How much will this cost me

[D_W]

antibody testing in NY shows it to be about 0.5%, same as south korea and germany.

We knew this from the beginning, though, that in the absence of testing, in any organized economy with medical capacity (and despite the criticism, we have more in the US than anywhere else in the world - it's part of our problem with medical spending - too much access and capacity) - the number of deaths is a better indicator of total infection than it is as a reflection of death rate from confirmed cases.

I'm hoping for antibody tests. The week we went into shutdown, I had the trots for two days and more than normal back pain and blamed it in a cake my daughter made. no other symptoms, so it may have been the cake.

It'll probably be the cake and the chair that I have to sit in to work from home, though.

 

[DBT85]

We do have to realise that there is a trade off between the economy, the spread of the virus, and death toll.

Had the virus had been allowed to spread uncontrolled in the UK the total death toll would be close to the overall mortality rate for the virus.

Assuming a 1% mortality rate, total deaths would be in the order of 600k. They may have been skewed towards the elderly and those with underlying conditions - but we all have, and most of us value, older friends, parents, brothers, sisters, aunts and uncles etc.

With a transmission rate of 2.5 we would about today be at peak deaths with between 30000 to 40000 deaths a day.

NHS and burial/cremation services would be utterly overwhelmed. Bodies unless removed rapidly would start to decay. The only solution would likely be mass burials.

For some this may be a price worth paying to get through the crisis quickly, although I suspect for most it would be completely repugnant. In any event it would cetainly be a guaranteed vote loser which is why no politician in power would contemplate such a policy.

The only question is how quickly lockdown can be relaxed - a function of risk, testing, monitoring, contact tracing etc.

True, but at the moment the mortality rate looks to be under 0.3% so 200k or so deaths, with social distancing and self isolation of the old and vulnerable that could have been spread over many months and it would barely have registered as worse than a bad flu year.

A bad flu year is like 8000 deaths for the year.

200,000 people dead in one year is not just a bad flu year. Not to mention that many of these dead people will statistically be ones that voted this govt in in the first place.

 

[Rorschach]

We do have to realise that there is a trade off between the economy, the spread of the virus, and death toll.

Had the virus had been allowed to spread uncontrolled in the UK the total death toll would be close to the overall mortality rate for the virus.

Assuming a 1% mortality rate, total deaths would be in the order of 600k. They may have been skewed towards the elderly and those with underlying conditions - but we all have, and most of us value, older friends, parents, brothers, sisters, aunts and uncles etc.

With a transmission rate of 2.5 we would about today be at peak deaths with between 30000 to 40000 deaths a day.

NHS and burial/cremation services would be utterly overwhelmed. Bodies unless removed rapidly would start to decay. The only solution would likely be mass burials.

For some this may be a price worth paying to get through the crisis quickly, although I suspect for most it would be completely repugnant. In any event it would cetainly be a guaranteed vote loser which is why no politician in power would contemplate such a policy.

The only question is how quickly lockdown can be relaxed - a function of risk, testing, monitoring, contact tracing etc.

True, but at the moment the mortality rate looks to be under 0.3% so 200k or so deaths, with social distancing and self isolation of the old and vulnerable that could have been spread over many months and it would barely have registered as worse than a bad flu year.

A bad flu year is like 8000 deaths for the year.

200,000 people dead in one year is not just a bad flu year. Not to mention that many of these dead people will statistically be ones that voted this govt in in the first place.

Try 30k as a bad flu year, and that is just over winter, these deaths would be spread over 2 winters, maybe more.

 

[Richard_C]

The office of budget responsibility (OBR) has produced its first (and by it own admission) not fully tested reference scenario. The normal reports come out on budget day and autumn statement day and primarily look at the impact of decisions on public finances. The OBR is often unloved by politicians from both sides, its independent and not slanted one way or another like IFS or resolution foundation can be. Truly independent.

Here:

https://obr.uk/coronavirus-reference-scenario/

There are 3 things to worry about longer term.

First is annual deficit - the in year difference between govt income and govt spending. The recent target has been zero, and UK was getting close. Deficit isn't automatically bad - some is 'capital' with future returns - roads, telecoms and so on. Imagine a household budget, in one year you might run up a deficit to buy a new boiler that will repay itself over 10 years. As long as interest is less than 10% that's a good spend. If you run up a deficit every year just to stay afloat, that will lead to increasing debt.

So that brings us to national debt - the sum that a country owes. Meaningless in £££ or £per person, so its often measured as a % of GDP - GDP being the total amount we produce each year.

Look at the table here - scroll down past the adverts and see a list of countries in order of debt as % of GDP.

https://worldpopulationreview.com/count ... onal-debt/

We are sort of mid table, c. 86%, below for example USA and France, and way way below Japan.

So the deficit for 2020 and a few yeare beyond will be massive, the debt will go up a bit.

What that costs depends on how expensive it is to service the debt - if the world has confidence in an economy then you can repay it over generations, if the world doesn't have confidence your currency weakens and you all become a lot poorer.

(if you look at low debt countries the reasons vary - Brunei needs no money, Afghanistan need sit but nobody will lend it so they have to live within their means)

The third factor is the sum of personal debt - we don't save up for cars we lease them (75% of 'buyers' do), people in lower income jobs owe a lot to their credit cards, bank loans, etc etc. and when that all comes unstitched the financial system begins to crack.

My view is bad things will happen, but if public debt is well managed and confidence maintained it won't be as bad as many think. Neverthless new normal won't be like old normal. We won't fly as much or take cruises as much or buy as much new stuff we don't need for a good many years.

 

[DBT85]

30k twice is still a fair bloody jump from 200k.

It's now irrelevant. The actions have been taken, lives have undoubtedly been saved and some undoubtedly lost due to the earlier inaction. People will pour over the data for generations to learn about it so that they can forget it all in time for the next one.

The only question now is how lock downs are lifted in a way to maintain an even keel and how govts the world over will deal with the financial aftermath. Either more austerity or even more spending.

The smart ones imo will focus on bringing new tech and jobs to their nation by investing in things like low carbon tech and so on.

 

[Sachakins]

So many valid points, so many views and so many opinions!
What they all appear to have as a basis is hindsight.
Not one of you are wrong, but all are basing decisions on whatever we know today, not what we didn't know several weeks back!

Whichever choices were made then, by whichever country you choose can be now said to be right or wrong with where we are now, with plenty of hindsight.

Given the option that if nothing was done by countries, and possibly deaths running into millions, as 1918 flu pandemic, would you still have the same views.

It will always been seen as a damned if you do and damned if you don't scenario.

Has your view on risk and financial debt changed?
Are you likely to take on unnecessary debt, for luxuries in example, today than you were 3 months ago, I expect not, knowing what you know now.

But if you had taken out that debt 3 months ago, it was on the basis that all things being equal in the future, it was ok to do.

But ask yourself in all honesty would you do the same thing today, maybe you wouldn't, maybe you would but more cautiously or maybe you would do just the same. But if you did the same, would many people think you foolish?

The answer I have is I don't know in all honesty, you have to look at yourself and ask am I a pessimist, pragmatist or optimist, and decide for yourself.

The events at this time and the questions we have should not, as the OP said be politicised, but should also not be theorised in with hindsight. Decisions had to be made, and is easy to decry them after the event unfolds.

Thanks for reading if you got this far. I don't expect many to agree, as it is hard to judge inital decisions fairly, after you know the outcomes.

Think of it like jury duty, the defendant looks guilty so must be guilty, but after the evidence is known, it's obvious the defendant is innocent, knowing that now maybe you will be less likely to prejudge with more knowledge, but unfortunately more knowledge only comes after the events.

So making judgement today on decisions made weeks ago is always skewed by what we know now, whether we like it or not, like the phrase " ...we can not unknow what we know..."
Or to use Donald Rumsfeld analogy, there are things we know we know, there are things we know we don't know and there are things we don't know we don't know.

BUT I wish you all to stay safe, thank you. (rant over!)

 

[Trainee neophyte]

So many valid points, so many views and so many opinions!
What they all appear to have as a basis is hindsight.
Not one of you are wrong, but all are basing decisions on whatever we know today, not what we didn't know several weeks back!

Whichever choices were made then, by whichever country you choose can be now said to be right or wrong with where we are now, with plenty of hindsight.

Given the option that if nothing was done by countries, and possibly deaths running into millions, as 1918 flu pandemic, would you still have the same views.

It will always been seen as a damned if you do and damned if you don't scenario.

Has your view on risk and financial debt changed?
Are you likely to take on unnecessary debt, for luxuries in example, today than you were 3 months ago, I expect not, knowing what you know now.

But if you had taken out that debt 3 months ago, it was on the basis that all things being equal in the future, it was ok to do.

But ask yourself in all honesty would you do the same thing today, maybe you wouldn't, maybe you would but more cautiously or maybe you would do just the same. But if you did the same, would many people think you foolish?

The answer I have is I don't know in all honesty, you have to look at yourself and ask am I a pessimist, pragmatist or optimist, and decide for yourself.

The events at this time and the questions we have should not, as the OP said be politicised, but should also not be theorised in with hindsight. Decisions had to be made, and is easy to decry them after the event unfolds.

Thanks for reading if you got this far. I don't expect many to agree, as it is hard to judge inital decisions fairly, after you know the outcomes.

Think of it like jury duty, the defendant looks guilty so must be guilty, but after the evidence is known, it's obvious the defendant is innocent, knowing that now maybe you will be less likely to prejudge with more knowledge, but unfortunately more knowledge only comes after the events.

So making judgement today on decisions made weeks ago is always skewed by what we know now, whether we like it or not, like the phrase " ...we can not unknow what we know..."
Or to use Donald Rumsfeld analogy, there are things we know we know, there are things we know we don't know and there are things we don't know we don't know.

BUT I wish you all to stay safe, thank you. (rant over!)

Not a rant (at least, I didn't read it as such). More important to me is not where we are, but where we are going to be. Will the economy bounce back as though nothing happened? Will people's spending habits (actually borrowing habits for UK and US) continue as normal? Will colossal new debt cause inflation? Will the oil price being low mean billions (trillions?) of unwanted dollars flow back to the USA, causing hyperinflation and chaos?

I honestly don't know the answers to any of the above, but I am confident that tomorrow is not going to look like yesterday. Normalcy bias will make people assume that it will all be back to normal within weeks, but I am working on the basis that people will now spend less, and save more if they possibly can. This will be a worldwide change.

Who is looking forward to a foreign holiday this year? Serious question, as I assume no one except the very financially secure will want to do that, and I survive by tourism...or at least I used to. Maybe next year, or the year after.

 

[doctor Bob]

Who is looking forward to a foreign holiday this year? Serious question, as I assume no one except the very financially secure will want to do that, and I survive by tourism...or at least I used to. Maybe next year, or the year after.

I can't see holidays starting up again this year.

 

[MikeG.]

......but it is clear the lockdown was too severe and too soon. ........

Except there are plenty of people arguing the precise opposite. Chris 152, for instance, has long argued that it was too late and too lax and that's why so many people have died.

There are too many people talking in black and white, and not noticing that the world is shaded in grey.

 

[Trainee neophyte]

Who is looking forward to a foreign holiday this year? Serious question, as I assume no one except the very financially secure will want to do that, and I survive by tourism...or at least I used to. Maybe next year, or the year after.

I can't see holidays starting up again this year.

30% of Greek GDP is tourism. 50% of Greek GDP is government (gdp is a ridiculous metric), so what percentage of the Greek economy is left to support everything else? Spain, Portugal, Italy all have a heavy reliance on tourism - looks like the governments will have to print, print, print to keep food on the table, and rioters off the streets. We live in interesting times.

[youtube]Ikje8bxl5NI[/youtube]

 

[MikeG.]

.........I can't see holidays starting up again this year.

I agree. Looks like I'll have to cycle down to Spain (again) to see my first grandchild in October, stealth camping on the way, and sneak over the France/ Spain border at night by some little known goat track in the Pyrenees. Dammit, I guess I'll have to row across the Channel, too.

 

[Rorschach]

......but it is clear the lockdown was too severe and too soon. ........

Except there are plenty of people arguing the precise opposite. Chris 152, for instance, has long argued that it was too late and too lax and that's why so many people have died.

There are too many people talking in black and white, and not noticing that the world is shaded in grey.

Take a look at Sweden, minimal lockdown but with sensible social distancing, deaths and infection curve very similar to our own.
There are plenty of people arguing on both sides, I obviously fall onto one side, others fall onto another. The problem is this was framed as a lives vs economy, but the economy is lives as well, so it's lives vs lives and that's a damn tricky argument to make. All we can hope is that in seeing the folly for what it is, we can get back to a normality that revives the economy instead of living in fear for evermore.

 

[Rorschach]

This will probably rile some people up my apologies if so but this is how some people think, and yes it is financially based.

Police are saying that with the claps for key workers etc they hope that people can see how important key workers are and that Police funding will increase after this.
They were blind to the fact that Police (and other emergency services) were cut due to austerity. We are about to enter a depression much worse than the 2008 recession, where do they think this extra funding will come from? Funding for emergency services is going to go down especially for Police I think as people will see health as far more important than law and order, not least because Police are continuing to act in bad faith.

 

[Cheshirechappie]

This will probably rile some people up my apologies if so but this is how some people think, and yes it is financially based.

Police are saying that with the claps for key workers etc they hope that people can see how important key workers are and that Police funding will increase after this.
They were blind to the fact that Police (and other emergency services) were cut due to austerity. We are about to enter a depression much worse than the 2008 recession, where do they think this extra funding will come from? Funding for emergency services is going to go down especially for Police I think as people will see health as far more important than law and order, not least because Police are continuing to act in bad faith.

You are quite right - this comment will rile some people up. It's also veering dangerously close to political territory, and as the OP said - please, no politics.

Let's get back to matters concerning the economics of all this.

 

[Cheshirechappie]

About the only firm conclusion I've come to in all this is that I just don't understand economics any more.

In the aftermath of the 2008 crash, I (among others) looked at the huge bailouts, quantitative easing and so on and said, "Sure as little eggs, there'll be inflation." Increase the money supply at a time of diminishing economic activity and inflation is inevitable, right?

Wrong.

There's no real inflation anywhere in the developed world. I just don't understand why. No doubt some clever-clogs does, but I've not heard credible reasons yet.

Now here we are, and printed money is falling from the gummint's coffers like leaves in autumn. Are we going to get rampant inflation, thus further diminishing my suddenly devalued savings? I really don't know. What do I do, wait and hope that the value of my savings recovers with the promised economic upturn? Or will my (and others) savings be trashed by gummint policies to bail out the indebted?

Who the [expletive] knows?

 

[Trainee neophyte]

About the only firm conclusion I've come to in all this is that I just don't understand economics any more.

In the aftermath of the 2008 crash, I (among others) looked at the huge bailouts, quantitative easing and so on and said, "Sure as little eggs, there'll be inflation." Increase the money supply at a time of diminishing economic activity and inflation is inevitable, right?

Wrong.

There's no real inflation anywhere in the developed world. I just don't understand why. No doubt some clever-clogs does, but I've not heard credible reasons yet.

Now here we are, and printed money is falling from the gummint's coffers like leaves in autumn. Are we going to get rampant inflation, thus further diminishing my suddenly devalued savings? I really don't know. What do I do, wait and hope that the value of my savings recovers with the promised economic upturn? Or will my (and others) savings be trashed by gummint policies to bail out the indebted?

Who the [expletive] knows?

There is inflation - lots and lots of it, just not evenly distributed. Inflation is actually an increase in the money supply, so by that metric we have had insane inflation. However, it hasn't shown up in price rises for Joe Public. If you are in the market for an Aston Martin DB6, or a Picasso, or a Caribbean island then prices are nose-bleedingly high. That's because all the shiny new money went directly to the billionaires, who spend differently to you and me. The next binge of printing will go to the masses (although the banks are doing everything possible to stop that), and then you will see too much money chasing not enough goods. It's still not a problem if the people use the free money to save, which is why Japan hasn't imploded yet. Savings get reinvested into the economy, and produce growth. US/UK economy is based on spending every last penny, plus a bit, with savings being actively discouraged, so a lack of production (everyone on the dole) plus a rash of new money with nowhere to go may cause runaway inflation. I don't pretend to understand the actual workings of it all though - even economists don't know what they are doing, so all of the above could be completely wrong

According to my current thinking, which is notable for being wrong quite a lot, we may have chronic deflation in the next few months, as house prices, stocks, bonds crater, and then the central banks will "money printer goes brrr".

More interesting is the idea that, with oil prices in the doldrums, all the nations of the world need much less in the way of US dollars to fund their energy needs. If all the unneeded surplus dollars get sent back to USA in a rush, all sorts of mad things will happen. "They" may have to attack Iran just to get the price of oil back up.

 

[MikeG.]

......but it is clear the lockdown was too severe and too soon. ........

Except there are plenty of people arguing the precise opposite. Chris 152, for instance, has long argued that it was too late and too lax and that's why so many people have died.

There are too many people talking in black and white, and not noticing that the world is shaded in grey.

.......There are plenty of people arguing on both sides, I obviously fall onto one side, others fall onto another.........

Precisely. And yet you stated your position as though it were fact. You made no acknowledgement that this was actually your opinion, and that others held a different opinion. In other words, you chose black to, for instance, Chris 152's white, when even you acknowledge that there is a grey. If you'd have said something along the lines of "in my opinion it is clear....." or "it seems fairly clear to me.........." then you'd have saved five minutes of my life.

 

[Chris152]

oh gawd...

 

[woodhutt]

Kind of on the subject of the economy. It seems to me that this pandemic has allowed people and governments to re-evaluate what is important to them. The impression I get from the posts which have gone before is a belief that everyone is striving to return to the way things were before this crisis. Do you really want that?
Here in NZ for example, there is now an awareness of our heavy dependency on tourism which has naturally been hard hit with the pandemic affecting airlines, hotels, and the hospitality industry as a whole. Also highlighted has been our vulnerability due to globalization, with little or no indigenous manufacture of things such as PPE, pharmaceuticals etc. The government has already announced there will be a re-think of our economic strategy.
When we arrived in NZ almost 35 years ago, food was cheap and clothing, white ware, cars etc. relatively expensive. Now it is the other way around and I know which I prefer.
It would seem to me that the UK, about to divorce itself from the EU and with lessons (hopefully) learned from this pandemic, is in an ideal position to reinvent itself.
Please don't take this the wrong way ( I am, after all, an ex-pat and in no way 'Anti-Pom') but on my last visit to the UK some 18 years ago, I got the impression that Britain had become nothing more than a huge warehouse and consumer for imported goods. Traditional industries had disappeared and nothing put in their place. A visit to my birthplace - a mining village in the North East - led to a meeting with a bloke who had been a miner for more than 25 years and who, since the pit closures, was reduced to delivering pizzas.
My point is, we know it's going to cost whatever direction we take in moving forward from this situation so take the opportunity and make your decisions count.
Cheers,
Pete

 

[Terry - Somerset]

Inflation normally happens if money supply is increased by printing more money. Conceptually when the economy was underpinned by "£ notes" the concept of more ££ chasing the same quantity of goods simply increased the ££ that people were able to pay.

This time around, and in 2008, the Treasury borrowed the money to ensure the banks were able meet their obligations despite assets not being worth their balance sheet values.

As the UK had (and largely stll has) a good credit rating, other countries, pension funds and individuals were happy to lend the UK money at fairly low rates. Alternative investments looked very unattractive at the time. The UK was fortunate in that a large part of the total national debt was long term.

So we had austerity - reducing public expenditure over the last decade to get the national books close to balance. This "trick" may be the end result this time, although a political debate will no doubt be had as to whether the repayment is made by (a) reducing public expenditure, (b) increasing taxes, (c) varying the duration.

However the current crisis has the potential to radically change the future in the way that 2008-10 did not:

- work from home, reduced office space, flexible working
- online shopping - ten years progress in 10 weeks
- increased use of face-time, reduced travel
- revised supply chains to reduce future vulnerability, UK manufacturing boost
- possibly reduced tourism - both UK and overseas
- part home based education

How all this may impact on unemployment, speed of recovery etc is unknown - although I would expect business closures to drive job losses initially. But what I do think is that every crisis can create opportunities. Or perhaps I am just an optimist!