Read on Twitter
1. Twitter is great in allowing you to get your thoughts out quickly. Sometimes too quickly. You have second thoughts. The world changes. I want to take three covid forecasts that I got wrong:
2. I thought the second wave would be associated with more uncertainty: Worries that a limited lockdown might not decrease the infection rate enough, worries that the end might trigger a third wave.
3. I am not so sure. The news about the vaccine go the other way. It looks like there is light at the end of the tunnel. Uncertainty is probably less, despite the intensity of the increase in infections in the short run.
4. I thought that the fiscal cost of the second wave might be very high. I was probably too pessimistic. Soft lockdowns cost less. Activity remains higher, revenues decrease less, subsidies are smaller. They may last longer, but again vaccines suggest an earlier terminal date.
5. I expected waves of bankruptcies. They have not happened (yet). In nearly all countries, bankruptcies of firms are down compared to pre-covid, often substantially. Maybe fiscal help was too generous. Maybe it is a calm before the storm, but the numbers are striking.
6. I expected a lot of inefficient bankruptcies, due to high debt rather than lack of viability post covid. This also does not seem to be the case. The proportion of low productivity firms in bankruptcies appears to be roughly the same as usual.
Live and learn.
Live and learn.
