Quick Update: Swine Flu in Japan

A few days ago I made a post about the effects of the swine flu on the Indian economy.

Today, the Japanese Health Minister has declared that the swine flu has reached pandemic levels in Japan after a third death in the nation from the virus.

At the moment, it doesn't appear as if the virus is having the same major effects on the economy that it had in Mumbai and other parts of India. That doesn't mean that it won't in the near future, however. The Health Ministry might be accurate and the virus could spread at pandemic levels. Or, the Health Ministry might be blowing smoke and being extra cautious. Even then, the media attention has the capability of transforming this into something larger and keeping people away from public places (and thereby from consumption).

In one of my previous posts, I commented on how stock markets are often driven more by psychology than by economic fundamentals. If history serves as a guide, then I would not be surprised in the least if this news affects Japanese investors and drives prices down, if only temporarily. Recently, negative economic news out of China and Japan hurt stock prices in the United States and Europe. That presents a pretty negative prospect, but that's reality in this global economy.

Keep in mind, I'm not predicting a decline in stock prices. Like I said in a previous post, I don't focus on the stock market, I prefer to try and gauge how the so-called "real economy" is doing. I'm merely pointing out that this swine flu is something to keep an eye on, since it definitely has the prospect of affecting economies.