Preface: The pros and cons of libertarian lockdowns

1 Reopening Requires Testing Relevant Variables

2. Shockwave: "Pandemic's Consequences for the World's Economy A. Tooze

3. Attacking COVID-19 Available Options Ended Quickly

4. What Happened and What May Happen Mohamed El-Erian

6. Economic Action Has Begun

6. Measuring Reopening Success?

7. Opening too early?

8. Suggestions

Epilogue      5/27/20     

Other CV Stuff

The Truth About COVID 3 min videos

The Best Case Vaccine Scenario 10/12/20
A Worst Case Vaccine Scenario

The Global View

 Latest News
A Concise History June 12 Summary
What Comes Next

Planning the Economic Recover
 COVID 19 Death Cycle
Media Caused Hysteria?
OVID 19 Morality Thought Experiment
Fake News Covid-19

Print Your Own COVID -19 3C Poster

Preface: Inspired by The pros and cons of libertarian lockdowns – or “don’t be a dickhead”

First, freedom is valuable. To make something punishable by the power of the state is not a step to be taken lightly. But, we do not rely on peer pressure as a substitute for making murder illegal. When life and death are on the line, laws and punishments are reasonable.

Second, most people try to do the right thing. We are social animals and fear being ostracized. In the UK, the vast majority of people complied with the lockdown, and not because they expected the police to come knocking.

So the third argument to fight the next stage in the fight against Covid-19 requires a subtlety that the law cannot provide. To stop the spread, especially in the NY area, there was a strong case for a blunt, “stay at home, save lives” approach.

Now we are trying reopen states while preventing a second wave. We must find the most effective ways to prevent infections while still allowing both economic activity and the social activity that makes life worth living.

Every workplace, every social setting, and every classroom is different.  While firm guidelines and ­standards can be useful, no law can reflect my own intimate judgment about how much risk I am willing to take.

The case for a libertarian lockdown, one that relies on voluntary action and social pressure, is strong. But there is also a powerful case against.

First, and most crucially, this is an infectious disease. Each case of infection risks sparking many others. People may die because of people actions or inactions.

Second, we are figuring things out in a stew of ­misinformation, quack remedies and questionable advice. Can we expect common sense to be sufficient?

Third, people may lack either the power or the information to make a real choice. If a restaurant is safe to reopen, I can go or not go. The restaurant looks conscientious at the front of house but is taking risks in the kitchen, would market forces really punish hidden offences quick enough to prevent getting the virus? What about employees.

A middle amount of national oversight is possible, but it depends of trust in government. I am not sure the US is at the top of the trust government list.








1. Relevant Variables
 Testing, Virus Rates, New Cases

Measuring Reaction to More Cases With Reopening



Edited By Quick Notes See Unedited Chart

Shockwave: Pandemic's Consequences for the World's Economy
from Adam Tooze Summarized by Walter Antoniotti 4/9/20

  In Europe's age of austerity, we have not been able to count on politicians to deliver adequate fiscal stimulus. The EU has until the current moment been deaf to any calls to loosen the purse strings. The Republicans play political football with the American budget. Only Beijing appears to hold all the strings – industrial policy, fiscal and monetary stimulus – in its hands.

[Thanks to the FED] After 2008 the US and European stock markets roared ahead of earned incomes, exacerbating inequality. All over the world businesses borrowed much in dollars to take advantage of America’s deep financial markets and low interest rates. But that exposed them to risks.

The basic weaknesses of the Eurozone are that it still doesn’t have a backstop for its rickety banking system and that it lacks a shared fiscal capacity; what’s more, Italy’s finances are so weak that they continually threaten to upset European solidarity.

In the US, the national institutions of economic policy actually work: they demonstrated this in 2008 and are doing so again now. The FED and the Treasury exert a huge influence not only over the US economy, but the entire global system. The question is how they stand in relation to a profoundly divided American society and how their technocratic style of policymaking is received by the "... know-nothing nationalist right wing of the Republican Party and its champion in the White House."

What caused a panic last month was the realization that Covid-19 has exposed all three weaknesses simultaneously. Indeed, in Europe and the US the failure of government has been so severe that we now face a public health catastrophe and an economic disaster at the same time. And to make matters worse, Donald Trump appears tempted to juggle the two.

All along, the state was actually involved as a creator of markets or as a distributor and enforcer of property rights. What is new is that the central banks are now permanently on call to add further stimulus whenever growth flags. Deep Doo-Doo for emerging markets as growth slowed and their currencies lost value.

Shock One In 2013 Fed chair Ben Bernanke’s suggested he might raise interest rates and causing markets panic.

Shock Two In 2014 oil producers were hit by the first big slump in energy prices.

Shock Three In 2015 the world economy began weathering  China's first real economic setback.

Shock Four Slow growth in EU and China caused  lower interest rates, raised the dollar's value, and hurt those with dollar denominated debt. A strong US dollar hurt US exporters causing a mini manufacturing recession  which set the stage for Trump.

Shock Five In 2017 the world began to fear Trump would end US global leadership, end world stabilization, and cause the end America’s hegemonic machine.

Shock Six Trump's trade war on Nafta, the EU and China all hurt highly internationalized businesses. Trade rivalries began and meant Huawei or Apple may not be able to pursue their global ambitions? EU was caught in the middle and continued globalization was at risk.

 German conservatives and America's anti-government right welcomed the prospect monetary discipline that would  slim down businesses that had gorged on  cheap funding. Instead, in the summer of 2019, the central banks, harried by Trump, pivoted back to expansion
Source See



Adam Tooze On The World After Coronavirus
and Should we be scared of the Coronavirus debt mountain?

Data is the Best Weapon Against COVID-19

10 Years of Change in 10 Weeks

  3. Pandemic Attack Options
Options have suboptimal outcomes.
Different mindsets in a democratic republic means some will be unhappy.

1. Close Economy, control virus, open economy when can test and find hotspots.  Think China, Singapore. South Korea

2. Do little. Protect economy. Some must sacrifice to avoid much future societal pain Think England and Sweden
Measuring the gain from avoiding future societal pain is difficult.

3. Procrastinate. Think Many Western democracies.
Some did, some didn't. Many have problems restricting liberty.
Asian democracies of South Korea and Singapore had few mass surveillance problems. With little testing possible, some shut down, other mindsets led to little action.


4. What Happened-What May Happen


2020 Began with self-confidence European technocrats preoccupied with striking a new Green Deal. The energy transition was a huge, urgent challenge that was unmooring Cold War alignments. China, not the US, looked like a potential partner.

Early January China informed the World Health Organization of a novel virus. On the stump at Davos on 22 January, Trump scornfully waved away questions about the virus. He trusted his new friends in Beijing- America had the situation under control. But the markets were worried.

On 23 January unprecedented lockdown by Chinese leadership began.

Part 1 Mohamed El-Erian

Part 2 How America Grows Out of Debt


Part 1 Mohamed El-Erian
Summarized by
Walter Antoniotti 4/26/20

Unusual Uncertainty Happened

Long-Term Economic Impact of COVID-1

I. Unusual Uncertainty Happened
  A. Improbable Events Happened-Caused Uncertainty
       1. Negative Interest Rate Government Bonds
           increased to $16 Trillion

       2. Free Trade America a becomes

       3. Oil Trade War

       4. Long Predicted Virus Pandemic a

  B. Radical Uncertainty rendered management models useless.
        The FED, business, and politicians became less reliable.

  C. Causes
Economic distortion from massive increased global
             liquidity in stock markets which have decoupled from
             the economy and became 99% liquidity driven.

       2. Technology changed so fast companies began asking
            for regulation which they hope to manage and control
    3. Climate change continued.

    4. Supply and Demand Shocks
      a. Internal and External
      b. Manufacturing and Services

    5. Globalization pause turned into a rewind
      supply chains were disrupted and began to shrink.

  D. Recovery
    1. Will not be V or Z shaped
    2. Will it be U shaped or W shaped, that is the question!

  E. Why Competition has increased
   1. Amazon eliminated traditional middleman profit
   2. Google price searching took pricing power away
   3. Uber made existing assets capita assets source

Part 2 How America Grows Out of Debt

source:  The Economist Summarized by Walter Antoniotti 4/26/20

America's wartime public debt high was 112% of gdp. Britain’s was 259%By 1980, America’s ratio had fallen to 26% and Britain’s to 43%.

Both countries had a  high tolerance for inflation and an ability to keep  interest rates low. Also their regulatory system depriving citizens of better investment options and forced everyone into low interest loans to governments. By the 1970's, economists were calling this “financial repression”.

In 2015, Reinhart and Sbrancia estimated that France, Italy, Japan, Britain and America had spent at least half their post war period in so-called “liquidation” years with negative interest. This “liquidation tax” ranged from 1.9% of gdp in America to 7.2% in Japan.

After the Great recession, from 2010 and 2019, America and the euro zone cut spending-to gdp ratios by about 3.5 percentage points. Britain’s fell by 6 percentage points. Traditional taxation, meanwhile, rose by between 1 and 2 percentage points..

Using such repression today would require redeploying tools such as capital controls, fixed exchange rates, rationed bank lending and caps on interest rates. This would lower economic freedom and be contrary to the political interests of investors and savers. If enacted, such changes may cause investment in crypto currencies and other immaterial products.

Our likely pandemic driven deflation means low interest rates and make the fiscal picture seem less bleak. Bond-buying by central banks takes much of the risk out of some society debt.

II. Long-Term Economic Impact of COVID-1

A . Government, companies, and household debt will
     increase and household debt will increase.
     to make sure that short term problems don't become long-
     term calamities which caused by an even greater surge in
     unemployment and corporate liquidity problems that may
     become solvency issues. 

B. Productivity will get even lower.
 1. Emphasis on resilience versus efficiency
rewires supply chains making them less efficient.

     2. De-globalization increases because of recent shock.
         a)  finally recognizing the alienation and marginalization
              of many segments of society.
         b) Trade war with China, Europe, and North America
         c) Virus leads to an era of de-globalization.

   3. Public-private sector entanglement
          a) Federal Reserve takes on high yield bonds risk.
          b) Ad hoc crisis management reactions rather than
               principled reactions cause a spaghetti bowl of
               public-private entanglements to be sorted out
               over time. 

C. Consumer risk aversion may decrease if virus shock
    duration creating a severity similar to the Great
    Depression frugality.

Since the Great Recession, when some economists began treating higher public debt as sustainable in a low-inflation environment, low-interest-rate world. Because the pandemic has pushed both inflation and interest rates downward their logic still holds. But lower interest requires low inflation causing and little debt depreciation. Continued debt rollover or higher taxes may become the alternatives.

Some argue that ultra-loose monetary and fiscal easing, commodity shortages, frayed supply chains and less globalization might increase consumer prices. CBs could face pressure to keep interest rates low to cap interest cost on government debt low while allowing inflation also erodes debt.

Source: The pandemic will leave the rich world deep in debt, and force some hard choices


D. Zombie Companies would be dangerous

    1. Zombie companies began in Japan where they kept alive undeserving
        companies with very low interest rates and by keeping markets open at
       any cost. This lower economic productivity, dynamism and growth.

    2. Cautious and adaptive investors can live some zombie companies.
        What is more difficult  is a move towards zombie markets where
        investment decision and capital allocation are driven by public sector
        support and by the strength of the Fed put.
   3. The zombie-fi-cation of markets results in 
       a. A loss of price discovery which erodes capital allocation
           efficiency across markets.
       b. A weaken ability for markets to discipline companies.
           The FED's venture into high yield has led to the notion
            of a win-win stock market. A good recovery obviously
            wins and a poor recovery also wins because fed buys
            equities. Continued massive intervention is a big
           dangerous step  towards zombie markets.



D. With the Global Financial Crisis of 2008 Think Occupy Wall Street

 "...we won the war against a global depression, but we lost the peace of establishing high, sustainable and inclusive growth."  While winning this ..."war against a global depression...." we must consider "...economic well-being and the inequality trifecta related to income-wealth-opportunity, and other social and political issues." 

To be part of the solution banks must extending credit when the credit quality of the economy is under pressure. If this becomes a long crisis—or a series of crises—bank credit quality becomes an issue and banks may become part of the problem.

E. The Collapse of the Fossil Fuel Industry gives us "...a golden opportunity to address the ignored related issues of the shift to green technology and more generally, a better proactive approach to climate change because the shift to green technology is only part of the solution.

We are looking at a massive supply destruction in the energy complex and government could allocate much public support to green alternatives and not just restart old-fashioned hydrocarbon industry.

F. The pandemic will leave the rich world deep in debt, and force some hard choices

5. Economic Action Has Begun" Take One

bars and restaurants under lockdown and beyond pod

It's Off to a Slow Start

The Fed's Unwritten Mandate: Liquidity at all Costs 45 min Video

US Leads the Fiscal Stimulus Race Part 1

Some Predict an Early Recovery


Some Disagree

Peter Zeihan Investing in a World of "Disorder"



Many Are Optimistic



6. Measuring Reopening Success

5/6/20 Reopened Germany still has many restrictions will remain.
Only people from no more than two separate households will be allowed
 to meet outside their homes between now and June 5.
People will have to keep about 5 feet apart when outside and face masks
 remain mandatory when shopping or using public transport.

Belgium, which has among the world’s highest Covid-19 deaths per capita
also said it would relax some lockdown measures starting May 10.

But Activity is Reviving!


Source: COVID-19: A Look at Politics and Policy in the Age of Pandemic 4/10/20

See COVID-19: Mehlman Castagnetti's CARES Act Analysis and Resources

Predicting Recovery Rate is Futile


Some Try: Projected Demand Recovery Time

Source: Piper Sandler

Cash Flow Often "the" Problem


Some Hurt More Than Others

 Source: @WSJ; Read full article


Follow the Money








7. Opening too early?
Actually it just happened-people just went out-some followed the guidelines-some did not


8. Suggestions A new policy toolkit is needed as countries exit COVID-19 lockdowns  






See Virus Determined Economy Opening

Problems Ahead








Florida Plans to Open May 1, 2020?