Sweden has closed its border to Norway over the discovery of a Covid-19 mutation. It’s an ironic reversal of the past situation. The “British Virus,” as German Chancellor Angela Merkel calls it, was discovered in Norway’s capital. It is supposedly more deadly. Although the scientists that reviewed the evidence are now only 50% sure this is actually true… Which means your guess is as good as theirs… Which is good enough to close the border in any event…
But whether it’s true misses the point I’ll try and make today.
If the discovery of Covid-19 mutations is sufficient to bring back travel bans and lockdowns, the pandemic could last for years yet. Because, well, viruses do mutate.
Lockdowns and travel bans are now being presented as precautionary measures against the new mutations being more deadly, more contagious or vaccine resistant.
Let one of these mutations into the UK and all our hard work will be for naught. But we won’t know they are more deadly, contagious or vaccine resistant until it’s too late. So we need the travel constraints and lockdowns now!
Cue travel chaos in the UK.
Of course, a mutation of the virus really could cause another surge in the pandemic. It might be more contagious. Or more deadly. Or more resistant to vaccines.
But if the purpose of a lockdown is to buy time to flatten the curve, but mutations threaten to undermine this outcome altogether, then we’re not really getting anywhere by locking down in the first place. Mutations undermine the very policy that is being rolled out to combat them.
Indefinite, precautionary and repeatedly renewed lockdowns and travel bans are in my opinion a very dangerous overreaction. They would destroy the country, not save it from a pandemic. That’s why they were only ever proposed as a temporary measure. Until now, with mutations giving a more permanent reason to stay locked down.
The potential for a mutation will continue for a long time. The potential for a new strain that is more dangerous in a myriad of ways will be there for far longer than it is viable to stay locked down.
So what do we do?
The government must do something, even if it makes matters worse
Unfortunately, it seems to be politics that is behind our overly precautionary strategy. With those who supported travel bans in March claiming the higher political ground today, the Covid Hawks are now in charge.
At least in the UK, that is.
But elsewhere, the political games may yet be good news.
I had worried that a Biden administration would try to outdo the world’s lockdowns and travel bans so far. In November, Biden tweeted about the lack of action from the Trump administration:
I am alarmed by the surge in reported COVID-19 infections, hospitalizations, and fatalities. This crisis demands a robust and immediate federal response which has been woefully lacking.
I am the president-elect, but will not be president until next year. COVID-19 does not respect dates on the calendar, it is accelerating right now. Urgent action is needed today, now, by the current administration.
But, upon inauguration, Biden changed his tune: “there’s nothing we can do to change the trajectory of the pandemic in the next several months.” So much for the robust immediate federal response needed today. It will remain “woefully lacking”, as Biden wants the state governments to handle matters.
With Trump gone, the US restaurant trade is being lifted from lockdowns in all sorts of places. Washington is even holding a “Restaurant Week” promotion now that the political landscape has changed. Some of this re-opening is in the face of a worsening pandemic:
In New York, Democratic Gov. Andrew Cuomo shut down indoor dining after the state’s infection rate started climbing again. But in a “State of the State” address earlier this month, he suggested the shutdown wouldn’t last long-term.
“We simply cannot stay closed until the vaccine hits critical mass,” Cuomo said. “The cost is too high. We will have nothing left to open. We must reopen the economy, but we must do it smartly and safely.”
And with Trump gone, Germany has finally given the experimental treatment he touted and used for himself the green light. Bloomberg reports the nation is the first in the EU to use it, ordering “200,000 doses of monoclonal antibody medication for $487 million”. When Trump reported using it, even the drug company’s CEO tried to talk it down…
Perhaps making it politically correct to acknowledge the costs of a lockdown, instead of just the benefits, will now mean we consider the implications more carefully. And perhaps with Trump no longer making it politically incorrect to search for alternative solutions, they’ll be considered. Like the research into Ivermectin.
But if you think things are only going to get worse… what do you do?
Well, we’re a financial and investment newsletter. So the real question for us is, what will perform well as an investment in a world of indefinite lockdowns, travel restrictions, quarantines and government intervention?
I believe that our economic and financial world is being divided into two realms. What the government can and can’t control.
For example, bailing out small businesses is incredibly hard to do at scale. But large ones are easy.
Tracking people’s movements is hard to do. Curfews are easy.
Enforcing compliance of socially distanced pubs is hard to do. Closing them is easy.
Forcing vaccines on people is hard. Immunisation passports are easy.
Let’s apply this sort of thinking to financial markets.
Boosting stock prices with huge deficits and money printing is easy. That’s how asset prices have diverged from the economy.
But there’s a more intriguing possibility for you to consider.
One particular type of asset is designed to thrive precisely because governments can’t control it. Because it offers a way out. An alternative to the financial and economic world we currently live in.
As its creator Satoshi Nakamoto explained, “The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”
He then set out the concept of bitcoin as an alternative.
No wonder it’s booming today as governments print and spend like mad in response to their own lockdown policies. If you expect those policies to get worse, I’d expect plenty more deficit spending and money printing. And I’d expect bitcoin to boom again.
Editor, Fortune & Freedom