I drafted some blog posts on the pandemic over the last few months, but never got around to publish them. By now, almost everything I would want to say has been said better by others. Nonetheless, a few personal observations.

One thing that still puzzles me is why so few people saw this coming. When I read about the outbreak in Wuhan in late January, I bought hand santiser, toilet paper, and a short position on the German DAX index. Meanwhile, in the media, in governments, and in the stock market, the consensus seemed to be that there is no reason for concern or action. Not that I expected much from Donald Trump. But why didn't mainstream, sensible news sites raise the alarm? Why were almost all European governments so slow to react? Why did the stock market keep climbing almost all through February? Wasn't the risk plain to see?

I'm not an expert on pandemics. Since practically nobody else seemed to be worried, I thought I must be missing something. In February, I sold half of my short position. At least I didn't sell the hand sanitiser and the toilet paper.

I still think it's possible that the mainstream opinion was right and I was wrong, given the data available in February, although hindsight bias doesn't make it look that way. But the more likely possibility is that a lot of people who should have known better really underestimated the risk. The stock market was not efficient. Newspapers failed. Governments failed. To me, that's surprising.

I'm also surprised, but positively, by what most countries achieved once the risk became apparent. I thought we in Europe could never close off entire regions or force everyone to stay at home, like China could. I was wrong. Within a few weeks, we have unprecedented regulations interfering with personal liberty; billions of people have changed the way they live and work; billions of dollars are spent on research and extending medical capacities; trillions on keeping the economy alive. Impressive.

With that amount of effort, we could keep global warming to 1.5 degrees, or achieve many other amazing things.

Of course, it's harder to get popular support for the same kind of effort in domains where people's personal well-being is not immediately at stake. And the runup to the current pandemic is no cause for optimism. If we can't even grasp the magnitude of a catastophe about to unfold within the next couple of months, it's no surprise we can't grasp catastrophes that unfold over years or decades. Still, I've learned that dramatic changes in politics and lifestyle are more feasible than I thought.

Ideally, I think, the lockdown should have been stricter. The curves are flattening, but they should be falling faster, so that we can reopen society sooner.

The next phase will be interesting. I can see how large-scale testing and tracking would allow us to all go back to work and school etc. But will that kind of mass surveillance be possible in Europe, let alone the US? And if we introduce a system of mass surveillance, will it stay and be used for other purposes? How desirable would that be? The downsides are obvious. On the other side, in "The Vulnerable World Hypothesis", Nick Bostrom makes a good case that mass surveillance is an important part of preventing the premature end of civilisation.

Difficult questions.

Now back to counterpart-theoretic semantics for quantified epistemic logic, before my work shift ends and my entertain-the-kids shift starts.


# on 26 June 2020, 03:51

Regarding the stock market not dropping, isn't the standard theory that stock prices reflect the discounted prevent value of future cash flows? If it was thought that the next few quarters would be very bad but the "good" companies would bounce back, shouldn't the stock prices drop only slightly? The thing to consider would be whether the pandemic will have long-term impacts on revenue.

# on 26 June 2020, 07:41

True. But 1-2 very bad quarters followed by an unknown number of still fairly bad ones should reduce the expectation of discounted future cash flows by at least 10-20%, and we saw none of that in February's stock prices. (It would have been smarter to specifically short airlines or tourism companies instead of a broad market index, or to buy credit default swaps (like Bill Ackman). I should have spent more time thinking that through.)

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