MEXICO AND SWINE FLU.

xin_38204062612518281987123.jpgSwine flu is obviously a bad thing. But it's a bad thing with outrageously bad timing. Mexico, in particular, was in economic trouble before. The situation is dire now. The sort of policies you implement to quarantine a disease are the reverse of the sort of policies you implement to grow an economy. One requires an acceleration of transactions. The other requires a cessation of them.

According to The Financial Times, Mexico is thinking of "shutting down" the country's capital. The immediate next step, according to the mayor, will be to close the transportation network. Restaurants that can hold more than 50 people have been barred from opening for business. Factory shifts are going to stagger and slow so fewer people are crowded into one place at one time. You can imagine what's happened to tourism. The recession had already slowed Mexico's economy. Now swine flu is going to bring it to a stop. And if Mexico goes down, that of course has major ripple effects on other countries and markets. It's a bad scene.

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