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Tuesday, April 21, 2020

Corona Madness and Burning down the Village (to save it)

The economic-social-health destruction from nescient policies is worse than the virus.

by StFerdIII


Burning down the village to save it. The consequences of the coming economic destruction should not be under-estimated. It will vary by country and region. But take the UK as an example. Currently about 16.000 are dead from Corona. Last winter, about 29.000 died of the ‘normal’ flu.  Corona-hysteria-ists contend that this virus will have phases, it will ‘mutate’, it will ‘come back’.  No evidence exists for these assertions.

They are based on a mix of ‘scientific’ hypotheses, bad models and conjecture. The virus has not changed much and once infected the person is immune (link). Across most of the world, the Corona-craziness has peaked and the number of cases is falling. In fact a recent study clearly articulates that lock-downs do not work, and the pattern of the Corona infection and death cycles are the same across all countries, and all variations of responses from keeping the economy open (Taiwan, Sweden); to shuttering all activity (Italy, Spain, UK) (link).

If the lockdowns are extended into the summer, there will be unbridled destruction

By the early summer, given the extension of the current lockdown, the UK will likely see 12 million unemployed (link). This is 50% of the private sector employment.  There are 32 million employed in the UK, with about 20 % working in various levels of government (link). This means that the private sector – which pays the salaries and expenses of government workers and funds the entire social-economic infrastructure of 70 million people – constitutes about 24 million workers.  If 12 million are unemployed in the UK, that is a real unemployment rate of 50%.

In the UK private sector 95% of businesses are less than 50 people and 90 % of those are less than 10 people.  These small and medium sized businesses (SMBs) total 1 million in the UK, and the SMBs employ 65% of the UK workforce or about 15 million people.  Only 40.000 firms are larger than 50 people and about 7.000 are larger than 250 people (link).  SMBs do not have access to capital, loans or large cash reserves. They usually survive month by month and quarter by quarter.

The SMBs will be devastated and out of 15~ million workers, one can rationally predict that 7-8 million will be unemployed soon.  Larger firms who have reserves, capital, access to bank lending, or international parent and sister operating companies, will survive, depending on their sector (travel, hoteliers, hospitality, retail, luxury goods and many other industries are of course at high risk and will shed costs, workers and stop projects).

This government inspired disaster is the greatest socio-economic calamity to visit the UK since the Black Death and the English Civil War.  Death rates will increase post Corona, given the stresses and ill-health which accompanies a shattered economy and society, in which 40% are under-or-un-employed.  In the UK (and elswhere), this vast and deep annihilation of employment, social mobility and freedom will leave a disfigured country, with civil unrest and unbridgeable chasms between regions, classes and sectors ( to a New York Post on the coming Great Depression).