Level 6 Flu Pandemic Announced: Force Majeure Declared?

The World Health Organization (WHO) has announced a Level 6 flu pandemic, which may prompt many businesses to call a force majeure on their contracts.

The Level 6 pandemic is being called by WHO because the swine flu (H1N1 virus) has developed into an out-of-control, world-wide pandemic and drastic measures must be taken.

The announcement came at 10:00 GMT in a closed-door meeting emergency meeting in Geneva, Switzerland. It is the first time a Level 6 pandemic has been announced in 41 years, the last time being the Hong Kong flu of 1968 which killed 1 million people.

A Level 6 pandemic is also found in many business contracts, under the force majeure clause. A force measure usually indicates an Act of God, be it earthquake, landslide, or any other act beyond human control.

A force majeure clause is usually placed into business contracts to allow one or more parties in a contract to stop meeting their obligations for that contract, because a situation has occurred that is beyond everyone’s control. Pandemics are typically listed as reasons for calling a force majeure.

This coincides nicely with next Friday’s Quadruple Witching Hour, which occurs when the expiration of open contracts coincide with the expiration of options and the expiration of single stock futures (SSFs). Quadruple Witching Hours naturally occur on the third Friday of March, June, September, and December.

The announcement of the Level 6 pandemic may be the excuse to trigger the force majeure clauses in all these contracts, as the stock and bond markets have been struggling to hold their own in the volatile economic worldwide downturn over the last few months. Should this occur en masse, the economy would tank suddenly, most likely the following week or next.

Should this diversionary tactic occur, it should be noted that the Level 6 pandemic was not the trigger, but rather the greed and outright theft that has taken place in corporate and banking worlds to the tune of trillions of dollars.

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