This blog post raises questions about what could be done to minimize the health, economic and emotional damage caused by the COVID-19 virus. You will also learn what pandemics could have to do with space travel and why exploring foreign planets and tracking down “extraterrestrial life” could be so difficult. The analysis should be a controversial basis for discussion.


1. Should the report be more positive?

In parts of Asia, the number of those who have recovered from the disease is always reported first and given priority. In Europe and the USA, on the other hand, the focus is on the total number of people infected and the number of deaths. Decisive for the further course of the disease is the number of those still infected, defined as the total number of infected minus those already cured, since those already cured are no longer contagious.

You can follow the development yourself “live” by looking at the real-time corona world map of John Hopkins University.

In the left column you can click on the country you are interested in, for example Switzerland. On the top right in green you can (also) see the cases that have already been healed. In the lower right corner, you can see the number of confirmed COVID-19 cases. Please click on the tab “Logarithmic”, then you will see this number in logarithmic scale. If the curve becomes less steep (is concave), this is a good sign, because it means that the growth rate of the newly infected is decreasing. This is currently the case in Switzerland (as of 31.03.2020)! Click on the “Daily Increase” tab to see the number of new cases per day. Here too, the trend in Switzerland is positive, as the trend is downwards (as of 31.03.2020). There are thus indications that the measures taken, the Social Distancing, are working.


2. Should targeted data be collected and thus more targeted quarantine measures ordered?

Elderly people are most at risk, especially if they have additional diseases.

At the other end of the spectrum are younger people without diseases who have already recovered.

While extreme quarantine measures make sense for the first group, quarantine measures for the second group, once the infection period is over, may be pointless, as they can no longer infect anyone and are no longer contagious (according to current knowledge).

Therefore, one could consider whether a database should be created for each citizen containing all relevant COVID-19 information.

Then it would probably make sense to test the entire population as quickly as possible. It is possible that many more people than expected have already been infected, are already cured and have formed antibodies for a certain time, can no longer be infected and cannot infect anyone else. We do not know; an expansion of the tests would bring more clarity.

The growing pool of convalescents that have detectable antibodies could then quickly resume work to support the economy. Why quarantine people who are already cured with antibodies? The faster antibody tests can be carried out on a large area, the larger the pool of reliable cured people would be. Antibody production could be documented as reliably as a passport, for example, and could be recognized by all countries, so that they could not only work, resume their normal social life, but also travel freely again.


3. Should liberal civil liberties be temporarily curtailed and COVID19 monitoring methods with fixed-term return to liberal civil liberties temporarily introduced?

Testing for COVID-19 could be “made compulsory” for a period of 1 year or could not be refused under penalty. In the case of violations against ordered compulsory isolation measures, one could take severe action, since this is not a trivial offence, but could be interpreted in some respects as manslaughter, an attack on the economy and the livelihood of fellow human beings. Is there a right to freedom to infect others and contribute to the collapse of the economy and the ruination of livelihoods?

In contrast to Italy, South Korea has succeeded in reducing the infection rate considerably and has not had to quarantine large regions of South Korea as a result of comprehensive tests and targeted quarantine measures. The policy in Europe of quarantining entire countries and sealing them off from all other countries is likely to cause severe damage to the economy and thus to the livelihood of all. In all decisions, it must be weighed up against the fact that the suicide rate of those who have lost their livelihoods is likely to rise sharply if the situation continues to deteriorate. Also, to be weighed up are personal and civil rights and the limited duration of the restrictions.


4. Should positive prospects, above all the presumed “end of quarantine measures”, be pointed out to give people hope?

Should politicians emphasize the limited duration of the quarantine measures? If the quarantine measures were strictly enforced, with an estimated duration of the disease of 3-6 weeks and an estimated time of an additional 2-3 weeks until one is no longer infectious, if one has overcome the disease, the measures could be eased considerably after 9 weeks. This would mean that the summer holiday (perhaps shortened to reduce the damage to the economy) could still take place, at least for the cohort of those cured (the group at risk might have to remain in quarantine).

These measures would have to be agreed between countries, preferably at international level.

If the summer holidays were to disappear completely, this would mean the deprivation of the livelihood of hundreds of millions of people working in the aviation, transport, hotel, catering and supply industries. Shouldn’t everything be done to ensure that the 2020 summer holiday season does not disappear completely? Shouldn’t people be given more hope for this?


5. Should side effects of medication and vaccination damage be temporarily weighted less heavily? Should drug approval procedures be shortened temporarily?

There are basically two errors that can occur with drug treatments or vaccinations: The first type of error is that the medication is administered, and the side effects overcompensate for the healing effect. The second type of error is that the medication is not administered and therefore a healing effect cannot take place, which would overcompensate the side effects.

For drug approvals, the 1st type error is always emphasized. It takes years, usually decades, until the drug is approved. Many approval stages and studies must be passed through.

In the USA in particular, ruinous class action lawsuits are threatened if side effects and vaccination damage occur.

In the current situation, a reassessment of the two errors could be useful. Traditional approval procedures do not have the time to conduct statistically clean studies.

The state could allow “rapid approval procedures” and “rapid test procedures”, at least on a voluntary basis. The risk of ruinous lawsuits for drug manufacturers could be temporarily mitigated.


6. Defence of the market economy and defence of the rule of law

Every day, central bank interventions become more comprehensive (capture more assets and increase in volume). Every day, the rescue packages of the states become larger and more numerous.

Two things are important here:

1. The market economy has not failed. The financial system has failed, based on increasing leverage, which has led market participants to believe that the central banks would always be able to rescue “everything”. The asymmetric reaction of central banks for decades (stimulating in the crisis, insufficient interest rate hikes during the boom) has maneuvered them into a situation where only the purchase of private sector assets (bonds, soon also shares) could prevent a collapse of the financial and economic system. In concrete terms, however, this means that the state will become the owner of the means of production on a large scale. Because the creation of money was created by a state monopolist and not in a market economy process, we have got into this situation. The mistake, the recession now beginning, perhaps even depression, must not be blamed on the market economy of an “innocent” person. Rather, it is necessary to design a different, more stable financial system.

If the central banks succeed (at all costs) in preventing a recession for a very long time, a very severe recession will follow. It’s a bit like a party that goes on for several days. The longer you don’t sleep, the greater the sleep deprivation and the greater the “collapse” afterwards.

Of course, the occurrence of a pandemic is not the fault of the central banks. But it is the mistake of central banks not to have made provisions for bad times and to drive more and more investors into increasingly risky uses and more and more companies into increasingly risky financing and higher leverage. In doing so, they have helped to create a highly unstable system that is less able to cope with shocks such as a pandemic.

Buying up stocks and bonds from private sector productive assets must not be allowed to override the market economy. The influence of the state on the economy will be greatly increased by the corona crisis. Like the time of the NRA (National Recovery Act) under Roosevelt from 1933 onwards, the US central government is likely to significantly increase its control over the economy and citizens, even under a republican administration. If state officials decide on allocation and make more and more business decisions, labor productivity and economic growth will decline rapidly. This danger may be small in Switzerland, but in many countries it is great.

“Just as there are not atheists on a sinking ship,there are no free-marketeers in a pandemic.”

Jonathan Freedland, columnist, the Guardian.


2. Huge rescue packages should make it possible to mitigate the threat of insolvency, especially in countries that are financially strong, such as Switzerland and Germany. The value added, corporate profits and sales lost during the quarantine measures have largely been irretrievably lost. Even some less solid pension funds are likely to be “technically insolvent” at present. The question arises: who will bear these “losses”? The answer is: all of us, but in unequal parts. There is a medium-term threat of large-scale asset redistribution.

In all well-intentioned bailouts, care should be taken to ensure that the principle: “You are the owner of the consequences of your economic behavior” is not too strongly violated, or at least “is fairly and equitably violated”. Politicians love to rescue prestigious large companies. This makes headlines. “Federal Council saves Mrs Huber’s hairdresser’s salon in Appenzell-Innerrhoden. Her job is secure”. Can you imagine such a headline? It’s important that “justly saved”. If this does not happen, the voters threaten to vote in a radical right-wing and left-wing manner. This danger may be small in Switzerland, but in Germany and large parts of Europe it is huge!


7. Humanity and the economy will probably survive this pandemic in a few months

The growing pool of people who have already recovered, changes in people’s behavior (social distancing), the targeted isolation of particularly vulnerable people (the chronically ill, the elderly), the capacity expansions in the health care system (more intensive care units, more heart-lung machines) and – with a time lag – vaccines and effective medicines, perhaps also the soon rising temperatures in the northern hemisphere, will most likely help to get this pandemic better under control within the next few months.

Then the economy can also recover, provided that a wave of insolvencies can be avoided. In this respect, the economic policy measures that have been introduced are a step in the right direction, even if the rescue packages in most countries are probably far too small to date.


This results in a serious warning:

Practically every day, more parachutes are announced, and their numbers increased. This trend is likely to continue. Therefore the so-called “bond vigilantes” have woken up. It is becoming increasingly plausible that the yield curve is steepening. The decades of declining interest rates on medium- and longer-term bonds should come to an end. At the short end, the central banks will have to keep interest rates close to zero. As a result, it is becoming increasingly dangerous to hold long bonds, i.e. to have a long duration.

The danger of a steeper yield curve could lead central banks, like the BOJ, to introduce “yield curve control” as a “weapon of recession”. This would be bad news for the US dollar and good news for gold.


8. Divine quarantine measures?

“I have wondered before now whether the vast astronomical distances (from other worlds) may not be God’s quarantine precautions. They prevent the spiritual infection of a fallen species from spreading.

C.S. Lewis, “Religion and Rocketry” from The World’s Last Night


A final word

The corona crisis need not end in a major depression with the rescue measures taken, if the right measures are taken. Even a sharp, prolonged recession can still be avoided. A sharp recession that lasts at least 2-3 months, on the other hand, can no longer be stopped.

The virus broke out in northern Italy, not in southern Italy. It broke out in winter in Wuhan, not (in summer) in southern China. There is weak evidence and hope that the spread of the virus will slow down at higher temperatures. However, experts disagree.

The lockdown in Wuhan lasted 7 weeks. Shouldn’t the goal be to end the lockdown in Switzerland, Europe and worldwide in 7 weeks?


Stay healthy! We wish you a happy Easter.


This post was automatically translated

Thomas Härter
Chief Investment Officer Aquila