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Old 09-21-2007, 08:13 AM   #21
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Well, at least somebody on our continent gets to enjoy it.
And don't forget $100/barrel oil is just around the corner. With the distances between points of interest in Canada a bit greater, travel expenses rise too. Living in Canada will be like living in Texas . . . but colder. And fewer varmints.
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Old 09-21-2007, 11:59 AM   #22
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We have 20-30 years' worth of oil in the Alberta tar sands that we will be happy to sell you. When that runs out, we've got a lot of hydroelectric power just waiting to be tapped.
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Old 09-21-2007, 12:54 PM   #23
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We have 20-30 years' worth of oil in the Alberta tar sands that we will be happy to sell you. When that runs out, we've got a lot of hydroelectric power just waiting to be tapped.
You don't have to tell me. The nice part right now is that one doesn't have to convert Canadian divis into real Merkin money with everything 1:1. At least this week. Everything's sweeeeeet.
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Old 09-22-2007, 09:43 AM   #24
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I believe that the outlook for the U.S. dollar is grave. A lot of people (including me) around the globe have been accustomed to being able to use the U.S. dollar. For as long as I can remember, it was treated as a rock solid asset, but one should remember that, after all, it is really just paper that signifies a trust in America's solid base of gov't and economy.

America doesn't produce substantially for export anymore. Their natural resources are mostly used at home, and they import lots more items and commodities than they export. It's a model that can't work. The dollar's value is now only supported by the hope and speculation that the country can somehow pull itself out of debt, and to a lesser extent that the war machine is huge and can, for better or worse, impose Americas will.

If those U.S. dollars that are stuffed under mattresses and held by foreign gov'ts overseas are traded in for the currency of a democratic country with a responsible spending system, whose economy is based on real exportable assets, then I fear the worst for the U.S. citizens, and especially for those who attempt to save money. For now, it is in these foreign gov'ts best interest to hold onto and keep accepting the U.S. dollar because the U.S. buys nearly everything that they manufacture or produce. Eventually, (and I mean soon), some nation will reach a point where they make the decision to not sell to the States anymore since every dollar that they take in is devaluing at a fast rate, and when that happens others will follow. Those nations will sell those U.S. dollars and probably buy Gold or the Euro or some other more stable currency with whatever they get for the dollars. Sure it will badly hurt their manufacturing and export industry but accepting monopoly money for your real goods is insane.

With the Fed rate cut, and potentially more cuts to come, coupled with Americas importing economy, I don't see anything but inflation of the U.S. dollar. The cuts do keep Wall Street on life support though.

The only medicine that will bring value back to the dollar, and to bolster Americas worldwide image as a responsible common sense nation tastes very bad. Interest rates must be raised a lot. This would certainly hobble the American economy, and sadly the citizens who for decades have become accustomed to the best standard of living in the world by far, would be in for some very humbling times until the economy sorts itself out and the hangover from the spending binge ends.
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Old 09-22-2007, 12:06 PM   #25
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This would certainly hobble the American economy, and sadly the citizens who for decades have become accustomed to the best standard of living in the world by far, would be in for some very humbling times until the economy sorts itself out and the hangover from the spending binge ends

Grizz,

thanks for your optimistic analysis of our economic future here in the states. But before thinking that any upcoming crisis would be solely an American one, I urge you to step back and look at the global picture. In the business world in Europe, they have a saying, which translated loosely says "when America sneezes, the rest of the world catches a cold". What it refers to is the fact that like it or not, America is still by far the largest economy in the world. If that economy takes a hit, it will be felt worldwide. China, India and Europe's economies are relying on export industries that are heavily dependent on Americans to buy their products; they in fact have been the beneficiaries of what you call our spending binge. If our economy slows, these companies will feel the pinch (they alrealy do because of the weak dollar, and that will only get worse as the dollar weakens). They might have to slow down their production lines, lay off people and their country's economic growth is going to take a hit. If global growth takes a hit, then global demand for commodities will decline (as will commodity prices). Countries that heavily depend on exporting commodities will see their revenues decline as a result. Your good country of Canada would be doubly affected by any economic crisis in the US: 1) your exporters would lose a big chunk of their business and 2) your economy would take a hit from lower global demand for commodities since Canada is an important producer of natural ressources. So I believe this is in no one's best interest to let things go too far in the wrong direction. Last month we had another reminder of the interconnectivity of our global economies: when the subprime mess hit the US, the pain was felt far beyond our borders.
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Old 09-22-2007, 12:58 PM   #26
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Grizz,

thanks for your optimistic analysis of our economic future here in the states. But before thinking that any upcoming crisis would be solely an American one, I urge you to step back and look at the global picture. In the business world in Europe, they have a saying, which translated loosely says "when America sneezes, the rest of the world catches a cold". What it refers to is the fact that like it or not, America is still by far the largest economy in the world. If that economy takes a hit, it will be felt worldwide. China, India and Europe's economies are relying on export industries that are heavily dependent on Americans to buy their products; they in fact have been the beneficiaries of what your call our spending binge. If our economy slows, these companies will feel the pinch (they alrealy do because of the weak dollar, and that will only get worse as the dollar weakens). They might have to slow down their production lines, lay off people and their country's economic growth is going to take a hit. If global growth takes a hit, then global demand for commodities will decline (as will commodity prices). Countries that heavily depend on exporting commodities will see their revenues decline as a result. Your good country of Canada would be doubly affected by any economic crisis in the US: 1) your exporters would lose a big chunk of their business and 2) your economy would take a hit from lower global demand for commodities since Canada is an important producer of natural ressources. So I believe this is in no one's best interest to let things go too far in the wrong direction. Last month we had another reminder of the interconnectivity of our global economies: when the subprime mess hit the US, the pain was felt far beyond our borders.
Sorry, I didn't wear my rose colored glasses today. There are definite benefits to a weaker American dollar for me, but I don't want to see it devalued out of sight any more than you do because you're right about the sneezing analogy, which I did allude to in my post. It's a given that pretty much every other developed country will get hit hard, and yes, the one I reside in will too. I doubt if any nation will be hit as bad as the states though, and I doubt that most other nations will take as long to recover.

Just to be clear, I'm not sitting up here in Canada gloating or laughing at you or your country. I think that many economic policies in my own and other countries around the world are short sighted and I'd be saying the same thing if I was a flag waving citizen of your country. The only reason that I am posting on U.S. policy is that nobody here probably cares to discuss Canadian economic policy because it doesn't have the ability to rock the world.

A couple of yrs ago I would always quote projects for my overseas customers in U.S. dollars. All of my competitors did too. Many people and businesses had an American money bank account. Nobody does anymore for obvious reasons. You can ignore the downward dollar trend and keep trying to save those constantly devaluing American dollars, or you can diversify into something else until the bleeding stops.
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Old 09-22-2007, 03:57 PM   #27
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Just to be clear, I'm not sitting up here in Canada gloating or laughing at you or your country. I think that many economic policies in my own and other countries around the world are short sighted and I'd be saying the same thing if I was a flag waving citizen of your country.
I must admit that I did feel a bit of gloating in your posts, maybe it was my mistake. Right now, many people around the world can't wait for the US to fall on its face, but I want to make sure that people are careful about what they wish for. However, you misunderstood me on one point. I am not a flag waiving citizen of the US. In fact I am not a US citizen at all!

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The only reason that I am posting on U.S. policy is that nobody here probably cares to discuss Canadian economic policy because it doesn't have the ability to rock the world.
Personally I would love to hear your views on Canadian economic policies. I think many countries around the world could learn from Canada.

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You can ignore the downward dollar trend and keep trying to save those constantly devaluing American dollars, or you can diversify into something else until the bleeding stops.
The dollar devaluation is a fact that can't be ignored! So I do diversify! In fact I have quite a bit of money invested in Canada (and I have been loving those returns for the past 3 years).
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Old 09-22-2007, 06:47 PM   #28
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For now, it is in these foreign gov'ts best interest to hold onto and keep accepting the U.S. dollar because the U.S. buys nearly everything that they manufacture or produce. Eventually, (and I mean soon), some nation will reach a point where they make the decision to not sell to the States anymore since every dollar that they take in is devaluing at a fast rate, and when that happens others will follow. Those nations will sell those U.S. dollars and probably buy Gold or the Euro or some other more stable currency with whatever they get for the dollars. Sure it will badly hurt their manufacturing and export industry but accepting monopoly money for your real goods is insane.
Makes sense to me.
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Old 09-23-2007, 02:22 AM   #29
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And anyone who stays heavily invested in equities with this storm headed our way, well, don't start crying when the market retracts 25-50%.
It has before and I was 100% invested in equities, and today I am still 100% invested in equities--50% US and 50% international, with a fair piece in Vanguard's energy index fund--and this philosophy has rewarded us very well.

Stay diversified and stay the course. Take advantage of buying opportunities. The Brits have a saying: Fortune favours the bold. Believe it.
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Old 09-23-2007, 02:25 AM   #30
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Take advantage of buying opportunities.
In that spirit, consider UTS Energy and Imperial Oil, both hit by recent bad news from regulators in the tar sands. (I don't buy individual stocks anymore, so don't sue me if it doesn't work out.)
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Old 09-24-2007, 11:50 PM   #31
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I think that the financial authorities have been encouraging a drop in the US dollar for some time now. It's not so much that the US$ has dropped in relation to the Canadian$, it's that the US$ has dropped in relation to the euro. The idea is that the US will now be more competitive in trading abroad and there will be more exports, reducing the balance of trade deficit.
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Old 09-25-2007, 10:03 AM   #32
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It's not so much that the US$ has dropped in relation to the Canadian$, it's that the US$ has dropped in relation to the euro.
You're right. The dollar has dropped in relation to most major currencies.

This is not really a Canadian success story; rather, it is the saga of the gradual decline of the American empire.
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Old 09-25-2007, 12:57 PM   #33
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But the real problem for US trade is China where the Yuan is going down with the USD, preventing any correction there. The best news for us Canucks is that the Euro is now $1.40 and the Mpeso is 10.9/USD.
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Old 09-25-2007, 10:58 PM   #34
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You're right. The dollar has dropped in relation to most major currencies.

This is not really a Canadian success story; rather, it is the saga of the gradual decline of the American empire.
I'm not in total agreement on this one. Canada has always had a "petro-currency". With oil seemingly in the drivers seat in the world right now, and with wheat, uranium, metals mining, and fresh water getting a lot more attention of late, I expect that the CDN$ would have made some ground on the U.S. dollar even without the unfortunate situation that the U.S. currency finds itself in.

I'm also not convinced that the U.S. empire is declining, but rather going through the early stages of what I believe will be a very painful shift from unabated borrowing and consumption to a more frugal economic strategy with manufacturing and exports taking the lead (lean 'n mean). If any country can turn it around, it's going to be the U.S. You can't find more patriotic citizens anywhere in the world who out of pride alone won't allow the U.S. to fail, also with a democratic political system, modern infrastructure and I suspect some of the best technological abilities in the world, the economy will have a solid base to re-start from.
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Old 09-26-2007, 02:53 AM   #35
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I'm also not convinced that the U.S. empire is declining, but rather going through the early stages of what I believe will be a very painful shift from unabated borrowing and consumption to a more frugal economic strategy with manufacturing and exports taking the lead (lean 'n mean). If any country can turn it around, it's going to be the U.S.
I agree. We go through down cycles (in certain areas of our overall economic mechanism). We are in one now. At the same time, we have increased competition on all sides of the equation... manufacturing products and providing services and to purchase products and services. The Iraq war is a distraction that takes our eye off the ball!

It is a matter of priorities. The end of the cold war left us with new and different challenges. In the new world there are certain capabilities that are in our strategic economic interest. We need to be focused on the right things at the right time. Protectionism will not work. We need to use the forces that are happening today to our advantage rather than try to fight them. It is our game to lose!
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Old 09-26-2007, 07:52 AM   #36
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You can't find more patriotic citizens anywhere in the world who out of pride alone won't allow the U.S. to fail.
If pride is all it takes to counteract economic woes, I'm sure that many other countries would be funding lavish state-supported parades, picnics and flag-waving displays.
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Old 09-26-2007, 09:52 AM   #37
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If pride is all it takes to counteract economic woes, I'm sure that many other countries would be funding lavish state-supported parades, picnics and flag-waving displays.
Things will need to get much worse than they are now, but I think that if both main political parties were to promote a "tough love" reform type of mandate to turn the country around, that the citizenry would get behind it and tow the line rather than having a bunch of civil strife as would happen in countries who aren't as steadfast in their belief (right or wrong) that their country and its core beliefs are the greatest on the planet.
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Old 09-26-2007, 10:25 AM   #38
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YTD Performance:
C$/US$ - +16.5%
C$/Mpeso - +18%
C$/Euro - +6.6%
Clearly the currency strength is more than just USD decline.
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