The USA is about to experience the largest fiscal policy shift since World War II. The House is debating whether to add $ 2,200,000,000,000 to the Federal Budget Deficit (counting loans as if they were expenses because that’s what they do). There appears to be a near consensus as all are speaking in favor. It is just possible to guess which are Republicans

I’m sure there is a similar near consensus that Rep Thomas Masie of Kentucky, who made them fly to DC by threatening to call a quorum, is a jerk (the Rep. is short for reprehensible). I don’t really wonder if someone is going to get knifed in the members only men’s room.

The Supply of Treasury securities is about to experience the largest shock in history. So what is happening to the price in anticipation of the huge supply shock ?

Quick find the shift from arguing about $ 2.5 billion vs 8.5 billion to arguing about $ 100 billion more to discussing $ 1800 billion more to approving $ 2200 billion more on the graph.

The rate is not quite at the all time record low, but it is close. One might argue that a huge Federal Debt will crowd out investment, beause it will create an illusion of wealth which makes people consumer more so the Fed will have to achieve high real interest rates in order to keep the economy from overheating. One can argue that the huge debt will cause high inflation (perhaps because the Federal Government is the world’s main dollar debtor and can make the dollar worth as little as they want) which will imply high nominal interest rates.

But one will not be able to convince investors of this. the invisible bond vigilantes clearly have got their hands on Harry Potter’s invisibility cloak.

This isn’t even a matter of much debate (except for Massie). It is clear that stimulus will help the USA and also, in particular, the GOP. When the interests of the USA and the GOP allign there is (almost) no debate, because Democrats care about the country and not just about hurting the other party. In 2009 Republicans demonstrated that they were partisans not patriots. Today, Democrats are demonstrating they are patriots more than they are partisans.

Many economists (some winners of the Nobel memorial prize) should admit that they were totally wrong. But of course they won’t.

Some economists whose response to the horrible Trump tax cut was more debt no problem can say “I told you so”

I told you so.

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For 3 days from an abundance of caution, 4 hours a day of online teaching responsibilities and extreme laziness, I have stayed in an apartment usuaally in a bed. Rome is a bit different than was I went into hibernation. There are people walking around without dogs on a leash. Some cars.

There was a guard outside the supermarket absolutely waiting for someone to come out bfore letting someone in. No crowds: no line at cashier. The Deli lady (who I thanked for risking her life to give me 100 g of spek + 100 g of bresaola said it’s a lot more pleasant this way.

Shelves a tiny bit less stocked than usual. The only thing I couldn’t get was garbanzo beans

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A clinical trial of hydroxychloroquine with 30 patients (15 treated 15 controls) has been completed in Shanghai. It is the first genuine randomized trial. It reports no evidence that hydroxychloroquine works at all.

It is true, that given the principal outcome measure defined in advance, the trial has no power. Not low power, 0 power. In a hypothetical, if all patients treated with hydroxychloroquine became healthy immediately with no symptoms and no detectable virus, then the report would be that there was not a statistically significant diference in the principal outcome measure for the treated and control subgroups.

The principal outcome measure was “can virus be detected 7 days after treatment starts”.
the answer was yes for 2 people in the treated group and 1 person in the control group.

Given that 14 out of 15 people in the control group had no detectable virus, the best outcome for hydroxychloroquine would have been 15 out of 15 in the treated group. Again a hypothetical, what if all the treated patients were assessed as cured after a week (best possible value of the principle outcome measure). This would reject the null that the probabilities were the same against the 1 sided alternative that treatment was better at the 50% level. It would reject the null against the two sideded alternative at the 100% level (not a typo).ù

So exactly zero power. Not low 0, zero, nada, niente.

With the benefit of hindsight, the researchers write that they could have designed the trial better. This does not mean that mistakes were made. When in a crisis, one has to act and must not make sure that one doesn’t do anything which is clearly suboptimal with the benefit of hindsight. That would imply sitting around thinking. They didn’t have time for that.

The secondary outcome measures provide statistically insignificant evidence that one is better without hydroxychloroquine. As noted by the authors, none of this evidence is strong enough to affect best practice of medicine (I still think that all patients without counterindications should be given hydroxychloroquine (I am not a doctor)).

The trial

At the clinical trials register, it is tagged “completed”, but the results are not yet uploaded (given the absolutely rigid standard format this takes the time of someone who is probably very busy).

The results are reported here.

p.s.

googling for the link above, I found Hydroxychloroquine Is Ineffective In Treatment Of Patients Hospitalized With Covid-19, According To Small Controlled Trial From Shanghai

To that headline I say no No NOOOOOOO. Failure to reject the null is not a finding that the null is the truth. that would only be the case if all tests had power 100%. Since this test happens to have power 0%, the error is extreme. The error of rejecting the null is universal. It is a simple mistake – a failure to understand the Neyman Pearson framework.

Since I am a big fan of the alternative in this case, it is a delicate time to point out that the headline is simply incorrect. But it is.

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Patient privacy prevents precise calculation of the fraction of Covid 19 patients in the USA being treated with Hydroxychloroquine or Chloroquine. However, Hospitals are purchasing hugely increased amounts

Christopher Rowland reports.

Data gathered in the first 17 days of March by Premier Inc., a large group purchasing organization for 4,000 U.S. hospitals, showed a 300 percent week-over-week increase in orders of chloroquine and a 70 percent week-over-week boost in orders of hydroxychloroquine.

I think that, because of the association with Trump, this is presented as a bad thing. Certainly there is a problem of short supplies. Hydroxychloroquine is used to treat Lupus Erythematosus and Rhumatoid Arthritis and those people have trouble making sure they get their medicine, because of the sudden new demand.

The article begins with the odd reference to the FDA as if the FDA regulated off label prescription of drugs. The only legal effect of an FDA finding that the drugs work when treating Covid 19 is that manufacturers would then be allowed to claim this in advertisements. This is extremely irrelevant. The drugs are off patent and produced by many firms — there are no huge profit margins there. Also the free publicity dwarfs any possible ad campaign. The FDA has no relevant authority here.

It seems that there is an idea among many people that doctors shouldn’t do anything unless it is proven to work in a clinical trial. I recall (but can’t find) and article in which Dr Arnold Relman (editor of the New England Journal of Medicine and pretty much head of the medical establishment) denounced this. Waiting for clinical trials is a decision. It is a decision which has caused deaths. There is no option to stop the clock while the trial progresses. Patients who could benefit from or be harmed by novel treatments exist.

The idea that the practice of medicine should be vaguely like the approval of pharmaceuticals is definitely new. I am 100% sure that the main driver is fear of malpractice suits. It is very necessary to have an official published standard of care — following this standard is the only protection against malpractice suits when outcomes are bad &, you know, we all end up dead in the end.

But doctors must practice also when there is no standard (that is no committee of respected doctors is willing to take the moral not legal responsibility of drafting one). Obviously there is no standard of care for Covid 19. Also obviously many doctors are sensible enough to look at the balance of evidence in the absense of proof and make decisions which they believe are best for the patient in the absence of certain knowledge and knowing that they might regret the decision with the benefit of hindsight.

I don’t understand why official talk about medical care is so different from the current actual practice. I think it is partly about practical action vs scientific research. In scientific research it is perfectly fine to have open questions. If there is a patient on the edge of death, it is necessary to decide now.

But I am more confident than I was that small c conservatism is not killing as many people in the USA as it might.

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This is a comment on “Is Anthony Fauci Really Our Truthteller-in-Chief?” by Kevin Drum. I will briefly summarize. Drum quotes from the latest press conference

“Is there any evidence to suggest that, as with malaria, it might be used as a prophylaxis against COVID-19?

DR. FAUCI: No. The answer is no.”

Later after Trump says hydroxychloroquine is the cure for Covid 19 Fauci changed his line to

Q I would like Dr. Fauci, if you don’t mind, to follow up on what the President is saying. Should Americans have hope in this drug right now? . . .

DR. FAUCI: No, there really isn’t that much of a difference in many respects with what we’re saying. The President feels optimistic about something — his feeling about it. What I’m saying is that it might — it might be effective. I’m not saying that it isn’t. It might be effective. But as a scientist, as we’re getting it out there, we need to do it in a way as — while we are making it available for people who might want the hope that it might work, you’re also collecting data that will ultimately show that it is truly effective and safe under the conditions of COVID-19. So there really isn’t difference. It’s just a question of how one feels about it.

Drum thinks more highly of Fauci’s first answer than of his second answer. He guesses

“It’s obvious what he really thinks, after all: hydroxychloroquine is nonsense, period. ”

The problem is that Fauci’s first answer was simply incorrect, wrong, a false assertion on a matter of fact. I am sure he was not lying, but there absolutely 100% no doubt about it and no grounds for debate, there is “evidence to suggest that, as with malaria, it might be used as a prophylaxis against COVID-19?@

I link to the top general science journal

“Hydroxychloroquine, a less toxic derivative of chloroquine, is effective in inhibiting SARS-CoV-2 infection in vitro,” Jia Liu, Ruiyuan Cao, Mingyue Xu, Xi Wang, Huanyu Zhang, Hengrui Hu, Yufeng Li, Zhihong Hu, Wu Zhong & Manli Wang, Cell Discovery, 18 March 2020

That is not proof that it is effective in vivo. However, given the fact that side effects, interactions etc are very well understood, I think there is no excuse for not prescribing it absent the well known counter indications.

Asserting that it is clear that Fauci thinks Hydroxychloroquine for Covid 19 is nonsense, and that he should say so Drum and others risk convincing people not to use it and risk causing deaths.

Why do people assume that they understand the evidence ? I do because I have noted the pattern that when I disagree with doctors about patient care, they end up saying what I originally said (I promise you I am not the only person who perceives this pattern).

The rule that Trump is always wrong is as near to perfect as any rule of inference can be, but it is always best to double check. Say by googling [hydroxychloroquine inhibits Coronavirus ].

Also read angrybearblog

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The best US solution to the coronavirus pandemic: SHUT.IT.DOWN — two weeks of China + one month of South Korea

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I will never forgive Donald Trump for saying something exceedingly controversial with which I agree. I hate to say this but I agree with Trump and disagree with Fauci on hydroxychloroquine and Remdesivir.

Update: But don’t mix the Hydroxychloroquine with Azithromycin
“Azithromycin: (Major) Avoid coadministration of hydroxychloroquine and azithromycin.”

Thanks Ted Lieu

I will discuss hydroxychloroquine here because there is no legal issue. It can be prescribed for Covid 19 under current law and regulation. As noted here, the FDA has no say in the matter — they regulate food, drugs, and advertising and do not regulate the practice of medicine.

Consider the different treatment of Remdesivir, Hydoxychloroquine, and sever control measures. Because it is not proven that hydroxychloroqine works, it is considered a Trump average level outrage to say it should be tried. The side effects have been known for decades (and are acceptable given the circumstances). It inhibits SARS Cov2 replication in vitro https://www.nature.com/articles/s41421-020-0156-0 . There is anecdotal evidence that it has saved lives.

This does not amount to proof. Therefore, it is argued (by many people I respect) that it is irresponsible to type the following: all Covid 19 patients should be given hydroxychloroqine now. There is no morally acceptable alternative to doing this now. Now.

In contrast, there is extremely limited evidence on extreme control measures. There is no control group. The sample size is maybe one or two. And yet, it is perfectly responsible to advocate extreme control measures. Indeed it is perfectly responsible to impose them by decree (I am in Rome and have been ordered by prime minister Conte not to leave this apartment without a good reason).

Note the contrast here
The NYTimes.com presents a model graphically on page 1. It shows estiamtes. It is, in fact, theory, forecast not fact. The effectiveness of “severe control measures” is assumed. The data on which the estimate is based isn’t presented (on page 1)

Consider this published the same day (no longer on page 1)

“Trump’s Embrace of Unproven Drugs to Treat Coronavirus Defies Science”

Notice there is no headline about how Cuomo’s, Newsome’s and Conte’s embrace of unproven public health measures defies science (and I absolutely don’t assert that — I think they are making reasonable policy choices given necessarily incomplete knowledge)

It is absolutely clear that there is no general rule for acting without proof or solid knowledge. Sometimes, the rule is to not do something new until there is proof that it works. Usually, the rule is entirely different.

I do not think that anyone can justify the current dichotomy. I don’t think anyone tries. It is just assumed that the FDA rules are laws of nature and must be accepted.

I am trying to understand why this is. There are many possible good explanations which I will try to consider over after the jump

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I am sure by now many of you have read what the gov is and is not doing for us. The later is more prevalent as can be witnessed in the stimuli being offered. I am going to ask you to pay attention to the last item on ACA Healthcare Insurance. Whether you qualified or not in the past, you may be eligible for assistance now. I have broken this out into 4-points of which many of us might find ourselves. If you questions, PLEASE ASK, I will try to answer.

The Rundown

Goldman Sachs projects that after a 30% spike in jobless claims last week, to 281,000, new claims will hit 2.25 million this week — an unprecedented surge.

Treasury Secretary Steven Mnuchin warned Republican senators Tuesday morning that without action the coronavirus pandemic could drive up US unemployment to 20%, a Republican Senate source told CNN.

Mnuchin’s comments came as he urged Republican senators to act on economic stimulus measures totaling $1 trillion designed to avert that kind of worst case scenario. A 20% unemployment rate would be double the unemployment rate during the Great Recession, the highest in the US since the Great Depression, and it would leave more than 32 million Americans out of a job based on the current US labor force.

During the Great Recession of 2008 to 2009, approximately 9 million people lost their jobs. Losses this time around could far exceed that total if economic stimulus is not enacted.

I am not sure if it can get any worst than this; potentially lose your life, lose kin, lose your job, lose your healthcare, or lose whatever resource you might have.

Senate Republican Stimulus for People

– a direct payment to qualified Americans of up to $1,200. Married couples could get $2,400. Taxpayers who earn more than $75,000 annually will begin to see that payment reduced by $5 for every $100 they earn over the $75,000 threshold, with those who make more than $99,000 getting nothing. Families with children would get $500 per child.

While a Treasury Department outline circulated earlier in the week had called for two payments from the IRS — one each in April and May — the Senate GOP proposal only calls for one check at this time.

– The poorest families, those with no federal income tax liability, would see smaller benefits, though the minimum would be set at $600. About 22 million people earning under $40,000 a year would see no benefit under the GOP plan, according to an initial analysis by Ernie Tedeschi, a former Obama administration economist.

Business is the big winner under the Republican Senate Plan. I am waiting for a cohesive Democratic plan. Perhaps, I missed it?

ACA Healthcare Insurance

There are some things which will help people who lose their jobs and subsequently healthcare. Andrew Sprung at xpostfactoid also writes at Health Insurance Org. Today he wrote about “Uninsured in a pandemic? Seek help – it’s likely available.”

1. If you lose your job – and your employer-sponsored health insurance with it – you become eligible for a special enrollment period in the ACA marketplace. You can apply through HealthCare.gov if you’re in one of the 38 states that use the federal website. Twelve states and Washington D.C. run their own ACA exchanges. You can access those sites from this list. You can also get assistance from a licensed broker through this site.

2. If your estimated income for the year – including expected unemployment insurance – is below 400% of the federal poverty level ($49,960 for an individual, $67,640 for a couple, $103,000 for a family of four), you probably qualify for advanced premium tax credits – aka premium subsidies – a federal subsidy that picks up much or most of the monthly premium for plans offered on the exchange.

3. In the 36 states (and the District of Columbia) that have implemented the ACA Medicaid expansion, you should qualify for Medicaid if you lose your job – or you’re a freelancer who loses much of your income – and your monthly income going forward is below 138% of the federal poverty level ($1,468 for an individual, $3,013 for a family of four*). Apply through your state Medicaid office or website.

4. Important note for those whose income falls abruptly, e.g., to zero: While the ACA marketplace (HealthCare.gov for 38 states, state-based exchanges in 12 states and D.C.) calculates subsidy eligibility and Medicaid eligibility on the basis of yearly income, State Medicaid departments determine Medicaid eligibility on the basis of monthly income. Accordingly, if your earnings before layoff or loss of work were substantial, and your income going forward is zero or below the Medicaid threshold, you should apply for Medicaid through a state office or website, not through the ACA marketplace.

The main provider for healthcare insurance may be Medicaid. Pre-Medicaid expansion, rule of thumb was about 1 million Medicaid enrollment increase for every 1 point increase in unemployment rate. More than likely higher with many more parents and other adults potentially eligible in expansion states (Prof. Edwin Park, Georgetown).

Hopefully, the better souls and minds prevail in determining what stimuli is used to assist people. If you need some assistance in finding information, please ask and I will assist.

Sources of Information which will lead to other place:

“Uninsured in a pandemic? Seek help – it’s likely available,” Health Insurance Org., Andrew Sprung, March 20, 2020

“The ACA as recession insurance, revisited,” Xpostfactoid Blog, Andrew Sprung, March 20, 2020

CR’s Guide to the Coronavirus freebie informan

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The closing remarks of Moscow Mitch McConnell statement before the vote to spare Donald John Trump his presidency.

He was talking about “factional fever” that the “framers” referred to as a concern for majorities acting in a partisan manor.  And yet, here we are.

Tags: Coronavirus, Corvid 19, Daniel Becker, Mitch McConnell, Moscow Mitch Comments (0) | Digg Facebook Twitter |

Given the Coronavirus crisis, there will be bailouts. Should there be bailouts ? If so how should firms be bailed out ?

I think it is useful to look at the last round of bailouts from 2008-9 for lessons learned. First with the benefit of hindsight, does it seem that bailing out firms was a mistake ? On the one hand one can argue that it was necessary to prevent the Great Depression. It is hard to discuss whether it was worth the cost, because there was no cost. Instead, the US Federal Goverment obtained the highest profits recorded in human history by accident when focused on saving the financial system (and GM and Chrystler).

The many brilliant economists who argued that we should stick to laissez faire and that, in particular, socialism for bankers and ruthless capitalism for everyone else is no good, have not examined the outcomes. I think this is because the evidence is overwhelmingly damaging to their case.

OK so let’s bail out again. Looking back, can we decide on a better way to do it ? It is challenging. Preventing the second great depression while making hundreds of billions in profits is a good year’s work by any standard.

If things worked out rather well (and the bailouts did even if aggregate demand management was distorted by austerians) what can we learn ?

It seems to me that we learn that Treasuries should bear risk. Bearing risk is highly rewarded in expected value. Bearing risk is highly rewarded on long term average. This is what matters to Treasuries who are concerned about long term debt sustainability. Bearing risk is very very highly rewarded during crises, when it is buying at fire sale prices.

In general the riskier the positions taken by the US Federal Government in 2008/9 the more it helped the private sector and the more it profited.

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