Canadian Dollar rises to best-in-class among globe's top currencies

[kato]

It is difficult to be glass half full in the current circumstances, Plom.

Those economies you mention (Euro Zone, US and Japan - you can throw the UK into that too) are in hock to the tune of USD 30,000+ per head of population and it is rising inexorably as a proporton of GDP. That is not sustainable and at some point in time the shit is really going to hit the fan.

ok short and sweet...

all the major world economies are consumer based economies. with that said, the better the feeling the better the result. power to the people to spend our way out of this, not the gov't. hence the problem with the debt burden.

 

[Dunder]

The shit hit the fan here a few years ago, the Canadian government deserves credit for getting its fiscal affairs in order.
Canada has been reducing its debt and not running deficit budgets for quite some time now.

Canada is in great shape and our future also appears promising.

Not bad for a bunch of pinko commie socialists eh?

I get that, but a certain point in time investors appetite to hold (or increase) the (US/Euro/Japanese) sovereign debt will decline. Then a horrible process begins.

1) Interest rates rise (on government bonds) which further increases the debt.
2) Because of reduced demand for bonds, spending needs to be reduced which leads to lower growth
3) The lower growth sees higher unemployment which reduces tax income, which results in
4) Even higher debt

This spiral tightens into a deep recession. When this happens concurrently in all of the major economies, it won't matter very much how disciplined the Canadian government has been, demand for your exports will fall horribly which means you will be in the same boat as the rest of us.

 

[RogueScholar]

This spiral tightens into a deep recession. When this happens concurrently in all of the major economies, it won't matter very much how disciplined the Canadian government has been, demand for your exports will fall horribly which means you will be in the same boot as the rest of us.

Fixed that for ya. Dunder, ye speaketh the truth, though. We've reached a point where only a very drastic paradigm shift is going to save our collective finances, and sadly humankind tends to resist those vehemently until tragedy strikes. Until the industrialized world is capable of assigning proper valuation to commodities and services again we are cursed to inch ourselves closer to one of the most critical turning points in recorded history. Will we be able to realize our mistakes without turning to violence in the process of clinging to our old lifestyles? I hope so, but it's a faint hope.

 

[Polaroid]

I get that, but a certain point in time investors appetite to hold (or increase) the (US/Euro/Japanese) sovereign debt will decline. Then a horrible process begins.

1) Interest rates rise (on government bonds) which further increases the debt.
2) Because of reduced demand for bonds, spending needs to be reduced which leads to lower growth
3) The lower growth sees higher unemployment which reduces tax income, which results in
4) Even higher debt

This spiral tightens into a deep recession. When this happens concurrently in all of the major economies, it won't matter very much how disciplined the Canadian government has been, demand for your exports will fall horribly which means you will be in the same boat as the rest of us.

And the Blue Jays will still suck.

 

[roguejuror]

And the Blue Jays will still suck.

yap

 

[MonkeyF0cker]

I get that, but a certain point in time investors appetite to hold (or increase) the (US/Euro/Japanese) sovereign debt will decline. Then a horrible process begins.

1) Interest rates rise (on government bonds) which further increases the debt.
2) Because of reduced demand for bonds, spending needs to be reduced which leads to lower growth
3) The lower growth sees higher unemployment which reduces tax income, which results in
4) Even higher debt

This spiral tightens into a deep recession. When this happens concurrently in all of the major economies, it won't matter very much how disciplined the Canadian government has been, demand for your exports will fall horribly which means you will be in the same boat as the rest of us.

Well. Actually, it would put them in a position to buy up higher interest rate bonds.

 

[Dunder]

Well. Actually, it would put them in a position to buy up higher interest rate bonds.

That has been the position up until now, indeed the willingness of China and the oil rich Middle East states to buy that debt is what has kept bond yields in check. This appetite for debt though is only there because the USD/GBP/EUR have not devalued by anything like the amount that they should have, mostly because there are so few alternatives. In the case of China, a large part of the reason to increase it's already massive foreign currency reserve is to keep it's own currency from rising too fast. Something has to give.

Even if you hold the view that the above mentioned countries would never default, there is already a strong case that the current levels of borrowing are only possible due to the same sort of moral hazard that brought the banking system to the edge of disaster last year.

The machinery of the world economy is badly broken IMHO and it whilst would be nice to think that market forces would gradually repair it, history shows us that this pretty much never happens.

 

[kato]

this...

General Motors, the nation’s largest automaker, today posted a $4.3-billion loss for the nearly six-month period following its emergence from bankruptcy last summer as a new company largely owned by the U.S. government.