At what point did you / will you take the coronavirus epidemic seriously?

[jay santos]

I agree with this. The valuations of the stock market were out of line with the earnings of most companies. Too much of our economy seemed to be far too dependent on the ability of companies and individuals ability to take on cheap debt.

A correction was coming. It just needed a flash point.

Regardless of the stock market valuation, we've already added 20% to our national debt for short term relief for companies and individuals, and when revenues from taxes come in for this year and possibly future years, the impact could be much larger than that.

[Omaha 680]

Regardless of the stock market valuation, we've already added 20% to our national debt for short term relief for companies and individuals, and when revenues from taxes come in for this year and possibly future years, the impact could be much larger than that.

It's Armageddon for state tax revenue. This year is not salvageable and the damage will spill into next year. The question is how bad the next few years are which will depend on how long we are shuttered. This has real implications not only on services the governments can provide but also additional job losses. I have been very fortunate so far, but as the NY state budget collapses, many project awards from MTA agencies are being put on hold. Many will be cancelled all together if there is not a federal bailout of the states. As we burn through our backlog I will start to get nervous.

[Mormon Red Death]

It's Armageddon for state tax revenue. This year is not salvageable and the damage will spill into next year. The question is how bad the next few years are which will depend on how long we are shuttered. This has real implications not only on services the governments can provide but also additional job losses. I have been very fortunate so far, but as the NY state budget collapses, many project awards from MTA agencies are being put on hold. Many will be cancelled all together if there is not a federal bailout of the states. As we burn through our backlog I will start to get nervous.

We just heard last night that New Mexico has a 2 billion shortfall. My guess is they will make most of that up by cutting Medicaid (payments & benefits).

[Uncle Ted]

Do you have any idea how Medicare works?

Yes... but the question here is how to game medicare and get 20% more.

[old_gregg]

Fair. Which is why I'm all for clearly stating the risks to different groups, recommending who should continue to shelter in place while others go back to work, and ultimately letting people make their own risk assessments. I could even foresee payments to at risk people to shelter in place as a type of short term disability payment to allow the economy to get going again while minimizing spread and protecting the most vulnerable who want to be protected.

that's like 70% of the u.s. population though

[Jeff Lebowski]

Taking Jay's estimate of 500K deaths with no distancing, let's do a little calculus. When dealing with risk and cost/benefit analyses associated with clean air measures, highway design, etc, a common value placed on a human life for such calculations is $10M/person. This factors in the economic benefit of human productivity over a lifetime, etc. So at 500K deaths, we are talking a cost of $5T. What will be the net economic impact of the shutdown to the US economy? You can't just plug in the cost of stimulus packages, because that money is not lost to the economy - it requires a more sophisticated analysis. Google shows a number of estimates, but most that I can find would indicate that the net cost to the US would be less than the $5T number. It has been interesting to see economists (not all necessarily - but some) argue that the shutdown is worth it, based on these types of analyses. For example:

https://www.eenews.net/stories/1062876839

Really interesting discussion here:

https://www.nytimes.com/2020/03/24/b...s-economy.html

Of course, you could argue that older lives should be valued less. That is discussed in both links.

Finally, you cannot discount the impact of uncertainty in these calculations. It is one thing to look back now and make a death estimate, but these decisions have to be made in real time. That impacts the calculus.

[Jeff Lebowski]

I agree with this. The valuations of the stock market were out of line with the earnings of most companies. Too much of our economy seemed to be far too dependent on the ability of companies and individuals ability to take on cheap debt.

A correction was coming. It just needed a flash point.

No question.

[Omaha 680]

that's like 70% of the u.s. population though

Lol. Maybe.

[Omaha 680]

Taking Jay's estimate of 500K deaths with no distancing, let's do a little calculus. When dealing with risk and cost/benefit analyses associated with clean air measures, highway design, etc, a common value placed on a human life for such calculations is $10M/person. This factors in the economic benefit of human productivity over a lifetime, etc. So at 500K deaths, we are talking a cost of $5T. What will be the net economic impact of the shutdown to the US economy? You can't just plug in the cost of stimulus packages, because that money is not lost to the economy - it requires a more sophisticated analysis. Google shows a number of estimates, but most that I can find would indicate that the net cost to the US would be less than the $5T number. It has been interesting to see economists (not all necessarily - but some) argue that the shutdown is worth it, based on these types of analyses. For example:

https://www.eenews.net/stories/1062876839

Really interesting discussion here:

https://www.nytimes.com/2020/03/24/b...s-economy.html

Of course, you could argue that older lives should be valued less. That is discussed in both links.

Finally, you cannot discount the impact of uncertainty in these calculations. It is one thing to look back now and make a death estimate, but these decisions have to be made in real time. That impacts the calculus.

Taking Jay's estimate of 500K deaths with no distancing, let's do a little calculus. When dealing with risk and cost/benefit analyses associated with clean air measures, highway design, etc, a common value placed on a human life for such calculations is $10M/person. This factors in the economic benefit of human productivity over a lifetime, etc. So at 500K deaths, we are talking a cost of $5T. What will be the net economic impact of the shutdown to the US economy? You can't just plug in the cost of stimulus packages, because that money is not lost to the economy - it requires a more sophisticated analysis. Google shows a number of estimates, but most that I can find would indicate that the net cost to the US would be less than the $5T number. It has been interesting to see economists (not all necessarily - but some) argue that the shutdown is worth it, based on these types of analyses. For example:

https://www.eenews.net/stories/1062876839

Really interesting discussion here:

https://www.nytimes.com/2020/03/24/b...s-economy.html

Of course, you could argue that older lives should be valued less. That is discussed in both links.

Finally, you cannot discount the impact of uncertainty in these calculations. It is one thing to look back now and make a death estimate, but these decisions have to be made in real time. That impacts the calculus.

Your point on uncertainty is important. That is why everyone agreed to the shutdowns when they began. Too much uncertainty and 2 million dead was unacceptable. But we have a better understanding of who is at risk now. We also have areas that did very mild distancing that had nowhere near the rate of infection and death that was predicted. Even in places like Utah that supposedly were doing full distancing, there were a lot of people that didn't do anything. The distsncing definitely helped, but it also wasn't ever going to be as bad here as predicted. Time to recalibrate the cost comparisons.

[Omaha 680]

I agree with this. The valuations of the stock market were out of line with the earnings of most companies. Too much of our economy seemed to be far too dependent on the ability of companies and individuals ability to take on cheap debt.

A correction was coming. It just needed a flash point.

No question.

So is "a correction was coming anyway" the new "they were going to die anyway"?

[jay santos]

Taking Jay's estimate of 500K deaths with no distancing, let's do a little calculus. When dealing with risk and cost/benefit analyses associated with clean air measures, highway design, etc, a common value placed on a human life for such calculations is $10M/person. This factors in the economic benefit of human productivity over a lifetime, etc. So at 500K deaths, we are talking a cost of $5T. What will be the net economic impact of the shutdown to the US economy? You can't just plug in the cost of stimulus packages, because that money is not lost to the economy - it requires a more sophisticated analysis. Google shows a number of estimates, but most that I can find would indicate that the net cost to the US would be less than the $5T number. It has been interesting to see economists (not all necessarily - but some) argue that the shutdown is worth it, based on these types of analyses. For example:

https://www.eenews.net/stories/1062876839

Really interesting discussion here:

https://www.nytimes.com/2020/03/24/b...s-economy.html

Of course, you could argue that older lives should be valued less. That is discussed in both links.

Finally, you cannot discount the impact of uncertainty in these calculations. It is one thing to look back now and make a death estimate, but these decisions have to be made in real time. That impacts the calculus.

I bet if you converted your $10M/person to $XM/decade of life saved and compared to the final economic impact of quarantining, you would come out with a 2:1 calculation. This is for the decision ex ante, going back to March. Obviously we didn't know that. So you can't blame anyone for what we did.

Now let's calculate based on where we're at today and what to do. Assuming some basic guidelines like wearing masks, being extra careful with elderly and at-risk population, I bet your decision is 5:1 or greater favoring all business opening up immediately. We know this now. Shame on government leaders for not acting with haste to open things up.

[old_gregg]

Lol. Maybe.

something like 50% of the u.s. population is obese. 15% ish with diabetes (including undiagnosed). 65+ is another 15% percent. venn diagram of those is probably close to a circle, but it's a big number.

[smokymountainrain]

Ok Jay, this is what I hear you saying.

If you are over 65 or have multiple health problems, society considers you expendable for the sake of our economy.

how about we do both? we open up the economy, stop sending $2400 to every couple making under 150k or whatever it was - because now they have jobs - and use some of those funds to focus on the well being of those in that 65+ age range.

[frank ryan]

Do you have any idea how Medicare works?

No, he does not.

[Jarid in Cedar]

Now that it is apparent that everyone has a trigger surrounding this issue, including Jay, Omaha, SU, et al, I will partially retract my snarky comment to Jay and dive in.

First lets start with a few thing:

1. You will not find a single comment from me that advocates or promotes shelter in home or other social distancing measures. So Walter, GFY.
2. With one exception (which I will discuss in a minute), I do not think that the measures in place have made as much of a difference as others think.
3. That said, without any real information to go from, the approach was as reasonable a response as could be had. The initial British response "Lets develop herd immunity" has backfired on them. Sweden's response is well chronicled, and I think ultimately where we are going to have to go moving forward, but as many comment about their social programs, the US is much larger and more diverse to be able to have an apples to apples comparison
4. For the same reason, we won't be able to have a test and trace system as robust as South Korea. First, test, trace, isolate is a containment strategy, we are past that and now in miitigation. The outbreak is too large and the US population is too large to effectively do things the same way.

There are some assumptions that are being made about who gets sick is skewed. In this JAMA article The Charlson Comorbidity Index score of the patients who had an outcome was 4, which correlates to a 10 year risk of death of 47%. This is significantly better than the average patient I care for on a routine basis. The majority of the patients that I cared for in NY would not fit into a group that I would consider significantly ill with little meaningful life ahead of them.

While much of the attention is paid to the deaths, death rate, etc, there is a potentially much larger group of survivors that are going to have major issues moving forward. This article addresses some of the ongoing and sometimes lifelong issues that survivors of prolonged ICU care experience. Beyond that, in our farewell meeting with the CEO/CMO of the system we worked for, said that across their 13 hospitals, as of 4/30, there were approximately 450-500 patients who were going to survive, but would never be able to be extubated. They will require a tracheostomy and lifelong ventilation due to the pulmonary fibrosis. Most of them will need to be in ventilator nursing homes. By way of comparison, there may be just 70-80 patients who are similar in the state of Utah. The financial burden for this care will fall to medicare and medicaid. The economic impact of the deaths and the survivors, through loss of work productivity, short and long term disabilities, and medical expenses is not being discussed enough.

A comment was made that US hospitals have not been overrun. In areas with a significant outbreak, that would not be accurate. In the hard hit areas, they have been able to accommodate the numbers of patients, but the overall ability to care for those patients is altered. Nursing-patient ratios in ICU's and medical floors are not medical standards. Physicians who are not specialty trained for inpatient or ICU medicine are delivering care that they are not trained to do or are comfortable doing. Certain medications are in short supply, leading to less appropriate alternatives.

IMO, the only thing that has spared most of the country from experiencing a major outbreak is the lack of air travel to and from the major hot-spots nationwide. And the relative isolation that most communities in the midwest and west have from each other.