This is not the end of the world

There is panic in the air and everyone around me (in Munich, Germany) is taking action and changing their behavior to break the chain of infection. Everybody is talking about the coronavirus pandemic and it has suddenly started to dominate daily life. Just as I am writing this the news came in that spring break is early this year (schools across Bavaria will be closed for the next three weeks) – talk about a disruption to family life! This has gotten worse faster than almost anyone imagined (even though the scenario is not really a black swan event – you can watch it play out in countless movies, usually on an infinitely worse scale).

Human fears (and as a result the financial markets) now extrapolate current infection growth rates and each new death into infinity. This leads to an inevitable overreaction. This is exactly what we need right now to reign in the virus and keep health care systems functioning: each life saved by (over)reacting is worth an economic slowdown – as long as the consequences can be kept in check so they do not cause worse outcomes than widespread coronavirus infection would.

In the thick of it we tend to forget just how adaptable and resilient people are (even if their governments show a hair-raising lack of preparation and decisiveness in dealing with the issue). This is not the end of the world. Infinite extrapolation of current infection growth rates is not going to be our reality. Radically changing behavior is going to have a significant result. Second order effects and the idea that things change and people adapt are completely ignored. Nobody even expects any good news.

I’m fairly certain that second order consequences of changing behavior are vastly underrated – to name just a few obvious examples: overall viral infections (e.g. during the current flu season) are sure to go down through infection conscious behavior and restrictions – this might even lead to lower mortality from viral infections this year overall (something we will probably never hear about). We will now manage to significantly lower our CO2 emissions for the first time! Maybe some of these practices will even stick (for example video conferencing instead of flying across the continent for a single meeting or the simple habit of regular hand washing).

Of course, nobody knows how this will play out exactly and how much tragedy and suffering the virus will cause. It is worse than the flu, but it will be manageable in the end – even if we have to add another recurring disease to the menu that we deal with in our daily lives. While mortality rates are estimated to be higher than the flu at the moment (reliable information will take more time and data), the „regular“ covid-19 symptoms seem to be quite manageable for the majority of people and can be self-treated at home. There is scant reason to fear the disease itself, if you do not have significant prior health risk factors. Thankfully, children usually face only mild symptoms and few complications.

One thing we can do is to make the best of a bad situation. Be mindful and supportive of the ones around you. If missing a concert or vacation now saves just one person from failing to get critical care later (as a result of overloaded hospitals as we begin to see in Italy) it should be worth it. And this will probably be as or more relevant for people with other critical health conditions than actual coronavirus patients – to keep health care systems functioning is the priority.

On how to do all this listen to actual experts´ advice – it is good and it´s available.

If we manage to get over our fear some additional time at home would usually be quite welcome, wouldn’t it? We get to spend more valuable times together with our families and have an opportunity to think beyond the daily grind – or simply read a good book…

The world economy is grinding to a halt, but I think it is kind of ridiculous to assume that a forced break for a couple of weeks can bring the entire world down on its knees – shouldn’t we be more resilient than that? After all these are temporary measures (especially, if we manage to mimic the developments in China or South Korea) and the world economy began this crisis in fundamentally sound condition. If we really are so vulnerable to a chain reaction from such an exogenous shock, then things ought to change and business structures need to adapt (and they will eventually).

As a brushfire does, this pandemic will cause the most harm to the weakest in society and they will hopefully have widespread support – gig economy workers, single parents, affected minorities and others.It may even give cause to rethink, if the quality of our safety nets is sufficient (both on an individual and a society level), who knows?

Unfortunately I can see in my minds eye the stockpiles of viral medicine (that we will undoubtedly be building up now) discarded once they passed their sell-by date and preparation plans & vaccine development delegated to the back of the lowest drawer once the crisis has passed – just as we did after the last epidemics. My hope is, that this pandemic is going to be containable soon (or we manage to adjust to it as a new fact of life), but is already scary enough to not only leave a memory of people´s resilience, but also trigger their capability to think and plan ahead for the inevitable next time…

All the best & be safe


P.S. please check back for a post concentrated on investing and investment strategies in the light of coronavirus development in the next couple of days

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