Canadian dollar almost at parity with US, will pass it soon

[Wezil]

Originally posted by DanS


They're going to China, however, which maintains a rough exchange parity with the US Dollar.

Yes, but labour is dirt cheap when the convicts do the work.

[Ben Kenobi]

But the dollar isn't "high"! It is at par with the US.

If our productivity were the same I would agree. If the average productivity is 85 percent of the average american, then we know they will be 50 percent above that line and 50 percent below. Of the producers who are more efficient, they will be above the line, and will be making more money then the less efficient producers.

If the dollar were at 65 cents, then everyone makes money, although the more efficient producers still make a bit more, the inefficient ones can still afford to stay in business.

If the dollar is at par, then only the top strata of businesses are going to survive, the ones who can afford to produce when their expenses increase and their revenue goes down.

I don't think it's a bad thing that the dollar is where it is, to me the ideal is where the dollar is priced correctly. I think it's overvalued now, and has been undervalued for the last 10.

Exactly. So you agree? A dollar at par means manufacturuers unable to compete as efficiently as their US counterparts will be in trouble. There will be a marginal loss of jobs with a dollar at par but most of the inefficient companies felt the pain long before now.

Oh, yes I agree, but I hope you understand why I believe that the best price for the dollar would be in harmony with our productivity. Then the dollare wouldn't be over or undervalued.

Yes the crutch is gone.

Indeed. I think this correction will help Canada but hurt us in the short term. Some people obviously have confidence in Canada, but I expect soon that the US dollar will climb again to more normal levels. We have been doing well recently, but still have a long way to go.

[Ben Kenobi]

BK - Btw, it wasn't just the Liberals. I remember the 69 cent "Mulroney Buck".

Oh I was referring to immigration, but as for the fiscal policy, yes the weak dollar has a long history. Almost 30 years now of persistant Canadian fiscal policy to have a lower dollar.

The thing I am interested is if the CDN dollar hits 1.05 USD, which has never happened. It's been at par before but never that high.

[Wezil]

Originally posted by Ben Kenobi


If our productivity were the same I would agree. If the average productivity is 85 percent of the average american, then we know they will be 50 percent above that line and 50 percent below. Of the producers who are more efficient, they will be above the line, and will be making more money then the less efficient producers.

If the dollar were at 65 cents, then everyone makes money, although the more efficient producers still make a bit more, the inefficient ones can still afford to stay in business.

If the dollar is at par, then only the top strata of businesses are going to survive, the ones who can afford to produce when their expenses increase and their revenue goes down.

I don't think it's a bad thing that the dollar is where it is, to me the ideal is where the dollar is priced correctly. I think it's overvalued now, and has been undervalued for the last 10.

But Ben, you continue to advocate for the crutch you blame the Liberals for creating. You just seem to be arguing for a smaller crutch.

Oh, yes I agree, but I hope you understand why I believe that the best price for the dollar would be in harmony with our productivity. Then the dollare wouldn't be over or undervalued.

Again, the crutch for the inefficient. "Okay Cdn workers. We know you try but you just can't measure up to the Americans. How be we tilt the field a bit?" Why the inferiority? We can compete with US workers on an even field. Business that can't compete don't deserve to be subsidized by me (in a low dollar).

Indeed. I think this correction will help Canada but hurt us in the short term. Some people obviously have confidence in Canada, but I expect soon that the US dollar will climb again to more normal levels. We have been doing well recently, but still have a long way to go.

I think what you call a "high" dollar is going to be with us for awhile. AIUI, it is mainly driven by high natural resource prices which I see no indication of slowing down and as I mentioned earlier, the badly inefficient industry has felt the pain long before now. Remaining industry is quite competitive with the US (but not with the 2nd or 3rd world).

[Wezil]

Originally posted by Ben Kenobi
The thing I am interested is if the CDN dollar hits 1.05 USD, which has never happened. It's been at par before but never that high.

I would favour BoC policy to prevent that. Cdn industry doesn't need to be shackled either.

Oh I was referring to immigration,...

Yes, I got caught in a x-post, but I was referring to this -

This recent expansion is an indication that the liberal policy of a weak Canadian dollar has been a crutch for Canadian producers...

As you've agreed, the Libs weren't the only party at fault for this.

I used to get so agitated by the yearly Dog & Pony show put on by Mulroney and his Finance Minister Wilson at budget time. Make no mistake, the Mulroney "Conservative" government was anything but with regard to fiscal policy.

[Ben Kenobi]

But Ben, you continue to advocate for the crutch you blame the Liberals for creating. You just seem to be arguing for a smaller crutch.

Oh, just because I believe that the correct value is 85 cents american, doesn't mean that I believe the Canadian government should intervene to keep the dollar at that value. I believe that if that is the true price, then the market will confirm that over time.

Again, the crutch for the inefficient. "Okay Cdn workers. We know you try but you just can't measure up to the Americans. How be we tilt the field a bit?" Why the inferiority? We can compete with US workers on an even field. Business that can't compete don't deserve to be subsidized by me (in a low dollar).

Enough people seem to believe so. We shall see. If the dollar stays at this level, then this will be a confirmation of what you say here that Canadians can compete with a level dollar. I happen to disagree which is why if I had money I'd be selling all my CDN dollars and buying American.

I think what you call a "high" dollar is going to be with us for awhile. AIUI, it is mainly driven by high natural resource prices which I see no indication of slowing down and as I mentioned earlier, the badly inefficient industry has felt the pain long before now. Remaining industry is quite competitive with the US (but not with the 2nd or 3rd world).

Oh I agree, and that's the interesting thing. Without the lower producers the productivity of Canadians will increase. The question is where ought the relationship be priced? The dollar has had a great run now that the brakes have been lifted. Personally I think it's swung too far the other way, but that's why I'd be selling and you'd be buying

[Wezil]

Why is 85 cents "correct"? Why not 90 or 80? I don't understand why you settle on this number and how it can be anything other than an aid to inefficiency...

[Ben Kenobi]

The latest figures I have seen is that the average Canadian productivity is about 80 to 85 cents on the dollar of each American. That to me says, that if I hire an american or a canadian to do the same work, that I should expect the canadian to produce 80 to 85 percent of the work done by the average american.

http://www.canada.com/edmontonjournal/news/business/story.html?id=c1c37d2a-da36-46a1-8664-0e5e6b98c0f2

Ok, I'm wrong. It's 75 percent.

Where do you feel the dollar ought to be priced? Should Canadians command a premium?

[RGBVideo]

Originally posted by Wezil
Why is 85 cents (of USD per CAD) "correct"?

Originally posted by Ben Kenobi
The latest figures I have seen is that the average Canadian productivity is about 80 to 85 cents on the dollar of each American. That to me says, that if I hire an american or a canadian to do the same work, that I should expect the canadian to produce 80 to 85 percent of the work done by the average american.

http://www.canada.com/edmontonjournal/news/business/story.html?id=c1c37d2a-da36-46a1-8664-0e5e6b98c0f2

Ok, I'm wrong. It's 75 percent.

Where do you feel the dollar ought to be priced? Should Canadians command a premium?

If this answer were written by anyone other than Ben Kenobi, I'd be sure it would be a troll.

[Wezil]

Originally posted by Ben Kenobi
Where do you feel the dollar ought to be priced? Should Canadians command a premium?

I thought that would be clear by now. I like par. I want business to live or die based on their efficiency/productivity/ability to compete and not based on a weak or strong dollar.

[RGBVideo]

Seriously though, I'm delighted to hear that the average Finnish productivity increased six-fold when Finland started using the Euro -- after all, one day (in Feb. 2002) the value of our currency used to be roughly 16.8 euro-cents, the next day when we joined the zone it jumped to exactly 1 euro.

Oh of course, this was slightly flawed logic. The apt logic from Ben Kenobi's economic sourcebook is that the Average Eurozone productivity per capita is approximately 5.945 times higher than the Average Finnish productivity was when Finland joined the Eurozone


Also applying the same logic, the avg productivity per capita in Cyprus is over 2.5 times higher than the avg productivity per capita in US, since the natural market value of Cyprus' £ is over 2.5 times higher than the natural market value of USD. :eek!:

[Asher]

Originally posted by Ben Kenobi
That to me says, that if I hire an american or a canadian to do the same work, that I should expect the canadian to produce 80 to 85 percent of the work done by the average american.

Oh, sweet jesus. My mind is reeling.

[Ben Kenobi]

Seriously though, I'm delighted to hear that the average Finnish productivity increased six-fold when Finland started using the Euro -- after all, one day (in Feb. 2002) the value of our currency used to be roughly 16.8 euro-cents, the next day when we joined the zone it jumped to exactly 1 euro.

And all the prices adjusted themselves accordingly. Yes I am aware of the adjustments that need to be made when working between different currencies. If someone said to me that Finns were half as productive as americans, and their dollar was only valued at 0.15, I cannot assume at face value that their dollar was undervalued.

Same with your example of the Euro. Living standards are not the same in Finland as here, and if 1 dollar CDN buys you about as much as 1 dollar USD, then the comparison is valid. I don't know the conversion formulas for other currencies. Do you? It would be great if you did, because then I would be more accurate. I am making that assumption that a dollar in USD in America buys you as much as a dollar in CDN in Canada.

[Wezil]

I'm a 70% Canadian myself.

[Kuciwalker]

Originally posted by Ben Kenobi
The latest figures I have seen is that the average Canadian productivity is about 80 to 85 cents on the dollar of each American. That to me says, that if I hire an american or a canadian to do the same work, that I should expect the canadian to produce 80 to 85 percent of the work done by the average american.

http://www.canada.com/edmontonjournal/news/business/story.html?id=c1c37d2a-da36-46a1-8664-0e5e6b98c0f2

Ok, I'm wrong. It's 75 percent.

Where do you feel the dollar ought to be priced? Should Canadians command a premium?

/me cries