The election results may not have been clear when this column was written. But it is clear that some pressing developments have overtaken all parties since this election was called on Sept. 7.

In fact, once the cabinet is sworn in and the throne speech is made, members of Parliament will be going back to a very different political reality. Hard to believe now, but when the election was called, the economy was only a secondary issue, over which the Tories and Liberals were busy exchanging insults. In the second to last week of the election campaign, the economy emerged as the challenge facing the country. It will be a major issue for most if not all of the coming parliamentary year, or possibly the life of the coming Parliament.

Another big issue will be deregulation — more specifically, reregulation. The question of how much government should be involved in the day-to-day economy was not discussed at all during the election. Still, this was an elephant-in-the-room issue, whether anyone wanted to discuss it or not, because of wide public perception that lax regulation by government caused the listeria outbreak and the meltdown of Wall Street.

So, there are a number of economic issues with which the incoming government will have to deal, whether they like it or not. These include the long-simmering question of bank mergers. For a number of reasons, mergers still seem unlikely to occur — Canadians have been well served by the existing financial services system and there is little reason to change the status quo. Such reasoning has been part of the coded messages Ottawa has been using to tell the banks to go away whenever the topic of mergers is raised. And most of the political parties, including the Conservatives, made it clear early in the election campaign they opposed bank mergers. That’s partly because history shows that bank mergers are approved only in times of stress on the system; then, weaker franchises are sometimes quietly folded into the rest of the cartel, while Ottawa reassures a concerned nation all is well.

The government is likely to argue that in the coming months, the interbank lending system will quietly mend itself, Canadian banks remain considerably stronger than their U.S. counterparts and subprime loans are a U.S. problem. Jim Flaherty has already quietly pushed the banks into getting rid of those silly 40-year mortgages.

Maybe so. But Canada, like the U.S., has an overcrowded market of lenders chasing too few prime customers. Household debt is at record levels and personal bankruptcies are rising, particularly in provinces such as New Brunswick, in which the credit union movement is rumoured to be on shaky ground.

It is only a matter of a few months, then, before Canada will have a credit crisis of its own. If Ottawa goes ahead and grants Wal-Mart Stores Inc. a banking licence (which it is likely to do), the situation will be all the more aggravated in our great, overbanked nation.

So, watch for a bank merger proposal to re-emerge and for Ottawa to announce its approval on a Friday night, when most awkward announcements are made. To politicians, bank mergers are a necessary evil that has to be done from time to time, much the same way the rest of us feel about dental root canals.

Why else would the former Liberal government ban bank mergers in 1998 but issue guidelines for such mergers at the same time?

Another biggie will be regulation. Let’s see: Canadians think their food supply is not as safe as China’s; they are angry about their airlines, telecom carriers, banks, airlines, oil companies, brokers, travel agents, telemarketers, politicians and food labelling. And the meltdown of Wall Street — the most defining development since 9/11 — is being blamed on lax regulation.

Yup. The climate is ripe for greater regulation, no matter which party is in power. The Great Canadian Nanny State will be back, and possibly soon, with one of those federal deficits that seem to go with excessive regulation.

Actually, reregulation of the economy has been creeping up on us for months, as all political parties have been promising instant remedies to appease a bitchy electorate during a minority government. Thanks to unfortunate recent events, demands that government coddle and regulate will be stronger than ever.

@page_break@Then there is the question of restoring full economic debates. Just before Parliament broke for the summer this past June, a curious notice turned up on the Web site of the House of Commons finance committee. It announced that annual pre-budget hearings would be held as usual in the fall — with one difference: all briefs to the committee could only have one recommendation. If a group tried to make more than one, only the first recommendation would be entered into the record. So, if Bank of Canada governor David Dodge and a fringe group both showed up to express their views on the economy, each would be entitled to just one recommendation. Such an absurd rule illustrates how reluctant politicians are to discuss the economy during good times.

If there is anything good to come out of the current economic slowdown, it is that the economy will probably return to the public agenda. IE