The Consequences of Coronavirus

A couple years back, I spent my down time playing a video game called Plague Inc. The game starts off with you playing as a bacteria, parasite, fungus, or of course as a virus. Your objective is to spread yourself across the globe infecting as many humans as possible, eventually leading to the culling of all of humanity. To win, you must silently evolve and spread, careful to not alert too many humans nor remain too isolated. On the way, you cause travel bans, mass hysteria, political clashes, etc… Sound familiar?

Screenshot of Plague Inc – A Popular Disease Simulator Game

Now, we are seeing an eerily recognizable reality to the fantasy of that game. Coronavirus-19 has become the modern plague of our times. And while it is no where near the level of Plague Inc’s apocalyptic end game, COVID-19 threatens to upend many of our society’s given structures and force the world down a new path.

The Eagle and the Dragon

The in vogue ideology amongst politicians these days is nationalism. Various reasons have made leaders place primacy on their internal interests, but COVID-19 has exacerbated this introspection and isolation to new levels. Countries have begun closing their borders and stopping flights. Unfortunate ethnic suspicions have cropped up against those with East Asian features and ancestry. Protectionism in trade will skyrocket as leaders seek indigenous supply chains and diversification away from China.

But something interesting is happening in the midst of this continued rise in nationalism. We are beginning to see a new internationalism arise. One not based on a Western axis, but one based on a fealty to Big Brother.

China is now being asked and tasked with saving various countries from its own viral spawn. The trade off being that those that accept its aid will tow its line in word and soon enough in action. Serbian President Aleksandar Vučić recently has called European solidarity a “fairy tale” and publicly exalted China for their aid. Italy, a country increasingly hostile to the EU, continues to crumble as its European neighbors watch on. In an amazing turn of events, we are watching China deftly replicate its debt traps with a biological twist. By providing desperately needed aid to fight a virus they generated and then covered up, China is turning its problem into its opportunity.

An Aerial Shot of an Empty Wuhan, China

On the other hand, the US is squarely focused on internal efforts and economic clout. The US Dollar flexes its muscle as the de facto reserve currency of the world even as the Fed is pumping out trillions in liquidity into the stock market. American states and local governments have increasingly been put on a war footing concerning health measures as the federal government tries to fix finances. America was fairly quiet on the Chinese origin of COVID-19; that is until very recently with President Trump calling it a “Chinese Virus.”

The reasoning for this sudden outburst lies in the revelations of Chinese malpractice compounded with their recent arrogance have added fuel to the fire of US-China conflict. From the initial coverups in January 2020 to the crackdown against whistleblowers such as Li Wenliang, China’s government has shown a penchant for deceit and ruthlessness. While they seemingly have gotten their situation under control (then again, this is coming from a regime who are experts at manufactured consent), China has now chosen to gloatingly chide other countries and even push wild conspiracy theories that COVID-19 was an American plot to defame the Middle Kingdom.

COVID-19 may prove to be the spark to truly light a Sino-American tussle, but in the midst of a clash of titans is the implosion of another – Europe.

The Fall of Rome

Bruno Maçães, a geopolitical analyst, has recently provided a damning critique on Europe’s reaction to COVID-19. Singling out the arrogance of European leadership and society alike, Maçães contrasted Europe’s nonchalant reaction with the Asian blitzkrieg against the virus.

Over the past several years, we have the European leaders’ internationalist streak halted by their own people, and now the European Union itself sits in jeopardy because their leaders didn’t stand up to make tough decisions. Rather their curate policy for their people, the EU has acted more like an NGO or a mercurial money lender rather than a mission of European unity.

The meandering pace of European politics has been blindsided by the manic pace of COVID-19. Even worse, is the effect on Europe’s economy. The Eurozone is facing a potential economic contraction with more and more cases reported each day.

European Union Banner Across a Cloudy Sky

What does this mean for the future? I believe we will see a further disintegration of the EU, especially with the UK setting a precedent and an already irate Italy facing the brunt of COVID-19, with little help from its European neighbors. The only possible lifeboat for the EU’s sinking ship would be a wholesale reformation. A union that cares more about a united European defense pact rather than granting open borders. A union that is seeks more economic cooperation and less political interference. A union that can actually define what it means to be a “European.”

When great societies encounter difficulty, they band together to face their problems united. They are bound by culture, language, religion, or other transcendent paradigms. However in Europe’s case, there is scant historical precedent for a “united” Europe politically or even culturally. Contrasting with the Indian subcontinent that had clear civilizational markers, traditions, and borders, Europe may finally reach a point where individual states wake up out of the European dream into a broken reality.

What is the breaking point? As with most transitions in the world, it involves money and power.

A Dismal Science

One of my favorite authors, Nassim Taleb, despairingly compares macroeconomics to astrology. While I agree that having humility in economics is more important than not, it is important to (attempt to) demystify policy impacts on markets and economies. Taleb himself leans toward a more Austrian lens in economic policy, a perspective that may come more to furor with the increasingly tumultuous banking situation in Austria’s continent itself.

Central banks across the developed world are entering uncharted territories with prolonged low/negative rates and massive liquidity pumped into markets. For a long time, both of these policies were theoretical and thought to be reserved for extreme contractions and deflation. However, over the past decade long bull market, governments have brought rates lower and liquidity higher at the slightest sign of danger during their economic adventures. European banks have especially become precarious with their countries’ central banks capitulating to the slightest scares and stresses of the EU as well as their own politicians. Now that a true crisis emerges with the coronavirus, monetary measures have been almost exhausted with banks continuing to dig themselves in bigger holes.

The De Facto Reserve Currency of the World – the US Dollar Is Now Being Tested by Massive Liquidity Pushed by the Fed

This is where the fiscal policy steps in tandem with state power. Emmanuel Macron has become one of the first leaders to announce gargantuan fiscal measures to aid small businesses, the poor, and those most affected by COVID-19. Similar extreme fiscal measures are being followed by other world leaders as monetary actions stutter. Post-2008 bailouts had regular citizens seething at elites and politicians alike, a hatred that would manifest years later as a factor leading to populist nationalism. This time around is a chance to instead directly send aid, assistance, and yes even “bailout” small businesses and underclasses rather than irresponsible rent seekers who give themselves massive bonuses.

Macron has also adopted the Asian path of wide reaching preventative policies that have strapped civil liberties in a time of need. The creep of state power has now become a leap in numerous countries; and while aggressive preventative measures may save lives, there may be fewer liberties safe after the storm.

Ebb and Flow

Today’s coronavirus restrictions may birth a whole new category of freedoms tomorrow. Economic booms have usually followed historic pandemics. Innovation has thrived in the cut throat environment post recessions. If countries continue to double down on their preventative measures and bailouts for vulnerable sections of the society, COVID-19’s aftermath may see the bloom of new technology and economic growth. We may even see real wages rise after this calamity as protectionist policies of low immigration and trade barriers are tested in a globalized world.

We may finally see the much touted rise of remote work as well as artificial intelligence as the benefits of both becoming glaringly clear in an environment where face to face human interaction is limited and efficiencies must be maximized for companies to survive. Both of these evolutions have the potential to drastically change how people work and markets operate.

Earth at Night Illustrating Current Connections and Megalopolises

On a global level, localization of economies and supply chains will see new coalitions of nations coalesce. China’s tremendous success over the past couple decades of globalization may unravel in an attrition laden confrontation with the USA. But perhaps, it it may not be the Sino-American relationship that is most transformed, but China itself.

Red Scare

China is an ancient civilization, the last surviving one along with India today. I have a strong admiration for a culture and people that have survived for thousands of years, even with my personal disdain of the Chinese Communist Party. But even here, I must applaud the CCP’s accomplishment of lifting hundreds of millions out of poverty in the last few decades (though this is after they killed tens of millions in their Great Leap Forward and Cultural Revolution). Xi Jinping has transformed China into a juggernaut. Erecting the towering Chinese economy, Jinping has had China leapfrog the world in infrastructure, technology, and various other fields. The crimes of the CCP against the Tibetans, Uighers, and many other Chinese citizens have been thrown under the rug as governments and companies alike have bent the knee to the Dragon.

But the coronavirus’ plot threatens this Chinese story.

Democracies react to internal strife with a changing of the hands. Dictatorships react to internal strife with an iron fist. The CCP may finally be facing challenges from its own people, not only as questions arise in the aftermath, but also as its financial clout is threatened by this debacle.

Xi Jinping Following the Footsteps of Mao Zedong [Lima Charlie News]

China’s economic strength was the golden armor that protected it from internal and external dissent. But now cracks have begun to form as exports have collapsed, local economies have frozen, and potential deflation of its currency. China’s powerful placation to the masses, its economy, is shuddering, and we may finally see a similar backlash of the proletariat we witnessed decades ago.

Yet, I still would not count out Xi Jinping. Xi’s story is one of success, and winners usually keep winning in China.

This is a repost from The Emissary. Please visit the blog for more content and thanks to Brown Pundits!

Published by

The Emissary

Find more of me at:

23 thoughts on “The Consequences of Coronavirus”

    1. correct. they specifically mentioned that in an emergency medicine lecture to us last week

  1. The world including China are in for a long haul in the financial and economic mess. Chinese corporate loans have seen massive increases to the tune of 500% over the last decade. China had also been giving loans to many countries in the world esp developing ones.
    “ountries worldwide owed more than 6% of world GDP in debt to China as of 2017”. It is even more as of now 2020. With recession and very likely depression, they can’t get their loans back and it will be affected as much if not more than the west. Many of the financial transactions done by Chinese firms and the govt , is opaque and under the radar and nobody knows the true extant of it.

    The USA had thought it can do imperialism with having other countries in it’s financial stranglehold. Now China is the competitor

  2. Yes, Trump downplayed the potential havoc that Corona virus could wreak on a nation that has great freedom and mobility and there are many who believe that “the government is the problem”. Clearly we are paying a heavy price for this.

    However, I am disappointed at the response from Biden and Sanders. Why is there no initiative that starts with the Democratic base that gets citizens to take social distancing more seriously? After all, Bernie is supposed to have this great connection with the millenials and Biden with older voters. What is stopping them from pivoting their respective campaigns to stay relevant?? They seem like deer caught in the corona virus headlights.

    A knee jerk reaction – blame Trump – will only backfire right now.

    1. “After all, Bernie is supposed to have this great connection with the millenials ”

      I think millennial live in their own world. I just hope there is twitter version of Corona which afflicts all this woke-sters* twitter accounts.

      * This social distancing has given this ass holes even more time to tweet

  3. Have been keeping an eye on Fox TV segments. There seems to be a concerted attempt to blame corona virus and its impact on China. A Congressman was talking about getting China to pay for the hit to the US economy. This is consistent with Trump’s frequent references to the “Chinese virus”. Clearly Trump and the Republican party needs a scapegoat right now.

    Clearly China withheld information and bears some responsibility for this ravages that the world is and will experience. The residents of Wuhan also paid a heavy price for the CCP’s heavy handed and inept response at the outset from Oct – Jan. However, subsequently the CCP and Chinese government agencies crackdown appears to have brought the spread of the virus under control. The world was watching but not taking any lessons.

    However, blaming China for our own inept response is not just sad, but also dangerous. As this hits the US economy, we are likely to see increased xenophobia directed not just against those who appear to be East Asian, but also more broadly at those whose ethnicity is non-European. Very consistent with the messaging that we have seen from Trump in the past.

    Some turbulent times ahead.

  4. Calling it the Chinese virus is perfectly legitimate. It’s the combination of Chinese cultural traits (consumption of wild animals and wet markets) and government (clampdown on whistleblowers, denial in the initial stages and not warning the world until too late) that’s responsible for this shared mess. China wants to be an ‘adult’ on the world stage, there’s no way they should escape unscathed without being named and shamed. I for one don’t believe it’s racist to do so and those who claim racism are only being disingenuous. I also dont believe the Chinese death figures, it’s probably going to be much higher than what they report.

    I think this mess gives a sneak preview into the scary new era of Chinese dominance – lack of concern for human and animal rights, misinformation, continued trade in wild animals to appease their insatiable bloated appetites for animal products, increased environmental destruction, lack of concern for global consequences, etc.

    1. Can’t agree more. This country thinks that being the biggest thug and throwing money to lesser privileged is the way to the top. Acts like a road side ruffian who suddenly became a mafioso. Lacks the finesse which America has.

      The way its acting now showering blame (and patting itself ) on other countries shows that it thinks people have already forgotten how and who started this damn thing. It think s the world sees it as “world” virus. Countries indebted to Chinese for aid might keep their mouth shut while they have their hands full with crisis, but once this is over there will be reckoning

  5. On a side note.
    Ray Dalio talked about, just last year, how traditional monetary policy tools like QE and lowering interest rates may not be enough for the next recession post 2008 crash. Well, we are basically headed to the next recession (pretty much guaranteed two consecutive quarters of negative growth).

    He talks about the US might end up doing what Japan did, when facing the threat of deflation. Coordinating the supposedly traditionally independent monetary policy with fiscal policy to inject money into the system. Any thoughts?

    search “its-time-look-more-carefully-monetary-policy” to find his exact rationale

  6. Islamic State “R&D” labs in the deserts of Iraq would now be busy with different kinds of wild animal and bird soups to see which produces the pandemic causing novel virus so that they can do virus jihad on the rest of the world.

    ISIS and their franchises in Asia and Africa would be watching with glee how vulnerable civilized world is with pandemics.

  7. This evening National Economic Council Director Larry Kudlow says the coronavirus relief package will be $6 trillion

    $6 trillion is the biggest relief package , dwarfing New Deal or marshall Plan. This observation caught my eye

    2007- 2017: $10 trillion in new debt
    2017: $1.5 trillion tax cut
    2019: $1 trillion deficit
    2020: $6 trillion bailout

    The building of the American Weimar Republic.

      1. Weimar Republic which was successor to the Hohenzollerns started with a huge external debt – War Reparations imposed by the Treaty of Versailles. That huge external debt combined with the need to reconstruct the war ravaged country flummoxed the the then German govt. So they printed tons of money, which led to hyperinflation of 1922-23. The economic trauma of that period is one of the causes of rise of Nazism.

        The US case is different ; the US does not have any reparations to pay. OTOH trillions of $$$ which the US govt has spent has gone into share buybacks which have been the main cause of stock market growth from 2009. Basically, all the debts incurred by the US gov has only gone into making the super rich even richer. Fat cats of 2008 have become fatter cats. But all this economy on debt is unsustainable. So far the US Treasury Bonds and many other western government bonds have had high value , i.e. those who buy Bonds and loan to the governments are sure that they get their money back. If the govt is floating on debt, that confidence is gone. Other countries including China have followed similar paths.

        You will see lot of pain ahead resulting in social upheavals.

        PS Even though the Nazi govt repudiated the war reparations, the post WW2 Germany continued to pay it till 1980s I think


    A SARS-like cluster of circulating bat coronaviruses shows potential for human emergence

    Abstract: The emergence of severe acute respiratory syndrome coronavirus (SARS-CoV) and Middle East respiratory syndrome (MERS)-CoV underscores the threat of cross-species transmission events leading to outbreaks in humans. Here we examine the disease potential of a SARS-like virus, SHC014- CoV, which is currently circulating in Chinese horseshoe bat populations1. Using the SARS-CoV reverse genetics system2, we generated and characterized a chimeric virus expressing the spike of bat coronavirus SHC014 in a mouse-adapted SARS-CoV backbone. The results indicate that group 2b viruses encoding the SHC014 spike in a wild-type backbone can efficiently use multiple orthologs of the SARS receptor human angiotensin converting enzyme II (ACE2), replicate efficiently in primary human airway cells and achieve in vitro titers equivalent to epidemic strains of SARS-CoV. Additionally, in vivo experiments demonstrate replication of the chimeric virus in mouse lung with notable pathogenesis. Evaluation of available SARS-based immune-therapeutic and prophylactic modalities revealed poor efficacy; both monoclonal antibody and vaccine approaches failed to neutralize and protect from infection with CoVs using the novel spike protein. On the basis of these findings, we synthetically re-derived an infectious full-length SHC014 recombinant virus and demonstrate robust viral replication both in vitro and in vivo. Our work suggests a potential risk of SARS-CoV re-emergence from viruses currently circulating in bat populations.

    1. do you think the recovery will be V shaped, given that is what usually occurs with wars and pandemics? or do you think it will be more like typical recession like the 2008 crash with anemic demand? I think more of the former. I am interested though in the possibility of the latter.

      1. No it won’t be V shaped; more like L shaped. Surging unemployment, supply bottlenecks, bond market collapse, banking crisis and all of them will cascade in the coming months

  9. The US job losses exceed 6.6 million as of now. This far outstrips in scale and speed unemployment in any previous period. This is going to morph into 1929 style depression.
    Within 2 weeks it has gone from lowest umemployment to highest

Comments are closed.

Brown Pundits