Short Sightedness Over the Strong Canadian Dollar

I've been stewing over this for awhile.
It's really bothering me that the media has been so fixated on the down side of a strong dollar. It sounds like doom an gloom, but there some benefits that no one is really talking about.

For starters, retailers are looking at lowering prices. When was the last time you heard of prices going DOWN? Not just on commodities, but on staple goods too. This is because retailers are getting their imported US products for less and because they want to keep you shopping on this side of the border.

High tech businesses are being presented with a fantastic opportunity for expansion through hardware purchasing. I work for a major cable company and I've been hearing lots of excited talk over cheaper fiber optics (meaning they can expand their network and improve your phone/internet services).

Finally, it presents our Government with an opportunity to reverse some of the hollowing out that has happened to our country over the last couple decades. That huge surplus they announced could be used to buy back much of our resources, assets, and manufacturing that have been sold off. They could purchase thes things back (at a profit) and nationalize them... ensuing that they benefit Canadians properly.

While it remains true that certain sectors will take a hit from the high Loonie (most notably Tourism), I think the good side could drastically over shadow the bad.

But only if we (the people and the Government) use this opportunity.

Thoughts?

Well, this is good news for Canadian consumers.

There's plenty of upside to having our dollar this strong.

An excellent example is my beloved Vancouver Canucks. They pay the players in US money, so their payroll has gone down. This won't translate into lower ticket prices or Stanley Cups, but they must be pleased about it.

Lots of stores around here have announced that from now on, if there is a US price and a Canadian price on something, you now pay the US price. That's pretty cool considering that's $3 savings on a book ($15-$20 if it's hardcover) and around $2 on magazines.

[edit on 4-11-2007 by Duzey]

Another issue that I forgot to address in my original post is the issue of our export market/US trade. Fact is, most of our trade is resource and energy based. This is a market that the US cannot simply walk away from. Without our exports, homes would not be built, the lights would not go on, and the people would go hungry. It is not an economically viable option for them to turn to overseas markets due to the overhead of shipping. The only other trade partner that can compete with Canada in this area is Mexico and they do not have the production needed to meet American demand. Thus, while commodity export to the US will be negatively effected, the net effect of a strong dollar is to increase Canadian revenues.



The main point I wanted to raise is the issue of our (rather huge) surplus combined with the strong dollar.

While Harper wants to piss it away by buying votes through reduced taxes, I strongly believe that we need to maintain current taxation and use the money to invest in/buy back our country.

I'd like to see a return to the socialistic roots of Canada through the government purchasing resources and production that has been sold off to foreign interests. It is a strategy that would equip us in the future to ensure that Canada can look after it's own best interests instead of being at the mercy of the giant to the south.

Maybe I'm a bit strange in my lack of personal greed, but I'm quite happy to pay my taxes if it serves my country and countrymen. Harper's bribe will not buy my vote and I refuse to accept that we should impair our growth in order to serve the interests of the US.

This is not something that will happen without action from the Canadian people. The Liberals AND Conservatives have far too many friends in the privet sector that would loath to be in competition with Crown Corporations. The NDP retains some of Canada's Socialist roots (and thus is the most likely major party to take up this course), but I'm not convinced that they have to conviction to see this sort of thing through.

The first step towards this possibility is making people aware that it is an option. Then we need to lay the pressure on.

Wouldn't it be nice to return to Canada for Canadians?

I think you may be on to something BitRaiser. The repurchasing of our former national corporations, in my opinion, would be a great thing. The problem is we are then stuck with the government running them. And again in my opinion, that isn't such a good thing. There track record with crown corporations isn't a good example of sound business decision making. They didn't make every decision a bad one, but if we put the good and bad on a scale, I'm sure we know which side would be heavier. Add to that the fact that the companies would be staffed by patronage appointment's and there is a recipe for disaster.

The Nationalization of our natural resource's would be benefical to all of us. Keeping our energy and minerals out of the hands of foreign private companies I think is imperative to keeping Canada "Strong and Free". Once the privatization of commodities like water start, we begin down a tunnel that doesn't have a light at the end of it, just a brick wall.

Did you know that 70% of the energy produced in Canada is exported to the US. That's a staggering number. There also starting the push towards PPP's on our fresh water supplies. What a joke. A publicly funded, private company sells our water back to us at a profit, with no benefit to us, the people that funded it in the first place.

While it's true that in many areas, Crown Corporations did not do very well, in some others they did much better than the privet sector that has taken over.

Translink (the company that handles mass transit in Vancouver) has raised prices significantly, while providing increasingly poor service. It's becoming a serious problem. The morning commute into downtown Vancouver via is nightmarish at best. They don't run enough trains, they don't put enough of the longer trains in service and there are failures/delays way too often (which often result in thousands of workers being late for their downtown jobs). I heard from a Translink employee that the "Expo" trains (which are the most common) were all supposed to be removed from service years ago. They are more than 20 years old and are falling apart. Translink won't shell out for the new trains because they are trying to squeeze as much out of the old ones as they can (for profit reasons).

BC Tel is another good example of a company that was better run by the Government than private interests. Since Telus took over, there's been major problems with labor (they are evil to work for) and again prices have increased while service has diminished.

The recently taken over BC Fairies also is starting to show problem. They won't put extra sailing on to handle increased loads during high volume while when it was run by the government, they would bring in extra boats whenever lines became too long. Now you have to suffer extended (sometimes multi-sailing) waits during the holidays.

The common tie between all these companies is that they've focused on becoming profitable rather than being a good service. This is what the private sector does. The bottom line is the only thing that is important. With a national (or Crown) Corporation, you can intentionally run at a loss in order to provide better/more affordable service to the people of Canada.

The mighty dollar.

A phrase that is a double edge sword in my opinion.

Over all the surge in the loonie has had investors start to take a serrious look at what our economic power as a nation. Granted a great deal of that economic power comes from our vast non renewable enegery resources. As one person in this thread stated 70% of the engery we produce is exported to the United States.

Over all a strong Canadian dollar will add a boon to our society. It will aid national programs such as health care and education. A strong dolloar will also place presure on international business importing products from accross our border or overseas to remain competetive.

I like the sentiment of the OP in how they expressed that as a nation these surplus dollars will help us reinvest in our country. While a great many Canadians do no see the big picutre when it comes to a national level the use of that money would ensure the future of this nation.

While looking at the internal effects, effects with in our own borders, Canadian bussines will have a strong arm at the negociating table when they need to purchase prodcuts in country made by other Canadian businesses. Yes it will allow business to look else where for products that are reduced in cost of labour and it will also give them an opportunity to invest in those foreign businesses to increase their potential product availability over seas.

While it's always nice to have a "ha in your face U.S.A." because of our dollar we must be prudent in our undrestanding that a great many Canadian businesses were very lucky because of the previous low. They were able to have foreign businesses invest in them and purchase their products at a greatly reduced rate. More $$ in due to a lower dollar means more investment and greater ability to keep employees employed.

As our dollar continues to ascend we will see a influx of lower prices accross the board. However we will also see a drop of dollar in the future.
Further to that interests are soon going to increase as well.

This situation reminds me of the 1980's after the NEP was implmented where intrestse rates where as high 14% in some cases and the dollar was any where between 72 and 79 cents against the U.S. dollar all due to a program of profit sharing between the provinces because of engergy resources. Personally I'm not a fan of the NEP and thought it was simply a tactic to throw more money down the black hole that is Quebec.

I just hope that when the dollar does fall those people who could invest properly get out at the right time.

High dollar means high times for the consumer and industry as a whole.

Unfortuantely and as always; All good things will come to an end.

Thank you all for your time,

Arcticnull