11/3/07

The US Dollar Limbo

How low can it go?

The rocket-propelled Canadian dollar flew past $1.07 (U.S.) yesterday, fuelled by strong economic data that have many forecasters wondering whether the economy is decoupling from its troubled southern neighbour.

Canada churned out five times more jobs than expected last month, a stellar showing that sparked a number of forecasts that the loonie is on its way to $1.10, as the greenback continues to dive.

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"We had thought that if the U.S. economy slowed down, the global economy would probably slow down, and that doesn't seem to be panning out as much as people thought," said David Watt, senior currency strategist at RBC Capital Markets.

"If the currency is, to an extent, decoupling from the U.S., then it makes sense to come out with a Canadian dollar forecast which pays less relevance to the U.S. economy."

HOLY BEAVER SHIT! We aren't even relevant to Canadians anymore? Those seem like some pretty harsh words from what little I know about this stuff.

I am no economist, but when Canada - a country with lots of oil that is now talking like the ineluctably superior trading partner of ours in the world, not to mention the fact that they are our largest trading partner in the world - deems us irrelevant economically, we really must be screwed.

The Canadian economy is doing well, but it isn't really that their dollar went up against ours because they are doing so fantasticly compared to everyone else as it is because the American dollar is dropping like a rock everywhere else:
Dollar at fresh low against euro

The euro's value settled at $1.4525, while the dollar also plunged to a new record low against the UK pound, settling at $2.0890.
If you are feeling pretty darn poor right about now, get used to the feeling as long as we continue on this stupid republican path to economic disaster.

Now... I want you to think about this:

Oil is nearly at $100 per barrel, but judging from the tanking dollar some of the price rise must be due to our dollars present lowliness. How long before the world decides that we shouldn't be relevant to the price of Oil anymore because they don't want to price it based on the extremely unstable US dollar?

Like I said: I am no economist... But de-linking oil from our dollar would have to pretty much spell doom for our economy. No?

As a side note... We can't even get our drugs cheaper in Canada anymore because of the roughly 30% increase in costs for American buyers:

Drug-busting loonie?

The loonie's muscle just may have done what U.S. government and law enforcement officials could not.

The strong dollar has "virtually stopped all exports to the United States of cannabis," said Marc Emery, the leader of the B.C. Marijuana Party of Canada.

Five years ago, one pound of Canadian marijuana would cost $1,600 (U.S.). Now it's $2,550 (U.S.) a pound when sold in the United States, he said.

They stemmed the flow of illegal drugs into the country! But they had to bankrupt the nation to do it. I am pretty certain that the price increases will affect all of those people that were crossing the border to buy their cheaper prescription medicines in Canada as well.

We are so fucked...

5 comments:

CT Bob said...

The only positive aspect of this situation is the fact that all Bush/Cheney's wealthy cronies are losing value of the blood money they've made as a result of those toxic policies.

It's almost worth having our economy go down the shitter to see those war-profiteering assholes suffer!

Beach Bum said...

Heard on NPR that one of the tiny Persian Gulf countries that has its currency tied to the dollar might uncouple it and change over to the euro or the yuan. That country's workers are complaining that their paychecks can't buy shit. The guy reporting this story went on to have another person say that if that country and others do uncouple their economies from the dollar it could accelerate to warp speed the greenback going down the hole. Yeah, we are fucked and we don't have any KY around.

Connecticut Man1 said...

"the fact that all Bush/Cheney's wealthy cronies are losing value of the blood money"

I doubt that Bob. Most of those super-rich aren't going to feel this much because they will already have made more than that in other currencies (or gold) they hold. The system is designed so that the uber-rich never feel it as bad as the average guy and the poor, if they feel it at all.

Beach Bum, that ain't good... But the shit really hits the fan when/if oil countries de-link from our dollar. Most countries back their currencies based on gold, but the US is tied into the oil market, from what I understand.

Eric Stepp said...

Beach Bum, you're talking about Dubai. Here's an article in last week's Economist that explains it.

Connecticut Man1 said...

Thanks for supplying the link eric stepp. :)