Canadian Dollar in free fall

[hitops]

Not sure if this is really political, but the dollar has taking a severe beating over the last year, eroding everyone's purchasing power by about 10%.

This is largely because traders know Canada is going to do very poorly, very soon. Now that the US is picking up, our resource-based currency doesn't look as good. Secondly and probably even more importantly, we are about to get murdered by the housing sector.

There may be other reasons as well, thoughts?

[ReeferMadness]

It's because investment is flowing back into the USA.

[Moonlight Graham]

It's because of a number of factors.

Personally I don't think it's that great at all. It sucks if I want to buy something from the US in US dollars (but good if I want to sell something). When the dollar went to parity a few years ago it still sucked for consumers because in a lot of cases businesses didn't care to reflect how much cheaper US goods were when sold in Canada in the price of goods/services. They kept Canadian prices high when they actually became lower. If prices were reflected fairly it would make pretty much zero net economic impact because a low vs high dollar switches from benefiting exporters to importers.

[Bryan]

Personally, I hope it falls a lot farther. It's not as if prices on this side of the border have come anywhere near to compensating for our money being at (or close to ) par for so long. Most things are still cheaper in the US for a variety of reasons, so the strong $CND really only helps if you when you spend it outside the country. It doesn't make your mortgage or utility bills cheaper.

Having our dollar with a high relative value to the US has been mostly a negative for me personally, as all my clients are in the US. Up until a few years ago, I used to be able to charge less than my competitors, yet actually end up with more in my pocket after exchange. The lower $CND goes, the higher my purchasing power goes at home. I'll gladly take having my winter vacations cost a little more in exchange for having more money for everything else throughout the year.

[hitops]

Personally, I hope it falls a lot farther. It's not as if prices on this side of the border have come anywhere near to compensating for our money being at (or close to ) par for so long. Most things are still cheaper in the US for a variety of reasons, so the strong $CND really only helps if you when you spend it outside the country. It doesn't make your mortgage or utility bills cheaper.

Having our dollar with a high relative value to the US has been mostly a negative for me personally, as all my clients are in the US. Up until a few years ago, I used to be able to charge less than my competitors, yet actually end up with more in my pocket after exchange. The lower $CND goes, the higher my purchasing power goes at home. I'll gladly take having my winter vacations cost a little more in exchange for having more money for everything else throughout the year.

By purchasing power I think you mean your profits. Your purchasing power declines if your revenue is in CDN.

While a high CDN doesn't make your utilities cheaper, neither does a low CDN. In real terms perhaps utilities must pay more for natural gas from the US depending where you live and charge you more, but for most nothing changes in practice as most of us get our energy domestically.

It does cause an increase in cost of living for most people however, particularly wrt food.

[Boges]

I thought the dollar at par was a bad thing. Now it's a bad thing that it's dropping?

I'm sure whatever manufacturers that are left are thrilled.

Edited January 15, 2014 by Boges

[cybercoma]

It will be good for manufacturing, but Harper's days are numbered. The results of this, if they happen soon enough, will show that everything Mulcair said about Dutch Disease were true. Instead of balancing interests, focusing too much on the energy sector has damaged the Canadian economy in the long term.

edit: deleted opening post quote

Edited January 15, 2014 by cybercoma

[TimG]

It will be good for manufacturing, but Harper's days are numbered. The results of this, if they happen soon enough, will show that everything Mulcair said about Dutch Disease were true.

Nonsense. The US economy is picking up and it will be impossible to separate the change in exchange rate from other factors like that. What is also complete nonsense is your assumption that any responsible PM could have done anything to prevent the CDN appreciation over the last 5 years. Edited January 15, 2014 by TimG

[cybercoma]

I didn't assume any of that at all. What I assumed is that he Canadian dollar would fall again at some point when the American economy picked back up. I also said that Harper should have been focusing on balancing the economic interests of the country instead of dumping all of the government's resources into the energy sector, which is not going to help us when the dollar falls. Now that the manufacturing sector has been gutted with absolutely no support for the Harper government to stem the tide while the economy recovered in the US, we're going to be in a terrible position with the falling dollar.

[TimG]

I also said that Harper should have been focusing on balancing the economic interests of the country instead of dumping all of the government's resources into the energy sector, which is not going to help us when the dollar falls.

Lovely talking point but where is the substance to support it? The oil/gas sector has been growing rapidly over the last decade - in the US and Canada. This growth means any responsible PM would need to pay a lot of attention to it. Especially since it is under endless attacks by hypocritical environmentalists looking to line their pockets with donations.

Now that the manufacturing sector has been gutted with absolutely no support for the Harper government to stem the tide while the economy recovered in the US, we're going to be in a terrible position with the falling dollar.

Harper participated in the GM bailout so your claim of absolutely no support is dishonest politiking. More importantly, it is not clear what more any responsible PM could have done in the face of the global restructuring. Edited January 15, 2014 by TimG

[Shady]

Not sure if this is really political, but the dollar has taking a severe beating over the last year, eroding everyone's purchasing power by about 10%.

This is largely because traders know Canada is going to do very poorly, very soon. Now that the US is picking up, our resource-based currency doesn't look as good. Secondly and probably even more importantly, we are about to get murdered by the housing sector.

There may be other reasons as well, thoughts?

Any links?

[Keepitsimple]

I didn't assume any of that at all. What I assumed is that he Canadian dollar would fall again at some point when the American economy picked back up. I also said that Harper should have been focusing on balancing the economic interests of the country instead of dumping all of the government's resources into the energy sector, which is not going to help us when the dollar falls. Now that the manufacturing sector has been gutted with absolutely no support for the Harper government to stem the tide while the economy recovered in the US, we're going to be in a terrible position with the falling dollar.

It would be helpful if you could be just a tad more specific - in terms of where exactly the Feds could actually help more than they have already. They participated in the auto bailout and have provided accellerated write offs for new equipment for manufacturers, among other things. Your attitude reeeks with "throwing money" at the problem - so how much money and where does it go? That said, outside of the tax code, Provinces have more effect on businesses than the Feds. Look at Ontario with their energy fiasco and their ineptitude in facilitating the Ring of Fire opportunity. Out of 46,000 jobs lost last month, 39,000 were in Ontario......it doesn't take too much intelligence to relate a good portion of those losses back to the complete failure and incompetence of the Ontario Liberal Government.

[cybercoma]

Of course, Harper apologists like yourselves will lavish him with praise for a strong economy and absolve him of any responsibility for a failing economy.

[TimG]

Of course, Harper apologists like yourselves will lavish him with praise for a strong economy and absolve him of any responsibility for a failing economy.

I don't see where I lavished praise on Harper. I asked you for specifics about what more a responsible PM could have done given the global restructuring in manufacturing that has been going on. It is easy to say that "Harper should have done more" but it is meaningless talking point if you don't come up with specifics.

[cybercoma]

The vast majority of legislation passed was to clear regulatory hurdles for the oil sands to the detriment of the environment and other parts of the economy. You want me to come up with an action plan for the CPC and I'm not going to do that. It's clear where there focus has been, denying it is just ridiculous. I already said in general terms that they should have balanced their approach, supporting all sectors not just the oil sands. Their token gestures GM didn't stop the mass exodus of manufacturing.

[Accountability Now]

I didn't assume any of that at all. What I assumed is that he Canadian dollar would fall again at some point when the American economy picked back up. I also said that Harper should have been focusing on balancing the economic interests of the country instead of dumping all of the government's resources into the energy sector, which is not going to help us when the dollar falls. Now that the manufacturing sector has been gutted with absolutely no support for the Harper government to stem the tide while the economy recovered in the US, we're going to be in a terrible position with the falling dollar.

Why is a falling dollar going to hurt our energy sector? We sell oil in USD.

[TimG]

The vast majority of legislation passed was to clear regulatory hurdles for the oil sands to the detriment of the environment and other parts of the economy.

Why the zero sum thinking? Legislation passed for one industry does not hurt other industries. For that matter, why is passing "legislation" a measurement of a government's commitment to an industry? If an industry is not facing problems caused by government regulation then there is not much government legislation can do about it.

You want me to come up with an action plan for the CPC and I'm not going to do that.

It is not about that. I am claiming you are spouting meaningless talking points that have no substance to them. If you want to establish that your talking points do have substance you are going to have to provide concrete examples of what a PM could have done but Harper did not. Edited January 15, 2014 by TimG

[PIK]

So screw the manufactoring and keep the dollar high so canadians can shop more in america. And as one guy said high dollar harper's fault , low dollar harper fault. The main reason why we lost all thiose jobs in Manufactoring is DALTON McGUINTY. It is really getting pathetic with everything is harpers fault, or mike harris's fault or could it be because the other parties have no ideas what to d,o so blame harper.

[gunrutz]

So screw the manufactoring and keep the dollar high so canadians can shop more in america. And as one guy said high dollar harper's fault , low dollar harper fault. The main reason why we lost all thiose jobs in Manufactoring is DALTON McGUINTY. It is really getting pathetic with everything is harpers fault, or mike harris's fault or could it be because the other parties have no ideas what to d,o so blame harper.

It is pathetic, but it suits them.

[gunrutz]

The vast majority of legislation passed was to clear regulatory hurdles for the oil sands to the detriment of the environment and other parts of the economy. You want me to come up with an action plan for the CPC and I'm not going to do that. It's clear where there focus has been, denying it is just ridiculous. I already said in general terms that they should have balanced their approach, supporting all sectors not just the oil sands. Their token gestures GM didn't stop the mass exodus of manufacturing.

yes, you have no answers, it is obvious, but you did manage to toss in the environment there, good job, script followed.

[hitops]

Since this thread started, the dollar has fallen another several cents. I've never seen it lose value this quickly.

[Bryan]

Since this thread started, the dollar has fallen another several cents. I've never seen it lose value this quickly.

I know. It's awesome. Hope it falls faster!!!

[overthere]

Of course, Harper apologists like yourselves will lavish him with praise for a strong economy and absolve him of any responsibility for a failing economy.

This is where you provide international metrics that demonstrate that Canada has a failed or failing economy. You could even compare our desperate situation with countries of roughly similar GDP/PPP like UK, France, Italy, Spain Mexico.

I can wait.

[overthere]

dumping all of the government's resources into the energy sector

just to point out the obvious, which you have missed: natural resources are not owned or really controlled by the federal govt. in Canada. They belong to each province, according to a trifling document called the Constitution. Once the province sells the rights to extract the resources, the many billions of dollars required in capital investment come from those corporations.

Hope that helps.

The vast majority of legislation passed was to clear regulatory hurdles for the oil sands

another cleanup for your admittedly tiny fact vault: oilsands projects take many years to plan and develop, several in northern Alberta took decades. Most of the oil product being produced today had nothing to do with Harper, the projects were planned and approved before his time.

Hope that helps

[eyeball]

just to point out the obvious, which you have missed: natural resources are not owned or really controlled by the federal govt. in Canada. They belong to each province, according to a trifling document called the Constitution.

Ocean run fish notwithstanding...which explains why our coastal fisheries are in ruins.

Oh well if the manner by which our forests were managed in BC by the province our fish would probably still have been doomed.

Edited February 6, 2014 by eyeball