It is generally believed that government’s have less to do with assisting an economy and more to do with harming it. So the question you must ask yourself is which party would least harm our economy over the next four years?
In January of 2008 I sounded an alarm on my blog regarding financial markets and the economy in the US and Canada. None of the politicians heard the alarm. The Harper conservatives are still downplaying the impact the failing US economy will have on Canada. Harper argues that the fundamentals of our economy are strong. That is the same argument the conservatives in the US are making, but Harper has never defined the fundamentals of an economy. It is my belief that very few voters have any sense of just what the fundamentals of an economy really are and Harper should have explained to the voters his definition of the fundamentals of an economy.
Economic fundamentals is a broad term which includes economic measures as interest rates, the government’s budget deficit, the country’s balance of trade account (relating to exports and imports), the level of domestic business confidence, the inflation rate, the state of (and confidence in) the banking and wider financial sector and consumer confidence. Now consider the economy in North America with this definition in mind.
The US Senate is staring at a $700 billion plus bailout decision of financial institutions. It could reach a trillion before it is all over. Granted our financial institutions and banks are better regulated than in the US, but we are still at some significant risk as this milestone meltdown in the financial markets plays out. Harper, Dion and Layton all continue to play the argument that we are better off than the US and that our situation here is different and that we should not worry. Well, that sounds good but the US economy performed better than Canada over the last year and their economic growth from June 30, 2007 to June 30, 2008 was 2.2 % compared to our 0.06%. The US is not statistically in a recession, but with US consumers beginning to realize the plight of their situation spending may soon come to an abrupt halt. They represent 75% of the American economy and their shattered confidence could push the US into a statistical recession, which is specifically a decline in the GDP for two consecutive quarters.
The stock markets are a key indicator of things to come in the financial market place and are usually six months ahead of the trend. Economists believe consumers are set to stop spending and in Canada stock markets are near their worst point. The US economy will flood over into Canada and is expected to hit Canada over the next month or two if trends continue the same in the US. This will hit every aspect of our economic fundamentals that our politicians argue are sound.
Interestingly, the impact on Canada will take place long after the election on October 14, 2008. This allows the politicians on the campaign trail to tell you anything they want and the voters are not well positioned to argue what they are being told as it relates to our economy. I can tell you that there is every indication that we are in for a rough ride given the current trends. This campaign has been more about trash talk than a serious debate on the issues that matter to Canadians like the economy, infrastructure, health care, the environment and education. When you go to the polls be sure to ask yourself who will least harm our economy? Who will best speak for Canada, manage our economy and the real issues that matter to all Canadians? The party with a proven record and the leadership to perform in tough times will be your best choice.