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Originally posted by jerZ07002 This is also an indication that the world thinks the US is going to ride the financial storm much better than canada, euro countries, japan, the UK, and all the other countries in which the currency is depreciating against the dollar. Funny enough that the world was blaming the US a week ago, and now the world is moving to the dollar for security. ironic.

I think you may be over simplifying this. Certainly, in the case of Canada; the IMF has stated that Canada will outperform all other G-7 countries in growth and that the Canadian banking system is the strongest in the world right now.

I would suggest that the drop in the Canadian dollar is largely due to a decrease in demand for oil. If people aren't buying as much of our oil then they don't need to buy as many of our dollars. Additionally, there is a lot of US money invested in Canada. As the crisis in the US worsens US investors pull their money out of foreign investments, which puts downward pressure on the Canadian dollar.

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Originally posted by RickyM you're just a shit version of Moral Hazard. At least he knows what he's talking about.

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Originally posted by pkcRAISTLIN lol, i love it when moral feels the need to lay the smack down

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Originally posted by Moral Hazard I think you may be over simplifying this. Certainly, in the case of Canada; the IMF has stated that Canada will outperform all other G-7 countries in growth and that the Canadian banking system is the strongest in the world right now. I would suggest that the drop in the Canadian dollar is largely due to a decrease in demand for oil. If people aren't buying as much of our oil then they don't need to buy as many of our dollars. Additionally, there is a lot of US money invested in Canada. As the crisis in the US worsens US investors pull their money out of foreign investments, which puts downward pressure on the Canadian dollar.

valid points. the statement was simplification. i wasn't intending to write a thesis.

i would also suggest that in addition to purchasing less oil, the US would purchase less of everything produced in canada. Since the US is the largest importer of canadian goods, that isn't a good indicator for the canadian economy.

EDIT: would you agree that the drop in the GBP/USD, EUR/USD, KRW/USD is a reflection of a greater perceived weakness in those economies (and subsequent rate reductions) as compared to that of the US? Obviously the valuation of currencies has more variables than just economic strength (i.e., interest rates, cross border transactions, national debt, account deficits, etc...), however, when interest rates in each country have moved downward together, and the other variables haven't moved significantly, my intuition is to attribute the movement to perceived weakness in the economy which has the deflated currency. Especially considering the US just approved increasing its national debt by 1/10th. Normally, such a huge increase in national debt should put downward pressure on the currency value.

Last edited by jerZ07002 on Oct-10-2008 at 15:31

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Originally posted by jerZ07002 valid points. the statement was simplification. i wasn't intending to write a thesis. i would also suggest that in addition to purchasing less oil, the US would purchase less of everything produced in canada. Since the US is the largest importer of canadian goods, that isn't a good indicator for the canadian economy.

+1

+
more oil refineries in the U.S

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Originally posted by jerZ07002 valid points. the statement was simplification. i wasn't intending to write a thesis. i would also suggest that in addition to purchasing less oil, the US would purchase less of everything produced in canada. Since the US is the largest importer of canadian goods, that isn't a good indicator for the canadian economy. EDIT: would you agree that the drop in the GBP/USD, EUR/USD, KRW/USD is a reflection of a greater perceived weakness in those economies (and subsequent rate reductions) as compared to that of the US? Obviously the valuation of currencies has more variables than just economic strength (i.e., interest rates, cross border transactions, national debt, account deficits, etc...), however, when interest rates in each country have moved downward together, and the other variables haven't moved significantly, my intuition is to attribute the movement to perceived weakness in the economy which has the deflated currency. Especially considering the US just approved increasing its national debt by 1/10th. Normally, such a huge increase in national debt should put downward pressure on the currency value.

I agree with you that the Canadian economy will suffer as a result of a downturn in the US economy, as the US is our largest export market. That said, the resulting economic downturn in Canada is likely to be typical of that experienced by any economic downturn in the US rather then a much larger and more veracious animal the ilk of which is taking hold of the US, UK, Iceland, etc. because Canada doesn't have a liquidity/credit crisis. Our financial institutions are still very liquid and they haven't tightened their domestic lending policies (much).

As for the other currencies, I cannot answer with any certainty as I have only given passing attention to what is going on in European and Asian economies. I would; however, agree that perceived economic strength does influence the value of currencies but I think it's a bit of a jump to say that that is the principle reason the US dollar is climbing relative to other currencies. One could just as easily conclude that the rise in the US dollar is due to foreign investors buying US dollars so that they can purchase US stocks on the cheap... which could be interpreted as a vote of confidence in the US economy or as buzzards coming in to pick the meat off the bones of a corpse.

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Originally posted by RickyM you're just a shit version of Moral Hazard. At least he knows what he's talking about.

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Originally posted by pkcRAISTLIN lol, i love it when moral feels the need to lay the smack down

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Originally posted by Moral Hazard I agree with you that the Canadian economy will suffer as a result of a downturn in the US economy, as the US is our largest export market. That said, the resulting economic downturn in Canada is likely to be typical of that experienced by any economic downturn in the US rather then a much larger and more veracious animal the ilk of which is taking hold of the US, UK, Iceland, etc. because Canada doesn't have a liquidity/credit crisis. Our financial institutions are still very liquid and they haven't tightened their domestic lending policies (much).

i agree.

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Originally posted by Moral Hazard I would; however, agree that perceived economic strength does influence the value of currencies but I think it's a bit of a jump to say that that is the principle reason the US dollar is climbing relative to other currencies. One could just as easily conclude that the rise in the US dollar is due to foreign investors buying US dollars so that they can purchase US stocks on the cheap... which could be interpreted as a vote of confidence in the US economy or as buzzards coming in to pick the meat off the bones of a corpse.

The world went on an american asset purchasing splurge last year and the dollar wasn't strengthening. In fact, the entire reason for the increase in purchases of american assets was the weakness of the dollar. A stronger dollar would discourage such purchases.

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Originally posted by jerZ07002 The world went on an american asset purchasing splurge last year and the dollar wasn't strengthening. In fact, the entire reason for the increase in purchases of american assets was the weakness of the dollar. A stronger dollar would discourage such purchases.

Indeed a weaker dollar encourages foreign investment; however, so do deflated asset values (which you now have... of course you're not alone in this but that's not really material here). So if your assets are of a deflated value and your dollar is weak (which it still is compared to historic norms, no?) then people are going to want to buy up assets. To buy US assets/stocks you need to have US dollars... currencies are subject to the laws of supply and demand... demand is increased because foreigners want to buy them and supply is low because financial institutions are holding on to them tighter then talk radio show hosts to Republican talking notes.

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Originally posted by RickyM you're just a shit version of Moral Hazard. At least he knows what he's talking about.

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Originally posted by pkcRAISTLIN lol, i love it when moral feels the need to lay the smack down

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Originally posted by Moral Hazard Indeed a weaker dollar encourages foreign investment; however, so do deflated asset values (which you now have... of course you're not alone in this but that's not really material here). So if your assets are of a deflated value and your dollar is weak (which it still is compared to historic norms, no?) then people are going to want to buy up assets. To buy US assets/stocks you need to have US dollars... currencies are subject to the laws of supply and demand... demand is increased because foreigners want to buy them and supply is low because financial institutions are holding on to them tighter then talk radio show hosts to Republican talking notes.

valid points again....well played with the republican talking notes.

In any event, i just want to reiterate how pleased i am that my canadian vacation this winter (which is good for your economy) is going to be 15% cheaper than the previous year. perhaps even cheaper if airline fares decline because of lower demand and lower oil prices.

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Originally posted by jerZ07002 valid points again....well played with the republican talking notes. In any event, i just want to reiterate how pleased i am that my canadian vacation this winter (which is good for your economy) is going to be 15% cheaper than the previous year. perhaps even cheaper if airline fares decline because of lower demand and lower oil prices.

I'm pleased that another of our American friends is choosing to enjoy our great country and that it will be more economical for him to do so.

With regard to the talking notes thing... nothing pisses me off more then the people who insist on calling stations, using the talking points but not understanding them or being able to defend them. Oh, interesting stat I heard the other day... 97% of US talk radio time is hosted by persons expressing hard right view points... and nearly all of them claim the media is left biased

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Originally posted by RickyM you're just a shit version of Moral Hazard. At least he knows what he's talking about.

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Originally posted by pkcRAISTLIN lol, i love it when moral feels the need to lay the smack down

Bloody hell.

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Whenever you go and buy something, you are affecting someone somewhere, be it environment, a person, or a community - you're making a statement with what you buy. So make it a smart choice ... Its a big picture

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Originally posted by ******** WOW!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! $0.83 ........ this thing is dropping so bloody fast. You'd think the banks were bribed to prop the bailout money to make it worth more until they can spend it. Like between the time of posting this thread and today, the Canadian dollar has almost droped 0.10 on the USD. WOW. The deflating price of oil likely pays into this as Canada is a petrodollar. It is weird how gas prices are going down even though most refineries are in the US. Canadian dollar takes steepest one-day dive http://ap.google.com/article/ALeqM5...I_KN7QD93NU35G4

Thats why I said Bloody Hell. Heck, oil prices dropped 7 bucks today, too.

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Whenever you go and buy something, you are affecting someone somewhere, be it environment, a person, or a community - you're making a statement with what you buy. So make it a smart choice ... Its a big picture

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Originally posted by ******** WOW!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! $0.83 ........ this thing is dropping so bloody fast. You'd think the banks were bribed to prop the bailout money to make it worth more until they can spend it. Like between the time of posting this thread and today, the Canadian dollar has almost droped 0.10 on the USD. WOW. The deflating price of oil likely pays into this as Canada is a petrodollar. It is weird how gas prices are going down even though most refineries are in the US. Canadian dollar takes steepest one-day dive http://ap.google.com/article/ALeqM5...I_KN7QD93NU35G4

Well you know, the world is flocking to buy US government treasury bonds, which sends the dollar skyrocketing.

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Originally posted by Krypton Well you know, the world is flocking to buy US government treasury bonds, which sends the dollar skyrocketing.

you mean abandonning stocks for good old bonds?

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