birdflu pandemic could trigger second depression:

Pandemic could trigger second Depression:

One of the biggest brokerage firms in Canada is sounding an alarm over the potential economic disaster that could result from an influenza pandemic.

Avian influenza has killed more than 50 people in Asia over the last two years and has led to the cull of millions of birds.

Now, financial experts are urging Canadian businesses to work with governments to prevent the spread of bird flu should it blow into a pandemic, and take measures to prevent a crisis that could reach the heights of the Great Depression.

In what's thought to be the first report of its kind, BMO Nesbitt Burns has issued a document, titled An Investor's Guide to Avian Flu.

The firm said its goal was twofold: to encourage the business community to get involved in planning and helping finance efforts to limit the effects of a possible pandemic; and to get Canadians to reconsider their buoyant optimism in the market.

""I think it's important to highlight the potential risk," said Sherri Cooper, the report's co-author and chief economist and executive vice-president of BMO Financial Group.

"I'm not trying to assess the probably of a pandemic. But it's out there, and it's frightening," she told CTV News.

Some of the repercussions projected in the report, were a pandemic were to break out, include:

A dramatic slowdown in the economy, equal to the Great Depression. A rampant decline in spending would result from people panicking, which would put a sudden stop in spending.
High levels of unemployment, with many people unable to work.
Travel restrictions on the free-flow of goods and people across borders. "In a world that depends so heavily on global trade, this would have a very damaging effect on economic activity," said Cooper.
A collapse in the housing market.
The report adds if there were to be a serious pandemic that leads to high death rates, a surge in housing supply would be met with a reduction in demand. "And just like during the Depression, there would be a collapse in real estate values," said Cooper.

According to the report, those who have saved their money would be able to then buy property cheaply. But Cooper said too many Canadians these days are over-leveraged, and saddled with too much debt: "And if something goes wrong in their personal income flow, they're vulnerable."

Cooper wrote the report with Donald Coxe, a global portfolio strategist for BMO Financial Group. They advise Canadians to invest conservatively and exercise prudence in their financial life.

"Stop buying things that you can't afford to buy," Cooper said. "Pay down your debt with that little bit of extra money that you may have at the end of the month.

Joseph D'Cruz, of Toronto's Rotman School of Management, said his initial reaction to the report was that it was "somewhat sensational." But he told CTV News that he believes its fundamental ideas could prove to be practical, as "there is a small possibility things will work out the way this report presents."

Public health officials, meanwhile, seem to support the warning from the financial sector.

"I would strongly urge businesses to work with local government and emergency teams to plan for the impact of a pandemic influenza," said Dr. Arlene King, the Public Health Agency of Canada's director of immunization and respiratory infectious diseases division.

King added that the BMO plan isn't alarmist. "It's good planning," she told CTV News. She said business leaders need to identify the critical functions of their operations and to have contingency plans in place for an emergency.

King mentions teleworking -- where an employee can work from home, communicating electronically with the office -- as one example of a plan, "where people can stay home and still function. But not necessarily in the workplace."

The World Health Organization and public health leaders have been warning for some time that the world may be on the verge of a pandemic -- the first since 1968.

Adding considerably to their concern is the fact that the strain they fear will trigger a pandemic, the H5N1 avian flu ravaging poultry flocks of Southeast Asia, is highly virulent.

The report urges governments of the world's wealthiest nations to provide the resources necessary to countries in Asia where the bird flu epidemic has already taken hold.

"In today's world, the economy is borderless and so are public health and terrorism risks. Forget the 'each-man-for-himself' psychology of protectionist and anti-globalization rhetoric," reads the report.

"Like it or not, we are all in this together, and we are all dragged downward by the weakest links."