Argentina is in "Virtual" Default

President Alberto Fernández said Sunday night that Argentina is in virtual default, comparing the economic situation to the 2001 crisis – the worst in the country's recent history.

The country is in recession and has suffered 18 months of economic crisis sparked by a currency crash. Its economy is expected to shrink by 3.1 percent in 2019.  

Again, the country will not pay its debts. I see nothing virtual in its default. The IMF tried to solve it insolvency but it only accelerated the process. It is difficult to explain why Argentina is suffering so much.

Free Oil

Nigeria is giving out oil at 12 dollar a barrel and it cannot sell it all. The low price of energy is stimulating world economy, preventing recession.

Argentina's Health Authorities are discouraging contact sex during the quarantine, and recommending masturbation and videosex. They warn of complications of the stress for cohabiting couples. Buenos Aires is the world capital of Freudian psychoanalisis.

Corona virus psy war

Bad news. China created the corona virus and tried to blame the Wuhan wet market. History is becoming a dystopia movie. From the Jerusalem Post:

On Wednesday, US Defense Secretary Mark Esper accused China of withholding important information regarding the coronavirus.

"I think in due course, once we get through the pandemic we're in right now, there'll be time to look back and really ascertain what happened and make sure we have a better understanding so we can prevent this in the future," he told America's Newsroom.

Also Wednesday, Secretary of State Mike Pompeo voiced his own suspicions regarding the responsibility of the Wuhan lab.

"What we do know is we know that this virus originated in Wuhan, China. We know there is the Wuhan Institute of Virology just a handful of miles away from where the wet market was. There is still lots to learn," Pompeo told The Story.

"You should know that the United States government is working diligently to figure it out."

The secretary of state added that the laboratory "contained highly contagious materials – we knew that, we knew that they were working on this program, many countries have programs like this. In countries that are open and transparent, they have the ability to control them and keep them safe, and they allow outside observers in to make sure all the processes and procedures are right. I only wish that that had happened in this place."

In the early days of the outbreak, China reportedly attempted to suppress evidence of the spread of the coronavirus, with doctors being censored and some journalists allegedly being "dissapeared." In addition, allegations have also been made of supposed complicity on the part of the World Health Organization (WHO) in covering up evidence of China's cover-up.

In response to these allegations, the Trump administration announced a temporary halt to all US funding towards the WHO, claiming that the organization "political correctness over lifesaving measures".

Turnaround time

In addition of the non-existence of herd immunity vis-a-vis COVID-19, President Trump's accusation that the WHO was misguiding the world by advising end of lockdowns, and the palpable failure of Singapore and its return to strict lockdown, is desinflating my natural optimism. We may write down this year 2020 as lost, certainly from the economic point of view.

I expect:

- breakdown of global supply chains and re-organizaton of world commerce, including stop of globalization, just-in-time inventories, and complex supply and finance chains
- sovereign debt downgrades as countries cannot export enough to pay their foreign obligations
- huge and unsustainable increases in public sector debt, including via unprecedented commitments to private sector debt obligations, specifically in the USA

So, why should it be that global equities are within 10-15% of their 2020 highs? 

I have to reverse direction and start selling instead of buying stock.

P.S.: On the other hand, why should a bad flu cause such a universal quilombo? (Balagan, in modern Hebrew)

PSS: China is agressively testing America's resolve to defend Taiwan. Coming a testing time for America. Its alliances will be tested on the field. Bad, bad. 

No Herd Immunity in sight

The Koreans discovered that people "cured" of the flu disease, can be re-infected by the virus. This is very bad, it means that only total erradication of the virus a-la-Wuhan can lead to renormalization of economic life. I wonder if NASDAQ will crash tomorrow.

The idea of herd immunity is that as more people get infected, that is, once a large proportion of the population gets infected (more than 50 percent), then this would protect the rest from infection.

While UK Prime Minister Boris Johnson and his advisers sparked an uproar when they bluntly proposed this approach - and later, at least formally, backtracked - this is actually something approved by politicians and public health experts in Sweden, the Netherlands and Norway as well. This is considered a cruel, eugenic policy. However, it appears that it would not work. 

Lab ferrets

The internet is a great collective mind, and processes a great number of ideas. Someone remembered news of criminal trials of Chinese lab workers selling lab animals in the local wet market. It was not in Wuhan, but knowing China, it stands to reason that the large biowarfare lab in the center of the town, two blocks away from the market, was supplying live and dead lab animals.

I posed a question in Greg Cochran's blog: Will the coronavirus evolve to a more or to a less virulent form? Natural selection will favour the lines that infect faster and more effectively, and that means ambulant and coughing carriers. Those lines that send the carriers to the bed or kill them, survive less. So the tendency, I reason, is the corona virus gradually turning into a common seasonal flu. Let's see what is Greg's opinion.   

Winding down the corona epidemic

Several teams in Israel are building models how to end the economic disaster of the corona epidemic lockdown.

Bar-Ilan University researchers led by Dr. Baruch Barzel of the Department of Mathematics, have devised a strategy based on alternating lockdowns: first splitting the population into two groups, then alternating these groups between lockdown and routine activity in weekly succession.
The official team that is dealing with this problem includes the Ministry of Health and the Treasury, and the Modeling and Prediction Unit of the Mossad (I didn't know of its existence). Their solution is gradually freeing up the industries that employ much manpower and pay low salaries, to avoid mass unemployment (which is almost irreversible), and the high tech sector. Tourism, restaurants, entertainment, aviation, etc. are to be left to the end. One of the reasons to lift asap the lockdown is the possible increase of social tensions between economic classes and ethnias.