Posts Tagged ‘Swine Flu’

The Contagious Economics of Swine Flu

August 15th, 2009

I had an appointment with the doctor today. I arrived at an empty waiting room. I usually wait for anything up to half an hour. “What gives, Doc? No one gets sick in summer?”

“Exactly,” he said. “It’s too hot to go out. Now I’m counting in Swine Flu to get me through these few months.” The doctor’s right. Swine Flu equals money, either money earned or money spent and lost.

Forecasts by informed bodies suggest that this current Swine Flu really could reach pandemic proportions, with up to 100,000 cases a day. The report assumes that infections will ultimately reach 50 per cent, with a mortality rate of 0.4 per cent. These are staggering figures. Imagine a small country of 6 million. 3 million will be infected and 12,000 will die. If that country is not economically stable it could founder completely.

The money earned column is clear. It is the doctors, drug manufacturers, syringe makers, hospitals and the nursing community who will benefit to varying degrees; the pharmacists will do well and undertakers may collect some of the spin-off. Article writers for the press will have a ball producing screeds of paper with forecasts of gloom and doom.

On the money lost side the effects are also fairly clear. The first category is that of ‘Lost Output’. Workers who contact the flu will take time off, probably only after they have infected many of their colleagues. Schools, colleges and other large public bodies may even decide to close down in an attempt to contain the spread of the illness. The eventual result of this lost output is reduction in incomes and down the line, lost GDP.

The second major category of losses is that of ‘Lower Demand’. It starts with luxury spending such as international travel and tourism. If you are going to get the flu it’s better to catch it at home. Restaurants will be hit and so will the movie houses and theaters; in fact all public gathering places will suffer. This was very evident in the SARS epidemic a few years ago.

There will be a loss of confidence among the investing community who will move into ‘hold mode’ until the pandemic passes. In the same way government spending may drop and affect public finances. Ernst and Young, the international accounting group has already reported on the impact of a relatively modest spread of swine flue. They are talking about output falling by a catastrophic 7.5 per cent.

It is impossible to quantify the economic effects of swine flu, it is a ‘new’ strain and relatively unknown. There are fatalities every year from one kind of flu or another. Sections of the population are high risk in any flu epidemic. Is Swine Flu replacing other kinds of flu or is it in addition to the regular flu’s that go around every year?

This time the world is better prepared for a flu epidemic that ever before. We have more effective drugs. We are going to make it through this one!

Tags: Drugs, Flu, Lost Output, Swine Flu
Posted in Economy, Finance | No Comments »

Looking for some quick money? Here’s an outside chance.

August 7th, 2009

The way the stock exchanges around the world are behaving, this may be a better bet if you are a gambler at heart. But you’ll be playing against me and the entire 60 million population of Italy. The prize is the SuperEnalotto jackpot, currently standing at 119 million Euros or a cool 171 million dollars. That’s a whole lot of bread.
All it will cost you is one Euro or a miserable $1.44 for two tries. And all you have to do is to match 6 numbers out of 90, a change from the usual 6 out of 49. This difference changes the odds somewhat. In a 6 out of 49 lotto, your chances of winning are about 1 in 14 million. In the Italian 6 out of 90 version, your odds drop to 1 in 622 million – so you need to choose your numbers carefully. That’s how they manage to rack up these huge lotto jackpots. Wins are few and far between.
This size of jackpot grabs people who normally shun the lotto because they consider it beneath them or who think it’s a ruse run by the state to raise taxes. So Italy is deep in the grips of lotto fever. The ongoing recession and the growing unemployment fuel dreams of instant wealth and sales of lotto tickets are booming. A recent report by the Censis social studies institute estimated that in June, Italians were spending an average of 7.8 million Euros (11 million dollars) a day on SuperEnalotto tickets.

In Varallo, a town of 7,500 in Piedmont province, the mayor convinced his five-person cabinet to each chip in and buy a 100 Euro ticket, which allows for several combinations of numbers. “Just imagine, we could abolish taxes, pay off mortgages and bring a little happiness,” said mayor Buonanno, in a telephone interview. “We will keep on playing until our six-number combination is drawn. We could buy some top soccer players, like David Beckham and Alessandro del Piero. That would put our town on the map.”

Psychiatrists and officials of the ever-present Roman Catholic church are warning lotto players that that the quick-fix hope raised by gambling can lead to long-term woe.

Everyone is entitled to dream and that’s what lotto offers, a slim chance of an instant lifestyle change. Some strapped town councils are even looking to Lady Luck. Earlier this week, the small Sicilian town of Ficarra diverted money from council salaries to bet on numbers associated with the local patron saint, the Virgin of the Assumption. However, in the end, it is Lady Luck who will decide who gets the jackpot.

I would love to have a ticket for this jackpot, but I’m not flying to Italy to buy one. I’ll just stay home and continue my day-dream right here. It started yesterday when I took my wife shopping and I parked next to a brand new Mercedes S type. Have you seen this machine?

Tags: crystal ball, Drugs, Flu, Lost Output, Stock market recovery, Swine Flu
Posted in Employment, Finance | No Comments »