On Resilience, Knowledge of the Future, a Typhoon and a Fragile Success
Photo by Hudson Hintze
Last week, Angela Merkel (German Chancellor), Madeleine Albright (former US Secretary of State), Charlie Munger (vice chairman of Berkshire Hathaway) and Howard Marks (co-founder of Oaktree Capital Management) shared the following comments:
Chancellor Angela Merkel: while announcing a gradual re-opening of Germany
“What we’ve achieved is an interim success — no more, no less. And I stress that it is a fragile interim success.
“We can’t have a wrongheaded push forward, even when the best intentions are behind it ... We need to understand that we need to live with this virus as long as there is no vaccine and no treatment.
“If we now allow more public life, in small steps, then it is very important that we can trace infections chains even better ... That must be our aim: to trace every infection chain.”
Madeleine Albright: from her article “The Best Response to Disaster Is Resilience” (NY Times)
“Flawed as we are, we have built great civilizations, learned to coexist and — with catastrophic exceptions — live in peace. However, such accomplishments do not happen without obstacles. To be human is to be tested over and over, and we usually need abundant help from others.
“These are not the best of times, but we have seen worse. It might do well for us to view these abnormal days as an opportunity to ask more of ourselves, to reflect on our relations with one another, and think critically about improving the social, economic and political structures that shape our lives.
“We can draw inspiration from those who have surmounted high obstacles in the past, and vow to make the new normal that we aim to bring about better, more just and more secure than the old."
Charlie Munger: from an interview with the Wall Street Journal
“I would say basically we’re like the captain of a ship when the worst typhoon that’s ever happened comes … We just want to get through the typhoon
"Nobody in America’s ever seen anything else like this … This thing is different. Everybody talks as if they know what’s going to happen, and nobody knows what’s going to happen.
“I don’t think we know exactly what the macroeconomic consequences are going to be, … I do think, sooner or later, we’ll have an economy back, which will be a moderate economy. It’s quite possible that never again—not again in a long time—will we have a level of employment again like we just lost. We may never get that back for all practical purposes. I don’t know.”
Howard Marks: from his "Knowledge of the Future" investor memo
"What does the U.S. see today? - one of the greatest pandemics to reach us since the Spanish Flu of 102 years ago, the greatest economic contraction since the Great Depression, which ended 80 years ago, the greatest oil-price decline in the OPEC era (and, probably, ever), and the greatest central bank/government intervention of all time.
."it’s my view that if you’re experiencing something that has never been seen before, you simply can’t say you know how it’ll turn out. We have no reason to think we know how they’ll operate in the period ahead, how they’ll interact with each other, and what the consequences will be for everything else. In short, The future for all these things is clearly unknowable"
Assuming the quarantine is lifted: When will you take your first flight? How will you react when the person next to you starts coughing? what has to happen to make you feel it’s safe to send your child back to school? when you go out to dinner with your wife/husband/friend/family, do you want to be served by a waiter/waitress wearing a mask and gloves? And for us New Yorkers, when will you get back on the subway?
"Questions like these suggest that a mere message from government is unlikely to get everyone to return to their former habits, including their jobs (if they have a choice).
"the reopening of the economy is likely to be gradual and, until a vaccine is perfected or herd immunity is reached, subject to alternating periods of progress and retreat."
OUR TAKE
In the short term, everyone wants to "get back to normal" but the process, as noted above, will be slow and uncertain.
Critical components in the "restart" process include: 1) increasing the availability of testing capabilities, 2) providing more access to personal protective equipment and 3) implementing comprehensive contact tracing services to help identify and isolate those infected with COVID-19.
While the longer term social-economic impacts remain uncertain, areas of increased focus include physical and mental health, food security, the virtualization of work/education/entertainment, cyber-security and the limitations of global supply-chains.