Blain’s Morning Porridge – Sept 22nd 2020: Rocketmen and Viruses
“I’m the King of rock and roll, completely…”
From the Ministry of Common Sense: “To celebrate this morning’s Autumn Equinox, we’ve decided to commit economic suicide.”
The pandemic is a pernicious little beast. It clearly eats away brains. Rising infections are a risk. In the face of clear evidence fewer people are dying and the medical services are coping better with Covid cases – we could assess that risk, and would probably conclude its better to stay broadly open. Or we can let fear and emotion run us: let’s stay safe by closing down while hoping and praying for a vaccine next year. Hope is never a good strategy – action is. The choice is pain today as more people might die earlier from the infection, or pain tomorrow as jobs, livelihoods, and more deaths result long-term from economic shutdown.
Choices, choices… Both approaches have clear costs. But one is clearly preferable to the other – if government had the guts to say it.
The brutal reality is deaths hump upwards during the autumn and winter from respiratory illness. Markets get it. Markets are about assessing risks and outcomes. Which is why they’ve stalled – losing confidence and knowing both long and short-term economic costs will be lower if we shift towards keeping the economy on track to recovery, and facing down the virus. It’s not just Sweden that get’s that. Compare and contrast the UK approach with Germany – which is going to brazen it out by keeping the economy as open as practical. Germany will suffer a far lower hit.
Just as the UK economy was struggling back onto its knees, it will get the legs kicked from under it. There is now zero-talk of swift recovery – estimates are now for 2022 before the economy claws back its likely 7% drop in 2020. A W-shape looks nailed-on.
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