The world falls apart as the US withdraws

An administration that cannot govern makes a stark contrast with China

Martin Wolf 

James Ferguson illustration of Martin Wolf’s column ‘The world falls apart as the US withdraws’
© James Ferguson

Covid-19 has not transformed the world, at least so far. But it has accelerated its development, technologically, socially and politically. 

This has been strikingly true in international relations: the divide between China and the west and the failure of US leadership of the west have both deepened. 

The western-led world order is in crisis. If the US re-elects Donald Trump, this will be terminal.

China is increasingly assertive. It pays no respect to western pieties about human rights, as shown in the brutal treatment of the Uighurs and the new security law in Hong Kong. Under Xi Jinping, emperor for life, the assertion of China’s status as a superpower and a despotism is complete. 

The abandonment of Deng Xiaoping’s celebrated advice to “hide your strength, bide your time, never take the lead” is unambiguous. Yet China must also be a partner in managing every global challenge.

Column chart showing share of world population in 2019 for various countries

The west has valuable assets in any competition for influence with China. Many still admire its core values of freedom and democracy. Western cultural and intellectual influence remains far greater than that of China.

The US has been able to create and sustain long-lived alliances of like-minded countries. If one adds together the nations that naturally align with the US, including those of Europe, Japan, South Korea, Canada, Australasia and, increasingly, India, their economic and political weight remains huge.

Yet things have fallen apart. The US has succumbed to fierce internal divisions that have ended up in a destructive zero-sum nationalism. Mr Trump is the embodiment of these divisions, as former secretary of defence Jim Mattis has asserted. 

He is also the chief protagonist of his country’s rejection of its historic role as global model of liberal democracy and leader of an alliance of similarly inclined countries.

Column chart showing GDP based on purchasing power parity as share of world total for various countries

Mr Trump’s is a post-values US. It is also post-competence. Even when people around the world did not like what the US did, they thought it knew what it was doing. 

The frightening success of the Trump administration in dismantling government has transformed that view during the coronavirus era.

This president and administration neither want to govern nor know how to do so. The contrast with China, for all the latter’s initial failures in managing Covid-19, is stark. In an article in The Atlantic, James Fallows describes the systematic dismantling of the world-leading US system of pandemic response. 

But the failure was not just due to the crippling of the government. It was also due to the character of the malevolent incompetent who runs it.

Bar chart showing GDP per head at purchasing power parity in thousands of dollars in 2019 for various countries

The world has noticed. US prestige and credibility have been grievously damaged. It is symbolic of the breakdown in relations among the core alliance that the EU, which has gained incomplete, but real, control over the disease, is not planning to allow Americans back in, yet.

In a Foreign Affairs article, Francis Fukuyama argues that the foundation of any political order, quite obviously so in a pandemic, is an effective government. In an earlier work, he argued persuasively that the ideas of the rule of law and accountability to citizens through democratic political processes are founded on this: if the state does not work, nothing does. 

The Trump administration appears determined to prove this hypothesis.

Column chart showing share of global trade in goods for various countries

An alliance of liberal democracies dedicated to creating a counterweight to China in some areas, while co-operating successfully with it in others, is conceivable. But it will not happen if the US does not recreate itself as a functioning state led by a president who does not admire every authoritarian he meets. Harold James, professor of history at Princeton, has even written a gloomy article about “Late Soviet America”.

Yet modern China has weak foundations, too. Its state is unquestionably effective and its people hard working and entrepreneurial. But the absence of a rule of law and democratic accountability makes the state too strong and civil society too weak. 

China did well when opening up to the world, as it did over the past four decades. But, if the world closes down, it will become harder for it to progress so rapidly.

Column chart showing share of global military expenditure as a percentage for various countries

In The Narrow Corridor, Daron Acemoglu and James Robinson explain the dilemma faced by an effective despotism. It can allow entrepreneurs off the reins, to enormous effect. But, without a rule of law, the result will inevitably be a tidal wave of corruption, which undermines the regime’s legitimacy. 

The ruler may then pull on the reins once again, forcing people back into behaving. But it also risks killing off needed animal spirits.

This is probably what is happening to the Chinese economy today. Some people seem to believe that artificial intelligence and the reaping of vast quantities of data will allow central planning to replace the market. Nothing is less likely. 

The driving force of change is the ideas inside people’s heads. No one can plan for that. People need the incentives to create new and challenging things. Will today’s more oppressive Chinese state nurture that?

Slope charts showing China and US's decline in popularity within democracies

On the one side, then, we have a rising despotic superpower, but one with real frailties. On the other, we have an incumbent superpower that has lost its way. I want western core values to succeed and flourish. 

I want China to prosper, but not at the cost of corroding societies that uphold those values. I want humanity to manage its relations peacefully and its fragile world wisely. If this is to happen, the US remains the indispensable power. 

The problem is not so much Mr Trump as that so many Americans want him to lead them. The western crisis is a crisis of values. 

We can overcome it. But it will be hard.


If you have not been paying attention to what is happening in Gold, Silver, and Platinum over the past 3+ days, then read this research article carefully. If you have been paying attention to the move in Precious Metals, then keep reading to learn why this move is so important. Here we go…

Precious metals have been on the move higher for much of the past 24+ months. Yet, certain forces have attempted to quell the upside advance as global investors adopt a more fearful stance relating to the global economy. As the COVID-19 virus event hit, a big downside washout move took place in Gold and Silver.

This type of low price rotation is a common pattern as traders are forced to liquidate precious metals positions to cover margin requirements related to open long positions in a deep downside price move. 

After that washout move completed, we saw precious metals, particularly Gold, rally back to previous price levels while Silver meandered near $16~$17 for a while before breaking higher.

Our research team has been warning that Silver would become the Super Hero of metals in the near future and recently we issued further research posts to support the upside price move we’ve seen in Silver prior to the current big breakout rally. Read some of our earlier posts here.


If you understand anything about Precious Metals and how the operate as a hedge against perceived risk in the global markets, then you already understand what I’m about to state… 

This huge breakout move in Silver and Gold is a massive warning shot fired across the bow for global investors. 

The idea that the US stock market can continue to climb to frothy highs while COVID-19 erodes the global economy, credit, debt and trade is moronic. Yes, certain stocks are generating decent revenues and returns, but we are talking about a potential global economic contraction of nearly 20% to 30% or more over the next 16+ months. 40+ million US workers are currently unemployed and many states are already re-issuing “shutdowns” again because of surges in the COVID-19 virus cases.

The first warning shot has not been fired for all to see. It was big, loud and easy enough for anyone with more than two brain cells to see. This is how Precious Metals tells us that many global investors don’t believe the current US and global stock market valuations are legitimate. It also pushes a very big concern for COMEX and other exchanges relating to the open short positions in Gold and Silver.

Short Volumes in Precious Metals have recently climbed from 10.86% of total Daily volumes to 15.29% over the past 7+ trading days. Historically, these levels have peaked near 25% to 26% recently (Source: ). 

We believe the institutional and private short-sellers are getting squeeze by a 50-ton press right now and that COMEX may have a massive shortage of deliverable material if this rally continues. Many larger firms will simply want to “take delivery” of physical metals if they believe this is the start of a massive upside rally.


(Source: )

We authored a research article just last week suggesting multiple “measured moves” were about to take place in both Gold and Silver. 

As of this morning, Silver had reached our predicted measured move target near $22.95 and has started to stall. 

Gold still has quite a ways to go to reach our target level near $1935. 

The fact that Silver has already reached the initial measured move target suggests that Silver may contract and setup a new momentum base over the next 3+ days before attempting to move higher. Gold, on the other hand, should continue to rally higher attempting to target the $1935 level while Silver sets up a new base (even though the new base may only last a few days).

This Daily Silver chart highlights the huge breakout move that recently took place and should send a big warning to all traders and investors throughout the globe – something big is taking place. 

 Precious metals don’t move like this unless there is massive risk in the markets. The only thing our researchers believe is likely to happen is a surge in new COVID-19 cases pushing many states into shut-downs again and tanking the minor economic recovery process that has just started. 

We believe the second phase of this process is extended consumer, retail, real estate and massive pension, debt and credit issues for consumers, cities, states and other entities. All of this may only be 2 to 5+ months away from landing on our “deck”.


The S&P500, Down Industrials, Transportation Index, and SPY have all stalled recently after rotating near major resistance. 

The NASDAQ has pushed even higher as traders pile into the technology stocks which seem to be bucking the trends. 

The US Federal Reserve will continue to attempt to support the markets throughout the remainder of 2020 and early into 2021, yet the US Presidential Election and the destruction to consumers may hit the markets before we can blink. 

Delinquencies are starting to skyrocket and the housing market, which by all data measures seems to be rolling along, is starting to fracture.

We believe skilled technical traders must adopt a very cautious portfolio balance right now or risk a massive blowout event – similar to what happened in 2008-09. This move in Precious Metals is a huge warning to anyone willing to pay attention. 

In Part II of this article, we’ll go deeper into detail showing you what is likely to happen in the SPY and Precious Metals markets over the next 6+ months.

Strange Symptoms

Many Stay Sick After Recovering From Coronavirus
One in 10 people infected with the coronavirus suffers from fatigue, muscle aches or neurological disorders for weeks after surviving an infection. What long-term damage does the virus do to the body?

By Lisa Duhm und Veronika Hackenbroch

The real estate agent Alexander Riesch (whose name has been changed by the editors) still feels sick even after officially recovering from COVID-19.
The real estate agent Alexander Riesch (whose name has been changed by the editors) still feels sick even after officially recovering from COVID-19. / Foto: Nora Klein/ DER SPIEGEL

It all began with a scratchy throat on Friday, March 13. A colleague had brought the novel coronavirus back with him from the Austrian ski resort Ischgl. Shortly thereafter, Alexander Riesch, 26, whose name has been changed for this story, also tested positive for the virus.

"At first I thought, well, at least now you'll have gotten it over with," Riesch says. His doctors also had no doubt: The body of a young, healthy person wouldn't take long to vanquish the virus. They sent Riesch home to recover. But a few days later, he felt so miserable that he had to call an emergency doctor. He spent a week in the hospital.

Officially, Riesch has been recovered for nearly three months. He has antibodies against the virus in his blood. Yet he still goes through spells in which he feels very sick. So far, none of his doctors have been able to explain why.

In addition to suffering from sore throats that range from mild to severe and seem to come and go at random, his lungs are also still affected. The symptoms didn't begin until after the doctors released him from the hospital and he returned home. A respiratory physician prescribed him an asthma inhaler and advised him to be patient. The cortisone does help a little, Riesch says, but his cough and the tightness in his chest return as soon as he stops taking it.

There's also the sudden muscle pain. Sometimes the left half of Riesch's body becomes numb, other times he feels so weak that he has to lay down immediately. And that's not even to mention the abdominal pain and nausea, skin rash and severe fatigue.

Riesch was on sick leave for 10 weeks. Meanwhile, he's back at work as a real estate agent. But every now and then, he has to cancel appointments because he simply feels too exhausted. Most of the time, he tries to live a normal life. "I've come to accept the pain I'm in now."

A Very Strange Disease

Half a year since the pandemic began, doctors are now observing an increasing number of coronavirus patients like Riesch who are officially recovered but in reality are far from healthy.

"COVID-19 is very unpredictable," says Timothy Spector of King's College London, who is tracking the course of the disease in more than 200,000 COVID-19 patients over a longer period of time, with the help of a mobile app, as part of a major research project. "I am trained as a rheumatologist, so I am used to strange diseases. But COVID-19 is the strangest disease I know."

Roughly one in 10 people with the disease continue to suffer from unexplainable symptoms for more than a month, many for more than two months. The most common are exhaustion, headaches, a loss of smell, trouble breathing, dizziness, diarrhea and skin rashes. "And some of our participants still have a fever after three months," Spector says.

Severe damage to the lungs, heart and nervous system in some people is also of concern. The disease can cause cardiac arrhythmia or even trigger diabetes mellitus. Some patients suffer from severe concentration and memory disorders, much like dementia. Even young people can be affected. More than 1,000 children around the world have contracted multisystem inflammatory syndrome in connection with a SARS-CoV-2 infection, which can lead to myocarditis and circulatory failure.

Nothing To Be Done

"Many patients say: 'Before the coronavirus infection, I was a different person,'" says the Swiss heart surgeon Paul Vogt. Doctors now fear that the pandemic will leave behind an army of chronically ill people. Some hospitals in Germany are already beginning to set up outpatient clinics for the follow-up care of COVID-19 patients.

"People tend to think: Either you are dead, or you are healthy again," says the British physician Helen Salisbury. "But it does not work like this."

For weeks, all people talked about was intensive care units and artificial ventilation. "But now there are all these people, that will maybe be ill for a long time."

Salisbury treats several people who were infected with SARS-CoV-2 and still suffer from exhaustion and bouts of fever or coughing and who quickly get out of breath. "All the tests are normal," she says. "There is no therapy I can offer to them." Many of the chronically sick are young -- and desperate. "But I can do nothing but listen to them," Salisbury says.

It's still a mystery to experts as to why the symptoms are so persistent and severe even after the patients have supposedly recovered from the disease. Doctors suspect it could be due to malfunctions in the immune system caused by an infection. It's also possible that once the virus succeeds in establishing itself somewhere in the body, it can strike repeatedly.

Or the lasting ailments could be a consequence of a lack of oxygen during the acute phase of the disease. Young COVID-19 patients in particular often don't notice for a long time just how badly their body is doing.

Like Other Viruses

Doctors see a parallel to another coronavirus disease. After the SARS pandemic in 2003, doctors continued to notice many chronically sick people, for instance in Toronto, Canada, where the worst outbreak outside of Asia took place.

"When I heard of the SARS-CoV-2 long-term patients, I thought: Oh, I was waiting for this," says Harvey Moldofsky, a sleep and pain researcher and a professor emeritus at the University of Toronto.

A physician, Moldofsky has been a specialist in unusual diseases since early on in his career.

That's why he was asked to step in and help after the 2003 SARS pandemic had subsided. "There was a group of 50 people that had all survived SARS, but although they had gone through rehab, they could not go back to work full time," Moldofsky says.

He interviewed 22 of those people in detail, and the stories he heard all sounded similar. "Over one year post-infection, they were still fatigued, weak, had muscle pain, sleeping problems and could not think straight," says Moldofsky.

All of these grievances are familiar to experts. Patients suffering from chronic fatigue syndrome also complain of muscle, head and neck pain. Many also speak of a "brain fog" that prevents them from being able to concentrate.

A number of viruses are believed to cause chronic fatigue syndrome. Among them are the influenza and Epstein-Barr viruses, the latter of which is known to cause infectious mononucleosis, or mono.

Researchers now suspect that the strange affliction is, in fact, an autoimmune reaction triggered by the viral infection, which can affect the autonomic nervous system. Other symptoms can include heart palpitations, an increased susceptibility to infection and sleep disorder.

Neurological Problems

Carmen Scheibenbogen, the head of the outpatient clinic for adult immunodeficiencies at Berlin's Charité University Hospital, is one of the few German experts on chronic fatigue syndrome. Many people with COVID-19 are currently turning to the physician for answers about their odd symptoms.

But even she has to disappoint them for the time being. A reliable diagnosis can only be made six months after infection. "By then, there's a good chance that everything will calm down on its own," Scheibenbogen says. Only symptoms that last longer than six months are considered chronic. And even then, there are few options for treatment.

Scheibenbogen advises those affected to take good care of their bodies. "Overexerting oneself or doing sports that exacerbate symptoms should definitely be avoided. This can make things worse," she says.

In addition to chronic fatigue, COVID-19 patients can also suffer from a number of other neurological complications. "The neuroscience research community is slowly waking up to this," says Benedict Michael, a senior clinician scientist and neurologist at the Health Protection Research Unit and the University of Liverpool. He adds that 20 to 30 percent of patients who require hospitalization develop some neurological complication.

In late June, Michael and some colleagues published a study on the matter in the medical journal The Lancet Psychiatry. In it, they examined 125 patients who developed neurological problems as a result of COVID-19. Around 60 percent of participants, mainly older people, suffered a stroke after being infected. Close to a third of them showed signs of other cognitive or psychiatric changes, including many younger patients.

In all, 8 percent of the 125 people examined developed a psychosis in connection with their coronavirus infection. Just under 5 percent developed dementia. "Many young people are still living their lives in the pandemic and do not even think about the fact that there is a potential risk of developing problems for them too," warns Michael.

At least in some cases it's easy to explain what caused the brain damage. Strokes can occur because COVID-19 often causes blood to clot. It's also known that the SARS-CoV-2 virus can sometimes lead to encephalitis.

In many other cases, however, the cause of the complications is still unclear. "It is quite possible that this is an immune reaction," Michael says. For some, it could also be a result of stress or a lack of oxygen -- or everything altogether.

Not the Only One

For many patients, there's still hope that the neurological and psychiatric problems, as well as the other persistent complications like exhaustion, will diminish or eventually disappear.

The case of the general practitioner Stephanie de Giorgio from Kent in the UK is also cause for hope. The 44-year-old was likely infected by one of her patients. A mother of two, de Giorgio had no risk factors other than mild asthma and being a bit overweight could have been cause for concern. "Well, now it has got me, too," she thought. Fifteen days later, her fever subsided.

The British general practitioner Stephanie de Giorgio / Foto: Horst Friedrichs/ DER SPIEGEL 

But many of the other symptoms remained. The worst was the dizziness, she says. "It felt like the floor suddenly moved." She even fell down a few times because of it. "I crawled up the stairs, just in case, and I took a shower sitting down."

She was also extremely fatigued. Her heart would begin to race with the slightest exertion. Her fever also came back in waves.

"At first I thought I was crazy," de Giorgio says. "But then I started seeing patients that had the same problems. And after I talked over the internet with all those other people, I realized: I am not the only one who is suffering."

She could only work a couple days a week at most. Afterward, she was completely exhausted.

Her brain, too, didn't seem to be functioning properly. "I could not think straight," she says.

"When I was baking, I put the eggshells in the bowl and threw the egg away."

After a day of gardening, she had to spend the next two days in bed. "When I overdid it, the illness got back at me."

But now, for the past few days, after more than three months of suffering, she finally seems to be getting better. "I can understand that people get scared by this," de Giorgio says. "It is important to not let them alone."

Jair Bolsonaro, Brazil’s ‘Captain Corona’, bets on virus denial

The rightwing leader may emerge politically stronger from the pandemic

Andres Schipani

Joe Cummings illustration of  Person in the News ‘Jair Bolsonaro, Brazil’s “Captain Corona”, bets on virus denial
© Joe Cummings/Financial Times

Disease has often stricken Brazilian leaders.

In 1919, the Spanish flu killed president-elect Francisco de Paula Rodrigues Alves.

Fernando Collor de Mello was impeached in 1992 after the country was struck by cholera.

Dilma Rousseff met the same fate in 2016 in the midst of the Zika epidemic.

Now Covid-19 has infected President Jair Bolsonaro.

But unlike his predecessors — assuming the controversial rightwing leader recovers from the virus as UK prime minister Boris Johnson did — Mr Bolsonaro may emerge politically stronger from the pandemic.

The former army captain announced at a press conference on Tuesday that he had tested positive, and in classic brazen style took off his mask and gave a thumbs-up to show he wasn’t worried.

“Just look at my face: I’m fine,” the 65-year-old said.

Arguably, no other president in Brazil’s recent democratic history has been so reckless with himself or the country.

“Not only did he not respect social distancing when giving the [press conference], he used the opportunity to repeat his denialist view of the pandemic and the efficacy of hydroxychloroquine,” said Mario Marconini, a risk consultant.

“He claimed the drug had already taken effect overnight.”

Mr Bolsonaro was elected in a landslide victory in 2018, after surviving a near fatal stabbing, by a country fed up with corruption and almost two decades of leftist rule.

But “Captain Corona” — as critics call him — has long denied the pandemic’s seriousness.

He has called the virus a “sniffle” to be faced “like a man, dammit”, even though Brazil has suffered 70,000 deaths and more than 1.7m infections, second only to the US.

Like his American counterpart Donald Trump, Mr Bolsonaro has attended numerous rallies without taking precautions, wearing a mask after a judge ordered him to, and has clashed with state governors who imposed lockdowns.

Two health ministers have resigned over his laissez-faire approach.

Yet, Mr Bolsonaro’s high-stakes gamble may pay off.

If this Tropical Trump, as he is also known, only suffers mild symptoms, he would become a living example that Covid-19 is only a gripezinha, or little flu.

Blame for the country’s economic hardship could then be shifted on to political foes, who have pushed for social distancing measures.

“Bolsonaro rose to power portraying the image of a lone ranger fighting a corrupt system and surviving adversity,” says Matías Spektor of the Fundação Getúlio Vargas think-tank.

“This is what he is now trying to turn Covid-19 into, portraying himself as a messianic leader in the hands of God rather than science. It resonates with many Brazilians.”

Mr Bolsonaro has always made a virtue of being a rank outsider. Born in the interior of São Paulo state in 1955 to a modest family, he joined the army, rising to the rank of captain, and entered politics in the late 1980s, first as a city councillor in Rio de Janeiro, then on to congress in Brasília.

He went politically unnoticed for many years and found prominence thanks to his extreme opinions and the identity politics he still pursues. Married three times and with five children, Mr Bolsonaro was raised a Catholic but baptised in the river Jordan by an evangelical pastor four years ago.

He has continued to slam “cultural Marxism”, “gender ideology” and “environmental psychoses” since taking office. “Jair Bolsonaro’s strong personality is somewhat driven by the fact he was a one-man conservative army for a long time in Congress,” says Gerald Brant, a US financier and longtime friend who is also close to Steve Bannon, the former Trump aide.

“He had to develop a unique communications style that was attention-grabbing.

He created a persona that could get through all the noise.”

Maria do Rosário Nunes, a congresswoman who Mr Bolsonaro once said did not “deserve” to be raped, deplored how he continues this confrontational style as president.

“He is someone, as they say, with genocidal standards,” she says.

His abrasive approach risks undermining the economic reforms he was elected to pursue.

Although finance minister Paulo Guedes has pushed through some measures, the agenda has largely stalled, in part due to the president’s unerring ability to feud with lawmakers.

His army career was similarly confrontational.

According to court records reviewed by the Financial Times, he was accused of “irregular conduct” after spending a fortnight in military jail for insubordination in 1986.

Mr Bolsonaro has since joined rallies, once on horseback, to show support for protesters who wanted to close the Supreme Court and Congress, and bring back military rule. He is currently under investigation over allegations of influence peddling made by his former justice minister.

Even so, his approval ratings remain at about 30 per cent.

At that level, history suggests he would be able fend off efforts to eject him from office.

Impeachment proceedings against Mr Collor de Mello and Ms Rousseff only advanced when their ratings fell to about 10 per cent. Covid-19 infection may also give Mr Bolsonaro further immunity.

“If he manages to cure himself and come out of the quarantine relatively unscathed, the episode will make him politically stronger,” Mr Marconini says.

Florida as a Developing Country

During the first waves of the COVID-19 pandemic in Asia and Western advanced economies, there was a clear pattern of lockdown, containment, and gradual economic reopening. But now a third pandemic wave has brought a new, more disturbing pattern to both developing countries and major US states.

Michael Spence, Chen Long

spence126_Eva Marie Uzcategui TrinklAnadolu Agency via Getty Images_beach covid19

MILAN/HANGZHOU – The COVID-19 pandemic has arrived in waves, starting in Asia, where it quickly spread from mainland China to South Korea, Hong Kong, and Taiwan. These governments all reacted quickly with aggressive tracking, tracing, and containment programs, and China induced a massive but short-lived economic contraction to stop the virus more or less in its tracks.

Meanwhile, a second wave, now in its middle to late stages, has swept mostly through the developed economies of Europe, North America, and Oceania. As in Asia, there has been variation in containment approaches and results across countries; but, generally speaking, most of these governments responded late, allowing the virus to spread widely before introducing countermeasures.

In any case, the pandemic has followed a clear pattern in both first- and second-wave economies. After a sharp economic contraction (phase one) comes a trough (phase two), when the virus’s rate of spread is reduced to the point that recoveries exceed new confirmed cases. Then comes a period of gradual, sequenced reopening, with precautions to contain the virus remaining in place (phase three).

The pandemic’s third wave, however, has taken a different shape, and is raising serious concerns. Though it arrived later, it is quickly sweeping most of the developing world, home to two-thirds of the global population. Moreover, this wave, which now accounts for over 60% of confirmed new cases, has left an alarming number of highly populous countries stuck in the pre-phase three period of the “pandemic economy,” with the economic and public-health crises both essentially spinning out of control.

The apparent difficulty in controlling the spread of the virus even with sustained periods of economic contraction is a unique and disturbing feature of the third wave. And as Figures 2 and 3 show, it can be found in a wide range of countries in Asia, Latin America, and Africa.

In most developing countries, a significant proportion of the population lacks the resources to withstand an extended economic lockdown, and the government’s fiscal capacity to provide a buffer is limited, sometimes severely. As a result, many of these countries will have no choice but to begin reopening their economies regardless of whether the virus has been contained.

Despite the tragedy that is unfolding across the developing world, the third wave has received somewhat less attention than the crisis in the United States, where aggregate nationwide data obscure the fact that there are now two pandemic economies within the US, each with a very different pattern. Several states in the South and Southwest are increasingly exhibiting, or reverting to, the same third-wave pattern observed in developing economies: economic opening with rapid virus spread.

The latest data on new infections in Florida suggest that cases are doubling at a rate below 19 days, which puts the state’s outbreak firmly in the “uncontrolled” phase. And a similar recent pattern can be found in Texas and several other states.

In the US, 27 states lifted their stay-at-home orders before May 15, while the remaining 23 states started reopening on or after that date. As the data for new cases clearly show, the earlier openers have experienced a significant increase in infections.

Of course, even among the states that started reopening before May 15, the pandemic economy has taken different trajectories. Whereas California has stalled in the virus-containment phase, other states (Florida, Texas) are slipping back into the danger zone, with doubling days at or below 18.

Meanwhile, among the states that lifted their stay-at-home orders on or after May 15, the majority (including Minnesota, Washington, and hard-hit New York) exhibit the typical second-wave pattern of slow but steady movement toward fewer new infections and increased economic activity. A notable exception is Arizona, where active cases are again growing exponentially.

The most plausible reason for these states’ relapse is that their leaders reopened prematurely, too rapidly, or both. It may be that some state governments simply decided that the tradeoff between virus control and economic recovery should be tipped in favor of the latter. It is also clear that some states and localities have taken enforcement of precautionary measures (social distancing, mandatory face masks) more seriously than others. And, notably, these “third wave” states lack substantial testing and tracking programs, which limits their capacity to contain the virus and raises the risks of reopening.

The explanation for the deepening crisis in developing countries is obvious: many lack the economic, medical, and fiscal resources with which to contain the virus and support their populations through an extended lockdown. But these reasons cannot reasonably be applied to an advanced economy like the US.

As a result, it seems that one part of the US will follow the second-wave pattern, alongside Europe, Canada, Australia, and New Zealand, while another part takes a path similar to that of the developing world. But unlike developing countries, these third-wave US states will still have the option of changing course, possibly catching up to the second wave, provided that they can muster the political will to do so.

Michael Spence, a Nobel laureate in economics, is Professor of Economics Emeritus and a former dean of the Graduate School of Business at Stanford University. He is Senior Fellow at the Hoover Institution, serves on the Academic Committee at Luohan Academy, and co-chairs the Advisory Board of the Asia Global Institute. He was chairman of the independent Commission on Growth and Development, an international body that from 2006-10 analyzed opportunities for global economic growth, and is the author of The Next Convergence: The Future of Economic Growth in a Multispeed World.

Chen Long, a former chief strategy officer at Ant Financial, is Director of Luohan Academy, Executive Provost of the Hupan School of Entrepreneurship, Chairman of Alibaba’s Research Council, and a member of the International Monetary Fund's FinTech Advisory Group.