Coronavirus – what kind of infection is this?

Until today, every conversation that I’ve had about coronavirus has been about the health risks and, chiefly, will it be safe to travel to Frankfurt. At the time of writing, we’re hearing the usual clamour of conflicting voices:

Officially, it’s considered highly unlikely that we’ll see the kind of contagion (a lovely word) that’s being experienced in China – and its evident that international policy is to contain the outbreak within Chinese borders.

Unofficially, it’s not that simple. Coronovirus doesn’t recognise political borders and will go wherever it will, mutating as it goes (maybe).

Officially, the boffins are working to find a vaccine. Its reckoned that something for animals may be available in weeks, for humans it may be months away.

Unofficially, the full range of the virus isn’t yet understood. It’s possible that it will become endemic and continue to transmit for years.

Officially, at the time of writing, the death toll is 563, with 28.018 confirmed cases, that’s a 2% fatality rate (1 in 50).

Unofficially, it’s likely that case numbers are hugely under-reported. ‘Hidden’ cases include those with only mild symptoms who do not seek medical help and thereby remain unrecorded. The true fatality rate could be less than 1% – no one really knows.

So, in respect of travelling to Frankfurt Light+Building, it’s as the man said: “Do you feel lucky?’ The chances of an exponential spread of the virus in cities outside of China may be unlikely as we see things at the moment, but we need to be prepared for warning signs that the situation has shifted.

And then, today, another conversation happened:

What kind of delivery period should we expect once the order’s been placed?’

‘ . . . . . . we have no idea.’

Ah – this is something else – and likely to be far more serious, in the short term at least, than the risk of succumbing (and maybe dying) from the damned virus.

We have been seduced into believing that markets can never fail – if one source dries up, another with magically appear . . .  until we recall that the global marketplace has exercised an enormous magnetic pull towards one country. And China is in lock-down.

Just-in-time delivery practices only work when the supply chain is robust and indefatigable. But, like any chain, it only takes one link for the entire chain to fail. We are currently all at risk from a financial failure that could dwarf the impact of the 2007-8 sub-prime mortgage crash.

Larry Elliott, economics editor at The Guardian, is asking whether the Coronavirus outbreak is a Black Swan event:

 Will coronavirus make markets take a ‘black swan’ dive?

A ‘black swan event’ is something that is completely unexpected and has potentially severe consequences. They are called ‘black swans’ because they are extremely rare, they cannot be foreseen . . . but then seem completely obvious after the event.

The coronavirus crisis began with a localised shock to the city of Wuhan and its surrounding industrial infrastructure. Factories were closed and travel restrictions imposed. As the virus spread, so did the resultant factory closures. China is no longer fit for purpose.

Article by Sam Chambers appears in

Coronavirus: Chinese ports grind to a halt while yards declare force majeure

This is happening while the global economy is still very fragile. There is no spare capacity in the financial system; interest rates can’t go any lower and investors are already exposed. If the coronavirus outbreak is a Black Swan Event then we all need to hold on tight because the road ahead is going to get very rocky indeed.

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