Friday, July 17, 2009

Swine flu and deflation

H1N1 flu seen prolonging, deepening UK recession

This article makes the point that swine flu "could tip Britain's economy into a downward deflationary spiral", but I cannot see how this can possibly be true. People staying at home and not working, or dying, is not going to reduce prices ! I read this view a few times before but absolute rubbish IMO. I hope as many as possible are not affected by swine flu, this is a reminder of the "real world" our government seem to have closed their eyes to.

Posted by stillthinking @ 10:30 PM (1206 views)
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9 thoughts on “Swine flu and deflation

  • montesquieu says:

    If we really do see 20million people affected, 100,000 dead (as predicted today) then it’s hard to see there WON’T be an economic impact. In fact the economic impact was my very first thought when I heard about swine flu back in April.

    If a rainy month at the wrong time can hit retail sales by 5%, or an early easter or dismal bank holiday weekend have a measurable effect on GDP for the quarter, then surely all those millions of people not working, driving, shopping, eating out for minimum of a week can’t fail to have an impact? It’s a no-brainer surely. Meanwhile if margins are tight (and they are where I work) then even a small drop in footfall (and consequently revenue) can have a disproportionate impact on cashflow, to say nothing of the need companies will have to pay overtime to cover sickness. Extra dead people will probably have a bit of an effect as well.

    Anyone care to put a number on this effect?

    Oh and despite some of the foamings at the mouth over at on the forum (which I dip in and out of but it’s really quite a nasty, unpleasant place), I don’t believe the ‘is it deflation/inflation/something horrible and new coming’ debate is remotely settled. If QE becomes impossible due to bond markets and other factors, then deflation remains a possibility IMO and a season of depressed activity in the economy could well make that more likely.

    Whatever happens swine flu will certainly work as a good dose of weedkiller on those supposed green shoots.

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  • shipbuilder says:

    I love it when such things get linked to the economy in the media. Suddenly we all get to see where the priorities of our business and political heads lie.

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  • .. and if the effects are far less severe it will still be blamed for “unexpectedly long” recession

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  • Let them make their excuses; it doesn’t really change anything.

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  • Slightly off-message, but what is it with this ‘flu? Some 29 deaths are attributed to it so far in the UK, out of around 55,000 infections. That’s 0.05%. Without wishing to belittle the matter in any way, the strain causing the global pandemic of 1918 is thought to have had a fatality rate of 2.5-5% (5% would equate to 2,750 deaths today).

    Around 0.01% of those who received the enforced vaccination in the US in 1976 are suing for side effects of the vaccination:

    http://www.dailymotion.com/video/x9mh9f_swine-flu-1976-propaganda_webcam

    The vaccination they’re preparing for this current outbreak is woefully (but not surprisingly) under-tested (but Baxter is sitting pretty):

    http://www.timesonline.co.uk/tol/news/uk/health/article6690010.ece

    The community needs to build up natural immunity, or in the event that a really virulent strain arises, we’ll be horribly vulnerable. So I hope workers don’t stay at home but go about their business as usual.

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  • Swine flu is certainly no more serious than any other flu. My family of four had it all at the same time last month, and we were all past it in under a week. I’d rather have H1N1 than standard flu, which renders one nearly unable to move. Swine flu, while unpleasant, allows one to walk around.
    Bird flu, on the other hand, were it to mutate to enable human-to-human transmission, would cause a worldwide depression. Its fatality rate is quite high.

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  • #1 I concur.

    Our children’s school is drawing up plans [under government orders] to have children stay at home in the event that many teachers are off with flu next term.
    The accumulative effect then of parents taking time off to supervise and then health care workers, train drivers etc also will have quiet an impact.
    That impact will be felt and given how delicatly poised the economy is it is hard to predict what will happen.
    All know is I would probably not be rushing out to buy a new kitchen/car/house…

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  • Surely swine flu will hit the elderly more, who are not classed as contributors to the economy. The burden on the state and the pension funds might be lifted somewhat because of this. Of course, this may well bring many more properties onto the Market as their children sell the inherited houses to make ends meet.

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  • If swine flu did kick into high gear I think it would certainly have an economic effect, but I think it and green shoots are the non-stories of the year.

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