I just finished watching my good friend Jeannie Lee on CBC Newsworld explaining the growing strength of the Canadian dollar and the negative effect this will have on Canadian retail and manufacturing. Yes, it is unfortunate that sectors of our economy have become so dependent on the mighty consumption of the American consumer. Let's just have everyone step back and remember that there are some major benefits to a strong Canadian dollar. Our money is now worth more in the world! Every Canadian now has more wealth abroad. Does Winnipeg want their Jets back? Quebec City should have a NHL franchise. A strong Canadian dollar is a precondition to this ever happening. Shit, if the dollar gets strong enough, my dream of putting a team in Whitehorse may become a reality!
Canadian based high technology companies like Research in Motion now have more comparative wealth than their American counterparts. Our government will pay less when it imports hardware from foreign countries. Let's not forget, the Canadian dollar is increasing while the American dollar is falling because we are in much better fiscal shape that the Obama led Yankees. Team Obama is running the show down south about as solid as Ryan Leaf leading the Chargers. We have benefited from a strong banking system and sound fiscal policy. Canada never had a Barney Frank leading a Fannie Mae or a Freddie Mac to the ruin of the real estate and credit markets.
A sector of our economy will suffer, while others prosper. We may want to at least start a transitional shift that lessens our dependence on the American consumer...at least in the near term while Obama is piloting the Hindenburg. The good news is that we have an abundance of natural resources that the world will always demand regardless of where the Canadian dollar stands. A strong Canadian dollar is a brick in the yellow road to the "make it 10" (NHL teams) destination.
There is no question that the strenghening C$ is positive for Canada's major sports franchises. As you point out that is one of the bright lights in the C$ runup. My guess is that the C$ will be at least par with the US$ for 3 to 4 years, until Americans wisen up to the Obama death march and vote him out of office - and that will happen. He is as good as gone....a one-term wonder reminiscent of Jimmy Carter. If the dollar remains high Canadian manufacturing will take a shit-kicking like you've never seen - 25,000 jobs lost for every 1 cent rise in the C$'s value. Manufacturers will need to change their approach or suffer.
ReplyDeleteWhen I was a kid, the Canadian $ was always higher than the US $. Businesses in Canada did just fine. They sold on the basis of quality. Manufacturers may need to get back to that unique idea. Also there are a number of manufacturers who import product from the US that are then used in their end products. Those manufacturers will welcome a stronger Canadian $.
ReplyDeletei agree with anon2. our manufacturers have gotten so used to running inefficient compared to our southern neighbours that it has become an overnight shock to the system. but fear not, when those that survive invest in new technology that they buy stateside for cheaper they will once again be in a great position to strengthen their efficiency and possibly with reduced labour rates as well.
ReplyDeletebrad
Point about the government - my county administration just authorized a new rescue truck for one of the more remote FDs - thanks to the strength of the Canadian Dollar, that fire truck will come loaded with an extra $30,000 of equipment than it would have when the bids first came in.
ReplyDeleteGuys, the Canadian dollar is doing great because we are doing great. Let's just go with it. There are benefits to embracing a strong dollar.
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