Tuesday, September 30, 2008

Yikes!!

So I arrive at my in-laws yesterday for Rosh Hashanah and my father-in-law drags me down to the family room to see the results of the House vote on the $700 billion bailout package. You see the vote took place as my wife and I drove from Ottawa to Montreal.

What does it all mean? Despite the hemmings and hawings from all of the "experts" that were in fine form after the failed vote it is too early to tell. We have seen these market meltdowns before and they have rarely amounted to much beyond Wall Street and Bay Street.

It is true that this meltdown combined with the credit crunch, resulting in bank failures, are eerily similar to the conditions in 1929. However, those events were helped along by the governments of the big economies of the day when they reacted with protectionism. Fortunately no government is talking about raising trade barriers this time.

All that being said I am very happy that my wife and I are currently debt free.

How will this impact the elections in both Canada and the US?

Well judging from the rhetoric from Republican members of Congress yesterday it would appear they expect to wear this failure. I suspect they may be right. Barring a major error on Senator Obama's part I believe he has the momentum to take him into the White House.

In Canada, the events of yesterday could help the Conservatives. For whatever reason Canadians seem to believe Conservatives are better shepards in bad economic times. It defies reality and history has proven that but that really does not matter. As well, this could be very bad news for the NDP. Canadians firmly believe they cannot be trusted on the economy and the events of yesterday could remind them of that. As well, the Greens could take a hit. In times of economic uncertainty fringe parties like them lose support as voters decide to stick with those with a proven track record to govern. In this country that is the Liberals and the Progressive Conservatives. (That was not a mistake).

The remaining days of this campaign could very well come down to a showdown between the Liberals and the Conservatives.

So the Liberals should pound the Conservatives on blowing the surplus and they should use Paul Martin to do it. Get him out there accusing the Conservatives of destroying what he and Canadians spent so many years building. The Liberals have a stellar track record when it comes to the economy and the Liberals should be using the one who created that record to remind Canadians of that fact.

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