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Thread: So The Loonie is Really High Right Now

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    Default So The Loonie is Really High Right Now

    The Canadian dollar is now worth 94 American cents. That's sounding pretty high, although it's been higher than a lot of Americans seem to think for a while now. (Customers who come into the club and think "20 Canadian dollars...that's like only 12 real bucks!!"...I let them think whatever they want of course, but this is so common, I feel almost insulted...lol, some weird patriotism or something).

    I know this makes shopping better for me in the States (I mean, better than it used to be a few years ago), but it probably makes other stuff worse. People who know economics at all, please tell me what you think.

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    Default Re: So The Loonie is Really High Right Now

    Well, I think it might be bad for tourism since quite a few people I know used to go up there because of the favorable exchange rate.

    OTOH, it's good because we might be able to get you down here one of these days?

  3. #3
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    Default Re: So The Loonie is Really High Right Now

    Speaking personally, it'll be great for me. The film industry here in L.A. loses a lot of jobs to Vancouver because of the exchange rate, so if it balances out they'll be more likely to stay here, and hence more jobs for my friends and me. So yay, loonie, keep on climbing!

    However, it'll suck for the vast majority of Canadian crew who will find themselves unemployed. Canadian cinema is not prolific enough to keep them all working.

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    Default Re: So The Loonie is Really High Right Now

    as with the US vs Canadian film industries, the same 'competitive advantage' formerly enjoyed by other Canadian industries due to a low exchange rate Loonie will also be lost as the US and Canadian dollars approach parity. This will probably mean that the next big auto plant closures will be in Ontario instead of Michigan, that all Canadian businesses that deal with US exports (other than energy) will see major cutbacks. After all, if the currencies are equal, Canada has higher taxes thus higher labor costs than the US !

    From the standpoint of Canadian dancers at Canadian clubs, a rising Loonie directly translates into a large US dollar denominated price increase at Canadian clubs for all US club customers (even though the Canadian dancers don't actually see any earnings increase in Canadian dollar terms). This will discourage many US customers from crossing the border, and will also increase the 'expectations' of those US customers that still do go to Canadian clubs.

    On the flip side, a stronger Loonie provides more incentive for US dancers to work in Canadian clubs, since they DO see an earnings increase after they convert the Loonies they have earned back into US dollars. The opposite of course is true of Canadian dancers working in US clubs, as they will see their earnings shrink after they convert the US dollars back into Loonies.

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    Default Re: So The Loonie is Really High Right Now

    isn't canada the #1 oil importer to the US?

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    Default Re: So The Loonie is Really High Right Now

    It sucked driving through Canada, and it sucks that I can't go work in Canada and take advantage of the exchange rate.



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    Default Re: So The Loonie is Really High Right Now

    A higher dollar just means there will be less foreign investment in Canada and Canadian consumers and companies will be more likely to spend their money in other countries.

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    Default Re: So The Loonie is Really High Right Now

    isn't canada the #1 oil importer to the US?
    Canada is a major exporter of oil and gas to the USA. However, these are 'world price' commodities ... meaning that the price is set by a world market currency basket in which the Canadian dollar plays an extremely small role. So from the point of view of Canadian oil and gas drilling / refining / transportation companies, the stronger loonie means that their labor costs go up while the price which can be charged for their exported product does not. In fact, in terms of the loonie, the price which can be charged for their exported product may actually go down !!!

    This is the same phenomena that is occurring to the Canadian auto industry and other Canadian industries that manufacture for export or which export raw materials that are 'world priced'... i.e. manufacturing in Canada becomes more expensive due to rising labor costs, Canadian products become more expensive / less 'competitive' in terms of the importing country's currency, the importing country goes looking for lower cost sources from other countries (or even domestically), and Canadian companies lose profit margin or lose business. For example, the likely result of the rising loonie will be auto company boards of directors will now be looking to close plants in Ontario instead of closing plants in Michigan or other US states.

    At the same time, Canadian companies find that costs / prices across the US border are now 'cheaper' in terms of the loonie. Therefore some Canadian companies will find it more profitable to shop for components in the USA rather than to continue manufacturing them in Canada. I am told that with the loonie at .94 , and with Canadian taxes being as high as they are, Canadian labor is now more expensive than US labor in terms of the US dollar. And the US dollar denominated market is more than 10 times the size of the Canadian dollar denominated market. The likely result will be that Canadian companies that are sub-suppliers to larger Canadian companies may be forced to close.

    In terms of individuals, the loonie at .94 to the US dollar will provide a strong incentive for Canadian customers to cross the US border to shop for bargains at US retailers. However, every loonie spent in America is one less loonie of profit for canadian retailers and the canadian companies that supply their products, and one more dollar of profit for american retailers and the american companies that supply their products. While this 'raises' the Canadian standard of living in general, it does so by undermining the profitability / viability of Canadian businesses which eventually results in layoffs, bankruptcies, higher gov't costs for unemployment and social welfare benefits for unemployed Canadian workers, higher taxes to pay for those higher unemployment and social welfare benefits being imposed on Canadian workers that ARE still employed etc. In essence, this is where America has been at for the past 10 years or so re Canada (as well as China / Asia) !
    Last edited by Melonie; 06-04-2007 at 09:47 AM.

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    Default Re: So The Loonie is Really High Right Now

    i'm in vancouver right now, and i'm not seeing too many movies being worked on here. and also, i RARELY get my us dollar converted to cdn when i spend it because it's so close. people are jipping me a few dollars!! grrr.

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    Default Re: So The Loonie is Really High Right Now

    Quote Originally Posted by mollyzmoon View Post
    The Canadian dollar is now worth 94 American cents. That's sounding pretty high, although it's been higher than a lot of Americans seem to think for a while now. (Customers who come into the club and think "20 Canadian dollars...that's like only 12 real bucks!!"...I let them think whatever they want of course, but this is so common, I feel almost insulted...lol, some weird patriotism or something).

    I know this makes shopping better for me in the States (I mean, better than it used to be a few years ago), but it probably makes other stuff worse. People who know economics at all, please tell me what you think.
    Reminded me of one of my favorite quotes from "Canadian Bacon":


    Highway Patrolman: I do have to fine you. That will be a thousand dollars Canadian, or 10 American dollars if you prefer.

    "He will come in one of the pre-chosen forms. During the rectification of the Vuldrini, the traveler came as a large and moving Torg! Then, during the third reconciliation of the last of the McKetrick supplicants, they chose a new form for him: that of a giant Slor! Many Shuvs and Zuuls knew what it was to be roasted in the depths of the Slor that day, I can tell you!"

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    Default Re: So The Loonie is Really High Right Now

    Yes, come to the US and buy our shit!!!!

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

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    Default Re: So The Loonie is Really High Right Now

    As far as shopping goes, definitely better in the states. As you know, I go back and forth. Things are just priced higher in Canada, as if the exchange rate is what it was 5 years ago. For example, a bebe dress I bought in AZ fo 98 is retailing here for 150 plus tax. Rip off! I find this pricing to be consistent at lots of major stores (bebe, guess, sephora, aldo, a & f, hollister) so anything I can get cheaper in the states, I try to wait to get there. Plus if you go to the states you can visit all the great stores we have that Canada doesn't! I recommend Nordstrom & Nordstrom Rack, Target, ULTA, Saks Off 5th, Neimans Last Call, Forever 21, Wet Seal, Arden B, TJ Maxx or Ross, others too just can't think of em. Oh and I always miss PF Changs when I'm in Canada so you must eat there!!

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    Default Re: So The Loonie is Really High Right Now

    My friend and I used to like going to Vancouver when the exchange rate was really US Dollar favorable. Now we don't want to go as much, so it affects tourism a lot.

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