Double Whammy

Trust is a funny thing. It is not easy to measure and it goes must quicker than it comes. The media and politicians have done an excellent job in creating mass hysteria and scare mongering lately during this Corona virus pandemic. That destroys trust. A lower trust level will have as a consequence lower economic growth and lower happiness in the years to come.

According to a good article by Nick Triggle for the BBC called “Coronavirus: Is it time to free the healthy from restrictions?” the constant stream of bad news on coronavirus has caused great anxiety and even among younger age groups the majority believe now they are at risk. In all age groups more than 50% of UK adults believe now the virus is a threat to them according to a poll by Ipsos MORI (1066 adults polled).

A YouGov poll for the Sunday Times shows that just one in four adults would feel safe at work and almost two in three people oppose the reopening of the UK schools in the next few weeks. This according to the article “Coronavirus lockdown: set free healthy under -70s, say doctors” by Caroline Wheeler, Nicholas Hellen and Tim Shipman in the Sunday Times on the 2nd of May 2020.

Nick Triggle further wrote; “How much actual risk does coronavirus present?

“The people who are most at risk are older people and those with pre-existing health conditions. The overwhelming majority of deaths have been among these groups. Young people, are of course still, dying due to the coronavirus – by late April there had been more than 300 deaths among the under 45 years old group in the UK. Some otherwise healthy people have died –as happens with other causes of death from heart attacks to flu as well”.

Nick continued to write; “The Edinburgh University and a group of London based academics published a paper arguing restrictions could be lifted quite significantly if the most vulnerable were completely shielded. That would require further isolation for these individuals and the regular testing of their cares. If we could protect them the researchers believe we could lift many restrictions and allow a “controlled” epidemic in the general population. People would return to work and school and the majority could be eating in restaurants and going to cinemas.”

“The lockdown has come at a huge economic, social and health cost. Cambridge University statistician Prof Sir David Spiegelhalter has highlighted evidence the risk of dying from coronovirus is very similar to the underlying risk people of all age groups from early 20s upward of dying anyway.”

In other words the Corona virus is not the new version of the Black Death or the Spanish flu. The Spanish flu killed and estimates 50 million people. Luckily the Corona virus does not even come close. Flattening the curve so far has come at a huge cost.

Arguably the world is better prepared to handle the Corona virus with every passing day as we learn what works to combat the Corona virus and lift production capacity of tests and other medical equipment every day. Some people predict the second wave will be worse than the first wave. With the first wave the world got taken by surprise. Have one look at all the recent media headlines that talk only about the Corona virus. The media talks about nothing else; even Brexit is not a topic anymore. It is clear the world is not going to be surprised for a second time.

Allison Pearson in the Telegraph newspaper made a couple of good statements as well. “Mercifully, Covid fatalities, although sad and grim, come nowhere near the toll for other common diseases. Cancer kills 165.000 people in the UK every year. Nearly 170.000 UK people die of heart disease every year. Covid-19 did not invent death. Sadly, death is all around us always. People are not stupid. They are fully aware the UK Government has made bad mistakes. They also understand this is an unprecedented situation and have sympathy for those shell-shock men and women who are striving around the clock to bring this horror show to an end.”

In the article by Simon Jenkins in the NewStatesman “The BBC and the journalism of fear” Simon makes some excellent observations as well; “In the case of a pandemic, we expect government soberly to measure the human risk of more virus deaths today against the certainty of enormous costs –and collateral deaths- enforced on the entire nation by prolonged lockdown. On the 29th of April cancer experts predicted 18.000 extra UK deaths from untreated cancers alone. Every day of the week government uses the measure of quality adjusted life years to decide where to spend money on life-saving medicines, hospital equipment and accident and pollution prevention.”

The stated UK objective of the lockdown was to flatten the curve and to prevent overrun hospitals. Despite that in London hospitals were probably overrun just like that happened in Italy at the peak of the first wave. Sweden did not have overrun hospitals. All European countries that had a big first wave of the Corona virus at least have achieved more immunity in their populations than countries that locked down early and hardly had a first wave. That may lead to different results were a second wave to happen. Sometimes what does not kill you makes you stronger is true.

In the previous blog called “Lockdown” excess mortality (deviation in mortality from the expected level) was discussed as a much more reliable data source with regards to drawing conclusions about the Corona virus. The euromomo.eu website in Europe is a gem in this regard. From their website;

“For the EuroMOMO network as a whole, from week 10, 2020 and as of week 18, there were 149,447 excess deaths estimated in total, including 137,524 in the age group ≥65 years and 11,573 in the 15-64 years age group. This time period includes part of the influenza season as well as the start of the COVID-19 pandemic. The excess mortality estimated by EuroMOMO over the past weeks appears to have peaked in all countries by now.”

So based on the EuroMOMO data you are more than ten times more likely to die from the Corona virus when your age is over 64 years when you get the Corona virus than when you are younger than that.

Sweden has kept the schools open and the Netherlands and the UK did not. We take the England data only for the UK (as there is no aggregated UK data) since the Corona virus did most damage in London. Did that put the Swedish children at risk? Below is the excess deaths graph for the 0-4 year old age group. All graphs are courtesy of the Euromomo website;

All three above charts are in the normal range in 2020. Surely it shows up in the 5-14 age groups then?

Again here is nothing abnormal to see. All three above charts are within the blue normal range in 2020. Surely the Corona virus shows up in the 5-64 age groups then?

In this 15-64 age group the Corona virus excess deaths clearly start showing up in 2020 when the blue line breaks out above the red dotted line.

For the 15-64 age group the charts for Sweden and the Netherlands look similar. In both cases the number of deaths in the last weeks has broken out of the normal blue range and hit the red dotted line. The England chart looks much worse and is more than three times higher than the red line. That looks like an indication of overrun London hospitals and lack of medical care for people that potentially could have been saved.

Still the real damage was done by the Corona virus in the age groups above that. Here are the charts for the 65-74 years.

Below are the charts for the 75-84 years.

And off course the 85+ group charts below;

The last charts for the 75+ age groups show that excess deaths in Sweden and the Netherlands have come back in the normal range. What stands out is how little the excess deaths have come down in the last weeks of the 75+ charts for England. The lockdown in England seems to have made hardly any difference for this age group. Clearly a lot more needs to be done in the English elderly care homes by the looks of it to bring the excess deaths down there.

Let’s give you the all ages excess deaths graphs from the Euromomo website for a couple of European countries to get a feel for the magnitude of the Corona virus problem by country.

So the Swedish excess mortality numbers are higher than their neighbours, but despite no lockdown better than the likes of the UK, the Netherlands, Italy and Spain. For all countries with a huge spike in excess mortality mentioned above the big problem was that the elderly were as a policy mistake not enough protected. Quite remarkable because reports came from Italy already early on that the average age of Corona virus deaths was 80 years old. Belgium has probably given us the most accurate death figures data. Here below is the excess deaths all ages chart from the Euromomo website for Belgium.

In Belgium the death figures include the care home, but also including deaths that are suspected and not confirmed as Covid-19 cases. According to Belgian’s figures 53% of Corona virus deaths have been in care homes. Covid-19 in Belgium would explain 90% of the excess mortality according to the article “Sterven aan Corona, maar dan verdekt” in the Dutch NRC newspaper of the third of May. It is likely in countries with a big social safety net the Corona virus can indeed explain the majority of excess mortality. In countries without a social safety net that is likely a much lower percentage.

As Brad Pitt says in the movie “The Big Short”;

“If US unemployment goes up 1% than 40,000 Americans die”.

“Just don’t F***ing dance”.

That 40,000 number has been questioned by research and might be more like 4,000 Americans per year. Unemployment has gone up way more than 1% though. The unemployment rate in the US averaged less than 6% after WW2 and has now hit a high of almost 15%. At the end of 2019 the unemployment was only 3.5%. It is easy to see the problem. It is estimated that if furloughed workers would be included the US unemployment rate could now be 5% higher and be 20% in reality now.....

That means the higher unemployment caused by the lockdown could easily kill 60,000 Americans per year. The average age of those deaths is also likely to be much lower than the average age of the Corona virus deaths. Effectively the lockdown policy may well be killing middle aged people in order to save elderly people. Nothing against the elderly, but it is up to the media to hold the politicians to account for the choices and trade-off's they are making. Not sure if the media is doing that at the moment.

Media and politicians have done enormous damage with scare mongering, poor preparation for pandemics and lockdowns. If lockdowns do not stop soon the cure may well be more damaging than the Corona virus. Who is going to start a business with their life savings if the government can order another lockdown that would wipe out your life savings in 2 months?

Sweden has shown the world it is possible for a society to continue during the Corona virus pandemic without a lockdown. The first wave in Sweden has peaked much earlier than the doomsayers had predicted.

The likes of Sweden, Italy, UK, the Netherlands, Spain and Belgium have also made it clear to the world that the age group above 65 years old needs more support and protective measures during the Corona virus pandemic.

The “scientific” advice in European countries for people that thought they had caught the Corona virus consisted mostly of; go home, self-isolate and take a Paracetamol and only call for help when you feel you will die today. That does not sound very scientific at all doesn’t it?

Let’s build in some margin of error and say instead of the above 65 year old age group, the above 55 year old age group need more support and protective measures during the Corona virus pandemic. Everybody in this age group that thinks they might have the Corona virus should have the option to get tested. If tested positive for the Corona virus this age group should be isolated in special Corona virus hospitals where they get the professional care they need. This will make it much harder for the Corona virus to spread unnoticed in the above 55 years old age group. Clearly any carers for the 55 years old age group should have access to unlimited Corona virus testing as well.

Group events and flying should be fine again. Just arrive one hour earlier to do a Corona virus test. If tested positive for the Corona virus, go straight home. If tested negative for the Corona virus welcome on board or welcome to the music concert. Society will be a little more complicated, but people can still have a great quality of life again.

When you trade with someone you exchange goods, but you also exchange your viruses and diseases. Globalisation made our quality of life better. The Corona virus is just the other side of the coin. The spread of disease and trade goes hand in hand and the classic example is the outbreak of the Bubonic plague in the mid 14th century when the Mongols went on their conquests. The Romans had a similar experience during the Antonine Plague of 165 to 180 AD. This pandemic was brought to the Roman Empire by troops returning from campaigns in the east. The outbreaks by the way decimated an estimated two thirds of the Roman population. More recently humans had the HIV virus spreading globally in 1980. HIV started when the virus jumped from chimps to humans in the 1920's in Congo. Air travel probably really helped it spread. Globalisation spreads disease.

So, if you do not want more disease and viruses to come to your country, the only solution is to go more local. Your iphone may be designed in California, but it is made in China. More local food supply and more local factories is likely a result of the Corona virus experience. That might mean to stop buying “made in China”, but to start buying made in your own country stuff again. It is unlikely all consumers will go down this road, but it is likely to become more popular.

For stock markets in past virus related stock market sell offs like the Sars virus there was usually a V shaped recovery when the virus had peaked and disappeared. The stock markets certainly have seen a V shaped recovery since the crash in March 2020. The 200 day moving averages have become major resistance levels though. The Nasdaq index in the US has managed to start trading above it, but that can be more explained to the resilience of tech stocks to the Corona virus. Despite unemployment being a late lagging indicator, it is unlikely stock markets can start trading easily above their 200 day moving averages unless people can go back to work and unemployment starts to drop. Some of the jobs may be paused and will still be there when the lockdowns are ended, but the longer the lockdowns lasts the more jobs will be permanently gone. People have stopped paying their rent and stopped paying their mortgages. In a highly leveraged and indebted world full of derivatives that can easily have bad second order effects like we saw in 2008. The buck has to stop somewhere. Clearly the bad second order effect has already happened in the oil and energy world. Some countries that depend on exporting oil to feed their populations are now in deep trouble.

The media and politicians have no idea how much one kills the economy when one creates more uncertainty. As we have seen if you kill the economy, you kill people as well. A lot of countries have scored own goals already by the double whammy of lockdowns and rising unemployment. The world has not seen unemployment levels this high since the depression. The world needs certainty and trust to be repaired in a big way. If not the consequences could be dire. After all Hitler attained power in 1933. The depression that went global started in 1929. Let’s hope for a V shaped recovery for the global economy and stock markets. We may regret it in a big way if it doesn’t play out like a V shape.

A double whammy can easily become a double dip this time.