The second wave

The dynamics of the corona pandemic are increasing and the number of newly infected people is reaching new highs at global level. The USA and South America are particularly affected, while in Europe the spread of COVID-19 appears to be under control. Of course, this could change quickly if we become increasingly careless.

The political reaction function has changed in recent weeks. In general, the political willingness for nationwide countermeasures has decreased. If one has to react politically to the corona virus, one now tends to regional restrictions. In addition, the overall sustainability of health systems has increased. A nationwide lockdown has thus become unlikely. Especially since the decision for a renewed national lockdown would entail a very high economic price. The renewed recession would be deep and probably also relatively tenacious, as uncertainty would rise sharply and the scope for fiscal and monetary policy has already been largely exhausted.

All in all, the sharply rising corona cases are a human tragedy, but should not lead to a renewed national lockdown. Of course, there may be regional restrictions, but these should mainly affect individual freedom. Thus, the increasing corona falls could slow down the economic recovery, but should not slow it down.

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