02-02-2020, 12:07 AM
*** 2-Feb-20 World View -- Wuhan coronavirus hits China's economy hard, threatens world economy
This morning's key headlines from GenerationalDynamics.com
****
**** Investors nervous as China's stock market to reopen on Monday
****
![[Image: g200201b.jpg]](http://Media.GenerationalDynamics.com/ww2010/g200201b.jpg)
New York's annual Lunar New Year parade on January 25 (Getty)
Investors are nervously waiting to see what will happen on Monday,
when China's stock market reopens for the first time since the
beginning of the Lunar New Year celebrations. It closed down 3.1% on
January 23, and has been closed since then. It was supposed to open
last week on Thursday, but the opening was postponed until February 3
because of the Wuhan coronavirus crisis.
Taiwan's stock exchange did open on Thursday, and fell nearly 6%.
Hong Kong's Hang Seng stock market index also fell nearly 6%.
Worldwide there have been 14,000 confirmed cases, with 304 deaths.
That means that 2.1% of confirmed Wuhan coronavirus cases are ending
in death. Deaths from ordinary influenza are closer to 0.1%.
Not that there's been much of a Lunar New Year celebration this year.
Coronavirus is now present in every province of China.
China’s economy seems to be grinding to a halt. Sixteen cities in
China, with a combined population of more than 50 million people, are
on lockdown, and people are prevented from leaving. Shops and
restaurants in many cities are completely deserted, as people are
afraid to leave their homes.
The only exception seems to be long lines where people camp out for
hours to puchase protective face masks. They've been sold out
everywhere, but Chinese officials have announced that prisoners are
working day and night to make millions more face masks.
Tourism will be hit hard. Hong Kong, Taiwan, Singapore and the
Philippines have stopped accepting visitors from China’s Hubei
province, and Russia and Mongolia have closed their borders with
China.
Many countries are imposing travel bans from China. On Saturday,
Australia and the United States joined Israel, Vietnam, Italy,
Philippines and Qatar to suspend flights from China. In the United
States, the government has put about 200 US citizens repatriated from
Wuhan under legal quarantine at March Air Reserve Base in Southern
California. The group includes State Department personnel, family
members, children and other Americans. It’s the first time such a
policy has been used in the US since the 1960s, when a quarantine
order was issued to stop the spread of smallpox.
****
**** Dangers of social unrest in China
****
The coronavirus crisis could cost China's economy $60 billion this
quarter. There were already millions of people unemployed, and the
coronavirus has forced many small businesses to close. Many
economists are concerned about massive layoffs in March, because of
loss of revenue in January and February, caused by a combination of
the Lunar New Year holiday and coronavirus.
Many businesses and factories have had to close temporarily to prevent
further spread of the disease. Where possible, people are being
ordered to work at home, but for many that will not be possible.
As long as the number of new cases increases every day, then the end
is not in sight. When the number of new cases peaks and 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.
Officials in China are hoping that the things will start to return to
"normal" by March 1, but there's a possibility that nothing will
change for two or three additional months.
This is exactly the kind of potential social unrest situation that the
paranoid Chinese Communist Party (CCP) thugs fear the most. Most
ordinary Chinese know that the CCP thugs are corrupt, incompetent, and
violent, but there's a kind of contract between them. The people will
keep quiet as long as there's plenty of employment and the livin' is
easy. When that deal begins to fall apart, a full-scale rebellion
becomes a possibility.
As I've written in the past, Hong Kong is on the fault line between
northern and southern China. ( "22-Jun-19 World View -- Hong Kong protests show historic split between northern and southern China"
)
Southeast China was the starting point of the last two massive Chinese
anti-government rebellions. Mao Zedong's Long March that led to the
Communist revolution civil war (1934-49) started in the south. The
massive Taiping Rebellion (1852-64), which was led by a Christian
convert who believed he was the son of God and the younger brother of
Jesus, began in the south and spread north.
The ethnic fault line between north and south is just as active today
as it ever was, and China is overdue for a new north-south rebellion.
So there's already massive unrest in Hong Kong, and now the country is
on the verge of large-scale unemployment. China has had massive
anti-government rebellions at regular intervales for millennia. It's
now been 71 years since the end of the last rebellion, and so China is
overdue for its next rebellion.
The CCP thugs are aware of this, and so the People's Bank of China
(PBOC), the country's central bank, has promised to flood the
financial markets with liquidity, and to increase spending in whatever
sectors it can.
Whether that will work remains to be seen. China spent huge amounts
of money to weather the financial crisis of ten years ago. China has
been spending massive amounts of money in many countries with its Belt
and Road Initiative (BRI). Even China has some limits on the amount
of money it can spend.
****
**** Effects of Wuhan coronavirus on global stock markets
****
There's been a discussion in the Generational Dynamics forum in the
last few days about whether this will be the trigger for a global
financial crisis and stock market crash, since Wall Street stocks are
in a huge bubble, bigger than 1929.
My response is that 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% stock market correction, but
not a full-scale financial panic.
However, another person has pointed out a flaw in my logic. Since the
panic is "expected," then it can't happen. Therefore, it's
"unexpected." Therefore it can happen. See how easy it is to tie
yourself up in knots?
At any rate, people investing in the stock market should be very
cautious these days. The stock market is in the biggest bubble in
world history, and so really anything can happen.
John Xenakis is author of: "World View: War Between China and Japan:
Why America Must Be Prepared" (Generational Theory Book Series, Book
2), June 2019, Paperback: 331 pages, with over 200 source references,
$13.99 https://www.amazon.com/World-View-Betwee...732738637/
Sources:
Related Articles:
KEYS: Generational Dynamics, China, Wuhan, Hubei, Coronavirus,
Lunar New Year, Taiwan, Hong Kong, Hang Seng,
Russia, Mongolia, Singapore, Philippines,
Vietnam, Israel, Italy,
Taiping Rebellion, White Lotus Rebellion,
Mao Zedong, Long March, Communist Revolution
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
This morning's key headlines from GenerationalDynamics.com
- Investors nervous as China's stock market to reopen on Monday
- Dangers of social unrest in China
- Effects of Wuhan coronavirus on global stock markets
****
**** Investors nervous as China's stock market to reopen on Monday
****
New York's annual Lunar New Year parade on January 25 (Getty)
Investors are nervously waiting to see what will happen on Monday,
when China's stock market reopens for the first time since the
beginning of the Lunar New Year celebrations. It closed down 3.1% on
January 23, and has been closed since then. It was supposed to open
last week on Thursday, but the opening was postponed until February 3
because of the Wuhan coronavirus crisis.
Taiwan's stock exchange did open on Thursday, and fell nearly 6%.
Hong Kong's Hang Seng stock market index also fell nearly 6%.
Worldwide there have been 14,000 confirmed cases, with 304 deaths.
That means that 2.1% of confirmed Wuhan coronavirus cases are ending
in death. Deaths from ordinary influenza are closer to 0.1%.
Not that there's been much of a Lunar New Year celebration this year.
Coronavirus is now present in every province of China.
China’s economy seems to be grinding to a halt. Sixteen cities in
China, with a combined population of more than 50 million people, are
on lockdown, and people are prevented from leaving. Shops and
restaurants in many cities are completely deserted, as people are
afraid to leave their homes.
The only exception seems to be long lines where people camp out for
hours to puchase protective face masks. They've been sold out
everywhere, but Chinese officials have announced that prisoners are
working day and night to make millions more face masks.
Tourism will be hit hard. Hong Kong, Taiwan, Singapore and the
Philippines have stopped accepting visitors from China’s Hubei
province, and Russia and Mongolia have closed their borders with
China.
Many countries are imposing travel bans from China. On Saturday,
Australia and the United States joined Israel, Vietnam, Italy,
Philippines and Qatar to suspend flights from China. In the United
States, the government has put about 200 US citizens repatriated from
Wuhan under legal quarantine at March Air Reserve Base in Southern
California. The group includes State Department personnel, family
members, children and other Americans. It’s the first time such a
policy has been used in the US since the 1960s, when a quarantine
order was issued to stop the spread of smallpox.
****
**** Dangers of social unrest in China
****
The coronavirus crisis could cost China's economy $60 billion this
quarter. There were already millions of people unemployed, and the
coronavirus has forced many small businesses to close. Many
economists are concerned about massive layoffs in March, because of
loss of revenue in January and February, caused by a combination of
the Lunar New Year holiday and coronavirus.
Many businesses and factories have had to close temporarily to prevent
further spread of the disease. Where possible, people are being
ordered to work at home, but for many that will not be possible.
As long as the number of new cases increases every day, then the end
is not in sight. When the number of new cases peaks and 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.
Officials in China are hoping that the things will start to return to
"normal" by March 1, but there's a possibility that nothing will
change for two or three additional months.
This is exactly the kind of potential social unrest situation that the
paranoid Chinese Communist Party (CCP) thugs fear the most. Most
ordinary Chinese know that the CCP thugs are corrupt, incompetent, and
violent, but there's a kind of contract between them. The people will
keep quiet as long as there's plenty of employment and the livin' is
easy. When that deal begins to fall apart, a full-scale rebellion
becomes a possibility.
As I've written in the past, Hong Kong is on the fault line between
northern and southern China. ( "22-Jun-19 World View -- Hong Kong protests show historic split between northern and southern China"
)
Southeast China was the starting point of the last two massive Chinese
anti-government rebellions. Mao Zedong's Long March that led to the
Communist revolution civil war (1934-49) started in the south. The
massive Taiping Rebellion (1852-64), which was led by a Christian
convert who believed he was the son of God and the younger brother of
Jesus, began in the south and spread north.
The ethnic fault line between north and south is just as active today
as it ever was, and China is overdue for a new north-south rebellion.
So there's already massive unrest in Hong Kong, and now the country is
on the verge of large-scale unemployment. China has had massive
anti-government rebellions at regular intervales for millennia. It's
now been 71 years since the end of the last rebellion, and so China is
overdue for its next rebellion.
The CCP thugs are aware of this, and so the People's Bank of China
(PBOC), the country's central bank, has promised to flood the
financial markets with liquidity, and to increase spending in whatever
sectors it can.
Whether that will work remains to be seen. China spent huge amounts
of money to weather the financial crisis of ten years ago. China has
been spending massive amounts of money in many countries with its Belt
and Road Initiative (BRI). Even China has some limits on the amount
of money it can spend.
****
**** Effects of Wuhan coronavirus on global stock markets
****
There's been a discussion in the Generational Dynamics forum in the
last few days about whether this will be the trigger for a global
financial crisis and stock market crash, since Wall Street stocks are
in a huge bubble, bigger than 1929.
My response is that 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% stock market correction, but
not a full-scale financial panic.
However, another person has pointed out a flaw in my logic. Since the
panic is "expected," then it can't happen. Therefore, it's
"unexpected." Therefore it can happen. See how easy it is to tie
yourself up in knots?
At any rate, people investing in the stock market should be very
cautious these days. The stock market is in the biggest bubble in
world history, and so really anything can happen.
John Xenakis is author of: "World View: War Between China and Japan:
Why America Must Be Prepared" (Generational Theory Book Series, Book
2), June 2019, Paperback: 331 pages, with over 200 source references,
$13.99 https://www.amazon.com/World-View-Betwee...732738637/
Sources:
- Close shop, work remotely: Big business reacts to the coronavirus (Al-Jazeera, 28-Jan-2020)
- The coronavirus could cost China's economy $60 billion this quarter. Beijing will have to act fast to avert a bigger hit (CNN, 31-Jan-2020)
- China Then And Now: Why Coronavirus Is A Bigger Threat To The Global Economy Than Previous Outbreaks (Forbes, 1-Feb-2020)
- As Wuhan Coronavirus Drags on Chinese Markets, the World Economy Braces for a Slowdown (Time, 31-Jan-2020)
- The impact of the outbreak of the virus will also spread from China to around Asia and other parts of the world, analysts say. (US News, 31-Jan-2020)
- New coronavirus will likely push China to step up stimulus (CNBC, 31-Jan-2020)
- China’s unemployment risks surge as service providers bear the brunt of coronavirus outbreak (South China Morning Post, Hong Kong, 31-Jan-2020)
- Coronavirus: Chinese health experts warn patients can get reinfected (South China Morning Post, Hong Kong, 31-Jan-2020)
- Public warned of online scams and dubious products amid Hong Kong’s mask-buying frenzy as coronavirus fears continue (South China Morning Post, Hong Kong, 31-Jan-2020)
- China coronavirus could inflict more economic pain than Sars, analysts say (South China Morning Post, Hong Kong, 30-Jan-2020)
- Coronavirus impact on China’s manufacturing not ‘yet fully manifested’ even as factory output cools (South China Morning Post, Hong Kong, 31-Jan-2020)
- China coronavirus could hit Beijing’s ability to meet US trade war deal import demands (South China Morning Post, Hong Kong, 29-Jan-2020)
- Citi / Nomura / Coronavirus may hit China economy harder than SARS, warns Nomura (Market Watch, 30-Jan-2020)
- China travel bans spread despite WHO advice (Bangkok Post, 1-Feb-2020)
- US Adds New Coronavirus China Travel Ban (OneMileAtATime, 1-Feb-2020)
Related Articles:
- China's coronavirus threatens Xi Jinping's Mandate from Heaven (25-Jan-2020)
- UK-China war of words escalates sharply over Hong Kong riots (04-Jul-2019)
- Hong Kong protests show historic split between northern and southern China (22-Jun-2019)
- MIT criticizes 'toxic atmosphere' targeting Chinese students (30-Jun-2019)
- Xi Jinping invokes the 1840s Opium Wars to justify military action for China's 'rejuvenation' (21-Mar-2018)
- Xi Jinping's 'Socialism with Chinese characteristics' is identical to Hitler's National Socialism (24-Oct-2017)
- China bans Winnie The Pooh because Xi Jinping looks like him (18-Jul-2017)
- China repudiates its Hong Kong 'One Country, Two Systems' agreement with Britain (01-Jul-2017)
KEYS: Generational Dynamics, China, Wuhan, Hubei, Coronavirus,
Lunar New Year, Taiwan, Hong Kong, Hang Seng,
Russia, Mongolia, Singapore, Philippines,
Vietnam, Israel, Italy,
Taiping Rebellion, White Lotus Rebellion,
Mao Zedong, Long March, Communist Revolution
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
