“Number of people who died in BC is 587. All but 2 were elders in Long Term Care homes.” -Dr. Henry, BC-CMOH, Dec 10.
Really?
I had missed this when it was first broadcast. But apparently Dr. Bonny Henry stated that all but 2 deaths with COVID in British Columbia were elders in Long Term Care. Assuming for the moment that this is true it certainly puts the whole COVID pandemic in a very different light.
Last year my mother, having reached her mid 90’s living on her own with very limited help, was diagnosed with inoperable stomach cancer. She did not want to go into a hospice and my brother and I were lucky enough to find her a place in a private Vancouver care facility. Mum was in no pain but was incredibly frail. Totally lucid but very weak. To no one’s surprise, least of all her own, she died about 40 days into her stay. The fact is that people in Long Term Care are often at the very edge of death. A cold could, and often does, push them over that edge. Not for nothing is pneumonia sometimes called “the old man’s friend”.
If 585 of the COVID dead in BC were in LTC chances are very good that, even without COVID, most of them would have died in the normal course of things.
Which is sad but also encouraging. It implies that COVID is, at worse, a mild disease for the vast majority of the population and deadly for a very small fraction of that population who were close to death in any case.
If that is the case then public health policy needs to be rethought. The idea that we all need to be vaccinated against a not very lethal disease was unlikely from the go. The idea that we need to close down our economy to prevent the spread of a disease which does not threaten the vast majority needs to be re-examined.
We’ve known for sometime that the majority of COVID deaths are concentrated in the very elderly. What Dr. Henry’s statement reveals is that COVID morbidity is entirely confined to the very old. We need to protect those people but we do not protect them by closing down our day to day lives. Nor do we protect them by wearing masks (outside LTCs) or restricting travel or closing bars at 10PM.
If Dr. Henry’s numbers are correct they have huge implications for public policy. Our lazy media needs to actually ask Dr. Henry and Health Minister Dix to clarify their policy in light of those numbers.
Over on Twitter I put up a poll: Cure or Vaccine? I don’t have a huge Twitter reach but of the 50 people who have voted so far, 75% say cure, 25% say vaccine. Of course one can embrace the power of “and” and have both and I think that is where we are heading.
Personally, I am all for “cure” over vaccine for a number of reasons. First off, COVID is not a very deadly disease if you are not over 80, in long term care and suffering from some other serious condition. An overall recovery rate of greater than 99% is not to be ignored. You certainly don’t want to get COVID and taking reasonable precautions and lots of Vitamin D makes a lot of sense.
The medical establishment has become significantly better at treating COVID using an array of techniques – everything from “proning” patients, to no invasive oxygen supplementation to certain steroids and anti-biotics to treat the symptoms of the virus. People are, sadly, still dying of COVID but unlike in the early days of the pandemic, clinicians have a variety of protocols which reduce the lethality of the virus.
Early intervention seems to be important. And there is where, if there is to be a “cure” we are likely to find it. (I will leave HCQ out of the discussion simply because it has become so political.) Ivermectin, a cheap, readily available anti-parasitic drug, taken early with daily doses of vitamin D3, vitamin C, quercetin, zinc and melatonin seems to work as a prophylactic and as a means of radically reducing the severity of a COVID infection. In fact, ivermectin shows promise as a means of preventing infection all together.
In the West we are going to be rolling out the vaccines in the next few weeks. There is a bit of debate as to who should get what will, initially, be a limited supply but there is a consensus that people most at risk from COVID and those who care for them should be first in line. We’ll see how the vaccine is tolerated by the elderly and there have been warnings that it may kill the very old and the very frail. Which, sadly, makes sense as the population of any long term care facility will always have several people who are on the brink of death.
It makes sense to vaccinate the very elderly because, unlike the rest of us, they do not enjoy a 99.0% recovery rate. More like 50% and worse if there are other conditions. And it makes sense to vaccinate caregivers as they are at greater risk of contacting the virus and, sadly, or transmitting it.
Now, what about the rest of us? And does the answer to that question change if we have effective treatments for COVID. With a 99.9 percent recovery rate for the under 80s with current treatment regimes, the urgency of vaccination, once the elderly and their carers have been vaccinated is much reduced.
Oddly, one of the principle arguments for mass or even mandatory vaccination is to “get things back to normal”. If everyone is vaccinated, the argument goes, then we won’t need lockdowns and, eventually, we won’t need masks. Of course, this argument presumes that lockdowns and masks have had significant effects on the rate of transmission of COVID. Cracks are beginning to appear around the efficacy of both lockdowns and mask mandates, especially as implemented in the West. (Personally, I don’t think it is a lockdown if you can shop with few restrictions at Costco or Walmart.)
However, if we have effective treatments for COVID and the recovery rate remains very, very high, would there remain any rationale for lockdowns, travel restrictions or mask mandates? Every year (except 2020) we have a flu season which kills people in significant numbers and for which there is a mildly effective vaccine. The survival rate in a hard flu season is roughly comparable to COVID. We do not lock down, close schools, demand masks; we just get on with life
The vaccine roll out will, I suspect, begin to restore the public’s confidence. For the last eight months we have been subjected to a relentless barrage of bad case numbers and models which suggest our hospitals will sink under the weight of cases. The arrival of a vaccine may reduce the case numbers a bit although not by a lot because of limited availability. But if it turns out to work, it should end worries about overwhelmed ICUs.
However, the real end of the pandemic will occur when the general public realizes that there are treatments and even “cures” for a disease which was not very lethal to begin with. We still have several months of public worry to endure but, as Spring arrives and the case numbers fall in the normal course for a respiratory illness, COVID will finally be in the rearview mirror.
From the very outset of the COVID debacle for a variety of reasons politicians, public servants and public health have been making mistakes. Which is perfectly natural given what was initially thought about the virus.
The imagery out of Wuhan and later Italy were horrific. People falling (apparently dead) in the streets, ICU’s overwhelmed. This was not the flu even if it was not quite Ebola or even SARS. Those images, in the absence of very accurate death rate reporting, meant that the lethality of COVID was vastly over rated. Worse the demographics and condition of the dying were initially hard to discern.
The second misperception was the means of transmission of COVID and just how contagious it was. In the early stages the view seemed to be that COVID was only transmitted by physical contact. The dark joke about licking doorknobs circulated. This was in pre-mask mandate days. Social distance and handwashing were the orders of the day. Then it occurred to researchers that, perhaps, person to person transmission was possible without direct contact. The case rates were climbing and now it became time to “stay home” to flatten the curve to avoid overwhelming the hospitals. (Remember Italy!) We duely stayed at home and the curve flattened out significantly in many jurisdictions. (Cynics suggested that this might have had a lot to do with the coming of Spring in the Northern Hemisphere.)
The good news was that, astonishingly, for Americans and some Europeans, there was a vaccine just around the corner. As I write we are within a few days of the first Americans receiving this treatment. (We Canadians, being led by an imbecile, first backed a Chinese vaccine which did not deliver and then failed to place orders for the vaccines which did. UPDATE: Canada may get some vaccine early in the New Year.)
My friend John from comments will point out that Australia got lockdowns right so they can work. However, Australia seems to the only jurisdiction which has been willing to go hard with lockdowns. (And, well, they were locking down into the warm Spring weather Oz enjoys this time of year.) In England, France, Germany, Italy, Canada and many US states lockdowns have not really flattened the curve much. Nor has the adoption of “mask mandates” done much for the case rate.
The fact seems to be that COVID is very contagious. However, we now know a lot more about its lethality and it turns out to be relatively benign if you are under 80 and don’t have significant co-morbidities, are not significantly overweight and do not live in an extended care facility. Not a nice thing to catch but very unlikely to kill you.
None of this is a secret. But the general reporting on COVID tends to focus on case rates which are then used to power policy. Two things which are not mentioned much are the significant progress which has been made in treating COVID and some of the steps people can take to improve their own immune systems.
Mask mandates and lockdowns notwithstanding, case rates are or have hit alarming levels all over the Northern hemisphere. However, case fatality rates have not been quite so alarming. (Probably because treatment protocols have improved and the dumber Premiers and State Governors have been persuaded not to send COVID patients into extended care facilities.)
Paying exaggerated attention to case rates leads to politicians feeling pressured to up the ante with masking and lockdowns. Their constituents are only aware of the rising case rate and so want “action”, ideally backed by force of law. The costs and marginal efficacy of such actions does not reduce the public clamour.
As COVID has dragged on there have been very real economic, social and psychological costs. A two week “flatten the curve” exercise is very different from a four month “no non-essentials, mandatory stay at home” program. And those costs continue to rise.
There are plenty of optimists who see the whole thing wrapping up over the next few months (slightly longer in Canada) as the vaccines begin to be widely distributed. 90% efficacy and all. Which would be wonderful to see. However, at this stage that is several months off.
The current plan in most Western jurisdictions seems to be to hunker down, lock down, shut down and wait for the silver bullet of the vaccine. The costs of hunkering down for another three or four, or until September according to the imbecile, will be tremendous. Economic, social and psychological costs are cumulative rather than discrete. Once a business closes it has a lower chance of re-opening, once a family is evicted it has a higher chance of being homeless, a closed church or social club or pub is forgotten after a few months. In fact, the patterns of every day life may become irrecoverable after COVID’s long disruption.
The imbecile – along with a lot of other dimwits – want to take this “opportunity” to “build back better”. Another few months of masks and lockdowns and the will to build back at all may very well leave the building.
Societies, economic systems, science and technology are all built on the acceptance of a degree of risk. At the outset of COVID we had a very limited capacity to calibrate the risks the disease posed. We did not know that it was rarely lethal to people under 60 or to people under 80 with no co-morbidities. Now we do. We also had a very limited idea of what the costs of various social measures to marginally reduce risk would be. Now we are beginning to understand those costs.
All over the West we are seeing people taking to the streets to protest the “lockdowns” but, more realistically, the destruction of their lives for relatively marginal benefits. At the moment, the protestors are no more than a small minority. However, as the destruction of those lives continues that minority will grow. And it will be joined by millions of people who are currently described as suffering from “COVID fatigue”.
While governments can certainly back up masks and lockdowns with draconian fines and penalties, ultimately they rely on the co-operation of their citizens. As COVID drags on, that co-operation will almost certainly collapse.
Though it will probably lead to higher case counts it may well be time for governments to look at opening up their economies and their societies. The plexiglass shields are in place, people have learned how to wear masks somewhat effectively, there is some data suggesting that far more people have had COVID than the case numbers suggest. Yes, extended care facilities need to be kept in their bubbles – which will make for a sad Christmas for many families – and, yes, thirty for Christmas dinner remains a bad idea. But opening up retail and restaurants and pubs is almost certainly an acceptable risk. Opening churches to limited congregations is likely fairly safe.
Most fundamentally, governments need to provide the information people need to assess their own, personal risk. If the vast majority of deaths from COVID occur in people 80 and over, explaining that to the public is important. So, frankly, is telling the public to get their vitamin D levels up and to get exercise. People over 70 with underlying conditions should be encouraged to shelter in place and government and social groups should work to ensure that our seniors have what they need without having to spend a lot of time outside their homes.
The next few months, especially in Canada, are not going to be much fun. Unlike our American friends, we will not have a vaccine. And, absent that vaccine, governments with an excess of caution, are going to be pressured to keep the lockdowns and mask mandates in place and enforced. Despite the fact that we now know that COVID is not lethal for the vast majority of people who get it.
(UPDATE: The possibility that Canada may get some vaccine early in the New Year is obviously good news. Now, if it is distributed to i) frontline workers, ii)extended care facility workers, iii) over 85’s, iv) over 75’s and people with co-morbidities the death rate should fall off a cliff. All the more reason to take easing restrictions now seriously.)
Selectively easing restrictions may increase the case count a bit, but it will reduce the economic, social and psychological toll COVID takes. Letting individuals assess their own personal risk and make decisions accordingly is a first step in building back smarter.
“Until now, B.C. has resisted calls for a mandatory mask order, instead making it the responsibility of businesses, transit operators and community service agencies to implement their own rules.
“The mask mandate is not something that in and of itself has made a difference in terms of transmission,” the province’s health officer Dr. Bonnie Henry said as late as Wednesday.
On Thursday, she said the change in policy was due to increasing public pressure, including from businesses, expressing concerns about putting the onus of enforcing piecemeal policy onto workers.
The mask mandate isn’t being implemented by public health order, but by B.C. Public Safety Minister Mike Farnworth under the extraordinary powers granted by the province’s record-breaking state of emergency. It’s not clear when it will take effect.” ctvnews
I had been under the impression that Dr. Henry had changed her mind for public health reasons. Apparently not.
Now the government’s public health policy is being dictated by “public pressure”. Whether masking works or not is a matter of scientific debate. My own reading of the literature suggests that “mask mandates” have virtually no effect. (Which is not the same as saying that masks don’t work. They may in certain circumstances.) But that literature has been tossed under the bus by “public pressure”.
To date I have been rather impressed with the BC Government’s tempered response to COVID. Through Dr. Henry it has treated British Columbians as adults. But, most of all, there was a deference to the best science Dr. Henry and her colleagues could access. That has gone out the window.
At a guess, when case numbers continue to rise, “public pressure” will mount for full, enforced, lock down regardless of the fact that the science is, at best, equivocal as to the efficacy of full lock downs. And there may well be “public pressure” to close the schools, again in the face of very little evidence that school closure helps much.
At the moment the public, goaded by an hysterical media, is terrified. Which will mean that “public pressure” can be mustered for virtually any policy which appears to have some effect on COVID. Worse, as the CTV article illustrates, if one province is doing something there is an expectation that other provinces should do the same thing. This is irrational.
If anything, the need is to be more granular. Take a look at regions and sub regions and tailor the public health response to the facts on the ground. Simply working very hard to protect out elderly may have a better public health outcome than masking, lockdowns and school closures. But if “public pressure” is all it takes to make sweeping, province wide, restrictive orders the scientific basis, medical outcome and economic consequences of such orders will be moot.
BC, through the grace of Dr. Bonnie Henry, held onto science as the basis for decisions. We have now succumbed to the Karens.
In earlier posts I have mentioned that Vitamin D seemed to have some positive effects for COVID. But, to be honest, I had no serious idea as to how significant that benefit might be.
Well, now there is a large study which has put some numbers to the hunch:
“In a study of more than 190,000 people who had been screened for COVID-19, nearly 13% of those with lower-than-recommended levels of the nutrient tested positive for the coronavirus, the data showed.
Conversely, just over 8% of those with “adequate” vitamin D levels and 6% of those with high levels had COVID-19, according to the researchers.
Overall, the researchers found people with “deficient” levels of vitamin D were at 54% higher risk of having the coronavirus.
“Simply going to your local pharmacy, purchasing a vitamin D supplement and taking it as directed can significantly reduce your risk for getting this deadly disease,” study co-author Dr. Michael F. Holick told UPI.
“That’s as good, if not better, than what any potential vaccine will do in terms of protection,” said Holick, a professor of physiology, biophysics and molecular medicine at Boston University.” UPI
I have been taking 1000 units a day since early spring and, with the weather changing and spending more time indoors, I will bump that to 3000 a day.
However, the larger implications of this study need to be thought about. Vitamin D is about as benign a substance as we can imagine. It is very cheap and very available and you can start taking it today.
Now, it is not a cure nor a 100% effective prophylactic, however, a push to lower the number of people suffering from Vitamin D deficiency might be significantly more effective than masks and a great deal cheaper than lockdowns.
Remember, there has never been a vaccine for AIDS however there emerged drug protocols which have changed an AIDS diagnosis from a death sentence to a manageable, chronic illness. My own view is that COVID will be defeated with better testing, better treatment and a drive towards improving people’s immune systems. It looks like ensuring everyone has sufficient levels of Vitamin D as we go into Fall is a very easy step to take.
It is so cheap and so benign that it really could be given away. But, and here is where things get a bit nasty, it is not obvious that public health officials and politicians responsible for the COVID file are willing to suggest pro-active responses to the virus. Social distancing, masks, lockdowns are all, practically, parts of a shelter in place mindset.
If, after looking at the study cited above and the many other studies which suggest Vitamin D improves both resistance to infection and response to infection, public health officials and politicians endorsed it, we might make more rapid progress against COVID.
The fact that the hospitalization rates, rates of admission to ICUs and deaths are all down, suggests that even if you are unlucky enough to get COVID you have a very good chance of being asymptomatic or of suffering only mild illness. Adding Vitamin D to the mix would, I suspect, push those numbers even further down. (Cases will likely remain high or even go a bit higher but that will mainly reflect increased testing and a good deal of debate as to how sensitive the tests should be.)
Psychologically, I suspect a lot of people would benefit from a sense that they are doing something to protect themselves and their loved ones and their communities. The rise of “the mask”, despite considerable expert doubt as to masks’ efficacy suggest people want to “do something” about the virus. Taking a couple of thousand units of Vitamin D a day might well be that something.
[Note: A recent article in the Telegraph written by a group of eminent scientists suggests that by boosting your immune system you may be boosting a pre-existing partial immunity to COVID. Well worth a read.]
COVID-19 is a nasty disease. All the nastier if you are over 60. While treatment options and techniques have improved since the beginning of the outbreak, avoiding the disease altogether is the optimal strategy. But how?
The graph above is both encouraging, very flat number of deaths, and alarming, significant rise in number of cases. It reflects increased testing. Number of hospitalizations and admissions to ICU remain pretty flat. However, the increased case count certainly made me reassess my situation and my family’s.
Everyone’s situation is different and, with the best will in the world, public health people have to deal with people in aggregate giving general guidelines. I have been saying since the beginning that each of us needs to deal with our own situations and take what measures we can. Here are a few ideas which may work for you. So far they have worked for me and my family.
Get your Vitamin D level up: Right from the beginning I have made a point of getting out in the sun (with no sunscreen) for at least 20 minutes a day. And I have been taking 1000 IU a day in supplement (2000 on rainy days). Can’t hurt, might help, was my reasoning. Turns out this was correct. “Vitamin D deficiency increases a person’s risk for catching COVID-19 by 77% compared to those with sufficient levels of the nutrient, a study published Thursday by JAMA Network Open found.” (source) Vitamin D supplements are cheap and, well, having sufficient Vitamin D levels is good for you on all sorts of levels.
Zinc: I recently started supplementing with 50mg of zinc daily. The science is all over the place on Zinc and COVID but there are virtually no downsides. In general, Zinc is an immune system booster and I have taken it for years during cold and flu season. It’s cheap and, after initial shortages in the early spring, readily available.
Vitamin C: Every year about Labour Day I begin to take 1000 IU of Vitamin C and I keep taking it until May or June. Again, this is about supporting my immune system rather than about COVID specifically. Again, cheap, available and beneficial. Why not?
What this means to me and my family is that our risk of contracting the virus is substantially lower than if we lived in a community with higher numbers of cases. That, in turn, means we can be less concerned about day to day interactions with others.
Limit exposure to higher risk situations: This is really about risk assessment and balance. Susan and I are well past the age where going to a rave is a live option; but the fact is that any large gathering presents a significant risk. Such gatherings are effectively banned in BC and will remain so for some time.
But what about the rest of life? Here having some sense of the overall infection rate in your area is important. I would not take the subway in Toronto or New York, I would be fine taking the bus in Sidney.
It is not obvious to me that social distancing – whether 1 meter or 2 – is particularly effective but I am perfectly willing to keep my distance in the grocery store. What I wish public health officials would recommend along with social distancing is social “speed”. I suspect there is a greater chance for viral transmission in the lineup to use the hand sanitizer than there would be if that lineup was eliminated. Simply being a bit organized when you shop reduces the time you are actually in the store.
You can also socially “schedule”. Most of the stores in my community are open until 9:00PM and are pretty empty from 7:00PM onward. Taking advantage of that emptiness costs nothing and cuts risk.
Staying at home: Our family is lucky. I work from home, the kids are home schooled and Susan prefers to be at home. There is no lock down in BC but people have re-ordered their lives to stay at home far more than they did before COVID.
People who used to work in offices are now working from home and that means they are not exposed to everything from public transit to dirty elevator buttons to their co-workers. Again, how useful this is depends on how much virus is in your community; but staying at home more often than not will improve your chances of avoiding COVID.
Masks: As a general rule I do not wear a mask because I live in a low virus area and make a point of limiting my social interactions. I am able to control my life to the point where I am virtually never in a situation where it is impossible to socially distance.
(As a matter of science I am pretty convinced that masks outside a high contact, long duration setting – think Emergency Waiting Room – are unlikely to be very useful. But the science is very ambiguous.)
Hand Sanitizer: I suspect hand sanitizer will become a permanent fixture in stores. We have very nice spray sanitizer in both our cars and it is now simply routine to spritz when we get back to the car. Low cost, might help, why not.
Hand Washing: Public Health Authorities have been all over the place on many COVID issues but they are united on proper hand washing. This is not surprising, proper hand washing is key to any number of public health concerns. Flu and cold season could be reduced in severity with proper hand washing. (It will be interesting to see what happens to flu and cold season this year.) The thing about hand washing is that it is a very simple thing to do and it takes all of 20 seconds after you use the washroom or come in from any activity.
Vaccination: We do not have a vaccine as yet though we are promised that something maybe ready this year. Thanks but no thanks.
I am a huge fan of vaccines for things like polio, mumps, diphtheria and a variety of other diseases. If I were travelling to a place which had a specific endemic disease for which there was a vaccine, I would almost certainly take it. However, I don’t take the flu shot and I would be very reluctant to take the first rounds of the COVID vaccine.
No, I don’t think Bill Gates is trying to microchip me. My reluctance is based entirely on the standard risk reward analysis I use in the rest of my response to COVID. Yes it is a nasty virus. But if you are under 70 and have no pre-existing conditions, it is very unlikely to kill you. And if you take the basic measures outlined above, there is every chance that you will not catch the damned thing at all.
The risk profile of any new vaccine is initially unknown. It has to be tested and, most importantly, its effects have to be observed over a decent length of time and over a substantial population of test subjects before a risk profile can really be developed. Until that is done it is pretty much impossible to assess what risk a vaccine poses. (But don’t take my word for it, here is an excellent thread from a pharmacology PhD.)
Reducing my already slim chances of contracting the virus at an unknown cost is not a chance I am ready to take.
Self Monitoring: All the accounts I have read about COVID suggest that its onset is characterized by all manner of symptoms. From coughing to loss of the sense of taste or smell and on down the line. What has also emerged is that people can have COVID and barely notice it.
Without being obsessive about it, I take a minute when I wake up to simply see if there are any notable changes in how I feel. Not very scientific. I don’t take my pulse or blood pressure or temperature; I just sit on the side of our bed, breathe normally and take a mental inventory. Does it do any good? I have no idea. But taking a moment to be aware of how you actually feel seems sensible to me.
Hydroxychloroquine: What a mess. If you are unlucky enough to contract COVID and are hospitalized, don’t think for a second that HCQ is going to help much, if at all. That science is pretty well established.
Unfortunately, HCQ has become a political football rather than a discussion between doctor and patient. Given its long history as a safe drug in the treatment of other diseases, I think HCQ should be an option. Get the politics out of it.
That said, whether or not you need to take a drug prophylactically is, once again, a matter of risk assessment. Were I a front line health care worker dealing with COVID cases day in and day out, I would want HCQ as a condition of showing up for work. I’m not. And, as mentioned above, I live in a low virus intensity area, can control my social interactions and keep my immune system in decent shape.
Now, if one of those conditions changed. If Vancouver Island suddenly had huge case numbers as the much discussed “Second Wave” hit or an unrelated illness compromised my immune system, then I would want HCQ to be an option.
Like many things on this blog, this was written to order my own thoughts on COVID. To first time readers, nope, not a doctor or epidemiologist or virologist. Like the rest of the laity, I am trying to figure out what best to do for my family and myself in our particular situation.
My eldest son and I have a lively online conversation which has gone on for years. We disagree about a lot but recently we have agreed that the stock market is heading towards a crash. Not an if, a when. Oddly, we both see the end of September as the likely date. Simon cites market history, I am inclined to go with people understanding “events” and responding to that understanding. Here are a few.
The American Election Whether you are a Trump fan or a Biden supporter does not matter because the Election itself is the market event. Markets could live with either a Trump or a Biden victory; what they cannot live with is the growing possibility that the Election will not be decided on Election Day. In critical states such as Wisconsin, Michigan and Pennsylvania, mail in ballots cannot begin to be counted until the polls are actually closed on Election Day. (You can get all the details in this excellent article, Why We Are Facing The Biggest Election Nightmare In Modern American History No Matter Who Ends Up Winning by Michael Snyder.)
Leaving aside the issues of fraud which arise with mail in ballots, the biggest problem is just how unlikely it is that we will know who has won the Presidency for days, perhaps weeks, after the polls have formally closed. The very definition of uncertainty.
Markets hate uncertainty and as the likelihood of a protracted vote count becomes more obvious the overall market is likely to become, in a word, skittish. Given that the general markets in the US, and to a degree in Canada, are already at all time highs, that will certainly tend towards defensive selling and profit taking. Which, in normal times, would actually be healthy. But these are not normal times.
COVID I think a plausible argument can be made that COVID, the disease, is abating. Case counts may pop here and there but that is almost always an artifact of more testing. Hospitalizations and death counts are low and going lower. The return to school will probably pop case counts in some places, but it is unlikely to have much impact on how many people get really, really sick. As one writer said about Sweden, “All the kindling is gone.” Which is pretty harsh but also, likely, accurate. COVID kills the elderly and the compromised; it is no fun for the rest of us but it is survivable.
However, the economic consequences of COVID, consequences which are entirely political rather than medical, are ripping through Western economies. Lockdowns, business closures, mandatory masking, broad layoffs, work from home, mortgage deferrals, evictions and eviction moratoriums are all in full swing. The idea of flattening the curve has given way to the goal of either avoiding or mitigating “the second wave”. The “vaccine” is variously “a month or two away”, “ready in 2021” or “very unlikely to be effective whenever it’s ready”.
Of course, the entire COVID “crisis” has become politicized with those on the left convinced that without masks and shutdowns we will all die, and those on the right certain that unless the economy restarts we’ll all die poor. Maskers see non-maskers as selfish, non-maskers see masks as a symbol of conformity. Democratic states wear their masks and their crashing economies as proud symbols of anti-Trump resistance. And so on.
From the market’s perspective the main effect of COVID is the creation of fear and uncertainty. While there are plenty of Robinhood traders happy to make good money day trading, there are also plenty of people eyeing the exits and wondering if “the top” has, in fact, arrived. The Robinhooders represent a tiny fraction of the very deep American stock market. If, as will almost certainly happen, they are hit with significant losses on their most recent FANG trades or if Tesla sinks like a stone, the overall markets won’t miss them. However, if the broader market becomes worried, the dash for the exits could be very ugly indeed. A so-called “second wave” of COVID, even if it is largely fictional could trigger a rush to cash out.
Antifa, BLM, protests, riots and arson In themselves, the various demonstrations and riots inspired by BLM and made nasty by Antifa, are largely irrelevant to all but a few hundred square blocks of a few American cities. (Yes, the craven pandering of big business and major league sports is obnoxious, but it is also very much a passing moment.) Applying a bit of crowd control and arresting leaders and organizers can, and has, shut the riots down where it has been allowed by politicians to happen. So far, BLM and Antifa have been denied the martyrs they need to grow.
In terms of economics, Antifa/BLM have caused several billion dollars worth of damage and made retailers more reluctant to locate in certain areas of certain American cities. However, America is a big place with a big economy, so the costs are relatively tiny. (Not so tiny for small businesses which have been torched.)
Psychologically and politically, the idea that there are nightly riots and that downtowns of relatively small cities like Kenosha could be razed is just one more shock to the system. The fact that police forces have been told to stand down in the face of the rioters and that state level prosecutors have declined to charge the rioters, erodes the faith people have in the overall system.
The fact that there are disturbances virtually every night drives home the message that there is no safety in the US. This is not actually true, the bulk of the United States will never see a BLM/Antifa protest much less riot; but that doesn’t actually matter. The riots and the seemingly impossible to appease demonstrators create a mood, a sense of unease.
Markets reflect the confidence of investors. Where that confidence is eroded the conditions are created for a crunch.
March and the Second Wave In late March we had what people called a mini-crash. The Dow, S&P 500, NASDAQ dropped hard as did the markets in other G-20 countries. At one point virtually every market in the world was off 25%. At the time commentators suggested this was a one time reaction to the economic effects of COVID.
The March crash very quickly reversed itself. The Fed turned on the money pipe and markets all over the world staged V shaped recoveries to the point where, last week the DOW, S&P 500 and NASDAQ were all at or near their all time highs.
But is it real? The March mini-crash suggested that the markets could be spooked easily. That they could recognize the immense economic implications of COVID. However, the speed of the recovery to new highs, suggests that the mini-crash did nothing to re-align the market’s value with the underlying realities of a collapsed GDP, very high unemployment and an accelerating “real” inflation rate.
Market crashes are sometimes triggered by a single event, the collapse of a bank, a commodity crash, or even a small war; but, more often, they happen when investors “lose confidence”. The end of the dot com bubble was not about the internet suddenly being useless, it was about millions of people saying, at more or less the same time, none of these dot com companies make any sense at these prices. It also happened when the overall economy was strong, American politics were in balance and there was no political pandemic battering the real economy.
The V shaped recovery from the March mini-crash suggests strongly that the real “correction” has not occurred yet. Remember, that in the dot com bubble and crash the NASDAQ went from a high of 4798 in March 2000 to a low of just of 1000 in two years.
It has been a glorious summer on Vancouver Island. Sunny, not too hot, with just enough rain to keep things green. COVID has largely passed the Island, especially the south Island, by. We never were in “lock down” but people stayed home in April and May, over the summer they have been venturing out. Social distancing has become second nature and about half the people you see are wearing masks indoors. (I am not. But, then again, I am almost never in stores or other indoor spaces.)
From a business perspective, this summer has been as quiet as most other summers are. Working with the junior mining industry you get used to the rhythm of the seasons. Right now, the majority of our clients are out drilling, mapping and soil sampling. They will have news in September and then we will get busy. As I have worked from home for a couple of decades COVID has made next to no difference to what I actually do with my days.
Having said that I cannot help but notice that COVID and its economic consequences seem to have befuddled the politicians and the markets. In Canada we have seen a 30% plus crash in the GDP but, with the exception of the March crash, our stock markets just motor ahead. Our Federal politicians have thrown fiscal caution to the wind and are heaping money on a grateful populace. Where is this money coming from? Well, the simple answer seems to be “The Future”.
The logic is that in an emergency it makes sense to keep things going by borrowing and then counting on future earnings to repay the debt. Interest rates are at an effective zero so this is, in principle, costless. More importantly, no one seems to be looking too carefully at the various programs designed to keep people and businesses going when there is no work and no trade.
Does this make sense? Can it make sense? I am reading a wonderful book on Keynes, The Price of Peace, and my sense is that the later Keynes would be fine with this unfettered spending. After all, the alternatives are too bleak to be contemplated.
Which is worrying because it means that there does not seem to be a plan to deal with the economic consequences of this exercise in emergency spending. What happens when interest rates go up even a little? What happens when mortgage deferrals end? What happens when the CERB runs out? If no one goes to the office but instead works from home, what happens to downtown infrastructure, businesses and buildings? What happens when the stock markets notice a 30% drop in the GDP?
There is a whole literature devoted to both the last summer before WWI and the last summer before WWII. I don’t think we are on track for war but I do think we are going to have the answers to the questions above in the next few months and we are not going to like them at all.
To some extent these questions will be asked in all the Western, developed, economies and the answers will differ significantly. Unfortunately, Canada, while having avoided a really awful COVID outcome, does not seem to have thought through how we rebuild our economy. Worse, at the federal level, we have a minority Liberal government which seems to think the coming economic distress will be ideal for resetting our economy along greener (and possibly, more gender/race inclusive lines). The idea that it might be useful to put as many people back to work as quickly as possible does not seem to have occurred to the Liberal government.
Regardless of government action, the “Market” is, eventually going to have something to say about how Canada has responded to and will respond to the economics of COVID. A 30% drop in GDP will not mean nothing; but it is hard to anticipate what will actually happen. Especially as our trading partners have, in many cases, experienced a similar collapse.
As they say in the stock market, things are looking “toppy”. Thrilling as Tesla and Apple’s share price rises have been, it is not unreasonable to think that parabolic is not sustainable. Solid as the Canadian bank share prices have been, as mortgage payment deferrals roll over into defaults, you have to think there will be some contraction. Real estate is hitting new highs with the abundance of cheap money available for mortgages, but if people do not have jobs, how can they pay those mortgages?
Modern economies are built on certain key assumptions. The most basic of those assumptions is that, more or less, production and consumption are in rough balance. While states and central banks have tinkered at the fiscal and monetary margins, until relatively recently, massive interventions were pretty much reserved for wartime emergencies. That restraint has now vanished.
Which is interesting as a matter of policy but what will its actual effects be on the day to day reality of economies. In a wartime emergency, spending big is not done to stimulate the economy, it is done to fight the war. Money is spent on war fighting tools which are very quickly consumed without leaving any trace in the overall economy. (Yes, wages for war work will rise but that usually reflects the scarcity of “manpower” which building armies and navies creates.)
The present circumstance is very different. Money is being spent and created at a wartime pace, but there is no wartime economy to finance. In fact, there is only a 70% peace time economy.
The consequences of the GDP collapse may be able to be postponed for a few months or a year, but, eventually they will begin to show up. Personal income will fall, tax revenue will drop: but there will still be the debt taken on during the COVID emergency.
I am taking my young dog down to Moses Point for a bit of a frolic. In 1914 and 1939 anyone with any awareness at all realized that war was imminent. Mary Wesley’s The Camomile Lawn, Anthony Powell’s, The Kindly Ones capture the sense of a last, good, summer. The water sparkles in the sun, the boats cruise by, but best to take a jacket because the cool breeze of fall is blowing and Moses Point is quite exposed.
In Western Canada and the Maritimes, COVID-19 is pretty much done. Still lots of it in Montreal and Toronto. There has been no silver bullet cure found and a vaccine, if it can be found at all, looks to be some distance off.
Meanwhile, our American friends have just had a couple of weeks of protests and riots ostensibly about the police murder of a black man, more generally about the frustration of the American left. The very real chance that Donald Trump will win re-election in the face of overwhelming media and elite opposition is creating massive shock. That, in turn, engergizes a small, but very vocal, minority to take to the streets in protest. The target is “systemic racism” and they just know The Donald is at the root of that system. Like COVID-19, the protests and the riots will pass.
The US stock market which used to be a barometer for the relative strength of the economy has taken a vacation from this role in response to the literal trillions of fresh printed dollars flooding the market. Ever upward regardless of such unwoke concerns as price/earnings and actual profitability. Never mind the millions of unemployed and the tens of thousands of businesses felled by COVID. It is raining dollar bills. (The situation is much the same in Canada with government money papering over the collapse of the oil and gas industry, mass unemployment and business failure, plus unprecedented levels of government and personal debt.)
Cementing my status as a grumpy old, white, man of heterosexual inclination and, thus, as unwoke as you can possibly get, I don’t think all this is even a little bit sustainable. At some point the reality of the massive demand destruction created by the COVID shutdown is going to bump into the massive personal and governmental debt and, to make things interesting, the structural unemployment the shutdown has created.
And that is if things go well.
It is just possible that the economy can be restarted, employment recreated, debt paid down and demand goosed; but the system as it stands right now is very, very fragile. It will not take much to turn a manageable recession into a serious depression.
One of the stranger things about modern economics is how much depends on confidence. If Mr. Jones thinks he will have a job next week he makes different choices than if he doesn’t. Repeat several million times an hour and you have an economy.
The reason why this is strange is that Mr. Jones makes his choices in conditions of uncertainty. In a normal, well functioning, economy that uncertainty is constrained in the sense that the past tends to determine the future. If you have had a job on the 1st of the month, chances were very good you would have one at the end of the month.
For many people the real effect of COVID has been to radically increase the level of uncertainty in their day to day lives. Take a look at this chart:
That is the US personal savings rate. When people are uncertain they don’t spend and therefore the savings rate goes up. If people don’t spend 30% of their income there are going to be significant economic consequences.
Of course, the personal savings rate is about people who actually have incomes and assets of some sort. What happens when you have to make choices with no income because your job has been cancelled due to COVID?
There is much debate about whether or not there will be a “spike” in COVID cases because of the lousy social distancing at the protests. And there is quite serious concern that a second wave of the virus in September is possible, even likely. What is not being discussed is the very real economic and social effects of a sudden rise in uncertainty.
I have not been writing much about COVID and its consequences simply because, day to day, very little changes.
I am very lucky. I live in British Columbia which has had among the lowest per capita case rate and death rate in the developed world. There are a variety of reasons for this first among them the provincial government’s decision to treat its citizens like grown ups. The government has shared its statistics, its models and its recommendations. It has issued very few “orders” nor has it locked down the economy. Social distancing, the ubiquitous plexi glass barriers at the cash tills, maximum occupancy to prevent over crowding are pretty much it in terms of required measures. No sit down dining in restaurants and bars closed. We are encouraged, but not required, to “stay at home”.
Yesterday there were only 15 new cases in the province. The curve has been decisively flattened. On Vancouver Island, where I actually live, there have been only 126 cases overall. There were no new cases yesterday.
The rest of Canada ranges from New York City levels of illness in Montreal to very little illness on the prairies and in most of the Maritimes. Ontario, particularly Toronto, has been hit pretty hard and has reacted with broad lock downs and fines for illicit dog walking or hoops shooting.
Right now, BC is coming back online in a phased way and I suspect most businesses will be operating with capacity restrictions by mid June.
Now the question is how much economic damage has the virus done.
While it is convenient for politicians and economists to think of the economy at the macro level with unemployment rates and money supply and such like, the actual economy is a vast set of tiny transactions and the habits which power those transactions. Before we can really talk about the effect of the virus on such lofty things as aggregate demand, we have to think about the very small scale exchanges of daily life.
To give one example: if a person who, before the virus, went to an office everyday is now working from home their web of tiny transactions will have changed shape – gas bought once a month rather than once a week, no dry cleaning, no Starbucks, no lunch in the food court. The question is whether, even if they keep their job, they will be going back to the office. Increasingly, the answer seems to be no as everyone from the Bank of Montreal to Facebook have announced that they are looking at leaving their workforce at home.
These sorts of choices – whether made by the individual, companies or governments radically and unpredictably change the economic balance in ways we will not fully understand for years. There is no way to model this sort of change because there is no way to predict what a shift to working at home will actually mean economically. Nor do we really have much ability to work through the ramifications of extremely limited air travel or fanless sporting events.
Now, add to these and countless other shifts in behaviour, there is also the uncertainty as to the rate of change in that behaviour. Air travel is, at the moment, very, very limited. Flights are cancelled, air crew furloughed, smaller planes deployed where possible. That happened at the beginning of April and is ongoing. It is not, directly, the result of government saying “reduce air travel” but rather a consequence of lockdowns and “stay at home” edicts. It is also a very rational response to the virus itself – who wants to sit in close quarters with someone who is asymptomatically infected? Will that change and if so how fast?
A lot of the day to day transactions of life require a background of general trust, a sense of confidence. You can flatten the curve, lift the lock downs and generally stimulate the economy with helicopter money but until trust and confidence are restored you are essentially pushing on a rope.
I suspect we are coming to the end of the first wave of the virus. A good, hot summer, may see the end of it. However, the possibility of a second wave, potentially worse than the first, cannot be dismissed. Which is just one more worry to pile on top of the profoundly out of kilter economy.
In many ways the biggest obstacle to economic progress is the very idea that we will somehow “get back to normal”. The fact is that there is no longer a “normal” to return to which means we will be going forward into a economy which we will be inventing as we go. Which might sound scary but, realistically, market economies have always invented their own futures.
Jay Currie 