01-31-2020, 01:14 PM
** 31-Jan-2020 World View: Some notes on Wuhan coronavirus
I'm a lot less anxious about this situation than most people are.
A further note on financial crisis: A number of laws were passed in
the 1930s with the objective of preventing a repeat of the 1929 stock
market crash. The years have gone by, and older generations who lived
through the 1930s have retired and died, leaving behind generations of
younger people with no personal memory of the 1930s. So these laws
have been repealed, mostly in the 1990s. Young people today see any
talk of a stock market crash as an evil plot by Boomers, inasmuch as
they already blame the 2001 Nasdaq crash on Boomers. If the
coronavirus problem leads to a 20% stock market correction, and then
there's a recovery, then young people will be further deluded into
believing that a stock market crash is impossible.
Guest Wrote:> I live in Asia, but not China.
> Okay, here goes. Every single conference, business meeting, and
> seminar scheduled to be held in China I know of has been
> cancelled--not rescheduled--cancelled.
> Clients who have factories operating in China that they are
> dependent on are really screwed. Everyone is looking for
> alternatives, but you can't build new factories in Vietnam
> overnight. People are facing complete ruin.
> Where is this virus really taking us? This one feels creepy. I've
> been these before. This one seems different, completely so. I hope
> this burns out quickly, otherwise Asian economies are going to
> crash.
I'm a lot less anxious about this situation than most people are.
- Is this the "big one"? The "big one" would be a major panic
and worldwide financial crisis.
I don't think so. If you look back at previous panics -- the 1929
panic, the 1987 false panic, and the flash crash of a few years ago --
they were all completely unexpected.
In other words, you can't "expect" a panic. A panic is, almost by
definition, "unexpectable." Therefore, if a panic is now "expected,"
then it can't occur now.
So there might be a 20% correction, but not a full-scale financial
panic.
- According to a BBC report that I heard this morning, the South
Koreans are in total panic over coronavirus, and there's a widespread
belief that the virus was created in China's biological warfare
lab. Some people claim that there is such a lab near Wuhan. However,
as I've said before, this is extremely alarmist, and to my knowledge,
no credible source considers it to be even likely.
- You say: "Okay, here goes. Every single conference, business
meeting, and seminar scheduled to be held in China I know of has been
cancelled--not rescheduled--cancelled."
Of all the problems that the virus pandemic is causing, this is the
easiest to fix. After a temporary pause, all of these conferences,
meetings and seminars will be rescheduled to take place online over
the internet. I would expect this problem to be almost completely
solved by March 1.
- Factories and other places where people are needed onsite will
also have their issues mitigated. People who don't need to be onsite
are already being asked to work at home. People actually needed
onsite will be educated, told to wear face masks, watch for symptoms,
and so forth. It's still a very serious problem, and some factories
may close, but it won't result in the ghost cities that some people
are predicting. Some Chinese factories have already been relocating
to Vietnam and other Asian countries because of the US-China trade
war, and the coronavirus problem may accelerate that.
- There are various estimates about how long this will last. The
number of new confirmed cases is increasing every day. When the
number of new cases starts to decrease, that will signal the
beginning of the end of the pandemic. That's likely to occur as
winter ends, around May or June in the northern hemisphere. It
may strike the southern hemisphere after that.
A further note on financial crisis: A number of laws were passed in
the 1930s with the objective of preventing a repeat of the 1929 stock
market crash. The years have gone by, and older generations who lived
through the 1930s have retired and died, leaving behind generations of
younger people with no personal memory of the 1930s. So these laws
have been repealed, mostly in the 1990s. Young people today see any
talk of a stock market crash as an evil plot by Boomers, inasmuch as
they already blame the 2001 Nasdaq crash on Boomers. If the
coronavirus problem leads to a 20% stock market correction, and then
there's a recovery, then young people will be further deluded into
believing that a stock market crash is impossible.
