The big picture.
Connecting the dots. Looking
behind the curtain.
I’ve been stewing over what to say if anything about the
Ebola situation. Fair warning – the
following is poorly written, probably incoherent and disjointed. My poor writing skills lead me to use a lot
of rhetorical questions. Assumptions are
made. While I’ve attempted to stick to
the facts as I understand them, I have let some commentary slip into the
document. Apologies. Read at your own risk. (October 25, 2014)
As I read this over and over, I’m afraid it comes across as
fear mongering regarding the possibility of contracting Ebola – like the
craziness we are seeing on the "news".
That is not my intention.
Actually my intention was/is the opposite. I don’t think I’ve achieved it.
First, the Ebola outbreak is an awful, dreadful epidemic in
parts of Africa. The people in these
countries deserve our compassion as well as our resources to help them fight
and eliminate the killer among them.
They deserve this because they are fellow human beings and we have the
capability and capacity in this country to help. I understand and believe this at my core (I’m
an atheist by the way). I would hope
that those of you who proclaim some religious affiliation understand this as a
core component of your belief system.
And, yes, you’re right, other countries should be helping two.
Secondly, there is also a non-altruistic component to our
need to battle this disease where it is.
Stopping the epidemic in Africa means it will not spread to other
regions and turn into a large worldwide problem. If you require this type of rhetoric to get
fired up about alleviating human suffering – “this is a national security issue
that can actually be stopped overseas”.
The enemy just happens to be a virus, not a human terrorist we can shoot or bomb. In this case the
actions we need to take to fight this battle are not with guns and ammo, but
with healthcare facilities, healthcare providers, healthcare facilitators, supplies,
logistics management, transportation, medicines and technology. We can do these things – we have the best
health care system in the world (right?), we have the best technology in the world
(right?), America is the most exceptional nation to currently exist or ever
exist (right?).
We seem to have no compunction against sending our service
members to fight and die because of “national security” threats that turn out
to be dubious at best and in political/ethinic/religious environments so
convoluted there is no way we can ever solve the root problems. We have little restraint in sending them to
face bullets and IEDs. Remember 6,836 US
service members have been lost in Iraq and Afghanistan between 2001 and 2014. (www.icasualties.org/) However, we balk when we can use our
resources and send service members to preform truly humanitarian service AND
resolve an obvious national security issue at the same time. We question the logic in sending them to
fight a battle where their safety is based on layers of plastic, following
procedures and disinfectant.
This outbreak started in December 2013 and got truly “hot”
in April 2014. (http://www.abc.net.au/news/2014-10-22/ebola-timeline-worst-outbreak-in-history/5831876) With the exceptions of NGOs like Doctors
Without Borders, we (and practically the rest of the world) have done nothing
to stop the spread of this epidemic in African countries. It was not until a single case came to US
“homeland” did “we” get fired up about this “terrible” disease.
I’ll offer a little commentary about shutting down flights. Bear with me, but I think we have to consider
several issues to see the big picture. Disclaimer
– I’m not an economist, political expert, international business expert, or
financial expert. Take what you like, do
some research on your own, and leave the rest.
Why is this photo op important: http://www.huffingtonpost.com/2014/10/24/obama-to-meet-with-ebola-_n_6042734.html
Here’s some issues to consider:
The world economy is a vast interconnected web. This was demonstrated clearly in the most
recent financial crisis. Countries and
financial markets no longer stand alone.
What happens in one part of the world can have direct and unpleasant
impacts in other parts of the world.
Like it or not, the US is tied to the economies of the world. If Europe or Asia is in big trouble, we’re in
trouble. If we’re in trouble, they’re in
trouble. Since 2008 governments have
been attempting to hold the world together and keep it from financial collapse. We are balanced on a tight rope and one major
crisis could send us falling. And, the
safety nets may not actually be there.
European economies are not in good shape (http://www.sltrib.com/sltrib/money/58508129-79/germany-economy-europe-growth.html.csp,
many other references available, please do some reading if you were not aware
of this).
China is not doing well either (http://www.sltrib.com/sltrib/money/58508129-79/germany-economy-europe-growth.html.csp,
China injects $81 billion into banks to support economy. http://www.reuters.com/article/2014/09/17/us-markets-china-repos-idUSKBN0HC0BU20140917 Many other references available, please do
some reading if you were not aware of the economic conditions in China).
Growth in the US is lackluster. Wage and salary growth has been stagnant for
years. While the stock market has been
going up in the last couple of years, much of these gains are the result of
financial engineering on the part of corporations, not real growth. (http://www.reuters.com/article/2014/10/18/us-markets-stocks-usa-weekahead-idUSKCN0I62F620141018,
same notes as other references)
Industries are interconnected around the globe. An example - If the Saudis don’t cut back on oil
production, the supply of oil goes up significantly and oil prices drop
substantially. The drop in oil prices
significantly impacts the economies of Russia and other oil producers. If the price of oil drops enough, the cost to
extract some oil becomes too high to justify continued production. Think fracking. Think North Dakota. Think oil boom becomes a bust. This is going on right now. Are those lower gas prices really good for
you?
Financial markets, investments and instruments are tied
together in a complex web of derivatives, insurance policies and other
financial contracts/obligations that I can’t even begin to understand or
describe. When things start falling
apart, everything is connected in a big house of cards, so it all falls
down. This is what started in the
financial crisis and was eventually brought under control (with much pain and
suffering, and government support). Note
– I do try to post articles on the Facebook page that describe some of this
interconnectedness (I think that is a word). Here's a quote:
- "
If internationally connected industries begin to experience
significant downturns, it is possible if not likely the financial contagion
will significantly impact other industries, then financial markets. As a result recession or depression ensues. That means masses of people out of work,
potentially leading to regional and worldwide financial crisis and more
importantly human crisis.
Now, rethink again what is going on daily behind the curtain. What must be happening within and between
governments to avoid mass panic and hysteria in all types of regional and
global situations that could bring international commerce to a halt? This activity does not fit into little
Facebook memes, political ads, headlines, talking points, or the rants of some
nut case trying to sell advertising time.
Fear, panic and hysteria are huge drivers of the markets and worldwide
economy. If fear and panic rule, the would could crash. Really pause and think
about it. (http://www.benzinga.com/news/13/10/4014995/alan-greenspan-fear-drives-the-markets
)
So, what the heck does all of this have to do with cutting
off a few flights from some small, far away countries in Africa?
If the US cuts off flights, we set a standard that the rest
of the world will consider following.
What will that standard be?
What is the threshold for cutting off flights? 1,000 people infected in the country? 500? 100?
1?
Or do you count deaths instead of infected? Those are rhetorical questions.
We saw just in the last few weeks that two countries (Belize
and Mexico) refused to let two passengers disembark from a cruise ship to simply
transit through their country to board a plane to be taken away. The travelers were showing no symptoms and
later tested negative for Ebola. These
were Americans to boot.
Is the threshold based on a percentage of the population?
Lets consider a little math (I know, it hurts):
Here’s each primary country where Ebola is active. The table indicates population, reported
cases and the percent of population the reported cases represent.
Country
|
Population
|
Cases
|
% of Population
|
Guinea
|
11,750,000
|
1519
|
0.01%
|
Liberia
|
4,300,000
|
4249
|
0.10%
|
Sierra Leone
|
6,000,000
|
3410
|
0.06%
|
· I’m just trying to evaluate magnitude here. Other metrics might be used – i.e. deaths,
active cases, etc. I also recognize that
a time metric is not included.
Now… consider the US with a population of 310,000,000 (310
million). Apply the average percent of
population for the three countries noted above of 0.06% and you get –
186,000 cases
That is one hundred eighty six thousand cases. The US would have to have this many cases to
be comparable on a percentage of the population to the cases in the outbreak
countries.
Note – that is zero point zero six percent (0.06%). It is not six percent (6%).
Based on our reaction to 4 cases, my totally unscientific
guess is, the US would be totally freaked out if there were 100 cases here.
So, lets say that the threshold is based on percent of
population and the cut off percent is 0.06%. Would we expect other countries to not cut off travel from the US until
we reached 186,000 cases?
The population of Germany is 80,000,000 (80 million). There is a lot of travel and business that
goes on between Germany and the US.
Germany is the prime economic driver of the European Union. Apply the 0.06% threshold and you get 48,000
cases. Would the US wait until Germany
has 48,000 cases before cutting off air travel from Germany to the US?
I’ll let you apply that 0.06% percent to a few other country
populations:
India: 1.25 billion
China: 1.357 billion
Russia: 143 million
Indonesia: 240 million
Do you think we would wait till their populations reach the
0.06% level?
Lets take a look at the annual number of visitors from other
countries to the US.
Visitors to US – top 15 countries. (2013 statistics - http://travel.trade.gov/view/m-2013-I-001/index.html)
Visitors to US – top 15 countries. (2013 statistics - http://travel.trade.gov/view/m-2013-I-001/index.html)
CANADA
|
23,387,275
|
MEXICO
|
14,342,722
|
UNITED KINGDOM
|
3,835,308
|
JAPAN
|
3,730,287
|
BRAZIL
|
2,060,291
|
GERMANY
|
1,916,471
|
CHINA (EXCL HK)
|
1,806,553
|
FRANCE
|
1,504,654
|
KOREA, SOUTH
|
1,359,924
|
AUSTRALIA
|
1,205,060
|
INDIA
|
859,156
|
ITALY
|
838,883
|
VENEZUELA
|
788,069
|
COLOMBIA
|
748,116
|
ARGENTINA
|
686,098
|
Note: A large number
of Canada and Mexico visitors enter the country by land. Most of the other countries a large
percentage of the visitors travel by air.
What is the threshold for cutting off travel from a
particular country? I honestly don’t
know.
Here’s what I think…
If we start cutting off travel from specific countries, other
countries are going to do the same. Some
countries are going to pick very low threshold numbers for cut off. Remember Mexico and Belize reaction to two
people on a cruise ship. Based on a
percentage basis alone and with some bad luck it is conceivable that a large
European country, one of the BRIC countries (Brazil, Russia, India, China) or
some other large 2nd or 3rd world country could have a
runaway outbreak that leads to several hundred people infected and 1,000s being
monitored. (Look at the population of
the outbreak countries above again. The
populations in the current outbreak countries are very small.)
Here’s one nightmare scenario and what I think is being
managed behind the curtain. Yeah – this
is all speculation, and a concocted scenario.
My goal here is to present a story of interconnectedness.
If the US sets the precedence of halting air travel from
particular countries, other countries are going to follow suit. (Actually this has already started.)
An outbreak occurs in a large country numbering in the
100s. Based on percentages this is
highly possible, but also highly manageable.
Let say – India (or take China if you like.)
Other large countries move to cut off air travel from
India. Remember the US set the
president.
Millions of travelers are taken out of the global travel
market. Airlines take financial
hits. Hotel companies take financial
hits. But they’re manageable. (Except for India based airlines and hotels.)
Small out breaks (i.e. 1 – 20 people) happen in a couple of
1st or 2nd world large countries – lets say China and
Germany.
Because of the perceived threat of a spreading contagion
some large countries start to ban travel to and from China and Germany. Remember – the US set the president. Now – we have 10s of millions of travelers
taken out of the global travel market.
Travelers in other, non-impacted regions stop traveling
because of fear. Booked air tickets drop
significantly. Hotel occupancy drops significantly. Now, large international
airlines start to fail. Hotel chains
start to fail. Thousands of employees
are laid off.
Planes are not owned by the airlines, they are leased
through leasing companies that are part of the largest banks in the world. Airlines stop making lease payments on
planes. Banks start attempting to
collect on financial protection for loss of lease payments that were bought
from other financial institutions. The
lease insurers can’t keep up with the rate of lease failures and payments
due. They begin to fail. Banks can’t recover losses on plane
leases. Airlines begin to default on
other massive loan payments that are due.
Hotel companies do the same.
Financial institutions begin to fail.
Small businesses dependent on travelers begin to fail. Worldwide travel spending continues to
shrink. Local economies and small
businesses are hit with large reductions in revenue. And… I think you see the potential picture.
I’m not attempting to predict the exact sequence of
events. Nor have I included all of the
interrelated business and counterparties (I may have gotten some wrong). But, I do think our leaders are thinking
about and talking about these types of scenarios behind closed doors. I hope they’re talking to and listening to
people much smarter than me.
One day we may encounter a virus or bacteria so virulent
that we must take the steps to close borders quickly, on a massive scale and
suffer the economic and social consequences.
The current strain of Ebola is not it.
Just to be complete – the travel bans have started:
Out of the countries listed in the article these appear to
have the most significant populations:
Colombia 48 million
Kenya 44 million
Ivory Coast 20 million
