Given the exquisite precariousness of the global financial system and the economy, the hopes of a brief and slight recession are very unrealistic.
If we asked a panel of epidemiologists to imagine a virus optimized for rapid worldwide spread and high lethality, they would probably include these characteristics:
1. Highly contagious, with an R0 of 3 or higher.
2. A new virus, so there is no immunity from previous exposure.
3. People who carry the pathogen can infect others while they are asymptomatic, that is, without symptoms, for a prolonged period of time, that is, 14 to 24 days.
4. Some carriers never get sick and therefore have no idea that they are infecting others.
5. The virus is extremely lethal to vulnerable subpopulations, but not as lethal to the entire population that kills its hosts before they can transmit the virus to others.
6. The virus can spread in multiple ways, including aerosols (sneeze / cough drops), brief contact (with hotel reception employees, taxi drivers, etc.) and surface contact (credit cards, keys, door handles , etc.) Ideally, the virus remains active on surfaces for prolonged periods, that is, more than 7 days.
7. Infected people recovering can get the virus again, since the acquired immunity is not 100%.
8. As a result of this and other characteristics, it is difficult to manufacture a vaccine that reliably protects against infection.
9. Tests designed to detect the virus are inherently limited, since the virus may be present in the tissue that is not being cleaned.
10. The symptoms of the disease are essentially identical to the less contagious and lethal types of flu, so people who get the virus may not know they have the new pathogen.
As you probably know, these are all the features of Covid-19, and that is why it is unstoppable. As we know now, millions of people left Wuhan while the epidemic was in full swing in January, spreading the virus through China and the world through hundreds of air flights to other nations.
As noted here before:no data does not mean there is no virus. Even in the United States, the facilities do not have test kits, for example: No one in Hawaii has been tested for coronaviruses while health officials wait for CDC kits. (02/20/20).
The situation in developing countries is similar: few or no test kits, which are not 100% reliable and, therefore, multiple tests may be required, so there is no way to determine who is a carrier. Without data does not mean there is no virus.
It is impossible to put together a benign narrative that includes these reports:
If we were to ask a panel of business executives to imagine a global system optimized for vulnerability to external shocks, they would probably include these features:
1. Long global supply chains, four, five and six layers deep, so those in the upper layers have no idea where the parts and components actually come from.
2. Just-in-time deliveries and limited inventories that rely on complex logistics, so any crash quickly interrupts the entire network as key nodes fail.
3. A global supply chain that depends on hundreds of factories and financially marginal suppliers that do not have the means to pay employees for weeks or months while the factory is idle.
4. A global supply chain that depends on hundreds of financially marginal factories with high debts and expenses that will close and never reopen.
5. A global consumer economy that depends on the permanent expansion of debt.
6. A global financial system with an extremely limited capacity to absorb defaults as providers and zombie corporations (that is, businesses that rely on increasing loans to survive) fail.
7. A global economy loaded with excess capacity.
8. A global economy that depends on the "wealth effect" of the increase in equity and housing markets to boost spending, so when these bubbles explode, spending evaporates.
These are precisely the characteristics of our precarious global economy., dependent on the increase in debt, vast speculative bubbles, vulnerable supply chains and marginal consumers and producers.
As noted above, it does not take much to break a system that depends on debt and speculation in constant increase. This graph illustrates the dynamics: when the debt burden, speculative bets and expenses are at levels of nosebleed, the smallest decline triggers the collapse.
In other words: the global system has been stripped of redundancy and dampers. A little push is all it takes to send it to the limit.
Given the exquisite precariousness of the global financial system and the economy, the hopes of a brief and slight recession are very unrealistic. The global economy is falling off a cliff and calling it a "recession," while the collapse of debt and speculative excesses is a form of denial.
When debt and speculative excesses collapse, it is a depression, not a recession. Yes we cant call things by their real name then we guarantee a broader and deeper cataclysm.