Canada Entering its Golden Era

[mirror]

With the rising commodity prices Canada's economy will probably be the best in the world over the next 10-25 years. Today oil hit its highest price ever - $65. Some Canadians just moan and groan. Some Canadians don't realize how fortunate we are.

[Riverwind]

With the rising commodity prices Canada's economy will probably be the best in the world over the next 10-25 years. Today oil hit its highest price ever - $65. Some Canadians just moan and groan. Some Canadians don't realize how fortunate we are.

What makes me sad is there are people willing to throw everything we have in return for some 'fantasy land' where they don't have to live with people who have different political views. Any serious constitutional crisis sparked by a referendum in Quebec or elsewhere will result in at least a decade of political and economic uncertainty that will bring reduced investment in the value added service industries that give us our standard of living. We all would be a lot poorer and will end up looking more like south america instead of europe.

[mirror]

I agree. We should be able to live and get along with the people from BC.

[canadian_conservative]

Yep apparntly are economy will be better than the United States earlier possibly in 10 years or so. Imagine the possibilities this opens up for Canada. New world trading partners more world countries trading with us. More GDP the possibilities just go on and on.

Edited August 11, 2005 by canadian_conservative

[Argus]

With the rising commodity prices Canada's economy will probably be the best in the world over the next 10-25 years. Today oil hit its highest price ever - $65. Some Canadians just moan and groan. Some Canadians don't realize how fortunate we are.

<{POST_SNAPBACK}>

You have never taken an economics course, have you? Or read a book on economics?

[Argus]

Yep apparntly are economy will be better than the United States earlier possibly in 10 years or so.  Imagine the possibilities this opens up for Canada.  New world trading partners more world countries trading with us.  More GDP the possibilities just go on and on.

<{POST_SNAPBACK}>

You have never taken an economics course, have you? Or read a book on economics?

[cybercoma]

You have never taken an economics course, have you? Or read a book on economics?

<{POST_SNAPBACK}>

ouch.

[mirror]

You have never taken an economics course, have you? Or read a book on economics?

ouch.

Impressive arguments. Such substantative comments.

Come on now, you have both never been at a loss for something to say so spit it out. Let's hear your brilliant suggestions, because right now you have both provided didley squat to this thread!

[Technocrat]

You have never taken an economics course, have you? Or read a book on economics?

I read a magazine called the economist does that count

Argus wins the asshat award... GJ you win a cookie

Perhaps your post should have read.

"I don't know anything... I pretend to... but I don't... so I’ll make a comment presuming that because I took economics 101 I know more then everyone else in the world in regards to economics. I’m going to be arrogant just for the sake of it... I like pretending I know things... because I so rarely get to feel smart."

In regards to the topic of the post… $65 a barrel is great for the oil companies and all those involved in it. However for your average Canadian will suffer due to higher oil prices. As fuel input prices increase, transportation of input goods and finished goods will increase, this cost increase to maintain target profit levels a company will either have to endure a lower profit margin on each good sold or the increase in cost will be transferred to consumers in the form of higher prices. A great example of this is airline ticket prices; as the price for aviation fuel increases so do the ticket prices. Of course there are other factors such as price elasticity to consider and the ability to switch to alternate technologies... if the price increases to a certain level where the adoption of a new technology becomes beneficial (ie. hydrogen fuel cells for example) then eventually the price for oil may stabilize and fall as demand for oil decreases as the adoption of a new technology/alternate fuel takes place (long run). Economics is a guessing game at best... ask my economist brother. (I will add more to this later after I get some sleep and I can check over what I have written when I’m not about to smash my face into my keyboard due to lack of sleep... I will change topics for now and come back to this later)

Most industry analysts that actually look at the numbers will tell you that the current price for oil is incredibly inflated. Many OPEC countries have been building up massive reserves to try to offset the price increases and demonstrate that there is still an incredibly supply of oil in the world. The other thing that many analysts ignore... especially the doomsayers is that while the known supply of light crude stocks may have past peak levels... technologies have been developed to extract oil from other sources... think Alberta... tar sands.

Projecting commodity prices 15 years into the future is extremely difficult and amounts to guessing.

All that said... Canada does have a vast wealth in natural resources... and in this manner we are extremely lucky, and are likely to benifit greatly from this over time.

[Guest eureka]

The Economist is a great source of information but don't hang your hat on its forecasts. I recall that in January 2004, it predicted the collapse of Gold.

[August1991]

With the rising commodity prices Canada's economy will probably be the best in the world over the next 10-25 years. Today oil hit its highest price ever - $65. Some Canadians just moan and groan. Some Canadians don't realize how fortunate we are.

I'll agree, insomnia aside, with mirror.

The last ice age, some 15,000 years ago, was a great benefit to Canadians, and Russians. By scraping away top soil on the north of the planet, glaciers made our natural resources easy to get.

For the next century or so, the world will have an increasing number of workers but seemingly fixed natural resources. Thanks to glaciers, Canada like Russia is on the right side of the supply-demand graph. A seller's market.

----

Global warming? Only 20,000 years ago, Montreal and Toronto were under a kilometer of ice. (Perspective? The Egyptian pyramids were built 5,000 years ago.)

[Argus]

You have never taken an economics course, have you? Or read a book on economics?

ouch.

Impressive arguments. Such substantative comments.

You expect me to put a lot of time and effort into rebutting your idiotic supposition that because commodity prices are rising Canada is looking at a golden age?

[Argus]

You have never taken an economics course, have you? Or read a book on economics?

I read a magazine called the economist does that count

Argus wins the asshat award... GJ you win a cookie

Perhaps your post should have read.

"I don't know anything... I pretend to... but I don't... so I’ll make a comment presuming that because I took economics 101 I know more then everyone else in the world in regards to economics. I’m going to be arrogant just for the sake of it... I like pretending I know things... because I so rarely get to feel smart."

Sorry. One of the two of us has a life, and I think it's me.

You can spend your time (and did) on a long-winded post disagreeing with a completely unsubstantiated, unsupported guess that because commodity prices are rising Canada is going to have the best economy on the planet. I simply dismissed it as it deserved.

[Toro]

The Economist is a great source of information but don't hang your hat on its forecasts. I recall that in January 2004, it predicted the collapse of Gold.

<{POST_SNAPBACK}>

Yes, and oil going to $5. I still have that one!

[Toro]

I don't know if I agree with mirror or not - and I do have a degree in economics AND work in a field where we actually get to apply economics in good ol' real life. But I don't know if he's wrong either. I think we're in a bull market in commodities, and because Canada is a net exporter of commodities, rising commodity prices are good for Canada as it increases export earnings. Certainly, it takes a bigger chunk out of our pocketbooks and hurts manufacturing, especially the auto sector in Ontario. But on the other hand, its increasing our currency as the loonie heads to $0.90 or higher, which cheapens imports, no small feat for a country who derives 40% of its economy from trade, especially when 80% of our trade is with the country of which our currency is appreciating. That's good for consumers. What is also good is that it should mean lower interest rates as foreigners buy our bonds.

[Argus]

I don't know if I agree with mirror or not - and I do have a degree in economics AND work in a field where we actually get to apply economics in good ol' real life.  But I don't know if he's wrong either. 

Hmm, well, that's certainly the kind of two-headed answer an economist would make.

I think we're in a bull market in commodities, and because Canada is a net exporter of commodities, rising commodity prices are good for Canada as it increases export earnings.  Certainly, it takes a bigger chunk out of our pocketbooks and hurts manufacturing, especially the auto sector in Ontario.

Yes, it hurts all manufacturing, and it hurts the guy in the street - or the roads, as it were, seeing his money drain into his fuel tank. In fact, it hurts all industry, as all industry requires fuel, and requires raw resources. It will cost more to make things, to travel anywhere. It will cost more to heat/cool homes and businesses, to power the equipment used in lumber and mining and fishing

But on the other hand, its increasing our currency as the loonie heads to $0.90 or higher, which cheapens imports, no small feat for a country who derives 40% of its economy from trade, especially when 80% of our trade is with the country of which our currency is appreciating.  That's good for consumers.

Yet that 40% of our economy derived from trade is from exports, not imports. Imports drain money from our economy. It is exports which is our life blood, and as the dollar rises our exports cost more. Our exports to the US have risen some 20% in cost in the last year or two based solely on the appreciating dollar, which is curtailing exports and harming tourism.

What is also good is that it should mean lower interest rates as foreigners buy our bonds.

<{POST_SNAPBACK}>

Unless higher costs lead to the threat of inflation and a rise in interest rates.

Anyway, our rates are more or less tied to the American rates. There is a limit to how much our rates can vary from theirs.

[Toro]

Hmm, well, that's certainly the kind of two-headed answer an economist would make. 

Hey, its gotten me far.

Yes, it hurts all manufacturing, and it hurts the guy in the street - or the roads, as it were, seeing his money drain into his fuel tank. In fact, it hurts all industry, as all industry requires fuel, and requires raw resources. It will cost more to make things, to travel anywhere. It will cost more to heat/cool homes and businesses, to power the equipment used in lumber and mining and fishing

Yet, the Canadian economy has continued to prosper as oil has gone from $20 to $65, copper from $0.70 to $1.50, nat gas from $2 to $7, nickel from $3 to $7, zinc from $0.35 to $0.60, etc., etc., etc.

Yet that 40% of our economy derived from trade is from exports, not imports. Imports drain money from our economy. It is exports which is our life blood, and as the dollar rises our exports cost more. Our exports to the US have risen some 20% in cost in the last year or two based solely on the appreciating dollar, which is curtailing exports and harming tourism.

Ah, mercantilism!

Imports do not drain money from the economy! Imports add to the economy because they give more choices to the consumer - which increases the quality our life - and lowers costs as it increases competition. Besides, foreign earnings aren't worth anything if you can't exchange those foreign earnings for anything!

A focus on exports is hardly a recipe for growth. Germany and Japan run trade surpluses with America - and have for the past 20+ years - while the American economy has run chronic trade deficits, yet America has had a much healthier economy. America has unique characteristics, mainly because the dollar is the prime reserve currency, but the trade surpluses in Germany and Japan have not lead to high growth.

Unless higher costs lead to the threat of inflation and a rise in interest rates.

Anyway, our rates are more or less tied to the American rates. There is a limit to how much our rates can vary from theirs.

But it hasn't. The CRB has doubled over the past 3-4 years and there is no inflation, at least no price inflation.

I don't disagree that interest rates are tied to American rates, but they aren't in lock-step either. If capital is flowing into Canada, that lowers the cost of capital to all Canadians. That is what is happening right now. There is no reason why Canadian bonds can't yield less than American bonds.