‘OPERATION WARP SPEED’ RUNS INTO A HARSH REALITY CHECK
The COVID -19 lockdown has left the world’s economies and markets in tatters but not ruins, thanks to trillions from The Federal Reserve Bank and governments. But they will skyrocket when a vaccine arrives.
Enter U.S. President Donald Trump who launched “Operation Warp Speed” last week and promises that a vaccine will be discovered around election time this fall. It was notable that his top science expert, Dr. Anthony Fauci, was masked and mute during this news conference. And Trump’s touting was sadly reminiscent of Vancouver stock promoters who, it was said, were always lying if their lips were moving.
The president’s prediction is widely discredited but made markets take off as this week began even though stock market guru Jim Cramer of CNBC cautioned about timing: “We can’t let the president keep talking about a vaccine being made by the end of the year.”
To be fair, markets also rose because cautious reopenings are underway, which may salvage some jobs and businesses. But the real question is how long will this pre-vaccine world linger and, depending upon duration, who can outlast it and who cannot?
Compare timelines from the Rose Garden to the forecast last week by Fauci. He told a Senate committee that “even at the top speed we’re going … we don’t see a vaccine” by the fall, but it’s “very likely” one will be developed within a year to 18 months.
And reopenings won’t change the reality that many business models simply cannot survive at anything less than warp speed.
Social distancing, and quarantining of elderly or sick people, will continue in most regions throughout the pre-vaccine period.
This begs the question: How can a restaurant or airplane or gym or hair salon survive, with only half of its seating, without doubling prices? The same challenge applies to sporting events, bars, cinemas, theatres, conventions, art shows, county fairs, or any sizable gatherings.
A swing toward working remotely has been helpful, and will prop up some employment, but jobs lost won’t be replaced, numerically, for at least five years as happened after the 2008-09 crisis. This will tank real estate values, notably shopping malls, storefront properties, industrial and office buildings, and luxury condos built in major cities like New York, London, Toronto and Miami.
This week, there was some good news out of clinical trials, but it’s too soon to crack open the champagne because the recovery will be sluggish, said Jerome Powell, the Federal Reserve chairman, in an interview Sunday.
“This economy will recover; it may take a while,” Powell said on 60 Minutes that aired Sunday.
“It may take a period of time, it could stretch through the end of next year, we don’t really know.”
Last week, the Atlanta
Federal Reserve forecasted a 42.8-per-cent decline in GDP between April and June.
Goldman Sachs estimated a 39-per-cent collapse.
There are now roughly as many Americans who have applied for unemployment benefits as there are Canadians in total.
The best hope is that the economy will hit rock bottom this quarter or next, thanks to the Fed, and that partial reopenings will not result in new outbreaks and lockdowns.
But a vaccine miracle soon is unlikely.
“I think it’s possible you could see a vaccine in people’s arms next year — by the middle or end of next year. But this is unprecedented, so it’s hard to predict,” said Dr. Paul Offit, a professor at the Perelman School of Medicine at the University of Pennsylvania.
When asked which vaccines were most promising, he said: “Who the hell knows? It’s like science by press release. I don’t see these things published in medical journals. I read about it on Business Insider. Wait for the efficacy and safety trials — that’s the pudding. The proof is in the pudding.”
The Manhattan Project took four years to come up with a weapon that ended the Second World War. Not only must a vaccine be discovered and proven safe, but its manufacturing and distribution will take many months to roll out. Like others, this war won’t end quickly, nor will it end by presidential decree or with a flurry of positive press releases. It will end when the scientists say it’s over.
Like others, this war won’t end quickly, nor will it end by presidential decree or with a flurry of positive press releases.