Canada's Snap Election Could Affect ETF

Canadian Prime Minister Stephen Harper has called a snap election, sending voters to the polls for an October 14 vote that will largely focus on an uncertain economy. The results may influence the iShares MSCI Canada ETF (EWC) which looks a bit rich relative to declining commodity prices and a slowing economy.

“Between now and October 14, Canadians will choose a government to defend their interests at a time of economic instability around the world,” Mr. Harper said on Sunday after asking the governor-general to dissolve Canada's 39th parliament.

Christopher Mason of the Financial Times reports that in recent weeks Mr Harper had repeatedly argued that his government, which holds a minority of seats in the House of Commons, was unable to function properly.

Falling US demand for goods and unstable commodity prices have stalled Canada’s economy. It grew only 0.1% in the second quarter, after contracting in the first quarter.

Economists predict the slump will continue well into next year, which likely influenced Mr Harper’s decision to call a vote now before a weak economy further overshadows his government’s agenda.

Mr. Harper will also argue that at a time of economic uncertainty, voters should not risk electing a different leader. After years of prosperity and annual budget surpluses that date back to 1997, government spending has increased dramatically.

It's Canada's fifth general election in 11 years and the third in just over four, dating back to June 2004, when a 25-year spell of successive majority governments ended.

With five parties now represented in the House of Commons and the separatist Bloc squatting on 15% of all federal seats, winning a clear parliamentary majority of 155 MPs appears out of reach.

No offense, but I'll take a two-party political system like the US any day of the week over unwieldy coalition governments.

Comments

[mdmrjsds:]

Thanks for the information.

A comment on the following statement by you:
...No offense, but I'll take a two-party political system like the US any day of the week over unwieldy coalition governments....

There is much positive about a two party system, particularly its stability. But a couple of comments on this.

We have the coalitions, they just aren't called parties. The congressional Nose Picking caucus, the congressional Sleep with Eyes Open caucus, etc. These are jokes, but there are groups that cross party lines based on other factors. And they horse trade just like the coalition governments do in other countries.

While two party systems are very stable, they can descend into stagnation. The world has changed a lot in the last 100 years. But the form of the US government hasn't really changed with it. The two party system has locked out change. I know that third parties can participate, but the two parties have so institutionalized themselves that in practical terms it is next to impossible for a third party to arise. It was common until the early 20th century for there to be more than two parties in America. And incumbents actually lost their seats in congress. Hard to believe, isn't it? It seems we promote competition except in our political system.

My thought is that our system needs a little juicing.

12 years max at a stretch in congress, then you have to sit out for 6 before you can run again.

And 20 year terms for the Supreme court justices, a new one appointed every 2 years, learns the ropes for two years, then sits for 18, moving up in seniority every 2 years.

The whole way we create currency and manage the economy has to be revamped. Maybe the federal reserve and benchmark interest rate was the best they could do 100 years ago, and maybe they needed to give freebies to the member banks then, but we can do much better now.

Could radical changes like these occur under our present two party system? Not a chance. We'll march to disaster with the band playing loudly.

2008 Sep 09 01:10 PM

[Caltorguy:]

Canada has almost never had coalition governments - our "first past the post" electoral system (like England's) is designed to produce majority governments that control parliament and usually does. You only need to have a plurality of voters in a majority of ridings (electoral districts) to win, which with 5 parties can be as little as 30% (but is usually 40% or so). Harper got 36% last time around - he is hoping to get 40% this time which would give him his majority. In Canada it is hard to imagine a centre-right government getting 50% or more.

2008 Sep 09 04:41 PM

[noam:]

If Canadian Royalty Trusts will be on the agenda in this election, we could see some steep rises in their sp.

2008 Sep 09 04:43 PM

[specks:]

Our parties, like the vastness of our country, have quite divergent philosophies!
Unfortunately, at the same time, the parties are still run by lawyers and well to do politicians!
Of course, not all lawyers are politicians and thank-God for that.

2008 Sep 09 05:25 PM

[dynacode:]

A conservative majority government is possible for Mr. Harper if he can convince Ontarians to back him up. But Ontarians have a difficulty to accept Mr. Harper, a right-wing westerner. The Libs made a poor choice with Mr. Dion, and I do not see Mr. Harper making big gains in Quebec. My bet is Mr. Harper getting a majority by the skin of the teeth, like 156 ridings if almost everything goes well in his campain. I am French-speaking Quebecer, and I wont vote C.

2008 Sep 09 11:02 PM

[john s. gordon:]

this will be fun to watch. elections canada runs a tight efficient ship with none of the 2000 florida fiascoes & hanging chads etc.
> jack

2008 Sep 10 08:28 AM