Italy is a Foreshadow of the “Tsunami” that is Coming. All Americans Should Prepare.
We have been sounding the alarm on the coronavirus situation for weeks.
Last week, we explained that America is entering the coronavirus J-Curve. We also explained why more than 80 million Americans are likely to be infected (as a low-end estimate).
One of the replies we received was short and blunt: “Thanks for scaring the s–t out of me.”
It is not our goal to scare you. The goal is to prepare you — or at least to inform you, so that you can take your own actions to prepare.
Because the actions you choose to take, or not take, over the course of the coming weeks and months could be a matter of life and death. If not for you personally, then for someone you love, or even for a fellow citizen.
The heart of what TradeSmith does is risk management. It is our mission to help you stay safe in markets. Profit opportunities are important too, of course. But safety, in the form of risk management, comes first. You can’t book profits if you aren’t in the game.
The situation with the coronavirus is roiling markets now, and has created 2008-like trading conditions.
But it is also much bigger than markets. This is potentially about life and death, and being ready for what is coming straight at us. This is not some far-off threat. It is not even an “imminent” threat. It is already here.
Realistically speaking, at the big-picture level, it is likely too late to stop the “tsunami” of chaos and turmoil that is going to wash over the United States — the same way it has washed over Italy. But it is not too late for vital personal actions.
It is also not too late to take precautionary measures to avoid hospitalization over the course of the next few months. These measures could not only save your life, they could save the life of others.
For those who are still skeptical, or who still hold that coronavirus is “just the flu,” let’s revisit some recent developments.
Angela Merkel, the Chancellor of Germany, is a no-nonsense person. She is seen as the steadiest and even-keeled leader in Europe. In a news conference on Wednesday, alongside her health minister, Merkel warned the country that Germany could see 70% of its population infected by the coronavirus — as many as 58 million people.
Or how about Leo Varadkar, the premier of Ireland. At a press briefing on Monday, Varadkar warned that more than half the population of Ireland could contract COVID-19.
Don’t trust Europeans? Fine. How about Washington’s official doctor?
Axios reports that Dr. Brian Monahan, the attending physician of the U.S. Congress, has told “Senate chiefs of staff, staff directors, administrative managers and chief clerks from both parties” that 75 million to 150 million Americans could contract the coronavirus.
This is real. And this virus is deadly. For vulnerable members of the population, including the elderly and the infirm, it is not just 10 times more deadly than the normal flu. It is potentially 150 times more deadly than the normal flu.
While the average death rate for the flu runs about 0.1% by generally accepted estimates, the death rate for COVID-19 among the elderly — aged 80 and above — is 15% or even worse.
Listen to the people who know — people like Mark Parkinson, the president and CEO of the American Health Care Association.
“The mortality rate is shocking,” Parkinson told the New York Times. He further told the New York Times that, for people aged 80 and above, “the death rate might well exceed the 15% that had been reported in China.”
“Thousands of nursing homes and assisted-living centers across the United States are becoming islands of isolation as health care administrators take unprecedented steps to lock them down,” the New York Times reports, “hoping to protect some of the nation’s most vulnerable residents from the threat posed by the coronavirus.”
The reason that world leaders like Merkel and Varadkar are warning their countries that tens of millions could be infected — and the reason the attending physician to the U.S. Congress says the same thing — is not to induce panic.
It is to try and save their hospital systems from breakdown.
The serious illness hospitalization rate for coronavirus can run as high as 15 to 20%, even for those not in the highest-risk age groups. This has been acknowledged directly by the Centers for Disease Control and Prevention (CDC).
Because the coronavirus is infectious enough to reach tens of millions, and because the hospitalization rate is so high, there is going to be a shortage of beds. There will also be a shortage of masks, ventilators, and doctors and nurses, too.
What this means is that, when a hospital system becomes overwhelmed, the risks of getting sick are suddenly much greater. In a jammed or broken system, it is possible you don’t get a bed. It is possible you don’t get a ventilator. It is possible your attending nurse is running on four hours of sleep over the past three days and has been pushed to the brink of exhaustion.
Then, too, when the hospital system is jammed, access to care becomes a zero-sum game. If you successfully get a bed and a ventilator, it is possible someone else does not. If you get the care needed to survive, it is possible that someone else does not — and dies.
This is not theoretical. It is already happening. We are getting a preview from Italy, where the entire country of 60 million people has been placed on lockdown.
The following is a post from Dr. Daniele Macchini, an Italian doctor from the town of Bergamo:
“The war has exploded and the battles are uninterrupted day and night. The cases are multiplying, we have a rate of 15-20 admissions per day all for the same reason. There are no more surgeons, urologists, orthopaedists — we are only doctors who suddenly become part of a single team to face this tsunami that has overwhelmed us.”
“The outbreak of coronavirus across northern Italy has pushed the country’s national health service to the breaking point,” the Financial Times reports, “underlining the challenge that other European countries could soon face should their strategy of containing the disease fail.”
On March 10, Giacomo Grasselli gave an 11-minute interview to a British journalist. You can watch the interview on YouTube here.
Grasselli is an Italian health official in charge of coordinating intensive care units (ICUs) in Lombardy, the hardest-hit region of Italy. In his calm and clear explanation of the Italian health crisis, Grasselli explains why Lombardy was hit so hard. This was his most important message:
“Everyone must understand, if you are not very careful in controlling the spread of the disease, this disease will overwhelm your system no matter how efficient, good, modern it is. So the most important thing… is to avoid a lot of people becoming sick… so you have to teach the population that they have to behave in some way to avoid the spread of the disease.”
This is why the foreshadowing is ominous for the United States. The northern regions of Italy are the wealthiest part of the country. Lombardy’s facilities are modern and high tech.
The challenge came in the fact that the system was overwhelmed — and the system was overwhelmed because Italy failed to contain the spread.
The United States has also failed to “contain the spread” of coronavirus. All hope of containment in the United States is gone. We are in a mitigation phase now, where we hunker down and do our best to keep the hospital system from getting too overwhelmed. This, according to U.S. Surgeon General Jerome Adams.
It’s not just the United States at high risk of repeating Italy’s experience, in which hospital systems are taxed to the breaking point. Other European countries are facing the same outcome.
This is because the early diagnosis is the same — they, like the United States, simply failed to contain the spread. In China, they took historic measures to lock everything down. In countries like Singapore and Taiwan, quarantine violations are met with fines and jail time.
We don’t have that kind of societal control in the West — and this is not to say that we should. Rather, it is to link Grasselli’s diagnosis to the open nature of Western societies. In most Western countries, “stopping the spread” of a disease as infectious as the coronavirus without swift and draconian measures is almost impossible.
As of this writing, the official number of confirmed coronavirus cases in the United States has surpassed 1,000. But the real number is orders of magnitude higher.
That is because the “official” case count only tallies individuals who are tested. South Korea has reportedly gotten its test rate up to 15,000 per day; in the United States, we have not yet tested 15,000 people in total.
And there is likely to be a shortage of U.S. test kits, even as the coronavirus caseload advances into the hundreds of thousands, then millions, then tens of millions. Robert Redfield, the director of the CDC, confirmed to news outlet Politico that U.S. labs do not have an adequate stock of “reagent” supplies, a critical part of the testing mix.
The U.S. stockpile of face masks has also been depleted.
“The Department of Health and Human Services said last week that the stockpile has about 12 million N95 respirators and 30 million surgical masks,” the Washington Post reports. That number is “a scant 1% of the estimated 3.5 billion masks the nation would need in a severe pandemic. Another 5 million N95 masks in the stockpile are expired.’”
So what can you do about all this?
At minimum, take the advice of the CDC.
“Have enough household items and groceries so that you will be prepared to stay home for a period of time,” says senior CDC official Nancy Messonier.
The following is a guidelines screenshot from the CDC website:
Within the next two months, the U.S. health care system will be put under severe strain — and in many parts of the country is likely to be overwhelmed. By taking proper measures now, the life you save could be your own — and someone else’s too.
Again, our goal here is to inform rather than scare, and to convince you that preparation efforts are worthwhile. As the greatest country in the history of the world, America will pull through this. And our friends and subscribers in the many other great countries around the world will pull through it, too.
But in order to do that to the best of our ability, we all need to be ready.