[R-G] Canada needs massive stimulus; Billionaire investor says gov't action needed to offset

[Anthony Fenton]

Canada needs massive stimulus; Billionaire investor says gov't action  
needed to offset damaging greed
Anonymous. The Times - Transcript. Moncton, N.B.: Dec 4, 2008. pg. C.2

(Copyright 2008 Times & Transcript (Moncton))

Canada needs a government that provides massive stimulus to diminish  
the recessionary harm to the economy caused by enormous greed,  
billionaire investor Stephen Jarislowsky said yesterday.

In a speech to the Montreal Board of Trade, the investment guru said  
Canada must conduct massive infrastructure spending and be prepared to  
provide increased social support for the unemployed.

While refusing to take sides on the political battle in Ottawa over  
who should form the federal government -- the Conservatives or the  
Liberal-New Democrat coalition that's seeking to replace them --  
Jarislowsky said an election now would be "absolutely foolish."

"What's needed now is a general coalition of all parties to deal with  
this economic problem," he told reporters following his speech.

"We need to have plans for a very, very tough period ahead and the  
government should operate on that on a non-political basis."

He said even spending $30 billion on stimulus would be totally  
insufficient, but declined to put his own price tag to maintain a  
stable economy.

"Contrary to Mr. Harper, if you don't spend that kind of amount and if  
you don't print that enormous amount of money, you're going to deepen  
the recession. So it has to be done," Jarislowsky said.

Jarislowsky said the global financial crisis, which he dubbed a  
balance- sheet depression, has been fuelled by extreme greed and that  
politicians, bankers, corporate boards and CEOs failed to learn  
lessons of the past.

"I feel certain, especially today, that a disconnect with the past  
largely explains the disaster we are now facing," Jarislowsky said,  
noting that bad economic times are needed every three to four years to  
keep greed in check.

In addition to criticizing U.S. President George W. Bush over the Iraq  
war, Jarislowsky said government officials deserve some of the blame  
for the economic crisis.

He singled out former Federal Reserve chairman Allan Greenspan for  
trusting market forces that created a destructive housing bubble by  
making it too easy and too inexpensive to borrow.

Housing prices far exceeded the long-term sustainable increases of  
inflation plus the productivity of a country, Jarislowsky said.

Canada's housing mess may not be as deep as in the United States, but  
prices are 30 per cent overvalued, he said.

Earlier Wednesday, the ReMax realtor organization said in its annual  
outlook that it expects Canadian housing prices will decline this year  
and next, resulting in a five per cent decline from 2007 levels by the  
end of 2009. Jarislowsky said Canada need not wait for the incoming  
U.S. administration to develop a realistic plan to combat various  
possible scenarios that may surface.

Bailing out auto manufacturers like General Motors doesn't make sense  
unless it's accompanied by union wage concessions, he said. Supporting  
banks is necessary, however, to maintain public confidence in the  
institutions and avoid massive withdrawal of funds.