A long hard slog

“It takes one to two years of repeated tests and long-term assessments to figure out if a vaccine is safe and effective, and the Pfizer vaccine—the first one approved in the US and Britain—got a total of eight weeks of hurried testing before it was approved for sale. It’s quite common for problems with pharmaceuticals—even horrific problems—to take months or years to surface, and the Pfizer and Moderna products belong to a type of vaccine—mRNA vaccines—that have never before been successfully used on human subjects, so no one anywhere knows what will happen when millions of people take them.”

John Michael Greer, “Into the Unknown Region” 



Hope is a powerful but dangerous emotion.

Right now, millions are hoping that the arrival of the vaccines will restore the pre-2020 world back, after the nightmare of lockdowns, restrictions and job losses.

The truth is, nobody knows for certain whether the vaccines will allow a return to normal or not. Politicians, investors and businesses have premised the hope of a better 2021 on the assumption that the vaccine rollout will be successful and the virus conquered.

Whilst I am not a scientist and certainly not an expert of infectious diseases, I have been doing a lot of reading around the subject to get a sense of 2021’s trajectory. Let’s start by discussing some of my initial forecasts of Covid in 2020. Whilst on the one hand, my early thinking that the virus would have largely faded away by early Summer proved correct (at least in Europe), I got the Second Wave horribly wrong.

My thinking was that the authorities would successfully contain any second return of the virus in the winter months, and factoring in the massively increased number of tests, making it more of a ripple rather than a wave. Initially, this seemed to be reasonable enough, particularly with hospitalisation and death rates remaining low in Europe during September and October.

Unfortunately, my ripple thesis blew up in November and December, after soaring rates of sick people with Covid forced government after government to impose new lockdown style measures. And in case there was any lingering doubt, the soaring death rate across Europe and the United States in December makes it clear that we are in the midst of a Second Wave.

An interesting question is how much the more transmissible “Kent” variety of the virus is responsible for this massive surge in cases. Either way, I clearly under-estimated the lethality and adaptability of the virus despite all the measures governments have imposed to get control of it.

For me, that’s a sobering thought as we now collectively dare to hope that the worst is (nearly) over.

The best-case scenario is that all the vaccines approved are safe, effective, have no medium-longer term health effects and will be rolled out speedily to a population prepared to take them by October 2021 in sufficient numbers that herd immunity is reached. After that, we can return to normal.

The risks to this best-case scenario, which is the de facto base case for the majority of governments, businesses and markets, are manifold.

Assume that the vaccines are safe, effective; what happens if governments mess up the logistics of rolling them out to populations or that insufficient numbers are prepared to take the vaccines? So far, the vaccination rollout for many countries has been shambolic with significant numbers of the population like in France seem determined not to take any vaccine. That’s just one risk.

Should one of the vaccines have serious longer term health implications, and this is only discovered after millions have been vaccinated, it could discredit the entire global vaccination programme amid public outcry. Even those vaccines that are safe could be crushed amid the uproar.

Another risk is the virus successfully adapts to the vaccines, and returns with a vengeance in the Winter months in a more lethal form to kill hundreds of thousands more vaccinated folk. Unlikely? Well, scientists are already worried that the South African mutation may prove immune to the existing vaccines and we are barely into the new year.

The mainstream media, like everybody else, wants to think that the vaccines will get us out of this nightmare. The media, are after all, like the rest of us. Hope is a powerful emotion but can blind us to unpalatable realities. And my fear is that serious concerns about these vaccines are being ignored by the mainstream media and we may only find out when it is too late.

So, for those who wish to know more, I recommend reading here and here in regard to concerns relating to the Pfizer vaccine. For the Moderna vaccine click here. And for the Oxford vaccine this article here is a very good read.

Moving on, let’s review my forecasting performance last year (you can read my forecasts here).

My first prediction was that Sir Keir Starmer would win the Labour leadership election (with a 75% probabilistic rating). Got that one spot-on. Sir Keir won in a landslide in the end and vanquished his rivals.

My next prediction was that Donald Trump would win the US election (60% probability). Whilst I have covered this before in my post-election analysis here, it is worth reminding what I wrote at the beginning of the year, before Covid reared its ugly head.

“Should Biden become the Democratic Party candidate the prospects of a Democratic victory in November increases (at least compared to his rivals), however, on the balance of probabilities I would predict that President Trump is more likely than not to get re-elected for a second term in office.

The reason for my call is that Trump has managed to erase much of the once mighty Biden lead in battlefield states and we are still in the early days of this presidential campaign. The booming economy in the “flyover states” and the wider cultural weaknesses of the Democratic Party suggest that enough voters will hold their noses and vote for the Donald again.”

Well, we all know what happened to that booming economy in the heartland states, it crashed with the advent of the Covid pandemic in Spring. Without that pandemic, I am reasonably confident that Trump would have pulled off a win.

The cultural weaknesses of a woke-obsessed bicoastal Democratic Party were shown in the poor performance of the party in the November elections. They lost seats in the House, failed to win a clear majority in the Senate and performed poorly in governor and state level elections across the country.

A fair point is that I should have adjusted my forecast in the light of the pandemic rather than doggedly sticking to my probabilistic forecast that Trump still had a likely narrow edge in the election.

So, to conclude, this is one where I got wrong, but in my defence, I always took seriously a Biden challenge, reflected in my 40% probabilistic chance of him winning the election.

My final forecast was also on the bullseye; that Britain and the EU would agree a shallow good-based trade deal prior to 31st December 2020 (70% probability).

Prime Minister Boris Johnson agreed to a deal with the EU on Christmas Eve, in line with my forecast at the beginning of the year.

So, overall, a solid performance, even if I did get the US presidential election wrong.

Now let’s look into 2021.

The Republicans keep control of the Senate (70% probability)

My first forecast, which we will hopefully find out if I’m correct or not soon, is whether the Republicans manage to win one of the two Georgia senatorial races to keep the Senate in GOP majority hands.

Despite a recent surge in support for the Democrats, my forecast is that the Republicans will manage to win at least one of the seats in the Senate. There are sufficient number of conservative voters, many of them who may have voted for Joe Biden, who don’t trust the Democratic Party with control over the Senate, House and the White House.

A narrow Republican majority in the Senate will keep Biden on a conservative, centre-right and sensible governing path.

An approved Covid vaccine will be withdrawn for safety reasons (50% probability)

This is a forecast that I really hope I’m wrong. However, having widely on the subject, I think there are genuine safety concerns relating to the Covid vaccines fast tracked through, specifically but not only the Pfizer vaccine.

It is therefore my forecast – with a 50% probability – that at least one approved vaccine will be withdrawn at some point should sufficiently numbers of people die or get severely ill after being vaccinated.

The political and economic backlash, should this occur, would be enormous.

In the medium-longer term, I do think that despite the long hard slog ahead of us, we will eventually conquer the pandemic, through a mix of reaching effective herd immunity, the use of existing and widely available drugs, such as Ivermectin to reduce the Covid death rate and Covid vaccines being rolled out.

Ether becomes the new Bitcoin (80% probability)

Back in 2017, I discussed the early signs how institutional money was starting to dip their toes into crypto-assets.

Well, after a tough bear market, crypto assets, in particular bitcoin, soared in 2020. Big Money, whether hedge funds, pension funds, insurance companies or high-net-worth billionaires, have been pouring capital into bitcoin and enjoy the rich returns.

I expect this trend to continue in 2021, but the focus will start to switch away from bitcoin to the second largest crypto asset, Ether. My specific prediction is that at some point in 2021, the price of Ether will reach $1,500.

If it hadn’t been for the SEC regulatory move against Ripple, it is quite likely that Ripple (or the XRP token) would have also benefited from the “wall of money” cascading into the crypto asset space.

Fortunes will be made in 2021 in this exciting if volatile asset class and if you choose the right tokens, big returns can be yours in the months ahead.

So, to summarise, 2021 will probably “feel” more like 2020 than 2019. Lockdowns in many parts of the world till Spring, a semi-normal Summer and the risk of things going terribly wrong again in the war against Covid during the second half of the year.

The economy will rebound to a certain extent, but with Covid and the related lockdown measures impacting the developing world in particular, it looks likely that we will continue that descent from the peak in early 2020.

We have only started the Long Descent journey, from the peak of industrial civilisation to our eventual fate of a deindustrial Dark Ages centuries ahead.

Time to toughen up and prepare for the shocks, expected and unexpected, that will come our way in the decades to come.

A long hard slog