A Second Depression?

Could an avian flu pandemic trigger a second Depression? 

The Bank of Montreal and its BMO Financial Group think so.

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

HT to Instapundit