Article: US$ Situation.

[rvijay]

What do all the frugal people here think of this article ? How much will the US$ decline in value ? How will this affect the pockets of the small wage earner ?

http://www.atimes.com/atimes/Global_Economy/GA07Dj01.html

Thanks in advance for sharing.

Vijay

[Ludi]

I think a severe recession is likely, but I'm going through a pessimistic phase and see disaster looming everywhere. So don't mind me....

[newstars]

Canadian economists are predicting the CDN dollar to reach 90 cents to $1 US this year. Some are even predicting the CDN dollar to surpass the US dollar. Kinda sucks for me cause most of my business comes from the US in US funds.

[FalafelsRule]

I should move to Canada. Everything is better about that country anyway, IMO. (well not the cold weather and the wait for decent healthcare, at times). Now, to top it off, their dollar is going to be worth more?

That is "Bushonomics" for you. I know there are pros and cons to a weak dollar, but seriously, the weaker the dollar gets, the more other nations will invest into other, more powerful currency.

[rvijay]

It actually works the other way round. A weaker local currency will attract more tourists and make it easier for foreign buyers. Also see my other thread here about Are good jobs disappearing in Canada ? This is a national report. Rent/Insurance is also quite high. Every place has its problems and the other side is always green. Bottomline, life seems more challenging everywhere these days.

Vijay

[Daral]

It actually works the other way round. A weaker local currency will attract more tourists and make it easier for foreign buyers. Also see my other thread here about Are good jobs disappearing in Canada ? This is a national report. Rent/Insurance is also quite high. Every place has its problems and the other side is always green. Bottomline, life seems more challenging everywhere these days.

Vijay

No, it doesn't work the other way around. And anyways, investment doesn't necessarily depend on whether a currency is overvalued or not, what matters is stability, and whether its appreciating or depreciating. Then you also have to take into account inflation and interest rate.

Investment will be highest in the country that has the greatest: (appreciation %) - (inflation %) + interest rate, because that's the effective return they will receive in nominal terms in their local currency.

With the dollar depreciating, we can expect a decrease in foreign investment unless the government boosts interest rates, which they're expected to do.

[rvijay]

Here is what I see in Canada. A higher Canadian Dollar hurts exports as the buyers have to pay more. Also lesser tourists as they get less value ffor their money. When the Canadian DOllar is low compared to the US$ business booms, also more tourists here.

Vijay

[newstars]

Here is what I see in Canada. A higher Canadian Dollar hurts exports as the buyers have to pay more. Also lesser tourists as they get less value ffor their money. When the Canadian DOllar is low compared to the US$ business booms, also more tourists here.

Vijay

The film industry here is hurting as well. I talked to quite a few people in the industry (actors, make up artists, etc...) and work is very hard to find right now.

As well, many exporters are reporting significant losses in profit due to the exchange rate alone, which has gone down 20 cents to the dollar in just 2 years. That's a lot of money to a small business like mine, it's a lot more money to the big businesses.

So to respond to Daral's comment, it does work this way around. At least for a lot of us.

[epski]

Does this article at all address how much of our country is owned by other countries? I don't have time to read it now.

[remilard]

Does this article at all address how much of our country is owned by other countries? I don't have time to read it now.

I'm assuming you are talking about the U.S. budget and trade deficits which are financed by other countries (even though that isn't foreign ownership based on any reasonable definition of any of the words above). If that is the case, yes the article mentions it (it is the sole reason countries are dumping US dollars which is the sole reason the dollar is losing value).

[newstars]

Does this article at all address how much of our country is owned by other countries? I don't have time to read it now.

Check out the Vanishing Country by Mel Hurtig. It's all about that. I've been meaning to pick it up for years, but just never had the money at the right time. I saw an interview with him on TVO and some of the numbers were scary.

[epski]

I'm assuming you are talking about the U.S. budget and trade deficits which are financed by other countries (even though that isn't foreign ownership based on any reasonable definition of any of the words above). If that is the case, yes the article mentions it (it is the sole reason countries are dumping US dollars which is the sole reason the dollar is losing value).

I'm talking about 2/5 of our national debt being held by foreign countries, like China.

[remilard]

I'm talking about 2/5 of our national debt being held by foreign countries, like China.

Would you care to explain how our owing debts to foreign countries is the same as those countries owning the United States?

I have student loans, held by Sallie Mae and Wells Fargo that probably roughly equal my current net worth. Is that to say that I am owned (or my property for that matter) by those institutions? I thought it simply meant that, under normal circumstances, I was obligated to repay them.

[epski]

You're too literal sometimes, Remi. And, in a sense, if you're working to live, instead of living to work, I do think that, figuratively anyway, Sallie Mae and Wells Fargo own a piece of you.

[Daral]

The film industry here is hurting as well. I talked to quite a few people in the industry (actors, make up artists, etc...) and work is very hard to find right now.

As well, many exporters are reporting significant losses in profit due to the exchange rate alone, which has gone down 20 cents to the dollar in just 2 years. That's a lot of money to a small business like mine, it's a lot more money to the big businesses.

So to respond to Daral's comment, it does work this way around. At least for a lot of us.

Eh, I was talking about investment, not imports/exports, which are clearly influenced by the relative exchange rate, because that factor goes into the relative pricing between domestic and foreign goods.

In short, I think we're talking about different issues here.

[newstars]

Eh, I was talking about investment, not imports/exports, which are clearly influenced by the relative exchange rate, because that factor goes into the relative pricing between domestic and foreign goods.

In short, I think we're talking about different issues here.

Gotchya