Today is a holiday in much of the world. But not in London. For some reason, the English are celebrating May 1st on May 4th. Go figure.

Here at the Daily Reckoning headquarters, however, we keep our eyes open 24/7 – well, unless we are on vacation…or sleeping…or having dinner…or have something better to do.

What we’ve been watching is a bear market rally. Stocks have bounced…and with them good news is beginning to appear. Commentators keep saying that “maybe the worst is behind us.” Analysts keep claiming they see “signs of a recovery.” Economists think the results are “better than expected.”

All over the world, people are breathing a sigh of relief. The end of the world did not come. Asian economies are still growing. Even with GDP falling at a 6% annual rate in the U.S.A., unemployment seems to be moderating…and house prices are falling not quite as fast as they were a few months ago.

Yesterday, the Dow fell 17 points. Oil traded at $51. The dollar dipped a bit – to trade at $1.32 per euro. And gold gave up $9 – ending the day at $891.

Hallelujah! Things seem to be coming back to ‘normal.’ No more 500-point drops in the Dow. No more oil at $149. No more nerve-shattering bankruptcies.

We will consider whether it is time to stand down or not in future Daily Reckonings. Today, we pause briefly to consider what it cost.

In the news this week, the headlines were dominated by the swine flu. Each day, the death count mounted. Each day, new cases were reported in new places. And each day, the world seemed to come closer to a pandemic that would take millions of walking, talking Homo sapiens and lay them silently under the ground. Almost every day, we were reminded of how much damage the last big pandemic – 1918-1921 – did. Thirty to fifty million was its toll, we were told…along with the additional warning that “major epidemics seem to strike every hundred years or so.” Even math-challenged Americans could figure out that their time might have come…

Included in the panicky chatter were announcements, warnings, and provocations from the various health authorities. The ‘alert level’ was raised to 5 (on a six-point scale)…travelers’ advisories were posted…the World Health Organization pestered member states to beef up their stocks of vaccines and to put in place preventive measures. “Wash your hands,” said one doctor. “Cover your nose and mouth with a mask,” said another. “Run for the hills,” said a joker.

The actual price in lives has been very, very modest. Thousands of people die from flu and colds every year. Still, people go about their business. They sneeze on the subway…they accept change from vendors in bare hands…they sit next to coughing passengers on airplanes. Life goes on.

But this new strain of flu spooked them badly. They feared it might be like the plague…a curse from the gods that could exterminate millions for their wicked ways. Humanity itself seemed at risk.

Yet, in response to the threat of extermination, the Obama government has proposed to spend $1.5 billion. By our calculations, that is approximately 0.0001% of the amount the feds are spending to fight capitalism’s correction.

Why is the threat of death less disagreeable than the threat of letting capitalism do her work? We don’t know.

The feds may be reluctant to spend on the swine flu because they are unsure about how bad it will be…and unsure how much they can do to prevent it. But couldn’t the same thing be said of the swinish financial correction? Of course it could.

The feds have no idea what they are doing. All they have is a crackpot theory…and some guesses. And yet…on the basis of these fantasies…they are spending an amount equal to the nation’s entire annual output.

*** Chrysler has gone broke. Meanwhile, over at GM, the new owners – the feds and the unions – are already working hard to bring the automaker into line with the new patrons’ program.

In a special press conference yesterday, UAW bosses joined hands with federal bureaucrats, and announced a “Five Year Plan”, which they predicted would be a “great leap forward” for the automotive industry and for Detroit.

“The first thing we have to do,” we imagine the declaration to say, “is to redesign the automobiles so they will be more easily turned out…and will be more in keeping with their new mission. We will dispense with the many different colors GM has used in recent years. In our view, they only encourage bourgeois egoism. In the future, all the automobiles will be gray. And there will be two models – one for the workers…and another, a luxury model, which will be reserved for politicians, apparatchiks and union bosses.

“Our objective is to produce solid, safe automobiles…while also providing employment for the workers. We will make some improvements on the assembly-line techniques. Each automobile will be assigned to a team of nurturing workers who will put the parts together between union meetings and lobbying activities. Consumers will be given a number. They will be notified when their automobile is ready.

“Marketing costs will be reduced by requiring customers to stand in line for a very long time, before they are allowed to pay – in cash – and take a number. Then, they will wait a very long time for delivery of their automobile.

“Congress, meanwhile, has agreed to pass legislation limiting the number of autos that may be imported from abroad to two vehicles per year – one for the UAW president…the other for Michelle Obama.”

“That idea of ‘decoupling’ was not all wrong,” explained French MoneyWeek editor Simone Wapler a few days ago. “You remember…the emerging markets were thought to be immune from the excesses of the developed countries. Even if there was a major correction in the United States, Britain, and France, for example, investors thought China would be untouched.

“Well, it turned out to be nonsense. Stock markets in the emerging markets actually got hit harder than those in the developed countries. So there was no decoupling in a financial sense; they all went down together. Investors lost money…they panicked…and they pulled their money out of all risky investments. The only safe place to have your money during the panic was in the U.S. dollar.

“But now, more than 6 months has gone by. And it appears that the ‘decoupling’ idea does work at an economic level. The United States and Germany are both in recession – with GDP retreating at 6% per year. Japan is imploding…with a negative trade balance for the first time in more than a quarter of a century. But India, China and other emerging markets are still growing. Consumer spending is up in China – at a 15% rate. And this year, more autos will be sold in China than in the United States – for the first time ever. And just look where those autos are made – in China, of course. So, they seem to be doing just what we predicted they would do – shifting their industries from export to domestic sales…and counting on rising consumer spending in their own countries to make up for lost sales overseas.”

“Is it time to get back into emerging markets?” we asked.

“Yes…maybe… But you’ve got to have a long-term outlook. Three…five…ten years. Companies are growing fast. Sooner or later, those sales…and the growth…are bound to be reflected in rising stock prices.”

Our old friend, Marc Faber – recently back from Beijing – added this:

“I can assure my readers that social, political and economic conditions in China have improved enormously in the last 20 years or so, and that, aside from the current temporary economic setbacks, the country’s progress and development is almost unstoppable (as was the case in the U.S. in the 19th and the first part of the 20th centuries.)”

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.