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We see immediate damages to the world’s poultry and livestock. We see billions being allocated to preparedness. And we can already begin to detect investor fear — both rational and irrational — striking financial markets. In response, my family and I have begun making advance preparations, and I think you should too. I’ve asked my son Anthony to learn everything he can about the Spanish flu pandemic of 1918, and he’s become quite an expert on the subject. I’m recommending that Elisabeth help assemble a task force at the Weiss School, our elementary and middle school for gifted children here in Palm Beach Gardens. And I’m going to personally lead the effort at our other Weiss companies — both for our own sake and for the sake of our subscribers. I’ll keep you up to date as we go. And I’ll do my best to share with you what we learn along the way. But I can already tell you the first thing I’ve learned about this crisis: Not to wait any longer. Why I Sometimes Feel Like I first recognized the frightening magnitude of the bird flu threat when it appeared in some scientific journals many months ago. But I didn’t lift a finger to act on my concerns. I suppose the main reason was because I just was too darn complacent. Plus, I wasn’t strong enough to overcome the resistance I got from all sides. “It’s just another false alarm, like SARS,†said one associate. “Remember Y2K?†remarked another. “They said that was going to be the end of the world. And what happened? Nothing!†Elisabeth was the most blunt. “Why are you always trying to conjure up the next big disaster?†she asked, poking at my notoriously bearish tendencies. “Aren’t there already enough real disasters in the world today?†Many Fearful Facts and Brace yourself. In the months ahead, you’re going to be bombarded with such a barrage of information and opinion about the avian flu it will make your head swim. But some of it will be off the deep end, coming from a radical fringe. And that’s too bad. Because it will cloud and discredit the truth, which, alas, is already many times more threatening than most people think. Here are just two examples of exaggerated or misleading commentary that you should be wary of:
What’s not factual about this article? Nothing. The killer virus it describes may indeed appear — someday. But prominently posting this 6-year-old article on a page that’s devoted to today’s bird flu is misleading. The deadly Ebola-type virus it’s describing is inconsistent with the known facts about the strain of avian flu that’s of such intense concern right now: “H5N1.†The H5N1 virus is not yet transmitted from human to human. And when it does become more contagious, it may also lose some of its potency, killing a smaller percentage of its victims. What We Know … And What Fact #1: It’s not SARS. The spread of SARS (Severe Acute Respiratory Syndrome) in 2003 may be helpful in modeling the social and financial impacts of an epidemic in today’s global economy. But SARS was a very different kind of disease. So the fact that it was quickly contained is irrelevant. Fact #2: It’s not the Y2K bug. The Y2K bug was strictly a computer glitch affecting machines, with most of the publicity generated by a radical fringe. In contrast, the avian flu is a real bug afflicting animals and humans, with no room for radical fringes.
These include the UN’s World Health Organization (WHO) … The U.S. Government’s Centers for Disease Control and Prevention (CDC) … Plus the UN’s World Bank. Each has its own avian flu website which I’d invite you to explore. Each is mobilizing massive human and financial resources to get ready as soon as possible. And each is joining with other organizations right here and now. Indeed, just this past Thursday, European Union officials met to pledge $100 million to help combat the spread of the potentially deadly virus in developing nations. Just about 12 hours from now, 500 world leaders — including Chinese Premier Wen Jiabao, top U.N. officials, and representatives from over 20 health organizations — will be convening in Beijing, China, to raise at least ten times more. The event: The International Pledging Conference on Avian and Human Influenza. The message to the world (clearly implicit in the name of the conference): This is not just about birds. Fact #3: There’s no time to waste. Officials unanimously agree that the time for vague forecasts and heated debates is behind us. We already had good data from East Asia. Now, we’re getting even more critical data from Turkey, the new epicenter of the pandemic. This evidence is more than enough to recognize both the immediacy and the intensity of the danger … and to justify substantial time and money spent on preparedness. Fact #4: It will impact your life and the life of your family. It will disrupt your home, your job, your company. It may also bring death. The only thing that remains uncertain is precisely when and to what degree. Fact #5: It’s already impacting your money. The impact on your investments could come sooner and with greater force than the actual disease itself, due to several factors:
Now, here are the uncertainties … Uncertainty #1: When. Scientists are certain that the pandemic now evident among birds will transform itself into a pandemic that spreads among humans. But they’re clueless as to when. It could take years. Or it could be happening right now in an unnamed village of Eastern Turkey or an unknown corner of China. Uncertainty #2: How deadly. Estimates of the number of deaths range from a few million (probably too optimistic) … to 150 million (perhaps closer to the mark) … to as many as “billions†(too pessimistic, in my view). But even in the best-case scenario, the number of estimated hospital visits is far greater … threatening to quickly overwhelm health care systems even in the world’s most advanced nations. Add in scenarios for massive absenteeism at the workplace … widespread disruptions to the distribution of critical supplies (especially life-saving medicines) … and the impact is potentially mind-boggling. Uncertainty #3: How much damage to the economy. The World Bank’s scenario — a loss of two percentage points in global GDP for a year — is just one estimate, and it’s based on a series of shaky assumptions that could easily be blown away in either direction. If the pandemic is contained largely to developing nations, the affect on the world economy will be milder. But all it would take is supply disruptions to a handful of critical resources — such as oil or copper — and instead of a 2% hit to GDP, we could be looking at five or ten times that much. Uncertainty #4: How much damage to financial markets. This is the greatest wildcard of all, driven as much by fear as by reality. Indeed, while … World health officials will be making every effort to spread rational fears of the pandemic as a form of prevention … World banking authorities will be scrambling to contain the irrational fears of the pandemic that will inevitably flow from the health officials’ efforts. Bottom line: Widespread fears among investors are inevitable, and not all of them will be irrational. This could open a Pandora’s box of market volatility:
Uncertainty #5: The self-fulfilling prophecy. We see this frequently in the financial markets: Investors anticipate a market decline. They sell. They help trigger the very market decline they anticipated. And then they sell still more. Or … Investors fear that a pandemic will drive gold prices through the roof. They buy gold. Their buying does just that — driving gold prices through the roof. So they panic and buy even more. This ebb and flow of greed and fear is what creates bubbles and busts. And it’s also what pushes prices far beyond what any economist or econometric model would normally anticipate. So as the fear of the pandemic spreads, you can expect some of the most Uncertainty #6: The self-negating prophecy. One reason the Y2K bug turned out to be so much milder than feared was precisely because the fear of Y2K was so much stronger than anyone dreamed possible, stimulating a concerted effort to prevent the disaster. Similarly, the main reason SARS was so quickly contained is because, after China’s initial ostrich-in-the-sand response, the widely believed prophecy of a global pandemic was so instrumental in preventing the prophecy from coming true. How much of that benefit will prophecies of a pandemic buy us with the avian flu? We don’t know. That, in essence, is what makes the future so unpredictable. Indeed, the more clearly we can see and articulate our vision of a future human disaster, the less likely that disaster will be. That’s the principle of the self-negating prophecy, and I pray that it will be the overriding principle in the pandemic now on the horizon. Good luck and God bless!
Even before the spreading fears of a pandemic, it was already moving much higher and doing so more swiftly. Now, it’s anyone’s guess as to how quickly it will surge. For both your protection and your wealth-building, I suggest jumping on it now, not later. And for maximum leverage with the least capital exposure or risk, I recommend you look into Sean’s small-cap mines. Today is the last day for joining before he issues his red-hot mining recommendations tomorrow. So be sure to call 800-400-6916 or click here before midnight tonight. About MONEY AND MARKETS MONEY AND MARKETS (MAM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Larry Edelson, Tony Sagami and other contributors. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MAM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MAM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Contributors include Marie Albin, John Burke, Beth Cain, Amber Dakar, Michael Larson, Monica Lewman-Garcia, Julie Trudeau and others.
© 2006 by Weiss Research, Inc. All rights reserved. |
Avian Flu: Fact and Fear
The avian flu is not yet a human pandemic. But it is already about to impact your money and your investments. 
Rather, the campaign to warn you is being spearheaded by the world’s most respected scientists and research organizations.
P.S. Among all the gut-wrenching uncertainties, the one near-certainty emerging from the fog is gold. Previous post: Big Money Being Made … and Lost
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