Sunday, February 16, 2020

@pdxsag Guest Post - Theories on the "WuFlu" / Coronavirus

This is a guest post by @pdxsag, who previously wrote book reviews of Real Food on Trial and - coincidentally - Bottle of Lies, about the outsourcing of our pharmaceutical manufacturing to dirty, incompetent third-world places.

There is a remarkably blasé attitude with regard to the Chinese WuFlu outbreak in the financial markets. Judged by their actions, market participants have placed their full and complete faith in the Fed Put (or perhaps helicopter money). Whether that is a wise judgement will not be the subject of this guest post. Rather, I will endeavor to show that everything we think we know about the Chinese WuFlu is based on propaganda and lies coming out of Communist China.

Among the financial twitter-sphere is an emergent network of critical truth-seeking fraud sleuths that latched on to the obfuscation and lies coming from Elon Musk and Tesla. They later turned their sights to Boeing. Most recently, they have taken on the task of separating truth and dis-information around the WuFlu.

One of the first to recognize the propaganda story was user @evdefender. He started tracking the daily totals for infected and deaths announced by the CCP and quickly noticed the reported numbers fit to a parabola perfectly. For statistic types, the error residual was 0.999. Nothing is that perfect in the real world. It seemed that the CCP was fudging their data, but not trying very hard to hide it. What became unmistakable this week was the facility with which Beijing changes their propaganda without any regard for plausible deniability.

disease outbreak with 0.999 correlation to a parabola

The last week of January (light blue dots) the casualty rate was following a parabola. Then on January 27th the parabola was shifted upward. No one realized it at the time – here wasn't enough data to assume it would follow any particular formula – but in retrospect it suggests Chinese officials realized the infected numbers coming out of Hubei province were such that their originally assumed “zero day” was incorrect and the spread of the infection was much further along than was originally believed.

The upward shifted curve continued for another week until on Feb 4 the daily “new confirmed” cases began dropping in a linear fashion alternating about +100 and -100 from a best-fit line each day. What was noteworthy about it was that on Feb 3, the CCP had a standing committee meeting in which Chairman Xi attended and was reported to have said restrictive measures to contain the virus were harming the economy. Again, in retrospect, it seems at the standing committee meeting a decision was made to begin a narrative that the infection was contained and would be in its recovery phase after one extra week of quarantine (Feb 3-7 original, Feb 10-14 extra week). Indeed, by February 8 the divergence from the original model is evident and by Feb 11 daily “new cases” were as low as they had been since Feb 1. The outbreak wasn't over, but it from the outside it could be surmised the worst was over. The final magnitude was now a “known, known.”

On February 12, however, the remarkable happened when Beijing announced a sudden increase of 15,000 “new cases.” It was couched in language about a change in counting methodology and so-forth, but the unmistakable fact is the announced number brought the infection rate back to the original parabola from Jan 27. To remove any doubt, the February 13 “new cases” fell on the parabola as well. To emphasize: the reported confirmed cases on February 13 were within 190, or 0.3%, of a quadratic model that was originally discovered and published by an anonymous twitter user 12 days prior on February 1.

To better visualize the changing models used to fit the propaganda narratives, @evdefender helpfully published a graphic overlaying the quadratic curves with the reported infection numbers.

3 phases of disease outbreak to fit a propaganda narrative

Also of note, is that the whole time this was going on, through three distinct phases of contagious outbreak, the mortality rate always trended toward 2.0% of the previous day's count of total infected. What is remarkable about that number is the only time the the mortality would be a fixed percentage of the prior day's total infected is when the outbreak would be essentially over. There is always a lag between people getting sick and actually dying. Based on a January 24 case report published by the journal Lancet, among the first cohort of 41 patients hospitalized by January 2, the death rate was 15% within 14 days of hospitalization. In the early phases of an outbreak, the death rate should track the infection rate from 14 days ago. That is how long it takes for a patient, once identified by admittance to a hospital, to die. Only in the final phase of the outbreak's spread, when the number of infected 14 days prior is essentially equal to the number of infected 1 day prior, would we see the mortality rate trend down and ultimately reach some total mortality rate as a percentage of the previous day's total. That China is reporting deaths showing a fixed mortality rate of a nice round 2.0% well before the outbreak had entered its final stages, suggests their reporting is not based on the reality of events, rather it is based on a model someone had built at the behest of the CCP.

So here is what is known:
  • China is reporting numbers from a model. We do not know what assumptions were made in developing the model, or even why that model was chosen among all the reasonable possibilities.
  • We do not know whether China is severely under-reporting or severely over-reporting infection and mortality rates. There are strong arguments to be made on both sides, to which I will return.
  • We know China has virtually been on a business “snow day” for 2 weeks straight, with a 3rd week about to commence with this Monday, February 17. This has been collaborated in multiple ways from online traffic trackers, anecdotal reports by Americans with business ties to Chinese suppliers, to vast numbers of smart phone videos showing cities under quarantine.
  • We know outside of China the WuFlu is incredibly contagious. The cruise ship now being held in quarantine at a Japanese port had one infected individual from Hong Kong on board for 6 days, from Jan 20-25. Some three weeks later testing shows over 200 people infected. Singapore has 67 cases. Japan and now Hawaii have cases notable for people with no direct contact to China falling ill. They had to have picked up the virus from other individuals. Given the timing of when travel bans went into effect, they contracted it two weeks ago, spread it for a week then fell so ill as to need to go to the hospital where they were tested.
  • We know outside of China the WuFlu is not terribly virulent. 4 deaths in total. One Japanese woman (not from the cruise ship) died and was in her 80's. No one from 200+ on the Cruise have died. No one in Singapore has died.
So the question arises: is this a highly infectious, but not particularly virulent virus (most novel virii are) being used by the Chinese for ulterior purposes?

If one looks outside of China, it's largely a nothing-burger. The seasonal flu is multiple orders of magnitude worse. It's possible, though everyday that goes by without happening this grows less likely, that the asymptomatic incubation period is not 1-2 weeks, but 3-4 weeks. If this is the case, the rest of the world is today, where China was in early January. This seems unlikely to me, but we'll know definitively in another two weeks time.

If WuFlu fails to gain traction outside of China and a few unique examples – elderly with direct or second-hand contact with infected Chinese nationals, and cruise ship passengers – then we can be fairly certain this was an internal Chinese problem. That would suggest that China's response was vastly out of character given the health threat. Their entire economy is halted. This is going to have enormous consequences both internally and externally. This leads to the next question: why might China be going all-in on such an incredibly expensive charade? Some possibilities:
  • there are two virus outbreaks: a deadly, escaped bio-weapon virus inside Hubei province, and a relatively benign as a red-herring to cover-up the former in the China and rest of the world
  • justification to expand their domestic surveillance state – never let a crisis go to waste, it's said. They now have tracking apps, quarantine hospitals, and a population prepped to call in the police on any neighbor running a slight fever, real or imagined
  • smoke-screen to round-up and “disappear” dissidents, especially in Hong Kong. Nothing like a highly communicable, deadly virus to take out the turn-out for a mob street protest
  • renege on the purchase agreements that were reached with the Trump admin in exchange for lifting tariffs
  • distract from a controlled demolition going on in their domestic banking sector; gives them an excuse to print money like Western Central Banks can only dream about
  • distract from a recession ostensibly imposed upon them by the Trump admin's economic negotiating tactics; a domestic recession of any kind would force them to admit to their populace that the CCP is not omnipotent
  • escalation of the trade war – we kind of forget it today, but in the 1930's and well before, it was understood interfering with another county's supply channels is an act of war, this is an act of war with plausible deniability
It would be easy to say with so many good reasons, why does there have to be just one? Indeed, as expensive as the epidemic response is, you'd almost have to amortize the costs among at least a few good reasons for it to make any sense.

The confounder among these possibilities is that China was pushing the “recovery” narrative just 3-4 days ago. Nothing had changed between then and now, so why abandon it and return to model A? Is the CCP itself have an internal cold war? Was Xi out-maneuvered? No idea.

What I am sure about is the economic impacts on not just the US, but the rest of the world, are going to be real and far-reaching. There was a little bit of added buffer on account of this occurring around the time of the Chinese New Year holiday. However, 3 weeks of supply-chain disruption on the part of the entire country is unprecedented. Central Banks can posture, but if they start throwing money at the economy we'll have a textbook 1970's stagflation... more money chasing fewer goods and services.

It would be a supreme irony if over the next 4-8 years the Boomers leave adulthood under the same economic malaise as they entered it. What a shame that would be. It couldn't have happened to a nicer demographic.

11 comments:

Anonymous said...

As one of the “couldn't have happened to a nicer demographic” I have reached the age of pragmatism. I believe you give far too much credit to the CCP or factions to conduct such sophisticated plans. With 1.4B, the organization of Chinese society is highly complex riddled with centuries of traditions.
Occam's razor suggests the simpler answers apply – Chinese government has lost control of the health situation and responded in the manner they are familiar – repression. (As many states do.) Layer in tradition and Xi and ensemble are losing their divine mandate. They are scrambling to save face and power.
There are anecdotal videos escaping of the draconian measures. There is even satellite imagery suggesting massive cremations in the diseased areas. Also escaping is news of food and water shortages along with serious sanitation problems (people flush masks etc down toilets in part due to no garbage services.) These are all signs of chaos and panic something not easily resolved and difficult for the regime to subdue.
You are very correct that the crisis is not going to waste – but at all levels – state, province and even personal. Various degrees of chaos and panic.
There are even (non state) videos showing how the Chinese spirit is coping – mass sing songs and dancing from balconies!
I pray for them (and I’m not religious.)

CP said...

Here's the two-part conundrum that we are seeking to solve:

*The Chinese are taking dramatic (draconian) containment measures and putting out fake data, while at the same time,
*The disease, to the limited extent that it has shown up anyplace else, hardly seems serious (very contagious or very virulent) at all.

By way of example of the second part, it has been three weeks since a foreign student in Tempe, Arizona - who visited or was from Wuhan, China - was diagnosed with coronavirus. (https://www.phoenixnewtimes.com/news/arizona-officials-no-new-coronavirus-cases-so-far-after-testing-11437285)

Possibilities/hypotheses to explain what is going on, in light of the conundrum:

*The virus is a Chinese hoax. When was the last time the Chinese had a mysterious respiratory syndrome - that didn't seem to spread anywhere else? Oh right, the last financial crisis (SARS). The virus story gives them power and excuses to do totalitarian things they want to do anyway, as @pdxsag theorizes in his post above.

*The virus is real but not that severe, and the excessive Chinese response is an overreaction caused by their communist incentive structure and culture of lying.

*The virus is virulent and contagious, but only in China (or Asian countries), for some combination of environmental and genetic reasons. See: https://www.unz.com/article/do-you-know-all-coronavirus-victims-appear-to-be-chinese-thought-not/

*The virus is virulent and contagious to all humans, but we do not realize this yet because of an extremely long incubation period. Every day that goes by makes this hypothesis less likely. The more time elapses without evidence of a person of European descent made severely ill by the virus, the more we should discount this hypothesis.

*The virus is or was already here, but outside of the population genetic and environmental circumstances in China it is just perceived to be a "really bad" cold or flu. Remember hearing about pretty bad respiratory ailments earlier this year? I have friends who experienced unusually bad "colds" starting in late December / early January.

Anyone who has a different or additional hypothesis distinct from the five above, please post it below. Let's use this comment thread also to keep track of evidence that can help us shift to one of the hypotheses.

MrGotham said...

I think you need to add another factor to the above list which is that Wuhan's public health system is overwhelmed (don't think there is much doubt about this) and doesn't have the ability to treat the sick effectively, at least not many of them. Whereas those outside the province and the country have received better treatment. There may also be a genetic factor as you noted.

I'm also sympathetic to the Occam's razor comments from the first poster. The incentives implicit in the CCP's control rubric led local officials to downplay and mismanage the epidemic in its early days, and now the national party has apparatus has stepped in to show that it is "doing something" as, given its iron grip on the country, it owns the problem whether that is a just conclusion or not. It can't be seen as passive given the implicit bargain in its current control over society.

It's possible that the national officials are over-reacting and making the situation worse with their draconian measures in the rest of the country, but given the rate at which it seems to spread, perhaps it is all justified.

Feels like the market's are substantially under rating the economic fallout from this unless there is a dramatic curtailment of the disease in the next couple of weeks.

CP said...

So your idea, "Wuhan's public health system is overwhelmed," would that fit into my hypothesis #3: "The virus is virulent and contagious, but only in China (or Asian countries), for some combination of environmental and genetic reasons"?

My focus with the set of hypotheses is to try to figure out whether this virus threatens the health of my family and me, personally. It is really hard to determine for two reasons, both low-signal / noisy participants in the conversation:

*hyper-globalists who think that quarantines are racist (really: low-status)
*doomers like zero hedge who actually make money alarming people and blowing things out of proportion

Something else I forgot to mention in my previous comment - Trump seemed really bored by the virus:
https://twitter.com/owillis/status/1226918856632999937

While he has a strong interest in propping up the economy and stock market until November, I actually don't think that he would go so far as to not establish more quarantines if they were needed. Why would he pass up anti-globalist travel bans?

At the same time, he is not explaining WHY he's bored by the virus. That would give a bit of support toward hypotheses 1-3.

Allan Folz said...

Occam has left the building.

The virulence inside China does not match the virulence outside China for any known infectious disease.

We can come up with explanations for those contradictions, but none of them will be simple.

CP said...

The long quote from Hilton Vacations in this article about possible spread in Hawaii is a reminder that there are a lot of people who stand to lose a shitload of money when the inevitable freakout happens & will delay that as much as possible,with ambiguous effects on containment.
https://twitter.com/toad_spotted/status/1229077923103158272

Chinese efforts to stop the full story about what’s going on are because they want the scales to be even since they’re now facing a severe pandemic and depopulation event.
https://harvardtothebighouse.com/2020/01/31/logistical-and-technical-analysis-of-the-origins-of-the-wuhan-coronavirus-2019-ncov/

MrGotham said...

I think we have seen it spread quickly outside China (at least in a few contained instances) so I think you can discount hypothesis 1.

While I have not seen any research on the typical time from onset of active symptoms to death, it seems like at least from Japan there isn't evidence of an especially lethal disease. Japan had 20 cases on Feb 1, reported their first death on Feb 12 and none since. HK had 14 on Feb 1 reported their first death on Feb 3 and none since. Still early to draw definitive conclusions, but in a couple of weeks we should have much better sense of mortality rates outside China. I'd take under 5%, and probably more like 1-2%. If you are over 70 or have other health issues, the number could be a lot different, it appears.

Seems to me this is more of an economic risk than public health risk. If you have to shut down the country for 3 months to defeat the virus, the economic fallout will be very material. But if this is like the chickenpox, you would limit the economic fallout by infecting everyone all at once, shut down the country for two weeks and then move on with herd immunity of some kind. The problem with that is the health systems would be overwhelmed with elderly patients at a minimum, and a lot of people would die unnecessarily, as is happening in Wuhan now.


CP said...

Diamond Princess info:
https://jp.usembassy.gov/updates-on-diamond-princess-quarantine/

Would you guys agree that a lot of people on the cruise ship were infected, but not very many became seriously ill?

Allan Folz said...

After my quip that Occam has left the building I spent the rest of the day pondering that question. After all, Occam's Razor isn't that the answer must be simple. It's that given a set of explanations, the simplest one is most likely to be true.

Not that it has to be true, just that it's most likely.

So, what are the simplest explanations?

* @timeofmonsters_ has me convinced a 6 week asymptomatic incubation period can't be ruled out. As explanations go, that's pretty simple. Unprecedented to be sure, but simple.

* fin-twit (1) (2) (3) are of the opinion CCP is trying to scape-goat a severe economic recession that's been unfolding since the summer. (Suppressing Hong Kong dissidents and yet more draconian social control are simply evergreen operations always in the works.) Of all the reasons to wreck your economy, that it was already wrecked is a pretty simple explanation in my book.

I'm open to and welcome(!) additional explanations, but please be clear how they are simpler than either of those two.

CP said...

On a side note, many people have taken to the side of conspiracy theory on why China implemented draconian lock-downs and quarantines. Many seem to believe that CFR has to be 10% or even 30%, and China has been under-reporting the death cases by an order of magnitude. Otherwise, why would a disease of 2% CFR shut down China? Well, regardless of what CFR maybe (we will not know for sure until the end of this pandemic), if your healthcare system collapses in a city within 1 week of the onset, any rational government will try to implement lock-downs and try to preserve medical resources in cities that are yet to be affected.
https://bartonview.blogspot.com/2020/02/why-covid19-is-worse-than-flu-and-why.html

CP said...

Here is my notes (paraphrased ) from an interview with Dr. Dingyu Zhang, who is the Head/CEO of Jinyintan hospital (Infectious Disease Hospital of Wuhan, also the first specialized COVID19 hospital in Wuhan), conducted on Feb 17
https://bartonview.blogspot.com/2020/02/interview-with-dr-dingyu-zhang-on.html