Thursday, September 20, 2007

Canadian Dollar at Par

CTV.ca | Canadian dollar hits parity with greenback as the US dollar sinks relative to most world currencies. This may strike you as dull and irrelevant but it will certainly affect you far more than anything any politician will wish you to believe.

The American dollar's weakness was evident across most currencies Thursday as it slumped versus the euro, the British pound, the yen and Swiss franc.

And Alexander warns it's important to keep in mind that the exchange rate we watch so closely is the value of the Canadian dollar compared to the U.S. currency.

"In recent years what we've been getting is a rise in the loonie on a strong economy, and commodity prices -- which are domestic fundamentals," he told Newsnet. "But it's also a reflection of weakness in the U.S. dollar, which has been falling against most major currencies.

"And although the Canadian dollar has outperformed the euro and many other currencies in the last year, the reality is most currencies have been going up against the U.S. dollar."


Now, as a USAmerican, you may not be particularly concerned about the impact on the Canadian economy. But remember, this applies to almost every other world currency. Now, next time you shop - for anything - check to see what proportion of your options are actually made in the US.

Everything that is NOT made in the US from US materials will be going up in price. So, yes, international economic policy does rather matter, and policies that tank the domestic economy - such as debt-funded warfare and labor policies that put downward pressure on wages - make it that much work.

But most critically, this is the result of many millions of individual, corporate and national "bets" on the US economy - and increasingly, the smart money bets against the US dollar.

As a fellow citizen, you and I are, unfortunately, the people who are going to have to deal with the fallout of seven years of utterly irresponsible domestic, foreign and economic policy. We - not the blithering idiots inside the beltway - are going to have to rebuild our economy, in the face of hostile world opinion and in the face of thousands of lost industries.

The only question is whether our current federal government will survive the coming... ah... correction. No, there's one more question. Whether it should.

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