Canadian Election

The Conservatives marched to a majority government by sweeping the election held May 2, 2011. PM Harper received a resounding mandate to govern for at least the next 4 years as the Canadian electorate rejected the Liberals reducing them to 3rd party status.

The headline news was the rise of the NDP to lead the Opposition with representation of over 100 seats in the House. This is unprecedented and more then doubled any previous number of seats it had ever held in any one session of Parliament since it's inception.

The Bloc Quebecois lost all but a handful of seats (3 or 4 depending upon re-counts) in Quebec as the NDP became the dominant party in that Province. The Green Party even managed to gain it's 1st seat ever in B.C. as it's leader now will be represented.

Canadians voted for stability; they affirmed the leadership of Harper & rejected Ignatieff. In fact Iggy lost his seat and has been put out to pasture as a lecturer at the University of Toronto. The Liberals seem to be in a quandry as they try & determine their future. Clearly they don't want Bob Rae as their leader as the Globe & Mail reports that they are planning on deferring any leadership decision for a year or more so as to avoid that eventuality.

The NDP were absolutely thrilled with their showing but, as many commentators noted, this strong showing took seats away from the Liberals & insured a majority government for the Conservatives. In fact, the NDP will yield less power now than they did in the last minority session. During the last Parliament the NDP held the balance of power and thus had significant influence on policy. Now, even though they have more than doubled their number of seats, they will have no influence. The Conservatives, with their majority, do not need the assitance of any other party to push their agenda. At least Leyton will have the loudest voice from the impotent minority side of the House as the leader of the Loyal Opposition.

I believe this is all good news for Canada.

How Markets Fail

Just finished a very informative, enlightening book called "How Markets Fail" by John Cassidy. This book traced economic principles from the time of John Stuart Mill and Adam Smith as they developed to create the atmosphere that resulted in the great collapse & bubble burst that started in 2007 and continues to today.

Cassidy is highly critical of Utopian Economics, the influence of the teachings from the University of Chicago School of Economics and the policies that resulted & were implemented by the "Maestro" Alan Greenspan.

Principles such as game theory, rational irrationality, invisible hand, prisoner's dilemma, myopic behavior, excessive risk taking and opacity vs. transparency were all part of the narrative. Very educational, very interesting but a challenging read.

Cassidy's conclusions were that we should be pursuing a robust financial system not by seeking the most advanced but rather by implementing the most reliable methods. He proposes a blend of the free-market and reasonable government regulation. He asserts that there are places where the government is required and best placed to monitor the market influences that could run amok should pure self interest be allowed full reign.

The final message of this book is that Utopian Economics must be replaced with reality-based economics. However, he was not all that hopeful that this could occur as traditional economic training is counter-productive for such a result. Academics are most comfortable with their mathematical models and are ill equipped to teach the reality based lessons that must be understood for the growth of practical economics. As a result his prediction is that we are destined to not learn from history but rather it will be repeated. There will be new bubbles and more dire consequences in the future.

In fact, as I write this entry there are opinions being communicated that we are on the verge of another bubble even larger than that from which we have just emerged and that the consequences will be even graver than we are currently enduring. In fact the commentators at Business Week are calling it the Granddaddy of all Bubbles .