David R. Kotok
Sun Jan 9, 2022

Writing in the early days after Omicron’s emergence, Lyric Hughes Hale, editor-in-chief of EconVue and host of the Hale Report podcast, considered COVID and China’s Covid response and its shift toward isolationism. She mulled whether China is merely deferring the inevitable spread of endemic COVID and consequent economic and human impacts.


Cumberland Advisors Market Commentary - Samarra by David R. Kotok


She and I have also discussed via email the current status of the World Bank’s COVID 19 Debt Service Suspension Initiative (DSSI), which has not been extended, a decision that ensures challenges for low-income countries. Lyric wrote:

 “Related to the DSSI, here is the latest from the World Bank, Dec. 8th
And the IMF:
It does not look like the deadlines have been extended. I don’t know why this story is not getting more attention. Also, local government debt in China.The ending of the DSSI is food for thought.”

Lyric has given us permission to reproduce her November 28 commentary, “Appointment in Samarra” in full for readers’ convenience. Readers can subscribe to the EconVue newsletter via Substack at this link:

Lyric is also on Twitter, @lyrichues. EconVue ( is an independent economic research firm located in Chicago.

EconVue Spotlight – Appointment in Samarra?

Lyric Hughes Hale
Nov 28, 2021
Dear Readers,
Last month, a bit past the peak of fall foliage, I went to Vermont to visit family. Along the way I decided to stop by one of the many small cemeteries that dot the state to see the only monument to the 1918 Pandemic in the US. Hope Cemetery was beautiful, graced with stone gates, on a shining autumn day and a place where the eternal and the impermanent exist side by side.

The monument was not easy to find, but when I did I was surprised to see that it had been erected just a few years ago, on the 100th anniversary of the 1918 pandemic, by the descendants of a local family who had lost their grandfather to the Spanish Flu. It is dwarfed in size by Vermont’s most popular monument, the 306 ft tall obelisk dedicated to the Battle of Bennington in 1777. 


Hope Cemetery, Barre Vermont, October 2021

The reason there are so few monuments to this cataclysmic event is clear from reading the engraving: “The Spanish Flu killed more Americans than all of the combat deaths of the 20th century”. In war there are victors, but in pandemics there are only survivors. As we are understanding painfully now, there is no one day when victory can be declared and the battle is clearly over.
It reminded me of the fatalism of the Somerset Maugham tale, “Appointment in Samarra”. No matter what we do, we might still fail and only natural law will end the siege. Notwithstanding vaccines and better available treatments than in 1918, it is still not certain that we will be able to do much better than our forebears. As we see from the newest variant, the problem might be not that Covid vaccines are too strong, but rather they are too weak. Vermont in fact has the highest vaccination rate of anywhere in the US, and cases there have seen a sudden uptick.
Could it be that marshaling all of our defenses worldwide, including historic amounts of spending, research, lockdowns, masks, and social distancing will only forestall the inevitable? Some governmental measures might make things worse and prolong the agony we are now experiencing. Political opposition around the world to another round of lockdowns and vaccination enforcement might themselves become contagious in unexpected ways. New York has already cancelled elective surgeries.
We have seen the damage inflicted on children for example, who have been deprived of both school and social engagement. My key concern: school closures, bringing us back to the days of this extraordinary photo, impacting employment.

EconVue - School Learning

Each country must choose a path and deal with the consequences. China has retreated, all but closing its doors except for the flow of goods. As long as it maintains a zero tolerance containment policy, its isolation from the rest of the world can be expected to last far longer than 2022. If this continues, current fears about China projecting itself militarily might be replaced by the economic shock of a new closed door policy, as has happened before in Chinese history. It would be an enormous irony if a disease that began in China before spreading around the world resulted in a new era of isolationism.
What are China’s alternatives? A recent paper (h/t @YanzhongHuang) published by the Chinese CDC Weekly models what might happen if Covid were allowed to become endemic in China, and concludes it is too high a price to pay:

Given the harsh reality faced by the global effort to contain COVID-19 and the virtual impossibility of its worldwide eradication in the foreseeable future, global human coexistence with fast mutating SARS-CoV-2 may have to occur, for the time being, irrespective of the wishes and aspirations of our people... In this article, we found that even in a highly underestimated outbreak scenario under the most optimistic assumptions, once China adopts the control and prevention strategies of some typical western countries, the number of the daily new confirmed cases in China would likely rise up to hundreds of thousands of cases, and among which >10,000 cases would present with severe symptoms. Particularly, the number of standing severe cases would exceed the peak number nationwide in early 2020 within 1–2 days, which would have a devastating impact on the medical system of China and cause a great disaster within the nation.

Chinese-style containment however is politically unacceptable in other countries, and another round of lockdowns and children forced to stay home from school will not go down well. Our international institutions are powerless to bridge this gap. Over the last several weeks, I have (virtually) attended COP26, APEC New Zealand, the IMF/World Bank meetings and others, and have come away with the impression that they too are flummoxed and unable to eradicate the uncertainties we face. We can hope that Omicron’s transmissibility is balanced by very mild symptoms that create natural immunity and that will overcome the disease over time. In the end, the only thing that can be controlled is our response.

We thank Lyric for sharing this with our readers and look forward to seeing her again in Maine at Camp K in August.  -David

David R. Kotok
Chairman and Chief Investment Officer
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