Coronavirus Is Not an Emergency. It’s a War.

March 19, 2020

This is a short midweek note, something I haven’t done for years. But as we all know, these are very special and difficult times.

Below, I’ll give you two links. They describe the nature of the new coronavirus pandemic and its potential consequences. I have run this past the best medical professionals I know, and they agree.

I was critical of the Federal Reserve for its emergency moves last Sunday. I now assume they had the same information that I’m giving you today. They weren’t panicking, they were trying to get ahead of the situation, going where we know we need to go and doing it now. Good on them. I apologize for my criticism.

Without radical action (some of which is already happening, some places, but not enough), this pandemic could cost many lives and potentially launch an economic depression. I am not exaggerating when I say this. I really mean it.

That doesn’t have to happen. We can solve this. That is what we as Americans or British or Italian or Chinese do. That is what we as humans do. We come together in a crisis.

But it will mean that we have to treat this situation not as an emergency, but as a battle that could turn into a war. World War C. It will be costly and require extraordinary measures, even if we act quickly. This weekend, I will explain why we should forget about balancing the budget, not unlike we did in World War II. I will say things I never thought John Mauldin would ever think or say, let alone write.

In the meantime, I urge you to read the following links and understand the urgent need for extraordinary actions in terms of social distancing. It will come at a terrible cost for much of the country, but if we do it now, we can get through this crisis quickly.

Consider how South Korea, Singapore, and Hong Kong have fared. Swift, comprehensive actions work. And as in a war, we must bear this financial and lifestyle burden together, understanding it will have consequences. The longer we delay, the higher the costs will be.

It is not that I think my ideas are any better than others being proposed, but I will offer some philosophical underpinnings and ideas that can guide us. And I will argue that proposals I have read so far, which may change by this weekend, are inadequate to deal with the nature of the crisis. They merely seem radical in terms of what we have done in the past of those alive. It is not radical if we are to avoid a World War II type of situation.

I am proposing that we do not think outside of the box. We must get rid of the box.

The data below clearly indicates we must take action. That action is going to cost a great deal of people and businesses a great deal of money, time, and blood. The sooner we take action, the lower the cost will be.

This first link talks about the consequences of delaying serious social distancing and quarantine policies, even for one more day. I believe the math and science are overwhelming. And that means you, gentle reader, must take action today for your own family. If you are in a position of power, you must take action for your community or your business. Focus on the actions that will make a difference today and be ready to adapt further as we see how the battle is unfolding.

Coronavirus: Why You Must Act Now

Let me call out my own home state. As of this morning, Dallas has basically shut everything down. Fort Worth, on the other hand, is letting bars and restaurants open with six foot distancing. Fort Worth is putting Dallas and everyone else in the region at risk. Maybe in hindsight, we will find out that Fort Worth was right. However, given the data, can we risk it? Governor Abbott, I know you read my letter. Take charge and kick some Texas ass.

This second link describes a study by the Imperial College in Britain. A link to more detailed data is in the article. Basically, without drastic action now, it is possible a million Americans will die, and potentially even more. Again, the actions we take today can drastically impact what we can and cannot do a few weeks from now. It is very sobering.

Sobering Prediction

Bluntly, this is going to cost more than a few trillion dollars. It will have unpleasant financial consequences for a very long time. So did World War II. But acting quickly will cut that cost in terms of life and spending. The consequence of not dealing with it financially, let alone medically, will be a depression and an unacceptable loss of life and economic support for millions of people.

Longtime readers know I am the “Muddle Through" economist. But this is not a Muddle Through scenario.

Again, I urge you to read the links, think about your own personal situation, and this weekend we’ll talk about what we must do as a nation.

It is time for our own Greatest Generation to step up. Only this time, it needs to be all of us.

For those of you who are Tolkien and Lord of the Rings fans, it is time to light the signal fires and muster the Rohirrim. I can never watch that 30-second scene with a dry eye.

It is time for us to light our own signal fires and muster our own courage. God knows we will need to support the front lines who go into harm’s way to keep the country running.

I’ll be back this weekend, and look forward to your feedback as always.

Your ready to get through this together analyst,

John Mauldin

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Discuss This


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William Morgan

March 19, 4:35 p.m.

Coronavirus policy in the west has been and remains, futile and costly. It has been a rerun of previous playbooks: slow down the infection while waiting for a vaccine.  “The infection” means one virus, one disease.  So, naturally, policy has been one size fits all - everyone should try not to get infected, bans on activities such as travel and sport, other activities restricted, self-isolation etc.  All these things are applied to all.
But consider.  In general, this virus behaves like TWO diseases.  One which is only benign to the young, the other which is only deadly to the old. ALL the risk to our heath systems comes from the old.
Therefore, a correct policy would have been :
1.  Separate the young and the old.  Old = around 55 (or whatever) plus the immuno-compromised, etc
2.  OLD. Test them all, tend the sick, isolate the uninfected in comfortable holding pens (our empty hotels). A tougher slow-down-the-virus policy. Organise teams to feed and entertain them.  They probably won’t want to leave.
3. YOUNG.  Test none. Here we want to SPEED-UP the infection. Give ‘em spring break, football matches, sex, medieval kissing competitions.  We want the kids to get it.  Lots will get infected, but very few will get very sick, so almost no load on the hospitals.
4. In six weeks it will be game over.  The young will be herd-immune, and it will be safe for the old to get back in contact with them.

So a sigh of relief all round. No school closures, no economic disruption, and the stock market can get back to ordinary pain. The above is of course over-simplified - to keep it short, and to emphasise its fundamental divergence from what’s being done now.

I have an envelope, on the back of which the math says current policy will cost Britain $7million per death delayed.  Ditto for the US, I would say.  We have policymakers, far from the first time, who appear to ignore the cost of what they propose.

There is still time to change tack.  But only one thing is for certain; time runs out.




Arthur Spooner

March 19, 4:33 p.m.

Hi John,
This is the “war” the US needs to bring a divided nation back together again.

March 19, 3:37 p.m.

Think maybe the time to get bullish is near. Consider the amount of commitment by the CBs of the world..pending fiscal stimulus is going to be nothing like we have seen..debt going ballistic but no one cares..besides lip service. Point is.. money is almost free, and there is no one in government that is going to be able to stop the rocket fuel entering the system..a V shape recovery is going to be pretty much unavoidable…
Hey..the discussion of MMT has to be expanded..its going to be unavoidable too ...
Canadian by birth..always trying to figure where the puck is going.

Louis Williams

March 19, 3:29 p.m.

The irresponsible media yelled fire in the theater for over three years. What did they think was going to happen? Probably just what they hoped for! Using statistics to produce the future is very dangerous. adaptation is not taken into account. Adaptation is a wonderful thing.

Ivor Goodbody

March 19, 3:16 p.m.

“As of this morning, Dallas has basically shut everything down. Fort Worth, on the other hand, is letting bars and restaurants open with six foot distancing. Fort Worth is putting Dallas and everyone else in the region at risk.”

Unless there’s a good deal of traffic between the two, it’s a safe bet the Dallas strategy will beat that of Fort Worth.

Just take a look at a similar contrast between St Louis and Philadelphia during the Spanish Flu epidemic, and how many lives St Louis saved by strict enforcement of social distancing:

Go home. Stay home (as far as reasonably possible). Save lives.

Ivor G

Barry Newman

March 19, 2:01 p.m.

A comment i posted on a different thread discussing the variability in the mortality rate. I thought it was worth adding here to the conversation:

The point to take home though is not what the overall mortality is. As someone said here, the problem is the denominator- we do not know the total number of cases. HOWEVER: the points are the rapid spread, since many people who are infected but not yet showing symptoms is a MAJOR problem. What is more, is that depending on the rate of spread, if it happens quickly, as happened in Italy, there were insufficient resources to care for the patients who got very sick. In our country, due to outsourcing to China, and also to “just in time” resourcing, we have no more than 2 weeks of personal protective equipment on hand, and that is for normal times, and is NOT ENOUGH for a major surge in sick patients. SO stopping the spread, and conserving resources is paramount. It is NOT just about the mortality rate. These are the important things to know.

[yes, i agree that there is a trade off between shutting the country down and the overall mortality, and there is no clear win-win scenario. If you limit the number of cases by shutting everything down, perhaps you save 50,000 lives. If you didn’t, maybe 50,000 more people might die, but you also save the economy. Which is preferable? And who gets to make that decision? Anyhone who opts for more deaths gets blamed, and anyonme who shuts down the economy gets blamed. You cannot win this one, you just have to muddle through and hope that the optimal outcome is minimizing both. Just sayin’]

Phil Chubb

March 19, 1:56 p.m.

It’s a shame you haven’t similarly exhorted America to mobilize to fight global warming/climate change, an equally urgent and much larger problem.

March 19, 1:50 p.m.

Is there any way to create a debt time warp? Where all promissory notes from bonds to credit cards just have their payment schedules slid forward 4-6 months? I seems like a way to get around this liquidity issue that landlords, publicly traded companies, small businesses, mortgage holders, car loans, ect. could survive without the anxiety and strong temptation to cheat the isolation measures.

O% loans from fed reserve could be provided to documented note holders in some way to get though the 4-6 note gap in repayments. Maybe an addendum to note saying you will accomodate renters, etc to get the free money.

Is there any way to do this from a legal/organizational point of view? Is it in any way possible. It already feels like we are in the Twilight Zone so maybe we could figure this out with some very creative thinking.

We need some way to quell the survival instinct while we work through this. Or maybe redirect it to work through this rather than direct it toward fiscal survival.

Jeffrey DePue

March 19, 1:44 p.m.

Dear John,

Indeed this is very, very serious. The staff at ECRI (link below) however believe that the FOMC’s response was completely wasted.  I encourage people to follow the link to ECRI.

Robert Hongen

March 19, 1:18 p.m.

Hey John,
I hope you already knew who your readers are. Most made the same choice you did. Good luck to all of us.
And the world will be a better place.

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