Soaring Loonie (NF)

[bigfish1965]

The higher loonie will do a few things. First it will drive down prices. Higher prices now are a result of stock purchased before the collapse of the US dollar. Pressure will increase to reduce prices anyway especially on consumer electronics. This wil also keep gas prices down (since oil is traded in US$) but again we need to wait for that stock to go throught he system.

Eventually this will result in lower than expected inflation and the freedom for the Bank of Canada to reduce interest rates.

Our economy is still very strong based on our rapid diversification and very low debt to GDP ratio. Our last two governments federally actually managed to do some good in getting rid of deficits and reducing taxes. Our resource and service based economy insulates us well from the current US trouble. Rather than shipping goods to the US we now ship raw materials to China who in turn ship them to the US. We created a middle man.

It is healthy for us to have a high dollar in terms of debt reduction for our governments, but hurts the manufacturing sector. Eventually the pressure to lower interest rates will be too strong and our dollar will drop back down to a more reasonable rate.

But alot of that also depends on the US ability to control spending. As more and more of their tax dollars go to finance debt, there will be inevitable upward pressure on tax rates as these bonds come payable.

According to what I have read, this is the first time we are in a position to not be affected by the imminent US recession. This could see more US dollars being invested into Canadian resource and energy companies as safe havens.

Our social programs, while initially expensive, save companies money on legacy costs since extending health care insurance to retirees is not needed.

Look for two or three cuts to the Canadian prime rate and a drop of 1% or more in mortgage rates in the next three months.

Next months CPI will tell the tale.

[topraider]

Good post re US dollar - I have a sneaky suspicion that a lot of countries that hold the$US as a reserve currency are "lightening up" , and purchasing Euros. China is losing a lot by holding US dollars, how long are they going to put up with that. Trouble is the US won't let them come in and buy anything with their dollars, since many of the Chinese multinationals are state controlled.

 

Its a lot cheaper now for Canadian companies to buy US ones

 

I feel bad for the Canadian retailer. Maybe its time that canadian customs started asking lots of questions at the border to slow things down a bit.

[lookinforwalleye]

Thats the one thing that we CANADIANS have, GREAT HEALTH CARE SYSTEM.

 

But lets not get crazy here. Im sure there are the older generation that can tell us about the dollar getting close to par and the events that happen back when.

 

Johnny,I like my health care. I sure and the hell dont want to have to take a loan out to see my Doc.LOL

 

Easy my American friends.Just poop chat,n.LOL

 

Yes it is a great system isn`t it every time a kid gets a sniffle or a hang nail off to the doctor they go.

I recently made an appointment for a physical and I have to wait 6 months, I don`t think a new doctor has set up shop in Orangeville in a decade although there is a dentist on every corner.

Canadian system is great if your healthy or if your dying if you fall somewhere in between that`s where you might have a problem.

[misfish]

Yes it is a great system isn`t it every time a kid gets a sniffle or a hang nail off to the doctor they go.

I recently made an appointment for a physical and I have to wait 6 months, I don`t think a new doctor has set up shop in Orangeville in a decade although there is a dentist on every corner.

Canadian system is great if your healthy or if your dying if you fall somewhere in between that`s where you might have a problem.

 

Well I guess it,s not great for some.

[pikehunter]

I recently bought a Curado from an American site for $165, and that's including S&H. The same reel at LB goes for $259, and that's before tax.

 

Retailers really need to adjust their pricing to better reflect the loonie's strength, not just tackle shops but pretty much everyone--especially car makers!

 

It may take time for retailers to catch up to the new currency exchange rate. One reason is that a lot of present inventory was purchased at a higher exchange rate. Most likely you will see prices drop once stock replenishment has taken place.

 

I saw a scenario a couple of years ago when boat shopping. A dealer with 2 year old boats, but still brand new, was trying to sell them for more than the current year model at other dealers. To match the other dealers price for a new boat he would have been facing a loss on what he paid plus his carrying charges. I empathized with him but bought the current year, well actually the "next year" model elsewhere.

 

It takes some time to work itself out. On the other hand remains the question: What will happen to prices when stock is purchased at the current exchange rate and the Can. $ drops? Bet you that the prices will skyrocket immediately on existing inventory.

[Uncle Buck]

Hit him Low.LOL

 

It's like that eh Brian?

[misfish]

It's like that eh Brian?

 

Yeah,,,,,,,,,,,,,,,,,,,,,,,,Too bad Im so far away eh.LOL

[TennesseeGuy]

I'm pleased that my Canadian neighbors are enjoying a good economy. I'd be less than pleased if they were involved in a weakening financial situation.

 

Don't be mislead by doom and gloomers in the states who play down our present economy. Other than health reasons there's no way a U.S. citizen should be having financial problem. The stock market is doing great and unemployment has been super low for a long run. I've never made a big salary, but my pile of stuff and savings is continuing a growth spurt that began in 1994. Our citizens have brought us through a major disaster on 9/11/01 and we're coming out of Katrina in good shape. Our workers have been productive and their efforts are carrying our country. Canada and the United States will be okay.

 

Global economy is doing great also. Take a look at the growth of global market funds, emerging market funds and energy funds. Countries such as South Korea, China and Russia have been good to me.

[JohnF]

I've seen far more advertising for Canadian Lodges in the states than I ever have in Canada. I've never actually seen an ad around home besides a few that they try to sell at BPS in T.O. The only way I hear about lodges is through the shows on WFN.

 

M

 

Application of simple economics. The American dollar for years delivered more bang for the buck when spent in Canada, so it was easier to attract those sportsmen with American dollars (that didn't cost 'em $1.50 cdn or more) than it was to attract us Canucks to spend our hard-earned devalued bux. Follow the money, and the States was where it was.

 

If by some flaw in the system(s) the powers that be can't force the US buck back into the ascendancy, or at least the Canuck buck down, you'll see a change in philosophy for those northern service providers, and possibly even some better deals for us denizens fo the frozen north. How practical that may be for the lodges remains to be seen. They need to gather in a lot of revenue in a relatively short season with pretty high overhead. But don't blame the lodge operators for chasing the American market. It's just a matter of economic viability.

 

Personally I'm off to the bank in the next few days to convert a few thousand that we'll need for upcoming trips to Phoenix and Mexico. I'm betting the high number won't last too long. It may not drop a lot but rest assured there's lots of governmental connivery going on to bring it down, and for some pretty solid reasons that are tough for us regular Joes to comprehend.

 

JohnF

[Vanselena]

The main issue the US is dealing with is credit. Americans are in then greatest amount of debt per person then ever in the history of the USA. Credit cards are maxed out, because of a long period of cheap mortgage rates renters became owners etc. The USA raised interest rates to try and curb spending but then consumer confidence started to fall and the USA recently started lowering interest rates. Basically it isn't a good position for a country to be in, Consumers in high debt and raising rates not possible due to economic reasons. Eventually the USA will have to raise rates to once again curb inflation and the world money lenders know this and are thus pulling money out of the US dollar and putting it into Gold or resource countries like Canada.

Our dollar is in a position to rise even further, there is talk of $100 oil and $1000 gold, if this happens then our dollar could be at $1.20. The US is the most wealthiest nation in the world and will get this sorted out, in the meanwhile I'll be accumulating money with the idea of investing in US properties once the US$ gets straigtened out.

[Zib]

I guess I'll have to plan my vacation in my own state of Michigan instead of going to Ontario next year.

[Hookset]

If the best that we as Canadians can offer to attract business is a "low dollar" then we are no better than Mexico or China. To rely on a low dollar to attract business is a recipe for disaster. We continually advertise ourselves worldwide as having a better educated workforce which offers high quality products and cutting edge technology.

Then the dollar soars, and the crying starts about lost business due to the high dollar.

Short term pain for a long term gain I say. A large part of the business we are losing will not be returning to the USA but will be headed for the next country which can offer production at a reduced dollar (see Mexico, China etc.)

I've been in the Automotive business my whole life (until lately thank god) and I've seen the quality and technology of product this country can produce. It is second to none. Suck it up Canada, the business we lose to our high dollar

was business that we would eventually lose regardless for corporations that care little about quality and only about production costs. We are better than that.

 

My opinion,

 

 

Hookset.

[wuchikubo]

Well with the higher dollar it my be looking more attractive for doctors to remain in Canada as opposed to moving south. Obviously, there are other factors than money, but I think we lose some new grads due to the money issue. If this holds up, hopefully, it can strengthen the medical heath care shortage issue.

[Zib]

A large part of the business we are losing will not be returning to the USA but will be headed for the next country which can offer production at a reduced dollar (see Mexico, China etc.)

 

Actually Mexico has been crying about losing business to China. I find that funny. Now they know how it feels.

[lickmyarmpit]

The yanks can't declare war on us they have everyone in Iraq! Maybe we should invade them

right now!

 

Never mind they have more hand guns there than we have soldiers.

 

 

Imagine that the last time our dollar was worth more than theirs is after they were losing a war!?!?!? Nam 1972, Iraq 2007

[Zib]

Imagine that the last time our dollar was worth more than theirs is after they were losing a war!?!?!? Nam 1972, Iraq 2007

 

Can you define "losing a war"? In Vietnam we won every battle but the war was unpopular with the public so it was a loss. The same thing is happening with Iraq. No country ever "WINS" a war; they are just declared the winners for the sake of having a winner & a looser.

[Stoty]

Karma.............

[jedimaster]

I generally term a loser in a war as follows. If an invading Country leaves they lose. If a defending country gets assimilated they lose.

 

Like when Canada and the US had a war Canada Won.

 

[Zib]

Like when Canada and the US had a war Canada Won.

 

 

What did Canada win?

[jedimaster]

1812

[wuchikubo]

I generally term a loser in a war as follows. If an invading Country leaves they lose. If a defending country gets assimilated they lose.

 

Like when Canada and the US had a war Canada Won.

 

 

General, indeed but not always true. It's only if the country is looking to take territory.

 

I.e.: Japan lost the war on their own territory but didn't get assimilated.

 

peace and be well.

[Zib]

1812

 

You might want to re-read your history books. The War of 1812 didn't have a "Winner". The U.S. declared war on Britain because they were preventing our ships from delivering goods to France & because they were supplying the American Indians with arms to fight off whites settlers from taking their land.

 

The US didn't have an army to fight the war because New England refused to get involved with the war & the only military the US had was in New England so they had to use local militia that was poorly trained. The British used local Canadian militia & mostly American Indians to fight off the US attempt to push back the militia that was attacking its trade ships in the Great Lakes. Canada seen this as a victory because they prevented a foreign country from trying to conquer them; which the US never planned on doing in the first place. The US seen it as a victory because they felt that they won their independence once again from the British after they destroyed a large part of the British navy & were allowed to send their trade ships to France.

 

Basically the War of 1812 was just a pissing match over territorial rights.

Edited September 21, 2007 by Zib

[Fisherman]

The main issue the US is dealing with is credit. Americans are in then greatest amount of debt per person then ever in the history of the USA. Credit cards are maxed out, because of a long period of cheap mortgage rates renters became owners etc. The USA raised interest rates to try and curb spending but then consumer confidence started to fall and the USA recently started lowering interest rates. Basically it isn't a good position for a country to be in, Consumers in high debt and raising rates not possible due to economic reasons. Eventually the USA will have to raise rates to once again curb inflation and the world money lenders know this and are thus pulling money out of the US dollar and putting it into Gold or resource countries like Canada.

Our dollar is in a position to rise even further, there is talk of $100 oil and $1000 gold, if this happens then our dollar could be at $1.20. The US is the most wealthiest nation in the world and will get this sorted out, in the meanwhile I'll be accumulating money with the idea of investing in US properties once the US$ gets straigtened out.

You're right about being the highest debt ridden, however, I don't know about being the wealthiest. With the amount of debt/deficit they have, they wouldn't have the proverbial pot to whizz in if everyone collected on what they owe. On the other hand, maybe that's what they are trying to do, pay off their debts with "cheap" money. I'm glad books are in the green, I don't mind the present value of the loonie.

[POLLIWOGG]

I wouldn't celebrate, The States got caught in a mortgage scam and despite the warning of American planes carrying nuclear missiles Iran stops selling oil in dollars. If George can pass that of as an attack on the US economy he may use those missiles.

[Guest Johnny Bass]

I understand GaryV that you are a business owner and rely on American business. But the Majority of us do not. I hear off all this gloom about Canada's economy going down if the USA dont buy from us? How did we ever survive without America?We actually did quite well.

 

Now that Mulrooney brought in all the cheap labour from 3rd world countries, they will be the ones most affected.

 

Companies are moving to other countries because they can. All thanks to Free Trade you seem to promote.

If they weren't allowed to sell in our country they wouldn't be quick to move and someone else would fill the demand.

 

You talk about losing manufacturing jobs? Wake up! We have already lost them to China and America has lost it to Mexico, China, Canada and a host of other countries. That is why their GDP continues to shrink.

 

You bring up some very good points Rick, but the truth of the mater is that its not the high dollar that is the problem. Its outsourcing and free trade.

 

I hope the dollar soars and interest rates drop.

 

We ship alot of resources and the higher the dollar the more the profit, not to mention, more profit means we pay off our defeciet, which means more money for the government which means more services. Its a win, win situation. Nations know that we are a rapidly growing nation and our economy is strong. Many will invest....

 

Top traider. China is basically holding all the cards and the US knows it. They use their reserves in US dollars as leverage. If they start dumping the US dollars the US dollar will do a nose dive.

 

Lookingforwalleye. I would complain to your local MP. I have no problems at all getting any health related appointments. And even if they make me wait a few weeks, it still beats having to dish out a months pay...

 

Tennesse guy. The fact of the matter is that MANY us citizens are having financial problems.(well except the cocaine dealers and the hookers). Many people are either claiming bankrupcy or on the verge of. The housing market is coming to a complete halt, record numbers of foreclosures, millions without health care benefits.... Your GDP is shrinking at a fast rate....

 

Stock market is doing good? There are only a few companies, mostly tied with arms, energy and pharmacudicals that are doing great. The rest are hurting. And how does the fact that the rich are getting richer help out the average American? It doesn't.

 

The US may be ok but they are going to have to weather a huge Recession. The Americans have increased their borrowing to mask the recession but investors are losing confidence in the American dollar.....