The U.S. has committed a strategic mistake

The art of gambling is about making many small bets and quitting those events which are not in one’s favor. “If you must panic you need to panic fast” as the saying goes. The leadership of the United States of America is currently going all in — gambling with the safety and security of the whole country and with the health of all its citizens. If they win, they win big — but if they lose the United States will be no superpower no more. This is what you call reckless gambling, the U.S. leadership is acting irresponsibly. You can do independent experiments in some states, but not with all of them together, at the same time. The country is attacked simultaneously by an infectious disease and like in war time a coordinated and synchronous response is necessary.

Given current circumstances it is hard to belief that the U.S. can win its gamble against nature: there are the laws of epidemiology and they apply in all countries regardless of their leadership. POTUS and his Republican fellows haven’t yet understood how a real pandemic looks like. What we have seen so far is just the beginning.

If the spread continues unchecked, what will happen? Essential government functions like policing, health care, water and electricity supply and defense will deteriorate: either by sick employees staying home or by employees having to care about their sick family or just out of fear of leaving home. This opens the door to civil unrest. The wealth gap was already large at the beginning of the crisis and there is the threat of open conflict once it becomes obvious that public order cannot be guaranteed.

POTUS is betting that there is a quick fix through a vaccine silver shot in the next couple of months. The risk is that the vaccine might have too many side effects to be useful for large portions of society, that immunity might not last long enough, that the immune response is too weak, that the Sars-Cov-2 virus mutates too quickly, that citizens might be too afraid of vaccination, that the vaccine cannot be produced fast enough with the required standards.

This uncertainty means that it is prudent for the time being to suppress the spread of the virus as good as we can to increase the time for finding an effective solution.

There are many warnings from the past that hope for a quick fix can turn into disappointment. In the 1960s there was the hope of limitless energy through atomic energy, at the start of the Lebanese civil war in 1975 many believed it would be over in a couple of weeks, in the 1980s many had hopped that a vaccine against HIV would only need a couple of years. If the spread of Sars-Cov-2 is not stopped early, life will become apocalyptic: the virus will spread to every corner of the country and nobody can’t be sure anywhere to not catch it. At that point simple face masks become ineffective. You need a full hazmat suit by then.

There is only one institution which can convince POTUS to change direction: Wall Street. The rise in asset prices since March is surreal, under good circumstances the pandemic will end at the earliest in summer 2021. The current optimism is not appropriate. Stocks need to crash hard and fast to send POTUS a message: a healthy economy needs healthy people.