The emergency phase of the COVID 19 pandemic is slowly coming to an end. No government was prepared for it, and too many failed in the initial assessment but did what they could afterwards. In the current second phase, however, any mistakes will not be easy to excuse. The authorities must better identify the risk factors and take specific countermeasures. These must be explained to the people at risk so that they can change their behaviour. In addition, vital infrastructure must be guaranteed, and freedom of action must be ensured when new data is available. The problem here is the trade-off between the well-being of the individual and the welfare of society. Finding and maintaining this balance is not easy.



According to the constitution of the World Health Organization (WHO), health is a fundamental right. Health is a collective term for the physical, mental and social well-being of every individual. However, “healthy” is not synonymous with “normal” if the norm is understood as the average in a statistical sense. This differentiation naturally remained wishful thinking in the recent situation where hospital beds and ventilators were already in short supply. The fight against the pandemic is now being fought with statistical averages for R (infections per infected person) and Z (number of deaths above the long-term death rate).

With the latest easing measures, a calculated risk is being taken with each country deciding what and when. It is always correctly pointed out that these would be partially or even completely reversed if the ratios were to deteriorate again. Although the financial world tends to associate such easing with the economy, it also serves to restore the mental and social well-being of individuals. Meeting friends, football matches and holidays abroad are just a few examples of the need for psychological reward in bad times.



The economy serves the material preservation and safeguarding of the life of each individual or a diversity of people. Its task and aim are the permanent fulfilment of human needs for goods and services. The economic order depends on the ability of people and their political institutions and organs (economic policy). The purpose of economic policy is to increase economic performance and productivity and thus to improve human well-being.

Worldwide aid packages amounting to trillions of dollars are intended to save the economy from imminent collapse. The seriousness of a simultaneous collapse of supply and demand was, and still is, demonstrated by the constantly new or increased funds that are (or could be) spoken. The problem is: Who is being helped, people or companies? In the EU there is the additional problem that rich members can provide much more help than poor ones. Germany will spend almost half of all the money of the entire EU. Yet, the EUR 750 bn revival fund presented by the EU Commission, consisting of grants (EUR 500 bn) and loans (EUR 250 bn), is in danger of failing.

The major central banks are pulling out all the stops to support the economy and financial markets. The Federal Reserve has adopted a whole series of aid measures with mysterious acronyms (including CPFF, MMLF, PMCCF, SMCCF). However, in doing so, it runs the risk of violating the Federal Reserve Act, as it also gives  money without collateral. The European Central Bank, for its part, is confronted with a ruling by the German Constitutional Court accusing it of exceeding its competence in the government bond purchase programme (PSPP). The fact that the European Court of Justice upheld this in December 2015 does not make things any easier. However, the crucial question is whether money really the most promising solution is.



The Corona crisis shows how fragile the balance between the needs of the individual and the demands of the collective is, especially when emotions come into play. It is no coincidence that people with other health problems and ethnic minorities or the economically disadvantaged are more affected. It is also no coincidence that countries with a “social” market economy perform better than those where the economy has a free rein.  A reform of capitalism, as called for by various experts, would probably be welcome. The effects of the Corona crisis will and should occupy us for some time to come.



This post was automatically translated

Christian Wagner
Financial Advisor