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As governments in Washington, DC and London and Paris took their time to push their respective populations to shelter in place, the novel coronavirus did what it does best: spread quickly and efficiently through dense populations, the sort of dense communities that define the US Atlantic coast and most of Northwestern Europe.
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Here is the accumulated data of all known cases of coronavirus in the United States, courtesy of The COVID Tracking Project. As you can see the situation is getting both worse and better.
Worse in that deaths are starting to rise significantly, and that is far worse than it looks. At present about 40% of deaths are in New York state, with nearly all of those in the New York City area – the first American metropolitan region to suffer a full epidemic. Nor is NYC done. Today’s figures indicate the city has at least another week, likely two, before deaths peak. New York’s experience will soon be echoed in other areas with New Orleans, Seattle, Detroit and Chicago looking particularly worrisome. Not linear, logarithmic.
Better in that the United States is finally testing about 100,000 people a day. Without decent epidemiological data any public health policy with an eye on containment or mitigation is simply a shot in the dark. Unfortunately, materials, equipment and lab bottlenecks have made testing numbers plateau at this level. Multi-day delays in receiving test results are widespread. Until the United States can increase testing volumes to at least 1,000,000 a day and reduce testing times to a few hours, the only method the country will have for containing the epidemic is complete economic lockdown.
The United States will be the country that has suffered the greatest recorded deaths from coronavirus within two weeks, and the death toll certainly will not peak within a week of that dire landmark. But as difficult and tragic as it is to imagine, coronavirus will burn a much harsher swathe through other countries in the months to come.
Join Peter Zeihan for an exploration of the pandemic to come. He will discuss how and where coronavirus will impact the major countries of the developing world, and how and where it will remake regional and the global economies both this year and far into the future.
Long after the epidemic peaks in the United States and Europe it will rage through the developed world, inflicting far deeper damage to populations and economies. The United States has HVAC systems and indoor plumbing and so has the option of social distancing. Much of the world’s population does not.
And while the American economy is largely sequestered from the rest of humanity, that of the developing world is not. Damage there will reverberate through the global system, region by region, sector by sector, in ways that will break the global Order’s very foundation.
Please click “Register here” above for more details.
Coronavirus: The Unmaking of the Global Economy
The United States is extending its recommendation for citizens to stay home by another month, while President Trump has started referring to “only” 100,000 deaths as a positive outcome. If this is the state of the wealthiest country on Earth, how fares the rest of the world? American policy makers and the broader public tend to develop tunnel vision in the face of a crisis, but the COVID-19 pandemic has taught us that the coronavirus neither respects national borders nor cares about personal and corporate balance sheets.
The unfortunate fact is that as dark as the near-term future appears in the United States, a far larger build in cases and deaths will occur throughout the developing world in April and into May.
Join Peter Zeihan and the Zeihan on Geopolitics team to discuss the path of the coronavirus crisis, the impact it will have upon Mexico and Brazil and Nigeria and South Africa and India and Indonesia and more, and how those impacts will fundamentally reshape the global economy.
We hope you will join us for this frank, data-driven seminar and Q&A session.
This videoconference will set the stage for a series of industry-specific seminars to come.
Future events will include:
Before the coronavirus crisis, there were few underlying financial instabilities in the American economic system. There certainly were nothing like the massive bubbles in real estate markets in 2007. Nor was there the sort of broad industrial dislocations that triggered the 1979 and 1983 oil shocks.
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Throughout media of all forms, we are hungry for information on coronavirus. Some of this is a flat out are-we-doing-better-or-worse-than-they-are, but most of it is simply to try to put what we know into some sort of context that is relevant to our lives.
None of us have much luck with that.
In part it is the nature of data collection during crisis period. Most health care professionals are more interested in saving the life in front of them than typing data into a spreadsheet. But mostly it is because all data is a product of its local circumstances:
In China, even before one considers political motivations, the system strongly discourages the passing on of bad news. As concerned as the Communist Party is with its international image, it is far more concerned with domestic popular responses to continued negative news. That and the Chinese government has a, shall we say, fluid relationship with data. And yet to this point data out of China is still the only large data set on coronavirus infections we have.
I’ve been waiting for some time for South Korea – a country with a great health care system and a strong respect for the application of science. Unfortunately, their “epidemic” is nothing of the sort. Until very recently, half of South Korea’s cases could be traced back to a single megachurch. It’s very useful as a cluster study and wow does it underline the impact of early, wide-spread testing, but it really isn’t the sort of broad-reach dataset that involves multiple regions and age groups that I was hoping to be able draw conclusions from.
Even “worse” most of Korea’s cases at that church involved young people. Their preponderance in the data skews Korea’s mortality data down significantly, so don’t fool yourself. The Korean experience to date of low mortality is not attainable for the United States because it hasn’t been a true broad-based epidemic.
Data out of Taiwan, Hong Kong and Singapore are similarly less than useful as their systems were so strongly proactive that none of the three ever really had epidemics to study.
Next up is Italy, where the local health system was simply overwhelmed unexpectedly. By the time the Italians realized what was happening, hospitals were overflowing. That prevented meaningful testing regimens anywhere outside of the hospitals themselves. Since the virus tends to trigger more severe cases in older patients, only about 10% of Italy’s confirmed cases were in people under age 40, while 70% are among those over age 50. That’s hardly representative.
It shouldn’t be a surprise that Italy’s data shows a death rate far above that of anywhere else. Italy is only now – in the fourth week of their epidemic – doing any significant testing outside of hospitals. So don’t overly fret. While South Korea’s low mortality figures are not America’s future, neither are Italy’s high ones.
All these countries’ experiences hold lessons for all of us, but what they do not hold are clear points of comparison. All the data must be absorbed within the context of which it was produced, in addition to being understood at a specific moment in time. (For the purposes of this post, the data in question is all from March 26.)
We still don’t have a reasonable understanding of the American data because we simply don’t have enough, but we are getting there. As of March 27 the United States has the results from over 500,000 tests, but as of March 19 we had only completed 100,000. The US is only now beginning to get its first look at viral penetration in its primary centers of inflection – and only its primary centers of infection. Testing will continue to increase rapidly both in number and in geographic reach, but kinks in the supply chain remain. Progress will not be in a straight line.
Which means the best comparative data the United States is likely to get before the epidemic washes over the country will be out of Spain and France, a pair of countries who had enough forewarning to begin at least some sporadic testing before their health systems were hit hard. Their data may be the best available, but as their epidemics are likely to occur no more than two to three weeks ahead of America’s, there will not be much time to parse and draw lessons from it.
And none of it will be of use to New York City, which appears likely to suffer its heaviest caseloads right along with the Spanish and French.
The British government announced March 27 that Prime Minister Boris Johnson tested positive for coronavirus, making him the first world leader to do so. As the United Kingdom is an advanced democracy, here at ZoG we are not overly concerned with Johnson’s isolation and perhaps incapacitation or even death. Part and parcel of democracies is that succession is part of life. The UK will get through this one way or another.
However, there are many countries that are not democracies and there are many world leaders far older than Johnson…
In the age of coronavirus, Europe’s near-term future is bleak.
European headlines in coming weeks will be about coronavirus deaths. In large part the issue is demographic. Coronavirus is far more likely to kill those over aged 60. The average European is approximately a half-decade older than the average American. Only the Japanese are older.
Specifically, Italy hosts the world’s second-oldest population, while Germany ranks 5th. Meanwhile, many of the “new” European countries in Central Europe are not all that much younger, while also lacking German- or Italian-quality health care. Others, Ireland, Greece and Spain come to mind, have had to deal with financial crisis by cutting services. Services like health care. The United Kingdom, courtesy of the dual forces of Brexit and coronavirus, are seeing many health care professionals who are not UK citizens but who were able to work in the UK during the Kingdom’s EU membership, fleeing back to their home countries at the worst possible time.
The demographic issue will hurt Europeans on more than simply mortality figures.
People under 45 tend to be a society’s big spenders. They buy cars and homes. They go to university. Such consumption is what drives most modern economies. But not in Europe. Europe’s young cadre is thin and getting thinner by the year. Most European countries – Italy and Germany most notably – have already aged to the point that any sort of demographic rebound is now impossible. They simply don’t have enough people who could even theoretically have children. There certainly aren’t enough people of the right age demographic to drive a consumption-driven rebound.
Which makes mitigating the economic damage of coronavirus structurally impossible. The sort of consumer stimulus which is the backbone of consumer-focused, anti-recession efforts in the United States simply wouldn’t work in Europe. On the whole, the European Union has aged into being little more than an export union. And in a time of global travel restrictions and virus-forced collapses in income and consumption, there just isn’t anyone to export to. All Europe can do is shelter in place, pray their health systems hold, and wait for the world to restart. So long as the coronavirus is impinging activity anywhere, a sustained European economic recovery is impossible.
But even if Europe had a favorable population structure, it lacks the institutional structure to hold the line against the virus anyway. It comes down to money.
Having its own currency enables the United States to print however much money it wants to risk, using that money to fund its own deficit spending. Neither W Bush nor Obama nor Trump would ever be confused with fiscal conservatives, but even now at the very beginning of the process we are seeing spending bloat unprecedented in American history – even at the height of World War II. By the second week of April, the Americans will have pumped over $2 trillion in financial relief into their system, or roughly 10% of GDP, in addition to monetary stimulus of a volume that stuns the imagination. The current spending wave has already seen the Federal Reserve hoover up over $1 trillion in securities, while the federal government is putting up to $1200 into the hands of the vast supermajority of American adults, with a $500 kicker for each child. Nor will this be the last such infusion. Expect another one sometime in the summer.
Europe lacks that sort of power and flexibility.
Part of the network of treaties that underpin the common European currency mandates not only fairly strict deficit ceilings (although those ceilings were suspended over the weekend) but far more importantly the Maastricht Treaty on Monetary Union took monetary responsibility out of member governments’ hands. European states can’t print currency. If they want to deficit spend, they have to raise the funds themselves. That takes time. That takes investors willing to put their money into governments’ hands.
Now technically, the European Central Bank can expand the money supply, and it will, but there are two problems. First, Europe never truly recovered from the 2008 financial crisis. Eurozone interest rates have been negative for years. What about unconventional measures? Much ballyhoo has been made in the United States about how the Federal Reserves purchased scads of bonds to prop up markets, purchases which peaked at just shy of 25% of GDP at the height of the financial crisis. The ECB’s balance sheet as of January 1, 2020, after a decade of calm and before coronavirus erupted, was twice that in relative size. It isn’t clear the ECB has much ammo to use here, conventional or unconventional.
Second, any ECB action raises the issue of whose bonds will the ECB buy? Will it be the country with the most likely chance of repayment (Germany), or the country facing the worst health crisis today (Italy), or the country likely to see the highest death rate (Spain), or the country in the worst financial position (Greece)?
Every time the Europeans face any sort of question that bridges the monetary and the budgetary, the eurozone finance and prime ministers have to meet to hash out their disagreements in marathon negotiating sessions that take days (if not months). In times of calm this is a questionable system which often borders on the comical. In times of crisis it is really really really really stupid.
It shows in the outcomes. During the 2008 financial crisis the Americans did more mitigation in three weeks than the Europeans did in nine years. This time around, the Americans did more in 48 hours than they did during the entire financial crisis.
The funding America’s Small Business Administration made available to provide bridge financing for America’s small businesses is a case in point. On day one $50 billion was unleashed, with another $350 billion to be available by April 1. The EU has no such established facility. Individual European governments are scrambling to raise the necessary cash for their own small businesses. Weaker EU states are unlikely to be able to raise the requisite funds without raiding their already rickety banks. With quarantines in place, entire countries shut down. Add in Europe’s far less flexible labor market and a workforce which remains wedded to old-style set-location facilities means European firms have more need for bridge financing than American ones, yet even Europe’s capacity to provide that financing is far lower.
Europe today is just getting going with its Rube-Goldberg-like-decisionmaking machine, and this time around coronavirus quarantines prevent the European leadership from even meeting in person to hash out a plan. The only European leader with gravitas, German Chancellor Angela Merkel, is in isolation due to potential coronavirus exposure.
Which means “Europe” cannot be part of the mitigation process.
That leads us six places, none of which are good. First, European investors know all this and they aren’t flooding their money into European assets. Instead, it’s a massive flight to US dollar assets. Expect the USD to continue to rise throughout the crisis.
Second, an exception to that rule will only increase the light between the various European governments. Germany, unlike most of Europe, has steadily whittled away at its debt levels to the point that pre-crisis there was a shortage of high-quality, low-risk government debt on European financial markets. With Germany loosening the purse strings, investors will purchase German debt. It is the bulk of the rest of Europe that’s likely to be shunned. Deep, visceral splits between how the Germans and the bulk of the Union viewed finance existed before coronavirus.
Debates on the topic are already taking on the stench of desperation. On March 25 the leaders of France, Italy, Spain, Portugal, Ireland, Luxembourg, Slovenia, Belgium and Greece (aka countries who consistently find balancing their checkbooks difficult) called upon the EU to issue a joint debt instrument to deal with coronavirus. Germans are likely to have a different opinion.
Third, when the scale of the capital flight and budgeting shortfalls becomes apparent, when European governments realize the money they need to try to save their systems is leaving, they will take action. Expect strict European capital controls at all levels. (China of course already has capital controls. Expect them to intensify.)
Fourth, the controls won’t be nearly enough. Even if the Europeans could prevent capital from leaving, raising capital to fund emergency spending the old-fashioned way isn’t as quick or effective as the American method of simply flipping the switch on the printing press. Firms would fold in the thousands, and the damage will not be limited to the small players. To stave off the subsequent economic and cultural carnage, expect mass nationalizations throughout European economies. Unsurprisingly, the French are already discussing the mechanics of how to manage this. Peugeot, Renault and Airbus have already indicated they will fight the process (although they’d still love help with recapitalization and operating costs).
Fifth, this is likely the end of “European” manufacturing. The European manufacturing system, especially the German manufacturing system, is based on the free movement of goods, people and capital across borders. That simply isn’t possible in an environment of national quarantine, capital flight, capital controls and nationalizations. Post-crisis things will still be made in Germany and Bulgaria and Sweden and so on, but not all that much is likely to be the result of a multi-national European supply chain.
This is doubly problematic in the short term as most European countries lack even small pieces of the medical supply chain. While the US can retool and China can get back to work, many European states simply don’t have anything within their borders they can use.
The dream of Europe was that open borders would enable Europe to have economies of scale of the Chinese or American type. But these are still separate countries, and the utter inability of the EU to ride to the rescue leaves individual states more or less on their own at the worst possible time. Germany, for one, is a major exporter of medical equipment, and it has already barred exports of many coronavirus-related materials. Even to its EU partners. Many Europeans already resent Germans’ unwillingness to share their wealth. Imagine how refusal to share medical equipment will go over once the death toll gets seriously scary.
Sixth, this is the end of the European economic and social model, and it risks being the end of “Europe” as an entity.
That’s three of the four freedoms upon which modern Europe relies. The fourth freedom – movement of services – was largely something that only the UK cared about, and the Brits are gone.
There is one possible “solution” to these problems: drop the euro.
If the Maastricht Treaty were abrogated (or at least suspended) and national control over monetary policy reintroduced, individual European countries could then engage in unlimited quantitative easing, both to mitigate the current crisis and to help manage the subsequent damage and recovery. This would (obviously) hold (many) downsides, but if the goal is to have the necessary capital required to address the current crisis, this is the only path I see that still results in salvaging Europe’s current economic and social structure.
In theory, once coronavirus was in the rear-view mirror, Europe could go through the process of re-merging their currencies (perhaps this time without basket cases like Greece). Yes, I realize this would be monumentally messy, but we’re already in a world where economic and financial norms are in abeyance. Most of contemporary Europe’s “messes” require extensive multi-national negotiations. This “plan” has the advantage of countries doing things themselves.
Regardless of the path forward (or down) coronavirus is just the beginning of Europe’s problems. Demographics, economics, financials, supply chains, none of it works under coronavirus – and coronavirus is going to be with us until we either get a vaccine, herd immunity or mass serological testing, none of which is particularly likely to happen in 2020. Even then, it is far from clear that Europe as we know it can reconstitute in the world after coronavirus. And never forget that all Europe is not created equal. Germany is not France is not Italy is not Poland is not Sweden is not Portugal is not Romania.
An end to the concept of “European” being singular represents more than simply the return to the norm of European history, it removes one of the central pillars of the world we know. That cascading failure and the reordering to come will be a subject in subsequent installments in our Coronavirus Guides series.
And now the pitch: the Coronavirus Guides are our primer documents, intended not to finish the discussions of this or that topic, but to launch them. Contact us at Zeihan.com/consulting to inquire about rates and scheduling options for teleconferences, videoconferences and in-depth consulting calls.
Not all epidemics are created equal, even when everyone is battling the same pathogen. Let’s start with timing and intensity. The imminent coronavirus wave of cases about to hit the United States is going to hurt, but it will hurt less than what’s about to occur in Europe.
Despite all their similarities, there are sufficient differences between America and Europe demographically, geographically, economically and institutionally to generate significantly different epidemic experiences.
Let’s start with connectivity. Despite being all under a single political authority, the US has considerably less connectivity than either China or Europe.
First, because of its failure of national infrastructure. The US has no meaningful passenger rail system aside from creaking Amtrak in the Northeast corridor, and it has no highspeed rail at all. If Americans want to travel long distance, their choices are limited.
Passenger aircraft: While it hasn’t officially been shut down (yet) American carriers have already reduced their flight schedule by over two-thirds, and most of America’s smaller airports are already closed. Expect several of the larger ones to follow suit.
Automobiles: Car travel is slower and outside of summer vacation season (which is likely suspended for 2020) is largely limited to short-haul travel. It is also incapable of serving as robust of a disease vector as passenger aircraft.
Second, it’s a simple issue of size. China is physically larger than the United States, but some 95% of its population lives on less than one-third the land area. Europe’s usable land is one-third less the size of America’s while its population is one-third larger. That makes America’s functional population density roughly half that of Europe and one-fifth that of China. Social distancing is simply easier when there is already some distance baked in to living conditions. Those hell commutes many Americans factor into their lives at least have one silver lining.
Third, the “normal” function of the American economy is a bit more resistant to viral spread than the European or Chinese equivalent. America’s economy is primarily service based, and roughly one-third of its workers can work remotely. Yes, that’s a low number, but it is significantly better than the figure in more industrial China or more manufacturing-based Europe.
Even within manufacturing, arguably the economic sector most impacted by the virus because staff must come to the facility to work, the Americans have a bit of insulation.
In part it is because the outsourcing of manufacturing jobs to China means the US manufacturing base is smaller in the first place and so less likely to serve as a disease vector. American manufacturing largely limits itself to North American needs. It isn’t nearly as export-driven as Europe or China and as such simply has fewer personnel to expose.
In part it is because the America’s manufacturing is integrated with Mexico, a country with which the US has a hard border that limits personnel exchange. For their part, China’s system is largely self-contained within its borders, while the German manufacturing system enjoys passport-free access to all its manufacturing partners throughout Europe.
None of which means the Americans are incapable of having an epidemic, obviously, but it does mean that epidemiologically segregating America’s cities from one another is a far simpler task than doing so in China or Europe.
The road forward will look something like this:
Europe is next up. Best guess is Europe had more – perhaps several times more – coronavirus cases than the United States. What is occurring now in Italy with high numbers of deaths and higher numbers of cases, will repeat in northern Europe on a much grander scale. Americans will get a good hard look at what the virus can do to a place of similar socioeconomic development before the virus crashes into the United States. From the point of large-scale movement restrictions, the peak in cases and deaths is typically two weeks out with notable declines in three weeks. Europe didn’t begin their restrictions until the week of March 16, so expect the epidemic to likely peak in the first or second week of April. In the meantime, Spain is following closely in Italy’s footsteps. Madrid is at the heart of the outbreak with a rapid increase in hospitalizations and a rising mortality count now well above what the US experienced on September 11, 2001.
One to two weeks later comes the United States. For the reasons noted above, the virus’ penetration into the United States will likely be somewhat less intense in terms of number of cases with several metro regions unlikely to experience severe outbreaks, but that doesn’t mean the Americans are in for a softer ride. There will be plenty of population centers that will feel the pain: Seattle, San Francisco, New York and New Orleans are particularly high on our watch list.
American deaths will fall into two general buckets.
First, the elderly. This group will feel disturbingly similar to cases elsewhere. Best data out of Italy suggests the average age of mortality from coronavirus is 80. On the somewhat bright side, however, is the simple fact that the Americans have fewer elderly. Birth rates in most of Europe cratered over 30 years ago, meaning that the average American is about a decade younger than the average European.
The second category for mortality are those with impaired respiratory health. Mild (and easily survivable) cases involve “only” the upper respiratory system and often involve “only” a dry cough and fever. Severe and critical cases (which require hospitalization) see the virus migrate into the lower respiratory system, inducing pneumonia and lung failure. Americans may be younger than Europeans on average, but they are also in poorer health. America teems with “lifestyle” diseases such as obesity and diabetes. Over half the American population has restricted respiratory health, making much of the population more vulnerable to the virus’ effects.
Once the initial peak passes, we’ll start peeking out from under our rocks and start venturing back into the sun. We’ll loosen our quarantines on both sides of the Atlantic, but the virus won’t be done with us. Europe’s higher connectivity means the virus is likely more entrenched more deeply within the population than the United States. Europe’s quarantine will need to last longer, and Europeans’ close proximity to one another means a local flare-up can easily go national or transnational. Distance and the de facto suspension of air travel means the United States can – will – have local flare ups and they will jump cities. But the combination of the virus’ relatively long incubation period combined with the fact that most US cities are at considerable remove will make the post-quarantine period feel like a giant game of whack-a-mole instead of a nationwide secondary (and tertiary, and quaternary…) epidemic.
There’s one additional difference worth noting. Leadership at the national level in the United States and the supernational level in Europe is sorely lacking.
Ideologically, the Trump administration is fairly opposed to government, and as such has refused to fill – three years into its term – many top spots throughout the federal system. Mr. Trump is also pretty hard on what staff he has; Even within his cabinet Trump has a bit of a revolving-door policy for top personnel. For example, the president is already on his fourth chief of staff. Don’t-shoot-the-messenger is a concept largely lost on the American president and he is allergenically opposed to information that doesn’t match his worldview or whim.
That makes epidemic mitigation – something that to be done right requires seeking bad news – damnably difficult. Trump’s decision to stop air traffic first to China and later to Europe was probably the right decision, that bought the United States a month of time to prepare. But then the Trump administration returned to business as usual and, a month later, here we are. Functional action on the epidemic, therefore, falls to the states and cities who are now competing for resources to combat the virus.
Europe isn’t any better, but it is less because of ideology or personality and instead because of constitutional law. The European Union has no indigenous disaster response capabilities, and what little it has are held within the NATO alliance. Since NATO’s backbone is US troops and since not all EU members are NATO members, it is highly unlikely we’ll see NATO forces enforcing quarantines across Europe.
Making decisions about novel situations at the EU level typically requires multiple all-night summits of all EU heads of government to hash out ad hoc legal and financial compromises. Under quarantine, that’s simply impossible. With the exception of Italy, the Europeans didn’t even begin travel restrictions until a week ago. Legally and functionally, the EU’s member states are entirely on their own, and most lack even scant bits of the supply chains required to ramp up medical services.
These differences in health, age, governing and health care systems abound and are giving us a real-life compare-and-contrast case study between two similar-yet-different systems that is simultaneously large-scale, amazing and disturbing. These differences will also generate radically different consequences in finance, manufacturing, currency and governance – all of which will be the subject of subsequent installments in our Coronavirus Guides series.
And now the pitch: the Coronavirus Guides are our primer documents, intended not to finish the discussions of this or that topic, but to launch them. Contact us at Zeihan.com/consulting to inquire about rates and scheduling options for teleconferences, videoconferences and in-depth consulting calls.
Here at Zeihan on Geopolitics, our job is to help people make sense of the world. We have done so by blending the studies of military affairs, economics, culture, demographics, energy and tech. About two years ago we realized the “end of the Order” theme that undergirds all our work was starting to become very present. (For those of you not familiar with our work, the short version is the era of global connection – of globalization, if you will – is ending).
To prepare for the next era, we have steadily expanded our expertise into the six dominant economic sectors that shape the human condition: agriculture, transport, industrial commodities, manufacturing and finance. In fact, as of February, our next big project was to produce a book which would describe in detail how these six sectors will convulse and transform in the years to come in a world without global structures.
Coronavirus has, to put it mildly, forced us to adjust a few things.
First, while the pace of humanity’s shift from the Order to the coming Disorder has been accelerating in recent years, coronavirus has both altered the context and launched it to light-speed. This series of newsletters is designed to give readers an idea of the depth and permanence of the changes. And where players do have some agency, to provide a bit of insight into the movers’ goals, capabilities and limitations.
Second, you will notice that some pieces have sections reminiscent of others. This is in part intentional. We anticipate many coronavirus-tinged newsletters in the next several weeks. Our goal is to enable readers to pick and choose the digestible bits relevant to them. But this is also in part the nature of the beast. If we were to assemble this into a single, coherent, non-repetitive narrative we’d need to first be at least most of the way through the crisis. That’d really not help anyone understand where we are today, what’s coming tomorrow, and what they might consider doing to prepare for the future. So we are opting for a degree of repetition rather than a treatise for the ages.
Third, this is, to be blunt, a bit of an advertisement. The bulk of the research for the new book has already been done, and most of our time this past two weeks has been to apply our findings to our newly changed circumstances. We are ready to go. In addition, most of our income comes from putting Peter on a passenger jet to go and interact with large groups of people. That business model requires…modification. Our current business lines fall into three buckets:
For information on rates and bookings, please contact as at zeihan.com/consulting/
And now, on with the series.
by Melissa Taylor and Peter Zeihan
Note from Peter: Dealing with health issues that impact family structure is not my strong point either topically or mentally. The bulk of this newsletter is the product of one Melissa Taylor who is both my chief researcher and a mom. If the text reads empathetic, instructive, and unambiguous, that’s Melissa’s voice. If it is snark in the face of despair, that would be me.
I just shared a lovely meal with my family. We all brought our own food and chairs, sat outside, and maintained a constant 6ft bubble around everyone, especially my parents. It was hard with a toddler running around, wanting to hug his uncle and grandparents. But despite that, it was comforting. This family gathering would have made most people laugh in disbelief a few weeks ago. But now it’s the new normal until we’ve been free from exposure long enough to relax… a little bit. That’s about 14 days, though even that might not be long enough to be sure.
Coronavirus manages to play into our weaknesses in a big way. Our brains are bad at comprehending risk, understanding probability, anticipating and accepting big changes, or dealing with uncertainty. So if this crisis has hit you like a ton of bricks, you’re not alone. And don’t worry, those spring breakers in Miami? They’ll have their own…moment.
I’m sure you’ve guessed from our company name – Zeihan on Geopolitics – that we are not doctors. But making the world a bit more comprehensible is what we do, so we have turned our efforts to compiling the best information that we could find to help you understand the virus and protect yourself. I assure you this is purely selfish. If you all get sick, who will read our stuff?
There are three reasons you should stay home and try your damndest not to get coronavirus. The first is that we do not know enough about the virus. Yes, it’s been around for 3+ months, but in part because of the Chinese attitude towards information control and in part because of the nature of viral medicine our understanding is limited. We don’t know if there are long-term consequences to infection for those that recover, but there are indications coronavirus can leave patients with permanent lung damage. There could be other permanent damage. We won’t know until we have people who have survived it get fully checked out months after their recovery. That will take, well, months.
Second, you need to protect yourself and your family. Yes, about half of cases are so mild that they’re mistaken for a mild cold. But “mild” in the medical lexicon means something else: that you simply don’t need to go to the hospital. Another roughly 30% of the cases are that flavor of “mild”: people who experience the worst flu-like symptoms of their life.
The next level up, “severe” affects an estimated 15% of cases. These people end up in the hospital because they require supportive oxygen treatment and are hardly able to use the bathroom on their own. Are most of these “severe” cases older and/or suffering from pre-existing conditions like asthma? Absolutely. Are they all? Absolutely not.
Finally, about 5% of sufferers experience “critical” symptoms. They need a ventilator to breathe. That’s the fancy way of saying they need to be on life support. The largest study – one out of China – indicates half the people in this category didn’t make it (although keep in mind that it appears roughly half of all cases are so mild that they were never diagnosed with coronavirus in the first place, so it’s believed the true fatality rate is far closer to 1% of all cases than 2.5%… as long as hospitals are functioning).
Which brings us to the final reason you should take this seriously. Regardless of the country you consider, no hospital has enough ventilators. America has more critical care beds than anyone else (almost more than everyone else) and we only have 100,000. Those who recover successfully from the “critical” category need a week or so of intensive care.
That means if everyone lines up and gets sick in a very orderly process, and no one anywhere has a heart attack or stroke or gets in a car accident or gets stabbed or shot or otherwise needs critical care, it’ll take nearly three years to cycle through everyone who coronavirus puts into ICU. Even then, this pie-in-the-sky scenario only gives everyone precisely one week of treatment. For many that simply isn’t enough. But with hospitals overloaded, no one will be allowed to linger in those critical care beds.
We have a word for what happens when you have to choose who gets help. Who to save.
Triage.
The Italians and Iranians have been mournfully struggling with that for days. They now have guidelines for who gets any time in critical care and who is left to die.
In the worst-case scenario, four times as many Americans will die than during the whole of World War II, including the lives of doctors and nurses risking their lives for you and everyone you love. You can literally save lives by staying home and binging Netflix. So do it. Now.
Here are some other ways to save lives. Maybe even your own. Let’s start with personal protection based on our current understanding of the virus.
Keep Germs at Bay – Washing your hands is the absolute best thing you can do. Watch this short video on doing it properly. Coronavirus may live on cardboard for a day, plastics and metals upwards of three days. So don’t wear your shoes in your house, clean or quarantine anything coming into your home from outside for at least three days, and use normal alcohol (at least 60% alcohol), peroxide, or bleach based cleaners frequently on commonly touched surfaces. Yes, some of this is overkill. Here at ZoG we are all about viral overkill.
Masks – Donate them. Seriously. There are doctors and nurses going without and everyone knows someone in the field. Reach out to them. It’s not that masks offer no protection, its that unless you’re up in someone’s face – like a health professional – the chances of your mask helping you with anything is extremely low. Keep a small stash in case you get sick to protect your family members from your germs. When more supplies are available, wear a surgical mask everywhere, but not for you. Masks for the general public are more about not spreading illness before you become symptomatic, than protecting you as an individual.
Leaving the house – If you must go out, bring hand sanitizer or alcohol wipes. Wear your glasses. Put on your least serial killer-looking pair of gloves. Don’t shake hands. (Peter’s greeting preference is the Bruce Lee fist-in-palm bow, Melissa goes with the hand-guns *pew pew*.) Keep distance. Pretend the people you’re interacting with are the extended family members you only see at holidays that you’d rather not see at holidays. Six feet is good. Two meters (six and a half feet) is better. Open air is better than enclosed spaces. Keep your hands off of your eyes, nose and mouth. That’s just gross even if there isn’t an epidemic. Most major grocery stores these days have apps which enable you to order and even pay for food ahead of time. That way you just need to pick it up. Use them.
Health – The heathier you are, the better. Get the flu shot. Not because it will protect you from coronavirus, but because you do not want to have the flu and coronavirus at the same time. Coronavirus at its core is a respiratory condition, so get in shape. Run, hike, swim, whatever it is that helps you breathe deeper and easier.
What you should know
Symptoms – Symptoms usually appear in about 5 days after exposure, but it could be as many as 14 days (or maybe more. See “We don’t know enough.”). Some people never show symptoms but still spread the virus. This means that if you have been in a risky situation, you should stay away from people with compromised health for at least 14 days. If you develop symptoms, they will likely include fever and a dry cough. You may get extremely tired or have muscle pain. If you are short of breath, you have likely progressed from the “mild” to the “severe” category…overnight. It’s time to call your doctor, immediately.
If You Are Sick – Stay home, even if it’s clearly not coronavirus. Isolate yourself from your family to the extent possible. If you get coronavirus, that does not mean your immediate family already has coronavirus even though you’ve likely been contagious for a few days. They should take precautions from you. The CDC has advice for disinfecting your home
A couple of things to not worry about.
Don’t horde food – The United States is the world’s largest food exporter by a ridiculous margin. Your grocery store has been preparing for this and warehouses are full even if workers are struggling to keep retail shelves stocked. Tech supply chains fall apart because it’s difficult to make an iPhone if you only have 99% of the parts. Food supply chains are the opposite. A taco without salsa may not be fabulous, but you can still eat it. And you only have to have one of the 500 types of salsa which typically make it to your store to enjoy it. (Melissa lives in Austin, so really not exaggerating about the 500.) You may have to come back another day (so don’t let your personal food stores get too low), but more food is incoming. And because food will continue to be prioritized, this should be true even if things get much worse before they get better. And for goodness sakes, don’t horde tap water. It is strictly monitored, safe, and there is no reason to think it’s going offline. Regulations and practices for producing bottled water are not nearly as rigorous and producing bottled water is far more labor intensive (i.e. people cough all over that stuff).
Don’t horde gasoline – Heard of the shale revolution? The United States isn’t simply a net exporter of crude oil, it is the world’s largest exporter of refined product. Product like gasoline. Unlike manufacturing, oil production and refining and fuel transport are extremely low-employment activities. There’s zero reason to expect disruptions to any part of the system for at least the remainder of this calendar year.
How long will this last? We would love to tell you, but we just don’t now. You should start settling in. Best case scenario estimates are a couple months. But that probably just means that about then we will relax…only to a few weeks later have to cope with a flare up in this or that city. There are any number of treatment regimes which show promise, but what we really need is a vaccine. At the soonest that will be October. And that’s very unlikely
My new book Disunited Nations: The Scramble for Power in an Ungoverned World published March 3. It is about the shape of a global Disorder when the Americans go home.
