Tuesday, November 9, 2010

Parity and then some...

Well folks we are now worth more than a US peso.

Despite our hand-wringing and angst over our $ 1 Trillion mortgage debt and super-pumped housing, despite our own Central Banker telling us we are in for hard time, the world doesn't care.

We are oil and wheat and uranium and that's what the Chinese want - along with Westside houses :)

And so our Loonie gets bid up, and rates cannot rise anymore or it will blast up even more, and destroy what's left of our manufacturing out East. Well, as long as Alberta is happy - that's all that matters.

Meanwhile the US fed, which makes Carney look positively responsible, has decided to let the government issue bonds and then buy them up- otherwise known as a ponzi scheme- which is why gold is soaring. Greenspan and Bernanke have together managed to distort financial markets and the economy for 30 years.

How do these relate to housing- this is the 'and then some'. Everything relates to housing, from the price of commodities to a boom in a country of one billion souls the other side of the world.


  1. The housing market in Canada will not correct, it is too late. The US dollar is collapsing and we will valiantly keep ours at parity. People are fed up with -2% real interest rates, and they're converting currency to anything which is a store of value. What are we going to do, raise interest rates? Not a hope in hell. Gold to infinity. This is the last chance to buy it. You're either a citizen of the world with means to sustain yourself, or you'll be begging the government to enact trade barriers so that your dumb as doesn't starve (and don't expect much).

  2. What exactly are you saying with respect to housing. That the Chinese will be buying up housing because they want to buy our commodities? Looks to me like the entire planet is up for sale.

  3. I'm saying nobody will buy houses if there is a currency crisis, which there will be if interest rates are held too low as commodity speculation rages. Western central banks *will not* raise interest rates. Yet they are printing money with no end and creating 30% moves in the prices of grains, energy, and 50% moves in precious metals. Its purely speculation, and that's the point.

    How can anyone have faith in our monetary system with those kinds of price shocks? They'll get a triple dose of bullcrap with "no inflation", with interest rates at zero while food goes up 30%. Oh, we don't measure that?! WHAT FUCKING GOOD IS CPI THEN.

    It's all bullshit, and it will collapse. The truth inevitably comes out when you have to pay for it, and the bill for this crisis is on the way.

  4. Will you anons just pick a name so we know who is responding to whom.

    I must admit we are at a very interesting juncture. As you say some Western economies cannot raise without bring what's left of the house down..UK, Euro, USA and the rest like Canada and Australia are facing a Chinese commodities boom that is completely distorting their economy and they have to raise.

    Imagine if own a small export company here or out east- you now face a strong loonie because of oil prices and rates are higher than the US and there is a world wide slow down and to boot everything you make can be made for a third of the price somewhere else. Not good.

    My game plan included a rise in the USD and more deflation and weakness in 2011, followed by a major currency crisis for the USD caused by a rampant inflation number and rates 'forced' higher by the market.

    The mother of all storms. Weak economy and higher prices + higher rates. Payment for bad decisions now.

    So far my plan has not played out the way I thought, but that could change, unless we skip the middle bit and go straight to the USD currency crisis.

  5. Can you fix your blog so that it lets me pick a name. Whenever I do it simply drops my post. Anon is the only way it works. There. Mystery solved. Easier than figuring out what's next in the housing market.

  6. When you want to post click on select profile and scroll down to 'name'.

    Make up a name and presto voila you have an identity!

  7. I think USD will come back very strong and will surprise a lot of people. I really believe that our loonie shouldnt be more than 70cents and it will go there in a very short time. One has just to cross the border and see what 1 usd buys there and what 1 cad buys here - there is a difference of about 25 to 30%. Why? I also think that 70 cents will make us competitive again. watch for comodities crash and some china trouble and you will see how fast the loonie will go down. That is the problem with commodity currencies which loonie has become the last 15 years (absolute correlation between price of oil and loonie)

  8. I agree with your premise 100% paradox and have placed my bets accordingly.

    Lets hope we are not wrong :)

  9. BTW -list/sales down today -about 30% in the areas I follow or higher.

    They had been super hugh so far this month so I am not getting excited yet.

  10. There's no point in watching the sales/list each day, esp. at this time of year.

  11. I just bought printer toner at $74/per in the US. In Canada? $94. Same product. And that's when the dollar was at par. 70 cents/1.00 US dollar will make that toner real real expensive.

  12. The American dollar can afford to get whacked. The rest of the world doesn't have a clue, except Ireland and you don't hear them whining. It's sad how Bernanke has to threaten armageddon to make it happen. We should be at $1.10. The sooner we go in, the sooner we come out.

  13. @egghead, retail prices in Canada are higher in much part because wages are generally higher. No $5/hr minimum wage with no benefits up here. It is what it is.

    Looks like inflation in China is becoming a real problem. The government is scrambling trying to figure out what to do when the currency they're pegging to is going to be flooding the market. Remember we haven't even seen a dime of QE2 yet and already inflation is increasing.

  14. I agree looking at daily list/sells is pointles and that's why I don't post them -unless they are bearish :)

    China needs to walk a fine balance between the over-heated economy and people's aspirations for material stuff.

    Funny how quickly they went for the Communist State to no-holds-barred-screw-the-environment-no-workers-rights capitalsim.

    Milton Friedman would be proud.

  15. China can either raise its currency or have the US collapse theirs. It's a Hobson's choice but USA is still no.1... for a few manoeuvres longer. They should collapse their dollar and pay the Chinese back in beads, just like the whites did with the natives. We're nice guys, until you split the bill with us.

    Wages won't he higher in Canada for much longer. Well maybe for those still earning a wage, it will be. We just barely scratched the surface of 'US demand falling for CDN goods' headlines. If you ain't lived thru the 70s, you ain't seen nothin' yet.