Why the Wuhan virus Hell will be with us for at least six months

Stocks took a hit because of the Wuhan virus

I’m going to lay out for you why we’re likely in for six months of sheer Hell because of the Wuhan virus.

First of all, let’s look at what we know about this virus.

1. It’s really, really new. So new that there is no herd immunity. None whatsoever.

2. Those carrying the virus can infect others even though they are not showing any symptoms whatsoever for an exceedingly long period of time – up to two weeks.

3. Some infected people never become ill so they have absolutely no idea that they are infectious.

4. The virus can live for three hours in the air and for days on hard surfaces. That means it can be spread multiple ways.

5. Even if you recover you may end up catching it again because the acquired immunity is not 100 per cent effective.

6. The symptoms of the virus are pretty much the same symptoms of a host other, milder illnesses so only a test can determine if you have the virus. The test is not 100 per cent accurate and can require multiple testing.

7. The virus poses little danger to 80 per cent of the populace, but hospitalizes 14 per cent and can be lethal to six per cent.

8. All of this adds up to one highly contagious virus. It would make one helluva weapon. (That’s another story.)

Now, here’s the really bad news. Millions, and I do mean millions, of Wuhan residents have been spreading this virus around Hubei, China and the rest of the world since November of last year. It is everywhere.

As I noted in my earlier post, the virus has followed trade routes and its impact depends largely on the level of economic activity China has within the host country.

So some countries will be better off than others. Those that closed their border early will be spared the worst of the morbidity and mortality.

But every country will feel the economic impact of the virus.

That’s because the draconian efforts to combat the virus are devastating production and the supply chains that feed it.

Modern manufacturing relies on long supply chains, just in time delivery and a vast transportation network.

Any prolonged disruption – which we are seeing – means there is no cash flow, no means to pay employees.

How many marginal factories will close down? How many bankruptcies?

The global financial system has only a limited ability to absorb defaults along this multi-layered supply chain. That’s why investors are attempting to liquidate their positions.

Governments? They’re awash in debt. They have been for years because in the wake of the 2008 crash, expansion of debt has been the go-to solution for everything.

So if you think all this can be sorted out in a month’s time, think again. Six months minimum.

Even then, the world will never be the same. The West is not about to forget that China is to blame for all of this. The day of reckoning is coming.

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