Yes, whether it's a cause or another effect of the cause of the rate rise, it amounts to the same thing, eh, everything is connected to everything else...... and most everything beyond that platitude is beyond my comprehension as well -g-
Good article on the currency situation;
theglobeandmail.com
As I see it, the BOC will do all it can to keep long-term rates down as the national debt (which is humungous, bigger than yours on a per-capita basis) is largely held in longish bonds. A two-point rise in long bonds would put us back into a current deficit. At the same time, our unemployment is around 9%, there are no signs of inflation, in fact I see a lot of anecdotal evidence of deflation around here, so imho the Bank of Canada has limited room to move.
In the 80s we used to speculate as to whether we'd see a 60-cent dollar, but I doubt we ever will, imho the BoC would do whatever necessary to defend a certain level above that. That could mean short-term rates of 8 or 10 percent, and that would tank the banks for sure.
Comparisons with the baht, the yen, the real and the various pesos are not very useful, imho, the main reason being that we have a system very like the US in terms of completeness and availability of financial information. I've never heard of a serious currency crisis that didn't have murky or fake data behind it, it's the surprises that bring on the nasty spikes, and I choose to believe that our glorious leaders keep the books in a reasonably orderly fashion. That being said, there does clearly seem to exist some downward pressure, eh.
You can view the Canadian dollar as weak just now, but there's another way to see it; the US dollar is extremely strong, it's strong against most everything else as well, including gold. Using a trade-weighted basket of currencies gives a much healthier picture of the loonie. My province (BC) is getting hit already by the Asian situation, though, over a third of our exports go there. Log prices have tanked, this is one reason why I find the time to post to SI in the daylight lately -g-
Banks here could easily get a little cheaper before they rise, imho. I'd still like to pick up more CWB, but I see no good reason to pay more than 16. It was tempting a short while ago to let the CM keepers go, but the thought of the $10/share gift to Canada Revenue turned me off, it's lifetime stock now. CIBC is listed on New York now, btw, symbol is BCM, they couldn't get their CM symbol down there as Coles Myers has it (I once bought some Coles Myers by mistake by not specifying CM-TSE, my own fault as the rest of the phone call concerned NYSE stocks -g-).
.......... cheers ............. marcos |
