The first two days of political insanity are recapped here. Since then, the Tories have shelved the campaign finance changes, Flaherty has said he’ll bring in a January 27th budget, and rumours of “secret” NDP/Bloc talks have spread.

So what does it all mean? The hell if I know.

So how will it play out? The hell if I know.

But here’s how I think this thing should play out.

The three things I think we should keep in mind in all of this are:

a) Despite being in a minority parliament, the Tories were given a strong mandate to govern in the last election.

b) To govern in a minority parliament, you need to earn and maintain the confidence of the House of Commons.

c) If the party in power loses the confidence of the House of Commons this soon after an election and a stable alternative governing coalition can be found, that alternative should be given a chance to form government .

Clearly, the campaign finance cuts were a poison pill no opposition party could ever swallow. The legislation was nothing more than Harper trying to manipulate the rules of the land for partisan advantage – and he used an economic downturn as an excuse to do it, which is even more underhanded. The opposition parties had no choice but to vote against this legislation. But Harper has backed down, so the issue now turns to the rest of the F.U. and the lack of a stimulus package.

The Conservatives won the election so they certainly have a right to respond to this crisis as they see fit. And there’s something to be said about co-ordinating our stimulus package with the American one. But regardless, the Conservatives need to earn the confidence of the House of Commons and the majority of the House (and the world for that matter) agree some form of a stimulus is needed now. So the responsible thing to do, in a responsible government, would be for the Conservatives to bend – remove some of the egregious elements of the update (say, banning the civil service from striking, pay equity changes, and the selling of crown assets), introduce a moderate stimulus now, and promise in concrete terms to do something larger in the January budget.

With those changes, no responsible opposition could bring the Harper government down. If they tried to, it would be seen as nothing more than a power-grab and the end result would probably be a Conservative majority government in a few months.

On the other side, if Harper doesn’t bend, then the opposition parties would certainly have the right to form a coalition government, if they can promise a stable one. Harper himself said as much back in 2004. I’m not too excited about the precedence it sets and, if the situation were reversed, I’m not sure Liberals would have welcomed a Tory/Bloc/NDP coalition back in September 2004. But the opposition parties have the right to band together if they deem Harper’s inaction on the economy to be so egregious that it warrants this unprecedented course of action.

So that’s how I see the situation, from my vantage point. In the end, public opinion about the fiscal update and the coalition will probably dictate what happens next – and maybe that’s not such a bad thing in a democracy. But I think the proper solution to all of this would be some real compromise on the part of Harper, and the passing of a revised fiscal update.

Will that happen? As I said above, the hell if I know.