Sinking Animal Spirits

There are many more pandemic threats than there are pandemics, and so I hope and expect that swine flu will run its course fairly quickly and without too much damage being done. Still, it's difficult to overstate how bad the timing is here. Not that there's ever a good time for a pandemic threat, but this particular point in the worst recession since the Great Depression is an especially bad time, for a couple of reasons. One is that people are certain to overreact, in ways that will be almost uniformly bad for the economy. Mexico City has become like a ghost town, it seems, with people staying indoors, and gathering places -- shops, restaurants, and bars -- closing their doors. It's unfortunate that the things which facilitate economic activity -- namely, the bringing of people together, are also the things that feed pandemics.