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

Coronavirus links

From Adam Levitin, a summary of the Senate economic rescue package.  Recommended.  Why can’t the news media provide information like this?  Don’t answer that.

Via Cowen, a discussion of bankruptcy.  Some kind of bankruptcy reform is quite possibly the best way to preserve established relationships, but apparently not under active consideration.

Some economic charts from WAPO.  FWIW, I think the Goldman prediction of a sharp bounceback in the third quarter is optimistic.  Could happen, but there is a real chance we will not contain the epidemic, with geographically uneven measures allowing the virus to continually resurface in new locations and reinfect areas where the epidemic is brought under control.

From TPM, the view from Thailand and Nepal.  Grim.  As noted, spread in Thailand suggests rising humidity may not save the day.




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Thanks, Milton Friedman . . .

On Sunday, our war time president:

“We’re a country not based on nationalizing our business. Call a person over in Venezuela,” Trump told reporters. “How did nationalization of their businesses work out? Not too well.”

Trump administration officials pointed to voluntary actions from companies, such as 3M announcing more masks are being shipped to New York and Seattle.

“We’re getting what we need without putting the heavy hand of government down,” White House adviser Peter Navarro said at Sunday’s briefing with the president.

Russ Roberts did an Econtalk episode with Tyler Cowen on the epidemic a couple of days ago.  From the transcript:

[This is Roberts] And my thought–it’s hard to have a libertarian moment or a classical liberal moment in these times–but, it seemed to me that when the Administration and Trump underestimated the seriousness of the problem and downplayed it, which I thought was a terrible mistake, but when they did, people like you and me and others said, ‘Hey, this is a real problem.’ And, the private, voluntary reaction to the crisis was quite strong. The NBA [National Basketball Association] shut down very quickly. The NCAA [National Collegiate Athletic Association] shut down very quickly. Baseball shut down very quickly. Nobody had to order folks around.

And, I think what’s been underestimated in this, in the demand for this sort of top -down, ‘Fix it. Solve it. Make everybody whole. Don’t let anything bad ever happen,’ we’ve missed the role that we can play individually. It’s going to be very imperfect, of course. People cheat on self-quarantining. I know that. But, the idea that if we could test perfectly, as if that could solve it, is unrealistic in a country of 330 million people, and our number of square miles. It just seems that the advantage of this bottom-up, voluntary response to the crisis is that it allows for nuance. The top-down says, ‘Everything’s closed.’ And that means that there’s going to be enormous economic and human results from that, that we’re just ignoring.

The advantage of the private response is it allows for people to be more flexible, to take into account when they can and should, when things are more dangerous for some than others. And, I just think that’s been lost in this maelstrom.

Yes, that’s just what we need . . . nuance and flexibility . . . if it weren’t for those darned misguided price-gouging laws the private sector would have taken care of this perfectly, no doubt.  It seems clear from the interview that Roberts knows this is ridiculous, but he just can’t help himself.  Later on in the interview (in a discussion of saving businesses from bankruptcy):

Russ Roberts: Well, I’m not sure–I’m like you. I want to minimize what we do, particularly if it’s likely to be permanent. Makes me really uneasy. We’re at risk that this becomes a watershed moment. I think it’s–actually, it’s probably too late. Everyone just expects the government to “solve this.” Again, they neglect the things that we’ve done on our own. I understand the things that we can’t do on our own to fix macroeconomic cascades. I’m not suggesting that we’re going to avoid all the problems if we just leave things alone, that’s not true.

But, there are a lot of things happening. People are buying gift certificates from their favorite restaurants, and other things to keep them going. They’re doing takeout. Obviously that’s not going to be enough. If people aren’t flying there’s going to be airlines going bankrupt. But, the idea that somehow we can make everyone whole–I really don’t like the idea of making businesses whole. I’d much rather make individuals whole, and I think that’s just really hard to do. This idea of giving everybody $1,000–I don’t need $1,000. Presumably you don’t need $1,000. Do we want to allow every American–to make it easy? Should we do that?

But, it’s clear there’s going to be terrible hardship on individuals who can’t get to work, or shouldn’t go to work. There’s no “free market” solution to that, that’s obvious. So, there may be some of those things that are necessarily to reduce the spread of the virus, but they’re so blunt. It discourages me tremendously to think about the consequences of how that will be going forward, both in how it affects behavior, that everyone thinks, ‘Oh I don’t have to worry about fill-in-the-blank, because eventually I’ll get check from the government.’

Yes, I too worry that if government solves this problem it will lead people to take fewer precautions to prevent the next pandemic.  This is just beyond belief.  Libertarianism can’t die quickly enough.


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The True Owners of Foreign Capital

by Joseph Joyce

The True Owners of Foreign Capital

Explaining the sources and destinations of capital flows is a key focus of research in international finance. But capital flows between countries can flow through financial centers before they arrive at their ultimate destination, and these intermediary flows distort the record of the actual ownership of investments. Two recent papers seek to provide a more accurate picture of the true sources of foreign finance.

Jannick Damgaard of Danmarks Nationalbank, Thomas Elkjaer of the International Monetary Fund and Niels Johannesen of the University of Copenhagen differentiate between “phantom” and “real” foreign direct investment in their 2019 IMF working paper, “What Is Real and What Is Not in the Global FDI Network?”  Phantom FDI flows to shell companies that do not engage in any business activities, and are used to minimize corporate taxation before the funds are channeled to their final destination. Among the host countries that receive a significant amount of phantom investment are the Netherlands, Luxembourg, Hong Kong, Switzerland, Singapore and Ireland. The phantom FDI overstates the actual amount of investment that takes place and obfuscates the ultimate ownership of foreign capital.

Damgaard, Elkjar and Johannsen use several sources of data in order to uncover the actual owners of FDI. These include the IMF’s Coordinated Direct Investment Survey, which reports foreign investments in 110 countries by the country of the immediate owner; the OECD’s Foreign Direct Investment Statistics, which differentiates between FDI in Special Purpose Entities (SPEs), a form of shell company, and non-SPE investment, and also includes information on the ultimate owners of investment; and Orbis, a global database of corporate data, including ownership information. Since the OECD data are incomplete, they estimate the share of real FDI in total FDI by using the negative relationship of real FDI/total FDI and total FDI/GDP.

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For a Universal Debt and Rental Moratorium

For a Universal Debt and Rental Moratorium

Incomes are collapsing throughout the economy, and both businesses and individuals face a crisis in meeting fixed payments they can’t control.  The most direct step we can take is to temporarily suspend these payment obligations.

Suppose the government were to announce that, starting immediately, all stipulated debt and real estate rental payments were to be suspended for all borrowers and renters.  This moratorium could have an ending date of, say, two months in the future, with the option of extending it if circumstances require.  No interest would accrue to any of these obligations; in effect, we would be stopping the clock on them for a period of time.

Of course, if nothing else were done this would shut down the credit and rental systems completely for the duration of the moratorium, so a stipulation would have to be added that it applies only to debt or rental obligations established at the time of the announcement.  We’d all have to keep two sets of books, one for pre-announcement loans and rentals, the other for post.

International obligations are somewhat more complicated, but the economic heft of the US is great enough that these conditions could probably be imposed unilaterally on foreign counterparties, especially if the logic of this step persuaded other countries to adopt a similar course of action.

A debt moratorium would dampen some channels of financial instability and provide greater security for most participants in the economy.  By itself, however, it would not address the gaping hole in the real economy caused by shutting down whole sectors of goods and services production.  That requires other forms of stimulus.

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Coronavirus dashboard for March 22

Coronavirus dashboard for March 22

This is a new daily or nearly daily update I hope to post, including the most important metrics to show how controlled – or out of control – the cononavirus pandemic is. Hopefully the numbers will move ever closer to the tipping point where the epidemic is under control.In order to bring this pandemic under control, and prevent both health and economic catastrophes, in my opinion the US needs 2 weeks of China (total lockdown, preventing community spread) followed by 1 month of South Korea (extremely aggressive testing). The metric to be watched for testing is a ratio of 15 tests administered for every infection found (the ratio at which South Korea turned the corner).

Here is the update through yesterday (March 21)

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

  • Number: up +7,123 to 26,747 (vs. +5,374 on March 21)
  • Rate of increase: day/day: 36% (vs. 34.6% baseline exponential average per Jim Bianco) (and vs. 38% on March 21)

Jim Bianco’s excellent exponential projection from March 10, of a daily 34.5% growth in reported infections for the next 10 days has been almost exactly correct. I am using this as a baseline against which we can tell how well “social distancing” strategies are working as well as State-mandated partial and total lockdowns.

In the last five days, the rate of exponential growth has actually risen from about 28% to 40% and even 50%, probably due to increased testing being able to uncover more infections.

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Not Just Covid 19, Cancer Too

Chloroquine and Hydroxychloroquine are being tested as components of multi-drug cancer chemotherapy. I have noticed that when I tweet this, people conclude that I am insane.

However this is not a tiny literature. \

Repurposing Drugs in Oncology (ReDO)—chloroquine and hydroxychloroquine as anti-cancer agents
is a long review article and meta analysis. It cites seven peer reviewed article which report the results of clinical trials and dozens of ongoing trials.

This is why I became interested in chloroquine and hydroxychloroquine. My family was very amused to find those drugs appearing in the news on Covid. I learned about Donald Trump playing doctor on TV, because my father immediately e-mailed me that now Trump is saying that stuff too (he I note does not think I am crazy — but he wouldn’t would he).

It is very easy to keep up with clinical trials, because there is a Clinical Trials Registry. To prevent publication bias and cherry picking, studies must be posted there, and a principal outcome measure must be chosen in advance. Otherwise the FDA considers any data to be irrelevant.

So see there are 21 Studies found for: chloroquine | cancer (at least one terminated because there was no sign the Chloroquine was helping — others with promising results — many others ongoing)

There are 74 studies of hydroxychloroqine & cancer

There are currently 5 Studies found for: hydroxychloroquine | Coronavirus

There is a (very overlapping) set of 6 studies of covid 19 & hydroxychloroquine

MY mania was triggered months ago while I was searching the Clinical Trials Registy.
https://clinicaltrials.gove is addictive

Hmm only 2,236 studies of addiction, one is
“Smartphone Addiction and Physical Activity” now I do have to look at that one on my phone (having neither the inclination nor the Prime Minister’s permission to engage in physical activity

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It is Clear that Hydroxychloroquine and Chloroquine are Currently Used to Treat Covid 19 in the USA

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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Weekly Indicators for March 17 – 21 at Seeking Alpha

b7 New Deal democrat

Weekly Indicators for March 17 – 21 at Seeking Alpha

A vignette….

Cognoscenti: “It’s impossible to forecast the economy.”

Forecaster: “Actually, if you rely upon a tried and true series of long and short leading indicators, you ca-“


G.S.M.O.D.: [BOOM!

Forecaster [poking head through rubble]: “Y’know, Deity, that really wasn’t very fair.”

Sigh. At least, the high frequency indicators have been the first to show the economic impacts of the coronavirus, as opposed to waiting around for monthly data. The Weekly Indicators post is up at Seeking Alpha.

Clicking through and reading will bring you as up to date as possible on the economic carnage, as well as reward me a little bit for my efforts.

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Hydroxychloroquine, Anthony Fauci and Kevin Drum

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

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

For the last few weeks, I have been screaming at the top of my lungs about “exponential growth.”   That’s because so few people realized the impact such growth could have in a pandemic, over the course of just a few months, even weeks.I first began thinking about this as soon as I read a Tweet by Trevor Bedford a month ago about how coronavirus had probably been circulating, undetected, in Washington for three to six weeks. I immediately thought, with a jolt, about what that meant in terms of exponential growth.

Looking back over my private correspondence, I see where I first voiced the likely impact back on February 27. Here’s what I wrote then:
“The CDC only has 250 working test kits. They have *none* to spare to check for community spread. Thus the virus will spread for several weeks undetected until tests are administered among the first very sick. By then it will be too late.

“Meanwhile the Administration has clamped a gag order on the government scientists. To my knowledge, it has taken no action to obtain the thousands of test kits that are needed from other countries.

“In short, malpractice by the Buffoon in chief could easily lead to tens of thousands of unnecessary deaths.”
And so I started shouting from the rooftops about exponential spread. Nothing since then has caused me to change my mind.

By now, at least among those who are able to listen and comprehend, exponential growth has been accepted as the immediate course of the pandemic. Steps have been taken, of greater or lesser effect, in a number of countries to stop it.

Today I want to switch gears. Because I am congenitally predisposed to thinking about what we are able to control – how to come up with a solution to when we cannot avoid being rolled over by a bulldozer.

So, here’s what I think we need to do to stop the exponential spread of this disease:

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