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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Peer Pedersen

March 19, 1:17 p.m.

What supersedes what?  Shall we be united in our response?  Give the fed credit by walking back some of your criticism?  How in the world did we get into this position of vulnerability in the first place?  Moral hazard after moral hazard in so many places from all things governmental, corporate, educational, to the soft fascism (see Johanthan Teppers “Myth of Capitalism”) I’ve seen developing over the past thirty years.
Was not Covid-19 simply the exogenous shock that has laid bare the excesses that have never been fully addressed.
It’s like some moron throwing a lit match onto praire grass after a prolonged drought (your fingers of instability) with a 60 mph wind blowing and WONDERING how did this Yellow Stone like conflaration happen?????
Bail out the airlines you say?  More federal money to NYC to …..  Cut rates to the negative domain?
Wow, it never ends.  Systemic survival you say? Maybe but you reap what you sow.  Let’s help (once again) the aholes who spent time buying back their stock to increase their compensation instead of spending it on R&D, Capex, or even (perish the thought) of giving a skoshisan bit of compensation to their line workers.  Strong hands will come in to buy say a Boeing (should be US investors only) if it goes in to receivership.  Management should be obliterated NOT saved.
Back to mypraire fire analogy, green shoots and flowers start growing not too long after it passes.

Steve Turner

March 19, 12:33 p.m.

Thank you John. I always appreciate your perspective. I’m not quite on the “War” band-wagon yet, but may be moving in that direction. I have been seeking out the kind of data in the first link in this article. It’s good to see it all together rather than trying to piece-meal it myself.

Richard Park

March 19, 11:28 a.m.

I get this:

Wrong Link
You have clicked on an invalid link. Please make sure that you have typed the link correctly. If are copying this link from a mail reader please ensure that you have copied all the lines in the link.

March 19, 11:18 a.m.

I’m not a fan of the “War” analogy given that we’ve lost every one since World War II; Korea, Vietnam, Afghanistan, Iraq, Poverty, Drugs, Terror… I’ll leave it at that.
We have had novel respiratory viruses that have killed millions before—I’ve survived a few—and there will be more—I’m all in if we want to rally resources in search of treatments, vaccines, hospital capacity and ventilators but not this… what happened to America, what happened to Liberty… I’m afraid John that I’ll have to respectfully disagree… Harry

March 19, 11:14 a.m.

John - please take a look at the following site and the statistics for South Korea.  307,000 people tested, - just 8500 positive tests out of the 307,000, and a total of just 91 dead.  That is a fatality rate of about 1%.  New cases peaked Feb 29 and have dramatically declined since.

My personal belief is that when the history of this is written, it will be the economic damage and not Covid 19 that will be the true catastrophe.

John Plodinec

March 19, 10:45 a.m.

Don’t forget Taiwan!  Only 84 mi from China but only one death, so far.  To me, the key takewaway is that we need a recovery plan (and a future response plan) based on an honest appraisal of where we are, and a principled vision of where we want to go.

March 19, 10:42 a.m.

John you are being an alarmist. The “Sobering Prediction” article has been debunked in numerous places. For instance:

You are correct in that “It’s a War”.  Not a viral war, but an economic one.  Who gains from it?  That’s the question we should be asking.

Paul Grunwald

March 19, 10:36 a.m.

Point to ponder:

March 19, 10:33 a.m.

“a million people may die”  Of course every one of those were going to die anyway.  Nothing we do, nothing, will save a single life, though it may extend it a bit. 

Generally, those at risk of dying are us old and feeble folks.  As a practical matter, we don’t have all that long left anyway.  Our productive years are behind us and now we are demanding the young shoulder a burden for decades in order to give some of us unproductive old folks a bit longer life. 

Sorry John but you and I disagree on this.  I believe what we are doing is unethical.

Joseph McKenney

March 19, 10:26 a.m.

I think the “cure” of shutting everything down is worse than the disease. Why don’t we isolate those at risk (elderly, immunodeficient, etc), engage in practical social distancing and let this run its course?

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