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The sound you hear is the air being sucked out of a previously buoyant Canadian economy. Yesterday, the Toronto Stock Exchange fell by nearly 7 per cent. Spectators of economic collapse rightly have had their eyes fixed on the United States, but since Sept. 1 Canada's premier stock market has fallen 21 per cent versus a 9 per cent drop for the Dow Jones index. In the past three months, not a single Canadian company was listed on the TSX for the first time, a surefire sign of anxiety among corporate leaders.

The Bank of Canada was forced last month to pump $3-billion into the overnight money market, and billions more in other short-term money markets in an effort to ease liquidity issues in the banking sector. Growth projections have been steadily scaled back, exports are threatened by the sorry state of the U.S. consumer and, in the so-called real economy, junior resource firms and some manufacturers are having to ratchet back spending because of the historic squeeze on credit.

All this has been greeted by near silence from our political leaders. In the midst of a federal election campaign, the party leaders – Prime Minister Stephen Harper prominent among them – are saying precious little at all about the deteriorating economic situation and what they are saying has been of precious little value. It's as if they have jointly taken a page from Kim Campbell's discredited 1993 playbook – that elections are no time for serious policy discussions.

In last night's debate, the first half hour was appropriately devoted to the economy. But it was more a matter of heat than light. Conservative Leader Stephen Harper opened up with a paean to the status quo and a belated attack on the five-point economic program Liberal Leader Stéphane Dion announced the previous night. “Obviously economic uncertainty is the big question of this election. Canadians are worried about the volatility in markets. What leaders have to do is have a plan and not panic. Last night, Stéphane, you panicked. You came on the set and announced a whole new economic plan in the middle of a national debate.”

Mr. Harper is too generous. Mr. Dion has some vague notions, not a plan. “I know very much how much Canadians care and are concerned about their savings their mortgages and their pensions,” he said last night. “For the first 30 days of a Liberal government . . . we will speed up investment to build infrastructure and to help the manufacturing sector to create jobs and employment and economic activity in Canada. Doing nothing is not an option.”

Mr. Harper was correct when he originally said it not so much a plan as “a lot of meetings.” And Mr. Dion has come to the issue very late.

But Mr. Harper is the Prime Minister and the front-runner in this election and the most in denial about the economic storm brewing. He was initially right to emphasize Canada's strengths, but his repeated claims that “the fundamentals of the Canadian economy are sound” are starting to wear thin. It is true, as Mr. Harper has stated, that the relative conservatism of the Canadian banking sector, and the strong fiscal position of the federal government, put Canada in a better position to withstand the storm than our neighbours to the south. But he is wrong to think, if he really does, that the contagion in the U.S. will not lay us low in Canada. During last night's debate Mr. Harper continued to downplay the threat to Canada's financial system by saying it is not in crisis. This is not leadership, it's lackadaisical.

All around the world, leaders are awakening to the threat emanating from the U.S. banking sector and beginning to put in place protections against the spread of pain. French President Nicolas Sarkozy has convened a meeting of leaders of Europe's “Big Four” in Paris to seek a common approach to the financial crisis. Ireland announced a rescue of its financial system, issuing a state guarantee worth €400-billion. Even the United States House of Representatives finally should approve a US$700-billion rescue package today.

The only ones not quite in the game is the closest neighbour and biggest trading partner of the United States.