China's Wuhan shuts down transport as global alarm mounts over virus spread - Page 23 - Politics Forum.org | PoFo

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Provision of the two UN HDI indicators other than GNP.
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#15066913
Drlee wrote:Ok folks. A little perspective.

I get that this is the Politics Forum. But at the end of the day, the Chinese officials are facing a monumental task. There was a little piece of the news that most missed. A lady in an apartment building infected someone below her by 10 stories because of an "uncapped pipe". Now I do not know if this is true but the Chinese media is reporting it is. If true can you get your mind around just how dangerous this virus really is?


Oh, this transmission was in Hong Kong.

Well, to be fair, something similar actually happened once during SARS in 2003, infecting quite a bunch of people in a building and, as far as I remember, killed a few.

This time, regardless of how the Carrie Lam administration should be overthrown, they acted quickly for this case and evacuated the building immediately, which admittedly saved quite some people.

The pipe isn't that dangerous. We all live by at least some of them and we have ways to prevent viruses spreading through them (namely, keeping some water in the U-shape section). However, certain buildings' (especially public housing estates') design of the pipes might have let viruses spreadable.
#15066923
Potemkin wrote:That's a good point. The CCP could very well end up as a victim of its own success. To a large extent, that was true of the Soviet Union too, a factor which I believe contributed to its downfall.

Its funny but I never see it mentioned that Stalin abandoned even in name "The Dictatorship of the Proletariat" in 1945, presumably for "Dictatorships of the Proletariat". Soon even this was abandoned for "Peoples Republic"s and various other novelties. If the Poles and even the Germans needed their own on paper fully independent governments, why not the Estonians, the Georgians or the Kazaks?
#15066977
Meanwhile regarding the epidemic.

China has shut down another province.

The infected and death toll skyrocketed last night as the Chinese included SOME of those diagnosed by CT. Expect far more in the future. They finally admitted that they were only including in the death toll those with a positive RNA test.

As of 10 Feb the US has 15 confirmed with 68 still pending results. If the numbers hold not that many of them will test positive but we do not know.

The cost to China is enormous. Wait until they start cashing US bonds to pay the bill. They hold about a trillion in US debt.
#15067253
@Rancid That wouldn't be a bad thing for the US. It would be great for the banksters as well.


I am confused. I thought it would be a bad thing. Tell me what you are thinking about this. I have no expertise in this area.
#15067300
Drlee wrote:I am confused. I thought it would be a bad thing. Tell me what you are thinking about this. I have no expertise in this area.


I'll tell you what I'm thinking!

EDIT Preface: Don't get me wrong, I'd rather this virus not exist, but there is a silver lining economically speaking.

First, China cannot cash its US debt instruments willy nilly. You can only cash a bond when it reaches maturity. Although you can hold a bond after maturity, it stops paying interest, so most sensible people cash it out immediately. Governments holding US bonds do this. That is, China never holds bonds that are already mature, so they are not holding anything they can cash out directly with the US treasury. All of their bonds are not mature.

If China wanted to unloaded the bonds to raise cash quickly, they would have to sell them on the secondary market. The US government will not have to pay a dime to China as they would be selling it to other random people on the global market. Hell, I would buy some if this happened, it would be fucking a deal. This will create a MASSIVE buying opportunity for the rest of the world as they would be able to scoop up the bonds at a price that is way lower (because they are selling a massive quantity). They would likely sell at a price that is way lower than their face value (the cash out value at maturity). The rest of the world will buy these up because the rest of the world is not in a panicked state right now. The US economy and the rest of the global economy isn't going ot suffer as bad as the Chinese economy. Also, the banksters will make tons of money by buying and brokering these bonds out.

Further, this would hurt China far more than the US or anyone else. The dumped bonds could potentially cause the US dollar to drop a bit. It will not cause it to collapse though, because again, the rest of the world is not panicking, and the rest of the world's economy is mostly ok. This will make US exports more competitive. It will also make China exports less competitive on the global stage.

Side note: This virus is causing companies to de-risk their supply chains from China (i.e. open factories in places that are not China), which will spread more money around the globe instead of concentrating it in China. Natural wealth redistribution, this is a good thing for the longer term global economy.

Overall, a Chinese sell off of US debt would hurt China FAAAAAR more than the US or anyone else. I would argue, if they do sell off, you need to get in line and buy! I would most certainly drop a good $50,000 if that happened. I love to buy bad news. I've made the most money on the market by buying bad news. :lol: To me, bad news = buying opportunity.
#15067334
Very good answer Rancid.

Thanks very much. If it should happen I might try to get into the cue.

Meanwhile on the virus front. The US has opened 5 testing centers. They will be available for testing anyone with flu like symptoms who test negative for flu.

On a better note. A US manufacturer which has a successful vaccine for Ebola and SARS has begun testing a new vaccine for CV. They have begun mass production of a vaccine for human testing and believe they could begin extensive human testing as soon as early summer. This would be epic if it works out.

I would be curious to know what the Chinese have in the lab. They are very good at making stuff but the rely to heavily on industrial espionage in place of good science. (Snarky comment.)
#15067348
@Drlee

Since you know about medicine, What is the sudden death symptom about?

The pneumonia deaths are understandable as a result of a lower respiratory tract infection.

The scenarios when the patient is getting better but then dying is also understandable as secondary infections.

The sudden death one I don’t understand. What is going on there? In videos showing it, it looks like the victim was poisoned.

Also, there seems to be reinfections happening. Are we really dealing with one disease?
#15067359
Rancid wrote:Overall, a Chinese sell off of US debt would hurt China FAAAAAR more than the US or anyone else.


That is what US Pofoers like to believe; however, it's not that simply. Obviously, if the Chinese tried to sell off all bonds at once, they would take losses. But that's not going to happen. If they decide to de-invest from US bonds, they'll do it gradually. Since China is a major buyer of US bonds, a reduction of demand from China will make it harder for the US to refinance its debts. In other words, the US government will have to pay more to finance its debts if demand for US bonds decreases. That's what drove Greece to near bankruptcy.

US debt is ballooning due to Trump's tax cuts. If demand for US bonds decreases at the same time, that could put the US government into a difficult position. Today, Greece can already get cheaper loans than the US.
#15067372
AFAIK wrote:@Rancid
If everyone buys cheap bonds from China who will buy full price bonds direct from the gov't? Won't they have a funding gap if this happens?


Good question.

In order to get people to buy bonds from the government, the government would have to offer higher interest rates. Interest rates that match or are better than whatever the Chinese would be selling off (due ot the sell off, effective interest rates would go up because the value of the bond is doing down... though, the face value never changes.. lol.. it's a little weird, but that's how it works). As I said previously, this would cause the value of he US dollar to drop, but not collapse given the strong state of the economy. Again, I'm not saying it absolutely be a good thing for the rest of the economy, but it can certainly work out to be a good thing for the rest of the world. Assuming this virus does fizzle out in the next few months.

FYI, the government offers bond auctions about 300 times a year, for different types of bonds. There's an auction open right now for 30 inflation protected bonds right now. I'm buying some actually. Not because of the virus, I was planning on doing this anyway.

Bonds are usually $100 each. Say the US government offers them at 2%. Usually they pay the interest every 6 months. So every six month you get $1 on each bond. However, you can sell the bond on the open market. Depending on economic conditions, people would be willing to buy that $100-2% bond at say $110. Because they paid $110 for it, the effective interest rate drops to 1.8% (2/110). However, in a sell off, the bond would likely sell below the face value, say $90. This makes the effective interest rate 2.2% (2/90). The government then needs to offer new bonds at say 2.2% or better, to get people to buy from them, rather than China. I hope that makes sense.
#15067373
Atlantis wrote:That is what US Pofoers like to believe; however, it's not that simply. Obviously, if the Chinese tried to sell off all bonds at once, they would take losses. But that's not going to happen. If they decide to de-invest from US bonds, they'll do it gradually. Since China is a major buyer of US bonds, a reduction of demand from China will make it harder for the US to refinance its debts. In other words, the US government will have to pay more to finance its debts if demand for US bonds decreases. That's what drove Greece to near bankruptcy.

US debt is ballooning due to Trump's tax cuts. If demand for US bonds decreases at the same time, that could put the US government into a difficult position. Today, Greece can already get cheaper loans than the US.


If they gradually sell off, that's fine too and nothing changes much. There's no problem here. There are plenty of people willing to buy US debt instruments.

My argument is, that at worse, there is no benefit to the rest of the global economy. At best, there is a benefit. I'm saying, its unlikely this virus will cause a long term slowdown/recession.... ASSUMING the virus fizzles out in a few months. If this thing gets worse... we will have bigger things to worry about than money. Further, it's causing companies to de-risk from China. This is true and happening, it's not conjecture.

My point here is, this is not necessarily bad for the rest of the world from a long term global economic standpoint.

Overall, there's no reason to believe China would sell their bonds. This is all hypothetical anyway, and it likely not happen either. Which speaks to my point, that this virus isn't going to create economic chaos for anyone. It will slow everyone down, but not cause a crisis. It will also slow China down more than anyone else, since this is happening in their country (which means others stand to benefit).


This isn't just something people want to believe. This is what would happen. With respect to the debt, the US NEVER has to pay off the debt, all it needs to do is balance the budget, which is a far easier task, and has been done in the past.

The difference between greece and the US, is the the US is a major engine of the global economy, it is capable of producing advanced technology that improves global efficiency (which fights slow downs). Further, no one wants to see it slow down as the US would ismply drag everyone else down. The US has far more knobs/time/leeway to get it's debt situation in order if there ever were a sell off (which, there won't be a sell off anyway). Further, I would argue the debt is still not really a big deal. The problem is the deficit, and that can be fixed more easily. In this sense, I agree with steve_american in that the debt and deficit really aren't as bad as people claim. People claimed it would be an issue in 2008, yet we got out of that just fine....well, except for poor people.... However, from a macro economic perspective, which is the subject here, poor people don't matter (sad, but true).
Last edited by Rancid on 15 Feb 2020 15:44, edited 1 time in total.
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