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Another recession hits Canada?

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  • Jan 24th, 2015 2:09 pm
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Jan 18, 2015
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Another recession hits Canada?

‘The dollar has tanked’ in wake of shock interest-rate cut
“One of the attractive features of the Canadian dollar has been the fact that rates in Canada are higher than in the U.S.,” one analyst says. “This differential has now been reduced.”

http://www.thestar.com/business/2015/01 ... e-cut.html

“The Bank was obviously spooked by the collapse in oil prices, which has already prompted some energy producers to cut planned investment and also jobs,” Capital Economics wrote.

The Canadian dollar, which fell more than a cent against the U.S. dollar on Monday, dropped sharply in the wake of the central bank’s rate cut. At mid-day, it was trading at 80.80 cents US, down 1.80 cents from Tuesday’s close.

The U.S. dollar is trading at 123.76 cents Cdn, up 2.69 cents.
Pound sterling is worth C$1.8719, up 3.72 cents, and US$1.5125, down 0.29 of a cent.
The euro is at C$1.4347, up 3.63 cents.

“The dollar has tanked. There is a run to the U.S. dollar,” Rahim Madhavji of Knightsbridge Foreign Exchange wrote in a research note.
“One of the attractive features of the Canadian dollar has been the fact that rates in Canada are higher than in the U.S. This differential has now been reduced.”
Collapse in oil prices, then job loss AGAIN (Target, Sony, and others), now Canadian dollar tanking, it means imports are more expensive (which is essentially almost all goods sold in Canada), is Canada heading into recession again?

Expect even more job loss? Canada has no economy left. The falling dollar, will increase inflation due to more expensive imports, and also the increase in money supply will also increase inflation. Not really good - but Canada doesn't have any options. When rest of the world's economy is accelerating - Canada's declining.
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What are you basing this one? Just on the falling Canadian dollar? You do realize that the Canadian dollar was worth as little as 61 cents US only about a decade ago and our economy wasn't considered to be tanking. Secondly, Canadian GDP has been growing steadily since 2003 with the only drop in 2010 although there was a quick bounce back in 2011. 2014 growth from 2013 was minimal but certainly cannot be considered a decline so I don't know what you're talking about.

Also, lower Canadian dollar means more exports, and is considered better for the manufacturing sector. The huge drop in oil prices is primarily due to OPEC purposefully overproducing in a deliberate attempt to drive oil prices down and damage the oil sands industry, it's not permanent.
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It isn't looking too rosy. Hopefully commodity prices rebound soon.
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Winkle wrote: The huge drop in oil prices is primarily due to OPEC purposefully overproducing in a deliberate attempt to drive oil prices down and damage the oil sands industry, it's not permanent.
I wouldn't count on oil recovering to its previous levels. The whole reason OPEC dropped the price to the current levels is because new countries were entering the game because of the high prices and new technologies for oil extraction, which threatened OPEC's control over supply. Add the new developments in the alternative energy industries and the lowered cost of switching (which largely came about as a result of overly high oil prices) and there isn't a solid foundation for oil prices to climb that high again. OPEC's strength lies in the fact that they can produce a lot of oil cheaply, but if oil isn't cheap then there's no reason not to buy domestic or from another non-OPEC country that just extracts oil using a more expensive process that still results in a profit.

The free market always corrects things when there's competition.
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Winkle wrote: Also, lower Canadian dollar means more exports, and is considered better for the manufacturing sector. The huge drop in oil prices is primarily due to OPEC purposefully overproducing in a deliberate attempt to drive oil prices down and damage the oil sands industry, it's not permanent.
Please tell me what Canada manufactures?
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Winkle wrote: What are you basing this one? Just on the falling Canadian dollar? You do realize that the Canadian dollar was worth as little as 61 cents US only about a decade ago and our economy wasn't considered to be tanking. Secondly, Canadian GDP has been growing steadily since 2003 with the only drop in 2010 although there was a quick bounce back in 2011. 2014 growth from 2013 was minimal but certainly cannot be considered a decline so I don't know what you're talking about.

Also, lower Canadian dollar means more exports, and is considered better for the manufacturing sector. The huge drop in oil prices is primarily due to OPEC purposefully overproducing in a deliberate attempt to drive oil prices down and damage the oil sands industry, it's not permanent.
The fact that the interest rate is lowered shows Canadian economy is quite weak and needs another stimulus. Meanwhile south of the border the Feds are probably raising interest rate as the growth is sustaining and accelerating.

When you have 1% interest rate and have to lower it, it means the economy is in a bad shape.
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ar2020 wrote: Please tell me what Canada manufactures?
Are you serious?

Ford, Chrysler, GM, Toyota and Honda all have major manufacturing facilities in Canada just for starters. The Honda plant in Alliston, Ontario makes all Civics in North America as well as a bunch of Acura models. The North American Corolla, RAV4 and several Lexus models are produced in Toyota's Cambridge and Woodstock plants.
b166er1337 wrote: The fact that the interest rate is lowered shows Canadian economy is quite weak and needs another stimulus. Meanwhile south of the border the Feds are probably raising interest rate as the growth is sustaining and accelerating.

When you have 1% interest rate and have to lower it, it means the economy is in a bad shape.
I do not disagree that the Canadian economy has slowed down and isn't in the greatest shape. The fact that the GDP barely grow in 2014 over 2013, as I had pointed out earlier, indicates that. But my point is that the whole doom and gloom outlook that Canada is on the decline while the rest of the world is growing is rather hyperbolic.
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ar2020 wrote: Please tell me what Canada manufactures?
Off the top of my head: Cars, car parts, planes, aircraft components (civilian and domestic, including a lot of subcontracting for the US defense industry), guns, trains, phones, paper products, alcohol, and software of all kinds. All of these benefit from a weaker Canadian dollar.
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Lower Canadian dollar is good for the economy... And me.
.
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ar2020 wrote: Please tell me what Canada manufactures?
:facepalm:

From wikipedia:
Canada also has a sizeable manufacturing sector centred in southern Ontario and Quebec, with automobiles and aeronautics representing particularly important industries.

Not just specifically cars and planes and trains but think about all the secondary and tertiary industries around it. Parts, components, logistics, design, engineering, consulting, etc etc etc
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Most manufacturing has shifted to Mexico, China etc. Sure we have a few industries but if you're relying on them to save the economy good luck. We're not in a recession but the economy sucks. You CANNOT argue that.
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Winkle wrote: What are you basing this one? Just on the falling Canadian dollar? You do realize that the Canadian dollar was worth as little as 61 cents US only about a decade ago and our economy wasn't considered to be tanking. Secondly, Canadian GDP has been growing steadily since 2003 with the only drop in 2010 although there was a quick bounce back in 2011. 2014 growth from 2013 was minimal but certainly cannot be considered a decline so I don't know what you're talking about.

Also, lower Canadian dollar means more exports, and is considered better for the manufacturing sector. The huge drop in oil prices is primarily due to OPEC purposefully overproducing in a deliberate attempt to drive oil prices down and damage the oil sands industry, it's not permanent.
61 cent US while commodity prices were high. Now oil, copper, and other prices are tanking, and there were ruch immigrants coming to support domestic housing prices.
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For the past 30 years, how many recessions in Canada? 6 or 7? Dotcom, subprime, NAFTA 1991 recession, 1983 recession ...
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spike1128 wrote: Canada goose made in Canada.
factory owned and run by a Chinese immigrant in Scarborough
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Demographia wrote: For the past 30 years, how many recessions in Canada? 6 or 7? Dotcom, subprime, NAFTA 1991 recession, 1983 recession ...
Most wasn't caused by us except for 1991. Where we owe so much $ and the world think we are poor and not trust to invest in us.

I think we have it the worst now, cause all these peasants from 3rd is eating our lunch.
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CRAZYBUBBA wrote: Lower Canadian dollar is good for the economy... And me.
Sucks for those who want to travel and shop abroad.
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Demographia wrote: factory owned and run by a Chinese immigrant in Scarborough
Now owned by Bain Capital.
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Demographia wrote: 61 cent US while commodity prices were high. Now oil, copper, and other prices are tanking, and there were ruch immigrants coming to support domestic housing prices.
Yes and commodity prices will tank and never raise back up forever and ever.
Demographia wrote: For the past 30 years, how many recessions in Canada? 6 or 7? Dotcom, subprime, NAFTA 1991 recession, 1983 recession ...
And so has many other countries that are deemed as economic powerhouses, they've all had multiple recessions, as many or more in the same time period. The US has had their credit-rating downgraded and are just recovering over the past two years. Numerous European countries are in financial trouble such as Greece, Italy, Spain, Portugal etc. who are being propped up by EU bailouts primarily funded by Germany and France (and they're walking a fine line themselves). China's economy and market growth has been much weaker than expected lately etc.

Yeah, Canadian economy's in rough shape, newsflash, but it's global and not just limited to this country. To make it sound like Canada's the only in trouble and that everyone else is doing fine and drinking fancy wine for breakfast is downright false.
ar2020 wrote: Most manufacturing has shifted to Mexico, China etc. Sure we have a few industries but if you're relying on them to save the economy good luck. We're not in a recession but the economy sucks. You CANNOT argue that.
Not arguing it but to say Canada is doomed and we're all screwed while everyone else is doing fine is also wrong.
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Demographia wrote: ...
Expect even more job loss? Canada has no economy left. The falling dollar, will increase inflation due to more expensive imports, and also the increase in money supply will also increase inflation. Not really good - but Canada doesn't have any options. When rest of the world's economy is accelerating - Canada's declining.
Inflation because the falling dollar? Ha ha, not really an impact.

Just "chill out" and wait a little bit.

On second thought, I guess it is easy to say it when you have a job, but even if you don't, I'd say just be cool and we'll be back on track in a few months.

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