Relevant and even prescient commentary on news, politics and the economy.

In 2020 A March Of Madness

In 2020 A March Of Madness, Econospeak

Just before the end of February, President Trump declared that there were only 15 Covid-19 cases in the US, and that “they will soon go to zero.”  Deaths from COVID 19 now passed 3,000 (March 30th) and yesterday Trump declared that because we might have had over 2 million dead if nothing had been done, it would show “we did a good job” if deaths kept to “only” 100,000 to 200,000.  To do this “good job” he has extended his “social distancing” policy to the end of April rather than Easter, April 12 (my birthday). Also yesterday Virgina Governor Northam intensified a stay-at-home policy and extended it to June 10, the longest such period of any state.  All this on the next-to-last day of a month with more dramatic changees for the world than any in a long tim, certainly more than any that I can remember in my nearly 72 years.

Probably the closest rival I can remember is Septembrr, 2011, which also changed the world, although that all happened on one day.  This has been day after day, with the US death toll now surpassing that of 9/11.  I think to match this month one has to go back to September 1939 or maybe August 1914, or maybe October 1918 when the Spanish flu epidemic reached its maximum death rate in the US just before WW I ended.  In any case, when I think of the beginning of this month it seems like another era, way more than a year ago.

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Coronavirus dashboard for April 1

Coronavirus dashboard for April 1

by New Deal democrat

Here is the update through yesterday (March 31)

Over 75% of the US population is now under lockdown, and it appears to be lowering the rate of exponential growth of new infections.

Based on South Korea’s experience, a ratio of 15:1 in total tests to results showing infection is the level where there can be some confidence that the infections have been contained. But testing in the past 5 days has plateaued (not good) and is not keeping pace at all with the growth in new infections. We will not be able to transition from the Sledgehammer of lockdowns to the scalpel of aggressive testing and quarantines until this changes.

The above three most important metrics are starred (***) below.

Number and rate of increase of Reported Infections (from Johns Hopkins via

  • Number: up +25,023 to 189,633 (vs. +21,555 on March 30)
  • ***Rate of increase: day/day: 15% (vs. 34.6% baseline, 19% for the past week, and 15% on March 30)

This looks like confirmation that the exponential rate of growth is beginning to slow.

Also, Ben Engebreth is started tracking coronvirus infection and testing numbers for each state, with graphs, here.

Number and rate of increase in deaths and testing (from COVID Tracking Project)

  • Number of deaths: Total 3946, up +807 day/day
  • Rate: increase of 27% day/day vs. average of 24% in past week
  • Number of infections: 104,117 down -9,386 vs. 113,503 on March 30 day/day
  • Rate: decrease of -8.3% vs. number of tests previous day

Comparison of rates of increase in documented infections vs. testing 

  • Infections +15% vs. Tests -8.3% day/day

Result: The rate of testing has been failing to improve (until today) and remains far, far below what is needed, which is probably now at least 250,000/day. Note this target number is also increasing exponentially as we try to chase the number of exponentially increasing infections.

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Remdesivir and Transfer Pricing

Remdesivir and Transfer Pricing

Gilead Sciences is conducting phase III trials to explore whether this treatment – which did not turn out to be effective against Ebola – might be effective in treating COVID-19. We all hope it will be and if it does pass phase III trials, national income tax authorities will later have to address the transfer pricing implications of any profits Gilead Sciences generates. This blog post is the first of two with this one setting up some basic transfer pricing principles by noting Gilead’s previous wonder treatments – its recent successes in treating Hepatitis C and its HIV treatments introduced a generation ago. My next blog post will discuss Remdesivir. Gilead was first to market with a treatment they called Sovaldi, which was their Hep C treatment based on sofosbuvir developed through phase II clinical trials by Pharmasset in 2011 for $11 billion. While Gilead was hopeful that its phase III efforts would lead to a successful and highly profitable treatment, the market place in 2011 worried that they had overpaid for an unproven treatment, which could also have competition. Matthew Herper noted in 2014 how this product launch did incredibly well after a rather fast process of obtaining regulatory approval in the U.S.:

Gilead’s launch of Sovaldi is looking like the fastest drug launch ever. Hepatitis C afflicts an estimated 3 million Americans. The chart below, from ISI Group analyst Mark Schoenebaum, tracks the number of Sovaldi prescriptions written by doctors according to data tracker IMS Health (this is labeled as TRx) against the launch of Vertex’s Incivek, another hepatitis C drug that was until now the fastest drug launch ever, and against the combination of Incivek and Merck’s competing drug, Victrelis. Schoenebaum also draws in his own forecast of what Sovaldi would have to do to reach $5 billion in sales in its first year on the market. That’s right — I said $5 billion. And Sovaldi (the red line) is way, way ahead of that forecast. In fact, the prescription numbers seem to be going straight up. There are still reasons some investors might question Gilead’s valuation. It may be that there are fewer hepatitis C patients than drug companies and public health officials think. It may be that Gilead gets blowback for the high cost of the drug — $84,000 per course. It may be that other entrants, from AbbVie or Merck, for instance, will prove good enough or inexpensive enough to take market share or even force a price war. It’s possible that insurance companies will push back.But having a product that is selling fast is a good problem to have.


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Richard Epstein: Peak Dishonesty

Richard Epstein: Peak Dishonesty, Econospeak

Epstein is the doyen of libertarian legal theorists. Larry Tisch Professor of law at NYU and a senior fellow at the Hoover Institution, he has vast influence throughout the conservative world, including the White House.

His latest jag is calling for an early end to isolation policies to contain the coronavirus. In a nutshell, his argument is that the virus responsible for this pandemic exhibits a range of toxicities, and that evolutionary forces will naturally and fairly quickly shift this distribution toward milder strains. He claims that happened earlier with HIV, which is now (in his view) no longer much of a threat. He thinks epidemiologists are essentially charlatans, promulgating an approach to modeling viral transmission and severity that ignores his superior understanding.

He was interviewed by Isaac Chotiner of the New Yorker (hat tip: David Dayen), who gave him a hard time about his self-certainty that he is right and all the health professionals are wrong. But that’s not what I want to talk about.

Here is an excerpt from the transcript as published by the New Yorker:

Epstein: ….I do think that the tendency to weaken is there, and I’m willing to bet a great deal of money on it, in the sense that I think that this is right. And I think that the standard models that are put forward by the epidemiologists that have no built-in behavioral response to it—

Chotiner: And you’re not an epidemiologist, correct?

Epstein: No, I’m trained in all of these things. I’ve done a lot of work in these particular areas. And one of the things that is most annoying about this debate is you see all sorts of people putting up expertise on these subjects, but they won’t let anybody question their particular judgment. One of the things you get as a lawyer is a skill of cross-examination. I spent an enormous amount of time over my career teaching medical people about some of this stuff, and their great strengths are procedures and diagnoses in the cases. Their great weakness is understanding general-equilibrium theory.

That last sentence brought back memories.

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Is Pompeo The Worst Secretary Of State Ever?

“Is Pompeo The Worst Secretary Of State Ever?”, Econospeak, by Barkley Rosser

This is the title of a column in today’s Washington Post by Jackson Diehl. His answer is an unequivocal “yes,” and I must say on thinking about it I know of no others clearly worse than him, maybe not even any as bad as him.

Diehl focuses on some general incompetence but then focuses on two specific issues that I have posted on here previously. The most important one, which is getting more serious by the minute, involves Iran. It is increasingly clear that Pompeo is probably the lead figure in pushing for heightening sanctions on Iran and also increasing the chance of war with them. He was a key player in Trump’s initial exit from the JCPOA nuclear agreement and has argued that making it harder for Iran to get medical equipment even as they face a deepening epidemic with thousands dying will bring them to the negotiating table or even lead to regime change. There is no evidence of any of that, just an immoral making many more people die awful deaths.

He is also apparently a key figure in labeling Covid-19 “the Chinese virus” or “Wuhan virus.” Trump has said he won’t call it those things anymore, apparently being told that this has been leading to attacks on Asian Americans. But Pompeo continues to push this line for no obviously good reason.

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“Wow, that’s something,”

A presidential comment on New Mexico Governor Lujan Grisham concerns:

Grisham: “We’re seeing incredible spikes in the Navajo Nation, and this is going to be an issue where we’re going to have to figure that out and think about maybe testing and surveillance opportunities,

The rate of infection, at least on the New Mexico side — although we’ve got several Arizona residents in our hospitals — we’re seeing a much higher hospital rate, a much younger hospital rate, a much quicker go-right-to-the-vent rate for this population. And we’re seeing doubling in every day-and-a-half.

it could wipe out those tribal nations.”

Trump: “We’re gonna get you that hospital as quickly as we can,” while directing others in the Situation Room to look into the problem and rush work on the hospital. “Boy, that’s too bad for the Navajo nation – I’ve been hearing that.”

Maybe it is just the way he speaks or his mannerisms. I get the feeling he is smiling as he states his concern.

The Navajo Nation government declared a state of emergency on March 13. There were at least 128 cases and 2 deaths reported on the reservation, which has a population of over 250,000 and spans three states. Governor Grisham followed up on a request with President Trump, a request she made to the Department of Defense last Wednesday for a 248-bed U.S. Army combat support hospital (CSH) in Albuquerque, New Mexico. Grisham told Trump she had not yet received a response. from the Department of Defense yet.

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A last look at the 2009 – 2020 expansion

A last look at the 2009 – 2020 expansion by New Deal democrat

All of the most important economic from February has been reported. Since that was the last month before coronavirus derailed everything, I thought I would take a look back and see what shape the economy was in just before the moment of impact.

As usual, the 4 coincident indicators that the NBER usually looks for in determining whether the economy is in expansion or contraction are: industrial production, nonfarm payrolls, real sales, and real personal income minus government transfer receipts. Here’s what they look like through February, with each normed to a level of 100 as of August 2019, first in a longer term view:

And now focused on the past year:

Note that all 4 flattened or rolled over at the outset of the 2008 recession. In 2016, production turned down and income flattened, but both jobs and sales continued to increase. In the latter part of 2019 into early 2020, production and sales turned down, but jobs and income continued to increase.

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(Abbreviated) coronavirus dashboard for March 29

(Abbreviated) coronavirus dashboard for March 29 – by New Deal democrat

Here is the update through yesterday (March 28)

[NOTE: I am not including the State by State breakdown today, which is time-intensive to create. It will resume tomorrow.]

In order to succeed in containing the pandemic, I believe that the US needs 2 weeks of China (nearly complete lockdown) followed by at least a month of South Korea (very aggressive and widespread testing).

At minimum, that means at least 50% of the US population under lockdown and a ratio of 15:1 in tests to results showing infection. The recent exponential growth of about 35% per day must be stopped. Those three most important metrics are starred (***) below.

As of now, about 60% of the population is under total or business lockdown, and the rate of increase in new infections decelerated significantly – but is still growing at over 20%/day averaged over the last 5 days. The amount of testing continues to increase, but still is falling far short of what is necessary for a successful regimen.

Number and rate of increase of Reported Infections (from Johns Hopkins via

• Number: up +19,849 to 124,686 (vs. +18,825 on March 27)
• ***Rate of increase: day/day: 19% (vs. 34.6% baseline and vs. 22% on March 27)

I have been using Jim Bianco’s excellent exponential projection of 34.5% growth from March 10 as my baseline. It appears that “social distancing” strategies as well as State-mandated partial and total lockdowns may have begun to put a dent in the exponential rate of increase, as the average rate of increase for the past 5 days has been 22%.

Note: Ben Engebreth, whose Department of Numbers used to track house prices back in the housing bubble days, has started tracking coronvirus infection and testing numbers, with graphs. You can find it here.

Number and rate of increase of testing (from COVID Tracking Project)

• Number: 109,071, up +1,742 vs. 107,329 on March 27 day/day
• Rate: increase of 2% vs. number of tests previous day

Comparison of rates of increase in documented infections vs. testing

• Infections +19% vs. Tests +2% day/day

Result: The rate of testing is failing to improve and is far, far below what is needed, which is probably now at least 200,000/day. Note this number is also increasing exponentially as we try to chase the number of exponentially increasing infections.

Ratio of tests to positives for infection (from COVID Tracking Project)

• Number: 109,071 new tests vs. 18,821 new diagnosed infections
• ***Ratio: 5.8:1

In South Korea, where aggressive testing has led to a near-total disappearance of new cases, the inflection point where the number of new daily cases plateaued was reached when the ratio of tests to new cases found reached 15:1. Any ratio less than that suggests that not enough testing is being done. Yesterday’s ratio of 5.8:1 is poor – and has been worsening for the past week, I.e., we are falling further and further behind in testing.


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