Leibig's Law

The current epidemic is exposing all the weak points in our current society, like this example from the UK.

New deliveries of eggs to British supermarkets are being snapped up as quickly as the shelf stackers can get them onto the shelves. At the same time, tons of eggs are going off in warehouses which currently hold massive stocks of food. The unexpected reason for this situation, we learn from the BBC’s Farming Today programme on Wednesday, is that the UK is currently in the grip of an unanticipated egg carton shortage. The entire of Europe is supplied by just three egg carton manufacturers. None is based in Britain; and the nearest one – in Denmark – is closed for the next fortnight.

An example of Liebig’s Law of the Minimum, which holds that a complex system fails at its weakest point.

It also shows neatly how adjusting to a crisis is far from straighforward, and often has unintended consequences

The initial problem for public transport operators was the severe fall in demand in February as passengers reasoned that trains and buses were incubation chambers for the SARS-CoV-2 virus. While some took to working from home, others walked or dug that old bicycle out from the back of the shed. The result was a collapse in demand which obliged operators to cut back the service. The unfortunate consequence has been that despite the instruction to avoid social contact, the remaining trains and buses are overcrowded at rush hour. The knock-on problem that this has now caused is that public transport staff are now going sick in large numbers.

Which will no doubt further curtail services and continue to increase the infection rate.

Simulating an Epidemic

Interesting video on Youtube looking at simulating an epidemic and how changing different parameters affects the infection outcomes.

Simulating an Epidemic

General Stupidity

Despite all the COVID news from Europe, and Italy in particular, it would seem that we’re learning nothing here in Australia. Our Government, and by extension the population as a whole, seems to be in reactive rather than proactive mode.

To wit, yesterday Bondi Beach was packed…

Social Distancing at Bondi Beach

… and, in Sydney, 2,700 people were allowed to disembark from a cruise ship while 13 passengers were awaiting results of Covid swabs. Four have since discovered to be positive, so frantic announcements are being made for the other 2,696 passengers to quarantine themselves.

People are still going out to pubs, clubs and bars and our footie codes are one of the few codes globally who are still playing games, albeit behind closed doors. No doubt the Government will shut that all down in the near future, but if they are going to have to do it next week, they should just do it now. Learn from Europe & Asia’s prior experiences.

Australia’s case rate has been increasing at roughly 25% per day for the last ten days, reaching 768 yesterday. Some simplistic maths shows that if we continue on that path, in 4 weeks we’ll have approx. 360,000 cases, whereas if we can drop the rate to 10% daily increase we’ll “only” have 10,000 cases.

This edition of Axios Edge makes some key points.

The spread of the novel coronavirus is similarly a function of decisive action by heads of state, or the lack thereof. Governments alone determine whether the number of new cases increases exponentially, or whether it is brought under control within days.

and

The bottom line: In normal day-to-day life, someone with the novel coronavirus will infect more than 3 other individuals. That’s a simple recipe for exponential growth. Effective heads of state have shown that they have the ability to change individual behavior across their country so that the number gets reduced to less than 1.

When will our Govt. switch to proactive mode?

Dodging Bullets (Part 1)

I’ve been nervous about the financial markets for a while - everything seems overvalued and with money almost free people make stupid decisions chasing return. Many companies have been taking advantage of cheap money often to re-purchase shares, loading up on debt to hand money back to shareholders. It was only a matter of time before something triggered a meltdown.

When what’s now COVID-19 took off in China, and supply chains started shutting down, I figured it wouldn’t be good. Indeed, the data from St. Louis FED shows a debt spike underway, though still about a third of GFC conditions.

At the end of Feb I moved my Super out of shares and into fixed interest. I wasn’t as smart as I thought I was though - the rules are that investment changes received by 4pm will be executed the next day, so when I submitted my change at 3:45pm I was pretty confident… only to realise that of course the cutoff is 4pm Sydney time, which is 3pm in Brisbane. Doh! Anyway, instead of a 4% hit I ended up taking a 7.5% hit - still a long way off where we currently are, with the funds I was in down about 20% at this stage.

I managed to get our relatively unscathed as well during the GFC, but made the classic mistake of taking way too long to get back in and missing a good chunk of the upside. The plan for the near future is to sit down and work out when would be a good time to switch back into shares.

The market has no idea what’s going on at the moment and is running around like a headless chicken, so I assume the wild swings will continue for a while yet. Significant COVID deaths are yet to occur in the US and their general response to the epidemic seems misguided at best, so the worst is yet to come. Another question to consider is whether China is back now? Are they on top of things and ready to get back to some semblance of normality, or will COVID flare back up once the relax their restrictions?

Anyway, interesting times as the Chinese curse goes 😁

Arctic Changes

Nice article by Neil Shea, over at American Scholar, on traveling through the changing Arctic.

Since the late 1970s, the Arctic has lost an average of 21,000 square miles of sea ice each year, according to scientists at NASA. Put another way, if you were to imagine sea ice as a territory the size of the United States, then Alaska and the Pacific Coast would have melted away, along with Idaho, Nevada, Arizona, Utah, and most of Montana. The scale of loss is astonishing, and the negative trend continues. One researcher told me that to understand it, I had to think in unprecedented terms: “There’s a new ocean opening up before us in real time,” he said. “That hasn’t happened before.”