RE: Lets not forget.1 Dec 2021 11:01
Read a fantastic column by Ambrose Evans-Pritchard yesterday, the World economic editor of the Torygraph.
Title: Bears beware: Omicron may yet deliver a roaring economic recovery
Goldman Sachs has gamed four omicron outcomes: “severe downside”, “downside”, “false alarm”, and a surprise “upside”. These scenarios have starkly different implications for asset prices and macroeconomic policy over the next year. Get it wrong at your cost.
You can already see this tension playing out in wild moves on global bourses, or in oil prices, with each snippet of fresh information.
Markets have taken a fresh beating this morning on warnings from Moderna that it is “not going to be good” for the existing vaccines. But if the disease is indeed milder, a slippage in antibody protection levels may not matter, and we still have T-cell memory as the next line of defence.
For the sake of argument – as a Gedankenexperiment – I assume that the benign picture from South Africa holds up over the winter and that we will land at the optimistic end of the Goldman spectrum.
The picture for markets is “bad” in the immediate sense that jumpy, snake-bitten governments will shutter parts of the economy as a precaution.
[...]
It is “good” to the extent that it brings this ordeal to a rapid climax and pulls forward the day when we can dismantle the suffocating architecture of perma-testing, flight curbs, vaccine passports, forced isolation, and state intrusion in people's lives.
Scientists will know in a couple of weeks whether omicron has a lower case fatality rate than delta.
[...]
The original cohort of patients breezing through surgeries in Johannesburg with little more than a headache may be a trick of the time sequence.
Should the benign scenario prevail, it will turbo-charge global economic growth and set off another leg of the commodity boom, probably pushing stock market indices to even frothier levels. You would not want to be in US Treasuries, gilts, or Bunds.
[...]
A benign omicron outcome reshuffles the political debate and splits the world into different camps. Those countries such as the UK, the US, Mexico, Brazil, or India, inclined to ‘live with the virus’ will return to normal very fast.
At the other extreme, China is trapped by zero-Covid ideology and two years of state propaganda extolling the country’s superiority over the West for having successfully bottled up the virus. China has scant natural immunity and prefers not to put its semi-defective vaccines to public test.
[...]
Europe is in a quandary. Delta is pushing hospital systems to the brink in Germany, Austria, Holland, and most of central Europe, with France catching up as its vaccine immunity wanes with a lag. Harsh measures are needed. Yet a milder omicron variant would call for the opposite policy in quick succession.
Those states still pursuing suppression strategies to varying degrees may find it ever harder to justify coercive action, risking ‘gi
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