03/02/10 Baltimore, Maryland – Here we go again. The Canadian dollar is rapidly approaching parity with the US variety.
In the last five trading days, Canadians have collectively grown almost 4% richer compared with their slovenly southern neighbors. Over the last 12 months, the loonie is up 22% versus the greenback. At this rate, we won’t be able to tell people when we head off for Vancouver: “Canada, it’s just like the US…only less.”
Add in the hockey game on Sunday…then the following nugget… Canucks have earned some bragging rights this week. But they won’t. From our experience, they’re always so…friendly.
The Canadian economy expanded at its fastest pace since 2000 last quarter, its government reported yesterday. As measured by the funny little statistic known as GDP, the economy expanded at an annualized rate of 5%, beating the Bank of Canada’s projections by nearly two full percentage points.
Unlike in the US, growth in the great white north was relatively broad. And now with several quarters of expansion under their belt, there’s extra pressure on the Bank of Canada to start (gasp!) raising rates. Can you imagine? Banks willing to pay interest on savings again? What a world.
“Maybe the BOC will even raise rates earlier than it said it would,” notes Chuck Butler in The Daily Pfennig. “Raise them now, or next week or next month? I don’t think so. But before the summer sun is hot and the tall colorful cold drinks with umbrellas are prevalent around pools… I DO think so!”
Cheers,
Addison Wiggin
for The Daily Reckoning
Addison Wiggin
Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He’s the creator and editorial director of Agora Financial’s daily 5 Min. Forecast and editorial director of The Daily Reckoning. Wiggin is the founder of Agora Entertainment, executive producer and co-writer of I.O.U.S.A., which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, the 2009 Critics Choice Award for Best Documentary Feature, and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A.and his second edition of The Demise of the Dollar… and Why it’s Even Better for Your Investments was just fully revised and updated. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post as well as major network news programs. He also co-authored international bestsellers Financial Reckoning Day and Empire of Debt with Bill Bonner.
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The strong economic recovery in Canada, an amazing 5% in Q4-09, shows the country economy has significantly de-coupled from the US. This large measure of independence in economic activities (albeit less so in business ownership, US still own a large chunk of big Canadian businesses) means the Bank of Canada can now afford to pursue a strong policy without worrying too much on the US Fed. If they hike interest rates and further encourage the already high savings, there will be a huge amount of real money available for investments for the future. Canada will take off from the US orbit.
No, we’re just enjoying a good commodities run, and lagging the USA on the credit bubble.
Consumer debt ratios in Canada are now approaching levels seen in the USA in 2006.