Liberals Fall Further Back in Canadian Election Race

(Update1)

June 8 (Bloomberg) -- Canada's opposition Conservative Party widened its lead over the governing Liberal Party with 20 days to go before a federal election, polling by Toronto-based SES Research showed.

Stephen Harper's Conservatives were the choice of 35 percent of 600 potential voters surveyed June 5-7, compared with 31 percent for the Liberals of Prime Minister Paul Martin, SES said in a press release. The Conservatives, who want tax cuts, took a 2-point lead in the survey yesterday over the Liberals, who have promised to spend more on health care. The poll's margin of error is 4.1 percentage points.

The results suggest no party is strong enough to win a majority of the 308 seats in the House of Commons on June 28, meaning none could pass legislation on its own. The prime minister would have to seek support to push through bills such as budgets, which may mean spending more on legislators' pet projects to win votes.

``Markets are likely to prefer a Conservative minority to a Liberal minority,'' Nick Majendie, who helps manage about C$6 billion ($4.45 billion) in assets at Canaccord Capital Corp. in Vancouver, wrote in a report today. ``In either case, there is, however, likely to be less fiscal restraint than if there were a majority government.''

i think this last comment is innaccurate. i believe after reading and studying the markets reaction to government, that business, overall, prefers a minority government....

here's the theory...

in the US, business loves it when congress and the senate have different parties controlling each house..or if not the houses being different, then at least the president being of a different party from the houses... reasons? because there is too much partisanship. bills fly through the houses when one party owns them all (like now) and so fiscal restraint goes right out the window (like...oh..now). witness the massive spending increases in the US.

so how does this affect canada? well, canada's majority liberals have no trouble putting bills right through the house of commons because they own it, and there if they don't like what the opposition says about their bills...so what? they cut off debate. if there is a minority government, bills will definitely not be flying right through. there is going to be major difficulty getting one bill through because everyone in a coalition government, or just those parties who want to pass a bill (remember, the way things are shaping up, you may need 3 parties to agree on any one bill) will want concessions.

how are you going to pass a spending bill if you can't get anyone to agree to it? business should rejoice.

on the other hand, i think what this manager is more worried about is if the liberals team up with the NDP. this may increase the chances of higher spending... food for thought.