as a little callous but whatever.
Anyway, these repo operations are meant to stabilize the markets in the event of a flash crash where there is a major dislocation on the price of equities, due to the coronavirus. Still might be a major downside move, but it should stave any long term move downwards.
China is a major manufacturing partner and it is Wilbur Ross's job to identify and discuss weaknesses in that setup. What do you expect him to do, quietly put his head in the sand?
Repo gives liquidity to banks, which may prevent them from selling other assets in order to maintain operations and meet any balance sheet requirements they may have. It doesn't automatically support equities. China's government may also buy equities when markets open, but that would be kind of foolish because they could simply wait and buy lower, where they probably would have more price impact.
China has historically had major issues with liquidity and balance sheet. Look up the 2013 Liquidity Crisis and you'll see what I mean. Not to mention that many banks participate in risky practices like meeting balance sheet requirements only on disclosure deadlines and dealing in loans secured with ghost collateral.
Yes, this not about equities. I've been through a couple market disruptions on the corporate side. Our revenue is from retail, our expenses are to other businesses. During a natural disaster, people are preoccupied in paying the bills and are late paying. Meanwhile, my corp had contractual obligations to other businesses to pay on specific dates. With less revenue and same expenses, we borrow from the banks. If all corps are going through the same natural disaster, we're all borrowing from the banks. Those banks run out of cash and borrow it from the gov't.
The emergency repo operations were required long before the coronavirus, we have liquidity issues in the US. Economy will start to collapse shortly... Fed can't expand the balance sheet without exacerbating the problems.
In the US, cost of money for institutions is already so low that effective interest rates could absorb a lot of demand without going haywire. It might actually be healthy for the economy.
I do agree that the Fed has been unwise in buying debt just to bolster Donald's bull market.
The entire world has been doing it for the last decade, and there’s been another uptick recently. The US recently resumed buying treasuries. This is not isolated to China.
You might be surprised to learn why there's excess housing. Young men who are courting a lady need two or three houses to have any chance of winning her hand:
That's a gross misrepresentation. China has a female shortage, so some males will not get mates, regardless of how much housing is built. The extra houses aren't convincing women to turn from lesbian/asexual to heterosexual.
I don't really understand your comment. A female shortage is compatible with men buying many houses to attract women. Men wouldn't be trying to turn lesbian women heterosexual with houses. Men would be trying to attract women away from other men with houses. The men would be fighting each other.
The article is about injecting liquidity into markets. The US has done a huge amount of this in the last decade, in fact almost every major power has. Here is the latest US resumption of buying their own debt:
I don't understand this obsession with "artificial" stimulus. If the economy naturally grows at 2% a year, but "artificial" stimulus causes it to grow at 3% a year, why wouldn't you do it? It's like refusing to get vaccines because they are unnatural.
Because ultimately it's likely we build unneeded infrastructure that is wasted, including useless companies. Then you still have to pay off those loans slowing growth afterwards. That might be companies that fail or banks with almost failing loans, retarding growth like in Japan for now decades, as well as governments having to reduce spending (or not stimulate) in the recession period because they had so much stimulous during "good times".
In the us it's extremely likely when the next recession comes, Republicans will rediscover their belief in avoiding deficit spending when they are no longer in power. We also will have less things to do to stimulate then in new ways because we already had been doing them. So many political groups want austerity when the economy is hurting instead of stimulous in recession.
This explanation doesn't really fit the evidence. China engaged in a giant stimulus in 2008-2009, and was rewarded with avoiding most of the impact of the financial crisis.
I'm sure China builds some unneeded infrastructure, but they build needed infrastructure that's now beyond the ability of Western governments. New York can't even finish the Second Avenue Subway after 50 years.
You're arguing with an incomplete explanation of how many economists believe stimulus spending works. I'm no economist, but a Keynesian would, I think, say that government stimulus is fine when the economy and demand are lagging. Doing it when the economy is strong encourages capital misallocation and the problems OP mentioned.
The Uber vs Lyft market share wars are a great example of this misallocation. Due to all of the VC money sloshing around both companies are forced to raise and spend ungodly amounts of money in order to fight for market share. In a more rational monetary environment raising money would be more difficult and both companies would be more focused on profitability instead of market share.
The primary risk of this misallocation is that if/when a recession hits, revenues are likely to drop (or grow more slowly), VC money will probably dry up, and raising prices will become more difficult. So the only way to survive will probably be to cut back on expenses (basically fire a ton of employees). And this of course would just compound the recession.
So your solution to the Uber versus Lyft market share wars is unemployment? People in unrelated industries should be unemployed because you find cutthroat competition backed by VCs to be unseemly?
In a way you’re assuming no inflation which has been the case for the past decade. BUT. What happens when China goes offline and takes low cost labor with it? For the record, I believe this situation will resolve within the month but it will certainly reveal global over-reliance on China (this is meant as a positive comment that China has been the single driving force behind economic recovery which they don’t get enough credit for).
Globalization kept inflation at bay. Instead of upping prices due to increased production costs, enterprises in advanced economies moved production to China & co.
This is not necessarily a bad thing of course, as China catches up and the ‘free’ markets work efficiently. Meanwhile the middle-class in the developped countries gets hurt, thus their economies see little inflation.
Another argument for this would be that everything not outsource-able saw rather higher inflation than the CPI numbers. (Housing, education etc.)
Inflation was low because of China. Production cost could easily triple in other parts of the world at the same quality and quantity even if we can move them instantaneously.
Bloomberg: "The central bank said Sunday it will use reverse repurchase agreements to supply 1.2 trillion yuan of liquidity on Monday, with the figure coming to 150 billion yuan ($21.7 billion) on a net basis, according to Bloomberg calculations."
https://www.bloomberg.com/news/articles/2020-02-02/china-s-2...