$this->bbcode_second_pass_quote('Tyler_JC', '
')Canada's currency is arguably backed up the country's large trade and current account surplus as well as its wealth of natural resources.
Canada's oil reserves are among the largest in the world. With the potential for polar/artic oil and gas, these reserves are even more valuable.
Arguably, the Canadian dollar is on the oil standard.
PeakOil is You
THE Canadian Dollar Thread (merged)
Re: The true value of the Canadian Dollar
by MOCKBA » Thu 31 Jul 2008, 18:11:27
The major flaw in this reasoning is the fact that natural resources represent single digit percentage of Canada GDP (was around 5% at the turn of the century) of which energy is 60% of which oil is 40% at best... So give or take Loonie is "backed by oil" at around 2-5% at best...
At the same time industry/manufacturing accounts for roughly 30% of GDP (the rest is services since agro is around 2%), so the Loonie is mostly "backed" by those sectors that already lost competitiveness because of overvalued currency and mediocre improvements in productivity.
Things do not look very bright on Canada trade balance going forward and we will see trade and budgetary deficits before currency corrects, industry and services become competitive again and demographics problem/health care liabilities are addressed.
One shouldn't discount minority government ready to be voted down any time on any bad news and split in "multicultural Canadian society" which is a ticking bomb as well. So overall sale of all the gold by BoC is tiny issue compared with everything else that awaits Canada in the future...
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Re: The true value of the Canadian Dollar
by Snowrunner » Thu 31 Jul 2008, 19:38:55
$this->bbcode_second_pass_quote('MrBill', 'T')hat is so not true! Some people believe they can post any old nonsense. I cannot even bother to correct you. See Tyler's post above for some correct analysis!
"So not true"? Has something changed since I looked last year in detail at the BoC and what it is doing?
How is the monetary policy of the BoC in any way in the interest of Canada? The big business as well as the BoC stare transfixed south of the border and just follow along whatever happens there.
But please, prove to me where the BoC is acting in a way that guarantees a long term stability of the Canadian Dollar.
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Re: The true value of the Canadian Dollar
by Snowrunner » Thu 31 Jul 2008, 19:46:04
$this->bbcode_second_pass_quote('MOCKBA', 'T')he major flaw in this reasoning is the fact that natural resources represent single digit percentage of Canada GDP (was around 5% at the turn of the century) of which energy is 60% of which oil is 40% at best... So give or take Loonie is "backed by oil" at around 2-5% at best...
What's worse is that most of these resources are sold "as is", there is very little upgrading happening in Canada and essentially once it's out of the ground it's out of the country.
$this->bbcode_second_pass_quote('', 'A')t the same time industry/manufacturing accounts for roughly 30% of GDP (the rest is services since agro is around 2%), so the Loonie is mostly "backed" by those sectors that already lost competitiveness because of overvalued currency and mediocre improvements in productivity.
Both industry and politics have failed the Canadian people BIG time on this one. It is ironic that Trudeau back in the 70s warned about only to rely on the US for Canada's prosperity, and yet, Ontario didn't learn and kept chugging products over the border.
Lately, the Government on all levels has rather propped up the dying auto industry rather than give incentives to new companies and business fields.
$this->bbcode_second_pass_quote('', 'T')hings do not look very bright on Canada trade balance going forward and we will see trade and budgetary deficits before currency corrects, industry and services become competitive again and demographics problem/health care liabilities are addressed.
It's already on the Horizon, the "glimpse" at the current budget is a big warning sign, but I doubt it will be seen. Flaherty with his track record is the wrong guy at the helm on that one.
$this->bbcode_second_pass_quote('', 'O')ne shouldn't discount minority government ready to be voted down any time on any bad news and split in "multicultural Canadian society" which is a ticking bomb as well. So overall sale of all the gold by BoC is tiny issue compared with everything else that awaits Canada in the future...
I don't think the multiculturalism is necessarily bad. It could actually proof as a boon as it gives Canada a "personal connection" to other parts of the world that may be interested in the resources or finished products.
The problem is that the Government would need to encourage new startups with new ideas and products and the BoC would need to stop staring at the Fed and the idiots at the heads of large Canadian Corporations who seem to be envious of the US and try to duplicate the "effort" of their compadres down south.
It willl be interesting... Canada's problem is that all the manufacturing and most of the people are out east, while a majority of the desirable resources are out West.
I have to wonder if Canada as a nation could survive a depression, I am starting to think this may not be the case.
