The Swine Flu and An Economic Checkup

Weather Report: Swine Flu Status, The Economy–How’ve We Done So Far?

Swine Flu Status: There seems to be a million articles, interviews, and reports about regarding the status of the swine flu outbreak but here’s what appears to be the nut:

• WHO has raised the pandemic level to 5 (out of a possible 6) from 3 to indicate a significantly increased risk of global outbreak of serious disease.
• No one knows the future of the flu’s spread and development.
• Keep a close eye on the flu’s spread and development.
• Preparation for a worst case scenario might involve a continuing preparation for the worst natural disaster in your area combined with specific preparations for a pandemic.

The Economy–How’ve We Done So Far?: An answer from Sharon Astyk posted on her blog, sharonastyk.com (a regular read is recommended), on 4/24 09 gives us some insight and information. Her piece is titled “Rates of Return”. Here is some of that post:

• “The worst news is not that GM is dead … . The worst news is that we finally have the beginnings of a tally of the rate of return on our investment.”
• “Here’s Ilargi over at The Automatic Earth (with a bit of help from Elizabeth Warren …) on what we’ve gotten for our money.“
• “Six months ago, in October 2008, the IMF predicted that American financial institutions would have to write own $1.4 trillion in toxic loans and securities. Three months later, it increased the prediction to $2.2 trillion. We find ourselves another three months later today, and the number has risen to $2.7 trillion, or roughly two thirds of the $4.1 trillion the IMF claims will need to be written down globally. I don’t know about you, but I know a trendline when I see one: the chance that the IMF has this time gotten the number right, as in high enough, are zilch and nada. Of the “American” $2.7 trillion, about one third has been actually processed so far, which means US banks will need to write down another $1.8 trillion. Against that backdrop, we need to turn to Elizabeth Warren, who has estimated that $4 trillion has to date been injected into the US financial system. If we were to simplify the issue somewhat, we might say that it has taken $4 trillion to write down $900 billion, and that’s without counting the remaining $8.8 trillion in loans that are floating out there somewhere in the economy. …”
• “But it’s the larger picture emerging from all this that we should focus on. The $4 trillion the banks received so far under the guise of encouraging them to restart lending, the actual numbers for new loans are down 23%. Yet, here’s a New York Times headline today: “Credit Markets Still Sputtering, Geithner Says” You pump one third of the entire annual US GDP into them, they react by cutting lending 23%, and you call that “sputtering”? …’

“In other words, it’s all been a complete failure.”

PrudentHome Note: Just like the flu, keep a close on the spread and development. Also, continue to prepare for the worst natural disaster in your area and combine that with specific preparations for a long, drawn-out depression.

Until next time, keep your eyes on the horizon as the weather’s changing fast.