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Coronavirus outbreak is No "Black Swan", it is "Gray Rhino" event Coverage of the coronavirus outbreak in China includes maddening references to the outbreak as a “black swan” –that is, a high-impact event that is utterly unforeseeable and unmanageable. Once you can imagine something, by definition it is no longer a black swan. If you can’t imagine that something has happened before cannot happen again, you are the proverbial ostrich with your head stuck deep in the sand. Coronavirus demonstrates how dangerous it is to rely on the myth of the black swan metaphor, which unfortunately more often gets used as a cop-out than for its intended use: as a to build more resilient systems. Given what we know about pandemics and their increasing likelihood, outbreaks are highly probable and high impact. I coined the term “gray rhino” for exactly such events: obvious, visible, coming right at you, with large potential impact and highly probable consequences. No, we don’t know exactly when or where pandemics will erupt. Nor do we know exactly how they will turn out. That does not mean they are unforeseeable. Very few predictions include that kind of detail –partly because the outcomes depend on how proactive we are in preparing to respond, and whether or not we act quickly. What we do know is that they will happen. We also know that global air travel –by increasing the likelihood of — and climate change –by expanding the habitat of the kinds of mosquitos that carry Dengue, Zika, and other deadly viruses— have increased their potential strength and likelihood of spreading. We also know that overuse of -particularly antibiotics- has led to more drug-resistant strains of infection. It should not be a surprise that infectious diseases made the top ten risks in terms of impact on this year’s World Economic Forum Global Risks Report. By some estimates an influenza pandemic like the one that killed my great-grandfather in 19/18, today could kill 80 million people and knock 5% off of the global economy. And that’s just a strong flu, not a more deadly corona or Ebola type virus. We also happen to know more than a little about the kinds of things we can do to reduce their danger –but unfortunately have invested too little in best practices. Pandemics –epidemics that have crossed national borders—have been a constant throughout history, recorded as far back as 430 BC in Athens to the Black Death of the fourteenth century, the European diseases brought by Columbus to the New World and which devastated indigenous populations, and extending through the 1918 Spanish Flu, which killed my great-grandfather. And of course more recently SARS, H1N1, Ebola, and MERS. The image above is of MERS to drive home that we have seen outbreaks of deadly viruses before; not only can we imagine them but we have very clear images of what they look like. The World Health Organization tracked 1,483 epidemic events in one hundred seventy-two countries between 20/ and 20/18. It has raised the alarm that the world is not prepared for the next pandemic, despite viral outbreaks being such a clear and present danger. In a September 20/19 report, called for concrete actions to lessen the risk, including stronger commitments by heads of state, countries, and regional bodies to invest in preparing for pandemics; regularly tracking preparedness; increasing funding, particularly for developing countries with weak health systems; improving international coordination. The best way to catch outbreaks early and contain them is to have a robust healthcare system. While this is most crucial in developing countries with severe healthcare deficits that mean they have trouble handling the most common issues, don’t think that the United States is immune (so to speak). Far too many people don’t get the health care they need because of the . There were about 28 million uninsured non-elderly Americans in 2018. Many people with insurance put off trips to the doctor because of the and/or time. Fewer than half of Americans, for example, get the flu vaccine. As of this writing, more than 80 people have died and more than 3000 coronavirus cases have been confirmed, mostly in Greater China. Along with China, cases have emerged in Singapore, Japan, Malaysia, South Korea, Thailand, Australia, Vietnam, Canada, France, and across the United States, including (yikes) here in Chicago and elsewhere in the United States. By the time you read this, the data will be out of date. I woke up this morning to read the harrowing account of a friend had been in Wuhan and developed a cough and slight fever when she returned to Malaysia, and was quarantined in a hospital while waiting what seemed like an interminable amount of time to get her test results –thankfully, negative for coronavirus. “Just” the regular flu. The World Health organization said on Friday that it’s too early to the coronavirus a global outbreak. Despite its stated emphasis on preparedness, as of this morning had still not yet called the new coronavirus a global health emergency, citing in part China’s aggressive efforts to contain the virus. China detected the virus December 29th because it had put in place an early-alert system, and within two weeks had analyzed, identified, and released its genetic code globally. As of January 24, it had quarantined cities with a combined population of 35 million. The Oslo-based Coalition for Epidemic Preparedness Innovations is working on a vaccine which it expects to be able to test on human subjects within weeks. Some self-styled Western health “experts” on Twitter called China’s quarantine and the rising global concern over the coronavirus an over-reaction, noting that the flu kills many more people each year than those identified to date. After all, the CDC’s annual flu burden report for the current season reports that as of January 18 preliminary numbers based on its weekly survey include between 8,200 and 20,000 flu deaths, between 0K and 250K hospitalizations, and between and 21 million cases in the United States. To be sure, that’s a lot more in terms of total numbers but a much lower mortality rate of about 0.008 %, far below even the mildest pandemics. Between 3 and 4 % of those infected with this coronavirus, unceremoniously dubbed 2019-nCoV, die from it, and about 25 % get extremely ill. Those numbers likely will change as more data comes in. Estimates of mortality rates for past influenza pandemics have ranged from about 0.1 % (19/57 and 19/68 pandemics) to 2.5 % (19/18 pandemic) to % (SARS) to 37 % (!!!) for MERS. This is a good illustration of the relationship between probability and impact. It is likely enough that this is a virulent enough strain that it could escalate even further, and fast. We don’t know enough yet about transmission or mortality rates of 2019-nCoV. But we do know enough to take it very seriously. And we know the situation and what we know about it will continue to evolve quickly. Live updates are available at the Washington Post or The New York Times. Check out this excellent article from The Lancet for more on this virus. You can bet there will be lots of ongoing coverage on other media as well. Wherever you get your news, watch out for overly politicized or hysterical accounts as well as any that pooh-pooh the threat. And just toss out anything that claims nobody could have seen it coming. Honesty is the best policy. |
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Many investors lose sleep over "black swans" -- hard-to-predict events that cause chaos, like terror attacks or the bursting of the dot-com bubble. Now authorities in China are being urged to watch for "gray rhinos" -- obvious dangers that are often ignored anyway. The People's Daily, a closely watched Community Party newspaper, warned in a front-page article on Monday that regulators "need to enhance the sense of urgency" to "prevent and resolve financial risks." "Both against the 'black swan,' but also against 'gray rhinoceros,' all kinds of risk signs cannot be taken lightly," the paper said. Don't feel bad if you've never heard of a "gray rhino." The term wasn't used much before a 2016 book by Michele Wucker titled "The Gray Rhino: How to Recognize and Act on the Obvious Dangers We Ignore." It uses examples of threats that were highly probable but neglected, such as Hurricane Katrina and the fall of the Soviet Union. In China, the focus appears to be on market bubbles. The newspaper said authorities need to "closely guard against" the risk from various excesses, including in the credit, real estate and stock markets. Investors fear that the newspaper's warning, combined with recent speeches from China's leaders, signals a coming crackdown on risky assets like tiny stocks, many of which are purchased using debt. China's small-cap Shenzhen index plunged 4.3% on Monday. The ChiNext, which focuses on high-tech companies, plummeted 5.1% and closed at its lowest point since early 2015. Honesty is the best policy.
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When I was pharmacist, I had to understand "medical terminologies". My mom fell down at her condo, I had to quit my job to take care of her for near 5 yrs but she passed in Sept 2013. During the time without pharmacist job, I started to invest in real estate and stock market when I've known a banker CEO/ Chairman. I always turn on TV on CNBC when the stock market is running. I live in Calif, so the time zone is 3 hrs different than New York. Every morning I wake up before 6:30 am and turn on my computer to watch the stock chart and listen to the CNBC news simultaneously. Stock market is very treacherous and unpredictable that makes investors very nervous. There are many terminologies in stock market that I have never known when I was a full time pharmacist. Now I have to learn those terminologies that people talk about on CNBC, such as two terminologies in this blog. People on CNBC keep talking about "Black Swan" 黑天鵝 and "Gray Rhino" 灰犀牛lately when they mentioned Coronavirus. I have to study these two terminologies to understand what the meaning are. So, I did the research. Black swans 黑天鹅 — risks that are completely unpredictable. Gray rhinoceroses 灰犀牛— which comes from the title of a book about large and obvious “dangers we ignore” until they start running too fast, or, as a People’s Daily explainer (in Chinese) puts it: “A gray rhino is massive, and responds slowly — you can see it clearly in the distance, but if it charges you, it will catch you off guard and gore you.” “gray rhinos” has been widely interpreted to “have feasted on cheap debt provided by state banks, spending lavishly to build their empires.” The appearance of the warning about gray rhinos on the front page of the print edition of the People’s Daily is final confirmation, if any were necessary, that the government intends to closely scrutinize the acquisitions and related debt of some of China’s biggest privately controlled companies. Some related stories: The Wall Street Journal says (paywall) that, “according to people with knowledge of the action,” President Xi Jinping personally signed off on measures to “bar state-owned banks from making new loans to property giant Dalian Wanda Group to help fuel its foreign expansion.” Wanda’s billionaire chairman, Wang Jianlin 王健林, told Caixin that Wanda will “actively respond to the state’s call and decided to put its main investments within China.” The South China Morning Post reports that three banks that “funded HNA’s growth…have decided to stop extending new loans to HNA,” while a fourth has “trimmed its exposure to the company.” HNA has also attracted scrutiny in the U.S. Honesty is the best policy.
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