The new normal in the age of coronavirus.
World stock markets are roiling and now I know why. I’m in Kansas City visiting my ailing mother and cannot enter her nursing home because I’m from Toronto, a city where coronavirus has struck, and am therefore denied entry.
Her long-term care facility is locked down, as all such residences will likely be in the weeks to come, because they are ground zero in the battle against this pandemic. This is because it is imperative to avoid infecting hundreds of thousands, or even millions, of elderly patients and their caregivers, a situation that would overwhelm the country’s entire healthcare system.
This is the new normal, so we all must simply get used to it. We are going to be stranded, inconvenienced, ordered around, quarantined, denied services, lose net worth and be frightened until a cure and vaccine is formulated in a year or so.
Italy cratered markets by locking down its economy, the eighth largest in the world, in order to halt the spread of coronavirus among its 60 million people. The government has banned everything except grocery stores and pharmacies from operating, in order to help stop the spread.
This turned jitters into panic in the markets, more so than when similar measures were taken in China, where the pandemic began. That is because nobody believes China’s figures, but Italy has been transparent and shown that the disease will spread, unless draconian measures are imposed.
Italy’s figures are also scary because they reveal a fatality rate of 3.4 per cent, which is frighteningly high compared to other communicable diseases like influenza. This is alarming. Italy is the canary in the coal mine and its economy has gone into recession. This is a fate that awaits all economies, thus the stock market panic.
So how bad could it get? Italy’s high fatality rate may be due to its unique demographics. Some 23 per cent of its residents are highrisk because they are 65 or older. Other countries, with more youth, may fare better, but the toll will depend on the quality of the medical system and the effectiveness of public-health efforts. Fortunately, Canada gets a passing grade on both, but the United States does not.
This week, reports quoted Dr. Brian Monahan, Congress’ in- house physician, saying that he expected up to 150 million Americans to contract the virus. There are only one million hospital beds in the U.S.
If the Italian death rate of 3.4 per cent holds, that’s a potential American death toll of up to 5.1 million, which is roughly equivalent to the population of metropolitan Boston. In Canada, it could result in up to 510,000 fatalities, or the population of metropolitan London, Ont.
This week, Germany estimated that two- thirds of its population, which is also aging, will be infected. There’s now a very real risk that the global economy will melt down like in 2008 and have to be kick-started again through a concerted multilateral effort.
Individual countries must undertake widespread testing and screening and impose quarantines and travel bans. Fiscal stimulus must be allocated to boost medical systems and provide money to keep economies going. The U. S. government is considering providing help to small businesses, workers and taxpayers by postponing tax return deadlines this April. But at this point no one knows exactly how much government help will be needed, in the U.S. or Canada.
The world’s beleaguered investors will take a further battering and buying or selling is not an option until the increasingly terrible headlines about cases peak sometime in the future, then begin to abate. My guess is that martial law will be required, at least in parts of the U. S., as medical care becomes impossible to obtain.
Once a cure or vaccine is developed ( estimates are a year from now), or signs indicate the virus is contained, then the market and the economy will take off again.
But the world will not be the same until then and neither will any of us.