Swine Flu Adds Complication to Economic Forecast
I had just finished posting an article named A Black Swan Named Swine Flu when I came across an insightful article by James Howard Kunsler that adds his always interesting view on the swine flu issue.
As James Kunsler and I both point out no one at this stage knows how the Swine Flu outbreak will develop. It may turn out to be a fairly minor public health concern, especially in Mexico, and then fade away, or it may turn into a world wide pandemic with terrifying consequences for all. With any viral outbreak the potential is there for it to become as serious as the 1918 flu pandemic that killed somewhere between 30 million to 100 people. That was out of a world population that at the time was about 1.7 billion.
Of course, we now have medicines and medical facilities that were non existent in 1918. But we also have about 6.6.5 billion people on this planet, many of them living in densely packed urban centers, like Mexico City. A viral infection spreading among a densely packed population could grow at an alarming rate. Especially if the virus is a new strain, like the swine flu virus, and there are no vaccines really for immediate use.
Another danger in our modern highly mobile world is that international travel is frequent and fast. Airlines can transport you to just about any other spot on the planet within 30 hours. Air travel is a vital part of the world's transportation system with huge numbers of people moved about every day. If there is one infected person on an airplane there is a good chance that at least a few fellow passengers will become sick shortly after completing the flight.
About ten years ago I flew to the Philippines on vacation and became seriously ill about two days after checking into the hotel in Cebu. I recovered just in time to catch my return flight two weeks later. What a vacation that was. Almost all of it was spent in bed at the hotel wondering if I would live or die. I'm sure that I was exposed to the flu on the aircraft during the 13 hour leg of the flight to Manila. If this swine flu thing becomes pandemic you do not want to fly anywhere.
It is still too early to know how the swine flu is going to impact us and the world economy. For sure, airline and travel related stocks, like hotels, are already taking a beating. If it becomes apparent that the swine flu will become widespread and is a deadly killer then the hope of an early recovery in the world economy and stock markets will be crushed.
Based upon research found so far on the Swine Flu outbreak since it is so late in the flu season it is likely the the outbreak will fizzle out as warmer wheather occurs and will then come back with a vengence in the fall and winter. This was the pattern of the 1918 pandemic and is the one that is most likely to occur in 2009. So the Swine Flu Black Swan may prove to be just as deceptive as the Bear Market. Just when once again you are feeling confident about the outlook it comes in for the kill.
Here are a few additional comments about the new Black Swan, A Black Swan Named Swine Flu
18 July 2009 by JackieTags: economic outlook, stock market, swine flu, swine flu outlook
