This is my take on the economic effects of covid19. Why is it wrong? Let's tear this thing apart.pic.twitter.com/GEgE808jU0
CEO at http://amazon.com/viahart . CEO at http://edisonlf.com . I tweet about business, e-commerce, supply chain, health, law, & infrastructure
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This is my take on the economic effects of covid19. Why is it wrong? Let's tear this thing apart.pic.twitter.com/GEgE808jU0
I think this bad boy is nothing like the GFC. GFC was a liquidity crisis caused by entities thinking they had more money than they really did plus a demand shock (oil prices got too high). Liquidity crisis could evolve into a demand shock (firings), but covid19 is farther-reach..
..ing and larger than the GFC in its demand shock. Also it's likely, imho, to last longer. Further, gov't can solve liquidity problems. Time cures a virus. This is the time when QE/printing money etc. won't work. But, I am open to disagreement!
1) The healthcare system maxes out at ~1/1000 infected (assuming 15% hospitalization) for OECD countries. If you reach this level, you get locked down. So you can't let the virus run.
2) if you keep the virus at 1/1000 and cycle over an entire year, you get 13-15 cycles a year (assuming 3 week cycle time). So at a maximum 15/1000 can be infected. That's 1.5% of population. You can't let the virus run while keeping health care system under capacity
There's a key point that needs to be mentioned here. With each successive way the r0 falls because a portion of the population is immune. It basically falls exponentially with each wave because it becomes harder and harder for the virus to spread.
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