Will Canada have a recession election?

harpereconomyStephen Harper has a timing problem.Canada Flag Icon

Last week, Canadian officials announced that GDP contracted by 0.2% in May, the fifth consecutive decline in the country’s economic growth. If on September 1, statistics show a further decline for June’s GDP measurements and confirm the earlier 2015 data, Canada will officially be in recession — the generally accepted technical definition amounts to two consecutive quarters of negative GDP growth. Stephen Poloz, the governor of the Bank of Canada, recently cut the benchmark interest rate to 0.5% in July, and he may take further steps to loosen monetary policy if economic conditions continue to deteriorate.

For a prime minister seeking a fourth consecutive term in a general election on October 19, that presents a significant difficulty — and the economy will almost certainly loom large during the campaign’s first debate tonight.

Even if Canada doesn’t technically enter a recession during the election campaign, it will be an unwelcome distraction for a prime minister who in 2011 benefited from the perception that his government’s economic leadership saw Canada through the worst of the US-originated global financial crisis.

Now, both Liberal leader Justin Trudeau and New Democratic Party leader Thomas Mulcair will be able to use the economy’s flagging performance as a weapon against Harper. In particular, Mulcair’s emphasis on creating jobs has boosted the NDP to a (very narrow) first place in polls. In May’s provincial elections in Alberta, Rachel Notley and the Alberta New Democrats rode a wave of voter dissatisfaction to end 44 years of consecutive Tory rule. The outgoing premier, Jim Prentice, only recently returned to politics after a prior stint as a Harper loyalist in federal government, became the first political victim of lower oil prices in energy-rich Alberta.

He might not be the last. Continue reading Will Canada have a recession election?

What to expect from Sunday’s Argentine presidential primaries

casarosada

On August 9, Argentine voters will take part in a compulsory open primary — the dress rehearsal for the general election set for late October.argentina

It’s the first presidential election since 1999 where a Kirchner won’t actually be on the ballot. Nevertheless, kirchnerismo is very much on the ballot, and its standard bearer, Daniel Scioli, the candidate of the ruling Frente para la Victoria (FpV, the Front for Victory), served as the late president Néstor Kirchner’s vice president between 2003 and 2007.

The country’s pre-game primary, however, is a relatively new feature to Argentine democracy. The outgoing incumbent, Cristina Fernández de Kirchner, introduced open primaries in time for the 2011 elections — mandatory for both parties and voters alike. Candidates must win at least 1.5% support in the primary to advance to the general election. In a country where polling is still more art than science, and where political parties and coalitions are still more personality-oriented than long-term ideological vehicles, the primary is the most reliable test of electoral support before the October 25 election.

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RELATED: Everything you need to know
about Argentina’s impending default

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If polls remain as tight as they are today, and no candidate wins (i) either 45% of the vote outright or (ii) at least 40% of the vote (and leads the nearest candidate by more than 10%), the country will choose between the top two finishers in a November 22 runoff.

So this Sunday’s primary could be the first of three showdowns for the Casa Rosada. Continue reading What to expect from Sunday’s Argentine presidential primaries

Alan Johnson’s endorsement for Cooper may scramble Labour race

yvettecooper

Alan Johnson, a former union official, former home secretary and one of the most highly regarded figures of the New Labour high guard has endorsed Yvette Cooper (pictured above) for the Labour leadership contest.United Kingdom Flag Icon

It’s been a surprising election, and the most beguiling twist of all has been the emergence of Jeremy Corbyn, the 66-year-old socialist, as the frontrunner among Labour rank-and-file. Polls consistently show that Corbyn has a wide lead over Cooper, shadow health secretary Andy Burnham and Liz Kendall for first preference votes. Corbyn has won the support of many unions across Great Britain, including Unite, the largest labour union backing the party.

Johnson, writing in The Guardian, argues that Cooper presents the best chance to unite Labour in the post-Miliband era — and he makes much of the argument that Labour, founded in part on the principle of full suffrage for women, has the chance to elect its first female leader: Continue reading Alan Johnson’s endorsement for Cooper may scramble Labour race

China’s stock market crash is a political, not economic, crisis

shanghai composite

In January 2014, the Shanghai Composite Index was hovering at around 2,000. China Flag Icon

Today, it’s ‘down’ to just above 3,600 and everyone from Beijing to London is gnashing teeth and wrenching hands over the great Chinese stock market crash of 2015.

However, in the light of the massive gains of the past two years, the current bear market seems more like a correction than a crash. You wouldn’t know it, though, from the response of China’s one-party state, which has intervened in just about every way imaginable to prop up the equities market.

Part of the anxiety, both in China and abroad, is due to the country’s role in the global economy — as the era of double-digit annual growth slows to ‘just’ 6% or 7% growth, global demand from the world’s largest economy will invariably slow. That will have a global impact. But no one expected China to grow at spectacularly outsized rates for decades without end, and that alone isn’t necessarily enough to torpedo the US or European economies. The ups and downs of China’s wild stock markets, moreover, aren’t necessarily correlated with long-term economic growth. That doesn’t obviate some of the real harms suffered by largely unsophisticated retail investors who dumped their savings into Chinese stocks during the rally of the past year and a half.

This underlines that the real crisis is political, not economic. Under pressure to ‘do something,’ the Chinese Communist Party (中国共产党) is doing a little of everything — devaluing the yuan, halting new IPOs, prohibiting trading in some of the hardest-hit stocks, buying stock in an attempt to keep prices artificially high, cutting interest rates. Certain institutional investors will not be permitted to trade (i.e. sell) stocks for up to six months.

It’s a panicky response that only further perpetuates the ‘crash’ narrative and further sell-offs. But it’s also the response of a governing regime that knows — and knows that the Chinese people know — there’s no competing political party to blame. Chinese leaders often argue that the one-party system incentivizes long-term policy planning because there’s no short-term gains to be had from elections every two years. But the acute knowledge that the Communist Party owns every policy (and every policy misstep) cuts both ways. The current stock market turbulence shows that Chinese Communists, just like American Republicans or Democrats, aren’t above taking hasty steps to end short-term political pain.  Continue reading China’s stock market crash is a political, not economic, crisis