22 September 2020

Europe's second wave of coronavirus


Excerpts from John Authers' most recent Bloomberg newsletter:

The question is much subtler than it was six months ago, when it was probably correct for a blindsided world to respond to a new and fast-spreading disease by shutting down. Now, there is greater knowledge, and much more complexity. So it is perhaps a little unnerving that the key test case on the “second wave” will be decided on by the U.K.’s prime minister, Boris Johnson.

To simplify a sprawling debate, the case for a lockdown is contained in these figures, shown here in a chart from Capital Economics. New Covid cases per capita are higher than they were at the worst of the spring in both Spain and France while they are rising menacingly in the U.K.

This is happening even though the U.K. ended up having one of the longest and most complete lockdowns the first time around. But are cases the best measure of the problem? In spring, cases were undercounted as officials struggled to organize testing. Now, more are being caught, despite serious problems with the U.K. testing system. Meanwhile deaths have barely risen yet, and remain far lower than they were in spring.

Hospitalizations show a just-discernible rise in the last few weeks, according to figures from Britain’s National Health Service. The number of people so seriously ill that they need to go to hospital is still tiny compared to the spring, and there is no imminent danger of the system overflowing.

While deaths are obviously the most important measure, followed a long way behind by hospitalizations, the situation is complicated by the growing evidence that some people can suffer long-term debilitating consequences. There is still very little data on how widespread the problem is, and how long the effects can persist, but there are enough anecdotes to suggest that people under the age of 50 shouldn’t be too cavalier about the risks of catching the virus — and that governments should go to some lengths to protect them.

Johnson has to decide what to do. A second full lockdown looks hard to justify. Allowing the disease to continue expanding at its current rate looks similarly hard to justify.

Will some more nuanced lockdown keep the disease sufficiently bottled up? Will Covid continue to grow less deadly over time? Or will greater understanding of longer-term effects force yet another change in direction? The answers to these imponderable questions matter to all of us. They will also determine the direction of asset markets.

More charts and discussion at the link.

13 comments:

  1. it's not quite what it seems. Yes it is going up. But comparing the early and late peaks is misleading. the early peak was, likely, undercounted a factor of 5 to ten relative to the late peak. You can see this by looking at the washignton state IME forecasts and comparing the predicted number of cases to the reported number. It's easy to see that this can mainly be attributed to the ten fold rise in testing rates between the two peak periods. And it's easy to see that if you assume the fatality rate isn't changing a lot that the death rates also concur with a factor of 10 underestimate of the number of cases in the early days compared to a factor of 2 underestimate now. So yes there is an increase. but it's been going on for more than a month and the deaths you'd expect by now are not rising as much as you'd have expected if the two peaks were comparable. Possibly deaths are down too since return to school means a lot of case may be concentrated in the younger ages. So bottom line is yes it is surging. And the good news is because this time we can see it happening earlier (better testing) we can act earlier to stop it. So the lockdown in UK is a good idea for that reason. stop it early. But realize the peak you see now is probably less than the peak you saw earlier in terms of cases in the wild, just not in the testing numbers.

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    1. I was wondering about this; thanks for clarifying. Wouldn't there be a way for the statistics to compensate for the rise in tests (assuming they don't already)?

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    2. @Drabkikker yes you can adjust for the testing. The method is simple, but the interpretation is tricky. But to see how simple it is look here: https://ladailypost.com/strauss-can-we-predict-the-expected-deaths-from-covid-19-three-weeks-ahead-of-time/

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    3. @ charlie: Thanks! I'll have a look at the article you linked.

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  2. Americans drank their COVID gains away in bars, and Europeans vacationed it away. It is tragic to see so much entitled indulgence at the expense of so many lives. I never want to hear people talk about "the sanctity of life" anymore.

    And worse: everybody thinks it's not them. "No, I went to a quiet bar/rural vacation, it was ok".

    It appears to be very hard to break this cognitive dissonance.

    It's very much like people complaining about traffic not understanding that they are the traffic.

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  3. I watched a few mornings of the Tour De France this year and noted that while public safety appeared better than here in the U.S., it was far from perfect.

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  4. I appears that lockdowns only delay the inevitable.

    Sweden has the right approach in protecting the most vulnerable while keeping the lives of the healthiest, lowest-risk populations relatively normal. The rest of the western world has seemingly adopted a "0 fatality" attitude towards the coronavirus that is akin to trying to keep anything from getting wet from a hurricane.

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    1. Some things are worth protecting from the wet of a hurricane.

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    2. Sweden has not protected the most vulnerable. The government outsourced responsibility for managing Covid-19 to the Public Health Agency, which in turn individualized responsibility and risk assessment completely. These experts decided to sacrifice the lives of those in care homes ("who only had a few months or years left anyway," as one of the the high-profile epidemiologists said early on) and to severely compromise the lives of all people in risk groups by making their safety their own responsibility, instead of the collective responsibility of society. The disastrous effect of Swedish policy is clear when comparing our figures to those of the other Nordic countries. This insane solution came at an unreasonably high cost, all for the mirage of "herd immunity" -- which we are not even close to achieving. The economy is showing signs of tanking anyway, and most of the Swedish media have gone full-blown jingoist on this issue and do not even try to hold decision-makers to account.

      /Yes, I live in Sweden

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    3. Tack så mycket for this, Anonymous. In my country (The Netherlands) many of the corona sceptics point towards Sweden as a prime example of how our government should have done things instead of imposing all the safety measures. Your story casts a different light on the matter.

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    4. "Sweden's GDP slumped 8.6% in Q2, more sharply than its neighbors despite its no-lockdown policy"

      "[Sweden's] death rate was once one of the world's highest, and is now still significantly higher than its neighbours: more than five times Denmark's, more than 11 times Norway's, and around 10 times Finland's.

      Those three countries have now, like the rest of Europe, eased some restrictions, while Sweden has kept its same rules in place. The effect that is in many respects Sweden's rules are now stricter than those of other nations."

      From: https://tinyurl.com/y2qzbqch

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  5. This has nothing to do with this post , I found this story and I thought it might interest you.
    https://www.atlasobscura.com/articles/dorothy-molter-root-beer-lady

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    1. Thank you for thinking of me, David. I did happen to see that and sent the link to my cousins who enjoy canoeing up in the boundary waters, but I thought it didn't have a broad enough appeal to warrant inclusion in TYWKIWDBI. :-)

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