Before you roll your eyes in desperation and think "this guy will pin everything on credit derivatives", hold on and read a bit more than the post's title.
Remember the post on correlation (gamma, γ) and how the simplistic way in which it was used by Wall Street financial engineers to calculate predicted loan "mortality" rates created the huge trouble in the securitization business (CDO, CLO, CPDO, SIV, etc.) - it being the proximate cause of the current global financial crisis? Well, the entire mathematical theory was lifted, warts and all, from epidemiology, i.e. the study of how communicative diseases (mostly viral in nature) spread.
Funny how the world works, eh?
Anyhow, I must also observe that we in financial markets seem to not be taking the swine flu situation seriously enough. The World Health Organization just went to Level 5 (out of 6) on its pandemic alert scale and we are just whistling past the graveyard, if you allow me the rather macabre simile.
Mexico is now officially shutting down its economy, telling everyone to stay home for five days. Infection is spreading fast to other countries, NYC is quickly becoming the US flu epicenter and.. what? We are acting as the villagers who think the wolf won't decimate the flock because previous avian flu and SARS alarms proved to be false. Three's the charmer, maybe?
I do not claim any knowledge of medical science; in fact, for those not familiar with Wall Street and London's City denizens, I should point out that we are rather pathetic when it comes to knowledge beyond our blinking screens. We simply encapsulate our existence in a self-created and self-perpetuated virtual existence of charts, graphs and numerical tables, thinking they tell all.
We do vacation in exotic (i.e. poor) locales - but always cocoon within the walls of five star resorts, sampling the local cuisine and whatever "culture" the resort manager allows to filter through during thematic "nights". The only sights of reality we get come as flickering images outside windows of speeding, air-conditioned taxis to and from airports. Oh yes, by and large we are a rather boorish lot. There are exceptions, but there are very few, trust me.
So, I am getting increasingly worried that the financial world, in its lack of real world understanding, is dismissing swine flu too easily and too lightly.
I fervently hope to be proven wrong very quickly.