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PostPosted: Mon Apr 02, 2012 8:41 am
 




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PostPosted: Mon Apr 02, 2012 9:41 am
 


Caelon Caelon:
eureka eureka:
Wait for the `Free Trade` deal with Japan. Then we will export a lot more raw lumber and a lot more manufacturing jobs.

Alberta beef and B.C. logs along with Central Canada`s jobs as Harper pushes this country deeper into the tank.


Japan due to size and population has become a manufacturing country and as such requires materials from around the globe. It has als built manufacturing plants in manyparts of the world. A significant number of Canadians living in Ontario owe their livelihood to Toyota and Honda. Without the Japanes auto plants there would be that many more Ontarians out of work. And of course Canadians in all provinces get to have jobs at the Japanes dealerships for autos and motorcycles.

Now Alberta beef would be considered a 'finished' product. It started off in a cow calf operation, went through a feedlot, then a slaughter house to a packaging facility. Value was added at each step and Canadian were employed here earning income. The Japanes get to consume the finished product and the value stops about the point the meat entered their mouth.

Looks to me like we win in both areas.

As for Central Canada jobs, the problem is south of Windsor. Putting all your eggs in ones basket depending on the economy of a single purchaser can bite you in the ass. Ontario is reaping the rewards of lack of foresight and it is not the fault of the federal government whether it was Liberal or Conservative.


R=UP

Free trade with Japan will be good for Canadian companies - right now our comapnies face way too many hurdles in getting our products into their market, while they face no such similar hurdles. There are lots of opportunities for Canadian products in Japanese markets, and as consumers, they have much more disposable income than our current #2 trading partner's citizens (China) do.

Free trade with Japan is one of the best things Harper's done while in office IMHO.


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PostPosted: Mon Apr 02, 2012 9:45 am
 


Gunnair Gunnair:
Lemmy, you are a petrodollar denier.


:lol:


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PostPosted: Mon Apr 02, 2012 2:37 pm
 


I believe that you are simply playing Devil's advocate, lemmy. There is no formula that can be applied. No currency is a straight one on one to a commodity price.

In fact, I dfo not think that oil is even close to 10% of our exports. It is, though, the recipient of much more than 10% of new capital investment. Just one of the other factors in the valuation of the dollar.

And, you know it. You would do the forum a service by treating this seriously and informing those two clowns.

Here is one paper that discusses this.

http://www.irpp.org/po/archive/nov11/bimenyimana.pdf

And here is a page of it. Note that one puts oil as 42% responsible. I don't see how it can be specific like that.

http://www.google.ca/search?q=how+much+ ... =firefox-a

More to the point, though, is that it is not a question of whether it is ten or 42%. It is at what level does the impact become greater than our industries can adapt to or withstand.

I am sure that you know all this. I do though I do not know the technical reasoning.


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PostPosted: Mon Apr 02, 2012 2:59 pm
 


eureka eureka:
I believe that you are simply playing Devil's advocate, lemmy. There is no formula that can be applied. No currency is a straight one on one to a commodity price.

In fact, I dfo not think that oil is even close to 10% of our exports. It is, though, the recipient of much more than 10% of new capital investment. Just one of the other factors in the valuation of the dollar.

And, you know it. You would do the forum a service by treating this seriously and informing those two clowns.


Lemmy, I think it would easier on the thread if you simply paid homage to his wiktelligence here. Oh, and admit your wrong. Shouldn't be hard, you being a Fraser and all.


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PostPosted: Mon Apr 02, 2012 6:26 pm
 


eureka eureka:
I believe that you are simply playing Devil's advocate, lemmy.

Nope, not in the least.

eureka eureka:
There is no formula that can be applied. No currency is a straight one on one to a commodity price.

Not just one commodity price but commodity prices at all. We haven't even discussed a host of other factors that influence currency value...some of them that are MUCH more important than export demand and price of any single commodity, such as oil, or even all commodities combined.

eureka eureka:
More to the point, though, is that it is not a question of whether it is ten or 42%.

It's nowhere close to 42%, nor 10%. I MIGHT be 1%, but I'd say even that number VASTLY overstates oil's importance.

The single most important factor in the determination of our currency's value is the overall strength and stability of our economy. Our strong, well regulated banking system and credit markets are the major factor that determines the value of the Canadian dollar. The dollar has appreciated vis a vis the US dollar because of this. The Loonie has become a relatively safer haven for investors as the US economy has teetered. Domestic stability trumps oil sales by a factor of a thousand when it comes to pricing our dollar.

We're also ignoring interest rates. Raise our rate by even a quarter percent and watch the Loonie sail. A quarter percent rise in oil prices won't have NEAR the impact a similar change in interest rates would have.

I would concede that oil is the single most important commodity in terms of export demand's contribution to our currency's value, but that still only represents 10% of the value of our exports. But even so, oil's importance to the overall value of the dollar pales in comparison to several other economic factors.

Gunnair Gunnair:
Lemmy, I think it would easier on the thread if you simply paid homage to his wiktelligence here. Oh, and admit your wrong. Shouldn't be hard, you being a Fraser and all.

"It is plain that the weight of evidence is greatly against me, BUT YE STILL CANNA BEAT ME AT THE PIPES!"



Last edited by Lemmy on Mon Apr 02, 2012 6:39 pm, edited 2 times in total.

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PostPosted: Mon Apr 02, 2012 6:38 pm
 


eureka eureka:
More to the point, though, is that it is not a question of whether it is ten or 42%. It is at what level does the impact become greater than our industries can adapt to or withstand.

Another econonomics 101 lesson for you. Since 1950 to today the Canadian dollar has been below 70 cents US for a total of 5 years. All of those 5 were under Chretien's watch. It has been above $1.00 US for 17 of those years. For your information that included the leaderships of St Laurent, Diefenbaker, Trudeau and Harper. Two Liberals and two Conservatives so it is not a partisan issue. In all the previous periods Ontario adapted to currency fluctuations even though there were US recessions, Canadian recessions, joint recesssions and growth economies.

Canada's 'oil boom' can be traced back to 1947 so if there is such an animal as a petro dollar it is over 60 years old. Nothing new about us having oil resources or it having an impact on our currency along with GDP, bank rates, balance of trade, etc, etc. In all that period Ontario companies learned to adapt to the changing currency values. It is the natural order on currencies that what goes up must go down and what goes down must go up. Ignore history at your own peril and do not expect a 5 year event to be a forever thing.

So what is different in 2011/12? The US is in one of its biggest downturns, which has been compounded by a bank crisis, auto manufacturing crisis and industry bailout packages. House prices have plummeted and unemployment is well above previous values. Obama has promoted 'buy American' policies. (suttle hint: Ontario is not part of the US) If you want to sell to an economy that is in the dumps you better have a product that is competitively priced to US manufactured goods. Or better yet be competitive with offshore goods. And do not expect a currency value that has happened in less than 8% of the last 62 years to be the norm.


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PostPosted: Mon Apr 02, 2012 8:42 pm
 


So what you seem to be saying, lemmy, is that everyone is out of step but youÉ I gave you a link to a whole page of references most of which would not agree with you.

It is also my understanding that foreign money moving to Canada in very significant amounts has been notable during the debt crisis. Not before in any great superiority to the parking in the USA.

Caelon! You need lessons in thinking; not just economics. What if the Canadian dollar has been at or above par fort 17 out of sixty two years. There has not been any movement approaching the oil driven rise of the last decade.

When our dollar has risen against the currency of the market for 80% of our exports (more than that of manufactured goods) by more than 60% in a few years (most of it in just four years), then adaptation is an absurdity. It is not possible.

And that rise exactly parallels the increase in oil prices and exports.

Here is a chart of the dollars.

http://www.cbc.ca/news/interactives/map-history-dollar/


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PostPosted: Mon Apr 02, 2012 8:44 pm
 


The wikfessor has spoken.


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PostPosted: Mon Apr 02, 2012 8:48 pm
 


You're either not paying attention or you're not comprehending. Suppose our entire oil industry (production, capital, and reserves) were suddenly transferred to Rwanda. You think our currency and Rwanda's would swap places on international currency markets? Don't be daft. Oil prices impact the daily fluctuations in the currency value, within a very narrow range. The more important determinations of currency value are pretty stable, so you don't see their impact on the daily swings. That doesn't discount their importance. Long term determination is barely influenced by a single commodity, though again I'll concede, oil's impact is greater than that of any other single commodity. I've tried my best. I'll say no more. Believe what you want to believe.


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PostPosted: Mon Apr 02, 2012 9:11 pm
 


Lemmy,

Do you thing that our resident economic expert would believe a Bank of Canada working paper regarding the impact of oil prices on the Canadian economy stating “the impact is small, so their economic importance is limited,
even for substantial oil price movements.”

Brian DePratto, Carlos de Resende and Phillip Maier, “How Changes in Oil Prices Affect the Macroeconomy,” Bank of Canada Working Paper 2009-31 (December 2009).

We could also point to the almost $100 per barrel drop in oil price in 2008 did not give us a 30 cent dollar, but facts just get in the way of entrenched positions.


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PostPosted: Mon Apr 02, 2012 10:56 pm
 


eureka eureka:


Odd that the period 62-70 is the only stable period in the whole era. I have a feeling that the 'Wild Card' here is the Currency markets themselves. i.e. Depending on the "flavour of the day" the markets will react or evaluate in different ways at different times. As a rather minor factor on the Global scene the $Cdn would be read in the context of a greater picture.


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PostPosted: Tue Apr 03, 2012 6:03 am
 


cougar cougar:
Caelon Caelon:
Then Ontario can have its own low valued currency to prop up its inefficient industries.


The industries are not necessarily inefficient, but many cannot compete with the Chinese cost of labor. The problems are at least two; how come Chinese can survive making $1-2/hour or less; why doesn't Canada protect its jobs instead of promoting the "global market economy?"

It may just turn out the Canadian lifestyle is inefficient (cars for everyone, long distances etc.) but do you want to have the life of the average Chinese worker?


Canadian expectations of its standard of living is a big house and two car garage, car, truck, cottage, and all sorts of luxuries - so they need and demand big wages. Cheap cost of labour means a cheaper product. What do you think will happen to the cost of the products we buy if they were all built in Canada?


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PostPosted: Tue Apr 03, 2012 7:36 am
 


I fail to see how I am being "daft" when I am saying what almost every source of information on this question says.

Here is one more from Natural Resources Canada about how the Canadian dollar tracks oil prices.

"Impacts on Canadian Trade and Currency

Canada’s dollar is often viewed as a petrocurrency because its movements often track oil prices. In February 2008, the price of WTI crude oil closed for the first time at over $100 U.S. per barrel and the Canadian dollar was trading around parity with the U.S dollar. When the price of crude oil collapsed, the Canadian dollar fell to about $0.82 U.S. by November 2008. In late 2009, as oil prices recovered, the Canadian dollar approached parity with the U.S. dollar.

The global economic downturn and the drop in commodity prices led to a weakening of Canada’s trade position. In 2008, Canada’s oil and natural gas exports were valued at $125.6 billion30, or 26% of Canada’s total merchandise trade exports ($483.6 billion).

In December 2008 and January 2009, due to a decline in commodity prices, led by crude oil, Canada recorded its first monthly merchandise trade deficits since March 1976. In 2009, Canada recorded its first annual trade deficit since 1975 due to a decline in commodity prices.

http://www.nrcan.gc.ca/energy/publicati ... rices/1357

There are a thousand such pieces. Technical explanations of how it should be do not seem to fit into the real world.


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PostPosted: Tue Apr 03, 2012 7:41 am
 


eureka eureka:
I fail to see how I am being "daft"

That's the very definition of being daft.


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