Llevo 31 años subido al andamio de la industria financiera, los últimos 25 gestionando patrimonios. He vivido en Nueva York y en Londres, donde he tenido la gran suerte de conocer y trabajar con algunos de los mejores inversores de nuestro tiempo. A ellos y a mis socios les estaré siempre agradecido por la formación que he recibido.
The pandemic presented policymakers with a stark dilemma: a collapse of the health care system leading to pandemonium or financial ruin for those whose livelihood depends on delivering services or goods in person. Reams of data tell us that the virus itself is only extremely dangerous to the elderly and the frail, but as we have been told repeatedly, a collapse of the health care system is a problem for all, as ICU beds would not be available for non-pandemic care. (Should you find yourself in the minority of those who like to analyse the facts, you will find the data on excess deaths per population cohort for the EU in the Euromomo data).
Why do we mourn COVID victims in public while we do not mourn those who die every year from pneumonia, influenza or tuberculosis, to name just three lethal infectious diseases? Perhaps because of our bad conscience, as very sadly, at the outset of the pandemic, those COVID patients who had a very small probability of survival were not treated. The elderly died by the thousands in care homes in New York, the UK or Spain. As it turns out, politicians were not prepared for this scenario and they soon decided to try to put an end to these triage decisions by adopting general lockdowns. We were told that shutting down all activity would slow down the rate of contagion, only later did we learn that it did not.
Here in Madrid, where we are taking refuge from full lockdowns in London and Lisbon, dark clouds are on the horizon, as the local authorities are losing their resolve. Little by little, local officials are going down the slippery slope that may bring about a second lockdown for no other reason that something needs to be done as case numbers rise and some among their voters live in fear. These politicians and many of their voters are once again confusing correlation with causality. It must be very confusing for their busy little heads to see case rates go up in both the UK and Israel, even as these two countries have the fastest deployment of vaccination in the world, while case numbers in France are declining coinciding with restaurant closures and earlier curfew times. Especially, because very few people in France have received the jab. None of these bright people is asking the obvious question: why are case rates not coming down in neighbouring Germany as it has similar policies in place?
We know today that lockdowns worked very poorly and unevenly. Some countries, such as Spain or Peru, implemented very harsh confinement conditions and yet experienced very high case and death rates per population, while other countries fared better, even with lighter rules or no lockdowns in place as was the case in Germany or Sweden. In July, The Lancet published a study that apparently nobody in the health Services or Policy communities has read: ‘A country level analysis measuring the impact of government actions, country preparedness and socioeconomic factors on COVID-19 mortality and related health outcomes.’
The findings of this broad study of national health policies and actions are an indictment on current pandemic policies. One may surmise from these findings that the Duchess of Windsor was a visionary, when she asserted, ‘You can never be too rich or too thin’.
‘Increasing COVID-19 caseloads were associated with countries with higher obesity (adjusted rate ratio [RR]=1.06; 95%CI: 1.01–1.11), median population age (RR=1.10; 95%CI: 1.05–1.15) and longer time to border closures from the first reported case (RR=1.04; 95%CI: 1.01–1.08). Increased mortality per million was significantly associated with higher obesity prevalence (RR=1.12; 95%CI: 1.06–1.19) and per capita gross domestic product (GDP) (RR=1.03; 95%CI: 1.00–1.06). Reduced income dispersion reduced mortality (RR=0.88; 95%CI: 0.83–0.93) and the number of critical cases (RR=0.92; 95% CI: 0.87–0.97). Rapid border closures, full lockdowns, and wide-spread testing were not associated with COVID-19 mortality per million people. However, full lockdowns (RR=2.47: 95%CI: 1.08–5.64) and reduced country vulnerability to biological threats (i.e. high scores on the global health security scale for risk environment) (RR=1.55; 95%CI: 1.13–2.12) were significantly associated with increased patient recovery rates.
In this exploratory analysis, low levels of national preparedness, scale of testing and population characteristics were associated with increased national case load and overall mortality.’
As you just read, there is no statistically significant relationship between mortality rates and border closings or full lockdowns. With these conclusions in mind, what have health officials the world over done in preparation for the third wave? You guessed it right if you chose ‘close borders and return to lockdowns’!
While this approach will work equally poorly this time around, citizens will sleep better at night in the knowledge that our fearless leaders are doing something about the rise in cases. Let us spoil the party by pointing out the obvious; the Farr curve for this third wave of infections will take the same shape as the previous ones. Within weeks, new cases will plateau and then, they will decline. It is far easier to sequester people at home than to make them lose weight and far easier than trying to reduce wealth or income gaps on such short notice. It is also a far better political choice, except for the economic victims. Sadly, in spite of all the government spending, many businesses are going under, just take a walk in the morning if you are still allowed to do so, and count the shuttered storefronts.
When economists talk about the recovery, they are confusing a flow with a stock, proving once again their unique usefulness to society. Indeed, the flows will recover with fewer days of lockdown, if that turns out to be the case, and population immunity in sight will establish confidence. However, the stock of capital will come out of this crisis impaired, especially in the case of small businesses. While it is true that there have been some programs to help fund the forced closure of many businesses, many of them will need to raise equity to pay down government guaranteed loans. Unfortunately, the currently ebullient equity capital markets are not open to such small tickets. In addition, monetary policy in the euro zone continues not to work after many years of financial alchemy. Thus, bank loans, the other voluntary source of funding for businesses, is also unavailable to most small firms.
Soon, some politicians may rediscover the taxation of windfall profits. This may not be a bad idea, and certainly, its time may have come. Those companies that have benefitted from the lockdown could be required to pay additional taxes on these windfall profits. Let us be clear, none of these companies planned for this scenario, therefore such a tax may be just. Perhaps, their luck should be shared with those unfortunate enough to have been put out of business because of government policy in the interest of the common good, no matter how ineffectual or irrational.
Finally, some people have already lost patience and are beginning to revolt against some of these hare brained measures. The young never really conformed, as hormones are difficult to confine. However, most of us followed the rules meekly. If you have followed our posts, you are familiar with our fear from day one that personal freedoms would be the long lasting victims of this pandemic. We are not far from abusive impositions from the government based on no evidence whatsoever.
It is shocking to read that British Health officials compare people attending parties with people who turned their lights on in blackouts during the Blitz! In any case, such Cassandras are fighting a losing battle, as most people will continue to do as they see fit. Already, restaurant owners in Italy are revolting because they cannot take care of their families. Society needs an urgent court ruling on these issues. Why are we shooting ourselves in the head with glee, when so-called experts should know that these measures proved to be ineffectual? The time may have come for civil disobedience. Some of the current cabinet members of periphery Governments started their political careers in the widespread youth protests against austerity during the European Sovereign and Banking Crisis. They should be sympathetic to new grass roots movements that call for reason and evidence to prevail over the sense of false security and widespread misery that will come from further disruptions to the education of children and young adults, our mental health, and the economy, to name just a few victims of these policies in order of decreasing importance.