[OAC_Sparky]

habmann,May 30 2007, 08:16 PM Wrote:From an economic point of view i'm sure if this is good for canada. But from a car guys point of view, i love the dollar being as high as it is. Makes bringing parts up from the states so much cheaper.
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Reality is it's not that the Canadian dollar is high, it's that the USD has fallen against other world currencies based on their debtload, both because of their war in Iraq and because of the level of imported goods they get from esp. China . As their dollar drops it could put pressure on US inflation (because it costs more to import goods) and normal the solution to that is to raise interest rates. If the US interest rates start to rise, the Bank of Canada will need to raise theirs to keep Canadian investment attractive -- the downside is that everything from mortgages to cars to credit etc. will cost more. This will absolutely kill the 0% down homebuyers and those that are already housepoor/overextended, and could kill a lot of economic growth here. If the US drives itself into a depression, you can bet that Canada will be 2 steps behind them.

It's also not really good for Canadian manufacturing; the US is our biggest trading partner, when our products cost more to the US consumer they go elsewhere for their goods. A good example is the Automobile industry. The exchange rate (in conjunction with government-run healthcare) gives Canada a competitive advantage second only to Mexico. This could tip a lot of investment the other way.

It also hurt some business in Canada that deals with the NYSE. Personally I recently sold stock that made 10% on paper but because the CAD rose against the USD the real yield was only .3% (yes...that's POINT 3 %).

OFC, if you buy US stock not and the CAD does go back down, then you stand to make some. Unfortunately, it looks that the dollar isn't going to go anywhere fast.

So enjoy the cheap parts and vacations now, tough times and higher prices on nearly everything else could be coming.... :huh: