Green Shoots vs. Swine Flu: When Memes Collide

This has been an interesting week from a crowd psychology, behavioral economics point of view. The month-long hyping-up of the "green shoots", "glimmer of hope" meme, become quite formidable, at last came across a worthy opponent: the swine flu [that's apparently a politically incorrect way of naming it and so is Mexican flu: it should be called Influenza A (H1N1). Who said that? The WHO, that's who]. For a few days at least, the pesky upstart looked like it had a chance to unravel the rampant optimism that followed 6 months of utter despair in the financial markets. But the paucity of victims (so far) and depression-fatigue combined to defeat (so far) the pandemic meme in the news cycle as well as in the markets.  

Obviously, this is only the first round of a long fight. This flu virus will probably return later or become more lethal or both. The market is guaranteed not to keep going up at the torrid pace it has been since the 666 low in the S&P 500 (+30% in under two months) and the economy, if it indeed stopped worsening at a catastrophic pace, will not return to healthy growth any time soon. We can also be assured that more out-of-nowhere potential catastrophes will come and threaten any complacency that the worst is over and the only way from here is up. 

For a comparison of the swine flu and the "financial flu" and why we are much better prepared for the former than we ever were for the latter, read here. For a must-read interview of a head of state who aims, among other things, to be a "ruthless pragmatist" when it comes to the economy, read this. Speaking of which, I was very surprised to read an editorial by Thomas Donlan in today's Barron's that was kind of favorable to President O.'s policies in general and to the way the Chrysler situation was resolved in particular.  

Getting back to the Mexican swine A (H1N1) influenza virus, this great little NYT article will go a long way toward diffusing any sense of panic you may have.