FT Alphaville » Blog Archive » How the failure of Lehman Bros is like SARS, and swine flu
How the failure of Lehman Bros is like SARS, and swine flu
Posted by Tracy Alloway on Apr 28 12:18.
It’s not great timing, given the the outbreak of swine flu, but it is, nevertheless, the theme of the latest publication from the Bank of England.
From a transcript of a speech (with charts) by Andrew Haldane, executive director of the BoE’s Financial Stability unit:
On 16 November 2002, the first official case of Severe Acute Respiratory Syndrome (SARS) was recorded in Guangdong Province, China. Panic ensued. Uncertainty about its causes and contagious consequences brought many neighbouring economies across Asia to a standstill. Hotel occupancy rates in Hong Kong fell from over 80% to less than 15%, while among Beijing’s 5-star hotels occupancy rates fell below 2%.
Media and modern communications fed this frenzy and transmitted it across borders. In North America, parents kept their children from school in Toronto, longshoreman refused to unload a ship in Tacoma due to concerns about its crew and there was a boycott of large numbers of Chinese restaurants across the United States. Dr David Baltimore, Nobel prize winner in medicine, commented: “People clearly have reacted to it with a level of fear that is incommensurate with the size of the problem”.