Harper and Flaherty's Conversion

Ottawa faces up to reality of deficits Here is the real reason that Harper and Flaherty had their economic conversion on the road to Damascus.

Budget officer questions projected federal surplus

OTTAWA - Canada's parliamentary budget officer is publicly questioning the projected budget surpluses of the Conservative government's recent economic statement and is asking for evidence to back up the predictions.
Kevin Page asked Finance Deputy Minister Rob Wright to turn over details on the projected spending reductions in departments and asset sales that the government has said will generate $10 billion in savings over five years. These are seen as key to the maintenance of a federal surplus.
Page's letter, sent on Dec. 3, has now been posted on the budget office's website. It asks for a reply this week.
He also asked for economic data and assumptions used for the 2008 budget and recent economic statement. Finance refused to give the data for the 2008 budget even though the numbers are routinely turned over to Bay Street forecasters. The assumptions, key to estimating the impact of economic volatility, used to be published by previous governments.
In his economic statement, Finance Minister Jim Flaherty projected a budget surplus of $100 million for 2009-10 based on the sale of about $2 billion in assets that he didn't identify.
Page tabled his office's assessment of Flaherty's economic statement last week, but the report got lost in the storm of the political crisis sparked by the Liberal-NDP coalition's attempt to topple the Prime Minister Stephen Harper's Conservative minority.

But as usual they will use a red herring to distract us from their complete failure to address this crisis earlier. Just as they used the opposition coalition as a red herring to seize power in Ottawa.

Canada's banks are being set up.
Prime Minister Stephen Harper has misplayed the financial crisis from the start. The lack of political leadership in this country is staggering. Now Mr. Harper – who dictates lines to his Finance Minister – has finally woken up to the fact 2009 will be one grim year for the domestic economy. '10 doesn't look too hot either. Someone will wear responsibility for a deep recession. The Conservatives are skating hard as they prepare to pin this one on the banks. The politicians will claim the banks hoarded capital, and refused to lend, and that sent consumers and corporations over the cliff. It's nasty, it's cynical, it's destructive and it doesn't happen to be true. But that's clearly going to be Mr. Harper's line.

And despite Flaherty threatening the banks, the Harpocrites have not addressed the increased service charges on credit cards the banks have made, the fact that interest on credit cards is as high as it was during the recession in the eighties, and that banks still charge usury rates on ATM fees.

Feeling the crunch
Rising card transaction fees may mean higher prices, retailers say

Restaurant industry supports cap on credit and debit card fees

RCC applauds Alberta Premier's call to Harper for limits on credit and debit fees

Suddenly the issue raised by the NDP is no longer pie in the sky. However unlike Stelmach, the NDP called for the elimination of ATM fees, not just a cap. And we need to see a reduction in usury interest on credit cards. Banks loaning millions to capitalist enterprizes will have less effect than reducing /eliminating service charges, reducing credit card interest and eliminating ATM fees.

New Brunswick Senator Pierrette Ringuette is calling for a federal probe and stronger regulations on fees charged by credit card companies .Canadians hold 64.1 million credit cards, and 80 per cent of them are issued by the two main players in the industry, Visa and MasterCard. Consumers already pay an average of over 24 per cent interest.Visa and MasterCard have about 80 per cent of the national credit card market. Credit card companies are, therefore, extremely wealthy and powerful. Is this a 'collusion' situation because of this 'quasi monopoly' situation?" Ringuette also raised the concern felt by business and retail lobby groups that rates for debit card transactions could increase. There has been concern that the Interac Association, the non-profit group which administers debit and direct payment, could change to a "for-profit" organization. If this happens, the retail council is concerned that the private corporation could be purchased by the credit card companies and therefore create an even greater monopoly over plastic in Canada.

The Canadian Imperial Bank of Commerce said it would tighten credit card lending through 2009, as it announced its fourth-quarter profit fell by 50 per cent from the same quarter in 2007 — mainly because of higher credit card delinquencies. Some banks have also raised credit card interest rates by five percentage points for customers who are late with their payments. Art Thornton, a bankruptcy trustee in Ottawa, says the changes will mean more business for him."It's going to increase the interest rates noticeably to people who can ill-afford to pay, and it's going to render them — in many cases — insolvent."

And this NOT the issue that Flaherty or Mark Carney are addressing when they challenge the banks to free up credit after bailing them out and reducing the Bank of Canada rate.

Hyer Questions Gov't on Credit Card Processing Fees
Friday, 28 November 2008
Ottawa, ON -- Thunder Bay Superior North MP Bruce Hyer was up in Question Period on Thursday. Hyer was questioning the government over the cost of credit card processing fees.Here is the transcript of the exchange in the House of Commons:

Mr. Bruce Hyer (Thunder Bay—Superior North, NDP): Mr. Speaker, small businesses create a huge percentage of all the job growth in Canada. We should be helping them, not hurting them.The Canadian Federation of Independent Business is demanding that this government act before the big banks' next big cash grab. Our small businesses are facing a 10,000% increase in their Visa and MasterCard merchant fees. Is this fair?Does the government believe that it is not its problem, or that it can just not do anything about it? Which is it?

Hon. Diane Ablonczy (Minister of State (Small Business and Tourism), CPC): Mr. Speaker, the member raises an issue of real importance to small business. As he knows, the Canadian Federation of Independent Business has been speaking with the players about this issue. The fact of the matter is that the banks in this country are competitive. They are free to put forward products to all of the customers they have, including small business.The Minister of Finance has written to the banks about this issue asking them to deal with it. We are awaiting their responses momentarily, and we believe we can work on it together.

Bank of Montreal Profit Rises on Consumer Banking

Canadian consumer-banking profit rose 20 percent to C$344 million from a year earlier as personal loans rose 21 percent and it added more mortgages. Commercial loans and credit-card revenue also rose from a year earlier.

Royal Bank of Canada reports fourth quarter and 2008 results

Canadian Banking net income was $2,662 million, up 5% or $117 million from last year, reflecting solid volume growth across all businesses and effective cost management, partially offset by margin compression and increased provisions for credit losses. Net income was up 13% over last year, excluding the impacts of a $326 million ($269 million after-tax) gain related to the Visa Inc. restructuring and a $121 million ($79 million after-tax) credit card customer loyalty reward program liability charge recorded in the fourth quarter of 2007.

Scotiabank Reports Fourth Quarter and Full Year Results

Canadian Banking's average assets grew by $21 billion or 14%, primarily in mortgages. There was also strong growth in personal revolving credit and other personal loans, as well as in business lending to both commercial and small business customers. Card revenues were a record $397 million in 2008, an increase of 8% from last year. International card revenues increased 11% due to strong growth in Peru, the Caribbean and Mexico. Canadian revenues were up 6% year over year, due mainly to higher transaction volumes. Credit fees of $579 million were $49 million or 9% higher than last year. There were higher acceptance fees in Canada, from both corporate and commercial customers.

It's time to 'shift to thrift'

A recovery in consumer spending will have to wait until Canadians pay down the excess credit card and mortgage debt accumulated in the past decade. Total personal debt nearly doubled between 2002 and the first half of 2008, when it stood at $1.2-trillion. The ratio of debt to disposable income rose from 98 per cent to 130 per cent over that period, while interest payments as a share of available income were virtually unchanged.
Canadians were besieged with advertising messages that promoted borrowing over those years. With credit so cheap and housing prices surging ahead, households took on a lot of risk. Now debt burdens look much too high.
We can take some comfort from the fact that the loans outstanding here are nowhere near as risky as mortgages in the United States. According to the Canadian Housing Observer, Canada has “a negligible subprime mortgage sector; [and] it is characterized by prudent underwriting.” And in Canada, mortgage insurance to protect the lender is mandatory for high-ratio loans.
But there is no insurance to protect the borrower when housing values decline or when someone in the family loses their job. If you ask people living in homeless shelters what sent them on a downward spiral, the common theme is a combination of losing their job, being unable to work because of injury or illness, and then losing their home.
This is a terrible price to pay for doing what was advertised as the smart thing to do.

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Bank Rip Off

Gosh folks are surprised that Canada's Big Six banks are greedy and won't pass on the interest cut to you and me.

Bank slashes key rate to 1958 level
Six Canadian Banks Fail to Match Central Bank Cut (Update6)
Big banks keep slice of deep rate cut
Big 6 lag behind central bank's lead
Bah humbug to banks’ greedy actions on rates

Why I am shocked, shocked I say, shocked that the media and pundits expected these greedy bastards to act like good corporate citizens. After all the last time Carney cut the interest rates, only a month ago, they didn't pass them on. And despite Flaherty and Harper bailing them out to the tune of $75 billion, the banks increased interest rates and service charges on credit cards and have refused to loan money to credit agencies like GMAC and Ford Credit. When you give these guys money with no strings attached they use it to increase their profit and to pay off their bad debts and criminal activities.Of course Mark Carney knows this he used to work for Goldman Sachs. Flaherty knows it too. When the bank and commerce committee met to review credit card and bank card user fees and interest rates they got the cone of silence from the bankers.Truly this is a case of throwing good money after bad.
And while they will claim they are looking after the interests of their shareholders remeber who that is , why you and me of course with our mutual funds, our CPP and other public pension funds who are institutional investors in the banks. In fact we own them.
Time to socialize the banks along with the auto industry under workers control, the only solution to this crisis of capitalism is socialization of capital.


SEE:
Back To The Fifties
UBScandal
Pension Rip Off
Credit Card Rip Off
Canada's Billion Dollar Rip Off
Bank Union
Service Charges


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Back To The Fifties

Deflation in Canada in the late 1950's led the Bank of Canada to create the floating Dollar. Now it's sinking.

Biggest inflation rate fall since 1959 raises deflation concerns
Economists fear deflation because consumers and businesses are more likely to delay purchases hoping that prices will fall further, slowing economic activity and business investments.
But more importantly, CIBC World Markets economist Avery Shenfeld said deflation often appears as the final nail in the coffin of a dying economy.
"Typically the only way you get deflation is if you've had a massive recession that has high unemployment rates and a lot of economic slack, so the conditions in which you get deflation are certainly not welcome," he explained.
One factor that may offset the potential for deflation is a recent drop in the value of the Canadian dollar. After starting the year near to parity with its American counterpart, the loonie, as the Canadian currency is popularly known, fell below 80 United States cents this week.

SEE:

Here Come the Seventies

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His Majesty Requests

His Majesty the RH Stevie Harper the First requests the presence of Canada's First Ministers,at 24 Sussex, two years after getting elected and with no consideration for the Premiers own First Ministers Conference.

Harper has summoned Canada’s premiers and territorial leaders to his official residence at 24 Sussex Drive Friday night. Harper’s office said the meeting is part of the ongoing discussions that the prime minister maintains with first ministers.

Right ongoing discussions...uh huh... what by email and phone, certainly there has been no FORMAL meeting between the PM and the Premiers since his election in 2006. Despite their demands for one. So much for Harpers much touted new, open, accountable, federalism.

Premiers left out in the cold

The Gazette

Published: 12 hours ago

Prime Minister Stephen Harper, who has made it his policy to have as little as possible to do with reporters, seems to have taken the same position about the premiers.

His office announced last week that Harper will meet the provincial and territorial leaders over dinner at 24 Sussex Drive this Friday night. It's easy to imagine Harper starting to yawn and stretch just as the dessert dishes are cleared, saying "well, guys, it's been a long week ..."

The premiers, and especially Ontario's Dalton McGuinty and our own Jean Charest, have been asking for months for a meeting with Harper.

In recent decades, first ministers' meetings became frequent and an accepted part of Canadian governance, almost a separate level of government.

But the newly-elected Harper had one such a meeting in February 2006, also on a Friday night, and hasn't convened the group since.

It's almost as if he considered the premiers to be a bunch of poor relations who have nothing to offer except begging and grumbling.

And he is only calling the meeting now because of the perceived downturn in the Canadian economy. Daddy is going to tell the kids that it's belt tightening time again. Since the Harper believes in reducing federal interference in provincial affairs, the coming recession will have to be shouldered by the provinces on their own. Watch for it.

It was never clear how much a first ministers meeting on the slowing economy could accomplish. But the Prime Minister has gone out of his way to diminish the prospect of results at this Friday's gathering, and has ensured minimal coverage of the event with his offbeat scheduling. In a two-page letter written to the premiers and obtained by The Globe and Mail, Stephen Harper outlines plans for a four-hour discussion on Jan. 11 at his Ottawa residence, from 5 p.m. to 9 p.m.

But what Harper and David Dodge believe is a coming crisis for the loonie and the Canadian economy due to the American recession may not be the economic reality. After all as G.B.Shaw once said; "If all economists were laid end to end, they would not reach a conclusion. "

Loonie's rise may continue in '08, say experts

Even a 12-per-cent depreciation in the U.S. dollar, if it were sudden and disorderly, would hurt Canadian exporters directly, who would be paid in a deeply depreciated currency for many of their products, which are priced in U.S. dollars, and it would hit Canada's economy indirectly through a serious contraction in the U.S. economy, Canada's primary export market.

It would take a concerted effort by the world's major central banks to deal with such a crisis, Iacobacci says.

The problem is that they don't appear to have a strategy for dealing with such a crisis, he adds.

"You need to prepare in advance," he says, suggesting the central banks need to determine in advance what amount of support for the currency would be needed in and how it would be delivered.

But even if a run on the U.S. dollar is not be in the cards, a further appreciation in the Canadian dollar may be.

"I'm back to being quite bullish on the Canadian dollar," says Dennis Gartman, U.S. author of the influential financial newsletter that bears his name and is read by traders around the world.

Gartman, who two years ago predicted the loonie would reach parity with the U.S. greenback, says the Canadian dollar is poised to rise even further, but on its own merits, and not because of a run on the greenback, which he suspects is already oversold on world exchange markets.

"It's time once again to say the major trend is in favour of the Canadian dollar to rise, and not just relative to the U.S. dollar, but to rise even more relative to the euro," he says.

In fact he expects the loonie will be one of the strongest performing currencies this year.

"Has anything changed fundamentally that was driving the Canadian dollar higher relative to the euro and the U.S. dollar? The answer is no," he says. "Canada has the things that the rest of the world needs."

"You've got wheat, you've got canola, you've got base metals, precious metals, and most importantly you've got energy," he notes, adding Canada also has water, suggesting that over time that will become an increasingly precious commodity.

While Gartman won't make a prediction on how high the loonie will go, he "bet it makes a new high relative to the U.S. dollar ... ."

"I think we'll see Canada versus U.S. dollars higher than the best levels that were seen in November," he says, indicating it will at least top the $1.10 US, breached in 2007, and set a record high against the euro as well.

However, he also expects the Canadian currency will eventually retreat back to parity against the greenback.

There are others who predict the loonie's retreat will come sooner and go further.

The federal export promotion agency, in its latest forecast says: "We expect to see it below 90 cents US by the end of 2008. "

The reason is that a global economic slowdown will ease demand for Canadian export commodities and in turn reduce the speculation, that drove the loonie to new highs in 2007, it says.

SEE:

Loonie Beats Dollar Benefits Who

Loonie Flashback

If It Ain't Broke

Harper The Autocrat

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Person of the Year

Time wimped out and made Putin their Person Of The Year. All the right wing media in the U.S. is whining that it should have been Petraeus. But good old Bill O'Riley on Fox last night let the cat out of the bag. The real reason for Time's choice was that they made a choice of the lesser of two evils the real POTY should have been; Al Gore. But that would have driven the American rightwhingnuts even battier.

And Time's Canadian 'Person of the Year' was not a person but a coin; the Loonie. And again that was the lesser of two evils because their real POTY should have been Dion. After all they gave it to Harper last year. And because it has been annus horribulus for the Liberal Leader in Waiting, he should have made Times cover. After all the Liberals adopted a bird as their symbol this year.



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Loonie Flashback

Guess they aren't too eager to adopt a blended currency now. Even though the Canadian business class has spent the past two elections and last six years promoting an integrated North American economy.

Yesterday

December 3, 2001 - The loonie's days may be numbered. Earlier this month a poll revealed more than half of Canadian business leaders think Canada should consider adopting the U.S. dollar. Conducted just after the Canadian dollar hit a record low of 62.30¢ U.S. on Nov. 9, the poll also showed that, even if Canada doesn't adopt the greenback, many companies will increasingly set prices for big-ticket items in U.S. dollars.

Today

The commodity boom, and the price of oil in particular, is what's been driving the Canadian dollar to an all-time high. If you did two lines on a chart, tracing the price of oil and the value of the loonie this year alone, you would find they track very closely together. After bottoming out at around $52 at the beginning of the year, the price of oil has rocketed to the mid-90s. And the Canadian dollar, which was thought to be pretty fully priced at 85 cents back in January, crossed $1.08 briefly yesterday, hitting a new all time high. That's a 21-per-cent appreciation relative to the U.S. dollar in only 10 months. Wow.

Only six years ago, the loonie was languishing in the low 60s, back when oil was in the low 20s, which only makes the point. "They are very closely linked," says Jeremy Leonard, an economist with the Institute for Research on Public Policy.

Nothing, it seems, can stop the dollar, so long as nothing can stop the price of oil.

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Loonie Beats Dollar Benefits Who

And, as predicted, the dollar reaches 1.10

Loonie surpasses US$1.08 in overseas trading

So what.I still see American price differentials of at least nine to ten bucks on CD's for sale at Starbucks, books at Indigo/Chapters. Heck even an American price differential on the duvet we wanted buy. Our dollar is high so who is raking in the profit? Well the retailers are and so are their suppliers.

Of course currency traders can make trillions off the cost of the loonie vs. the dollar, but for you and I well we are still paying last summers prices for American goods. Of course because the Canadian retailers bought their stock at higher prices last summer too. But often our retailers are simply branch plant operations of their American parent company. Which is why Wal-Mart can adjust its prices, so should Home Hardware. While Rona or Indigo can't do so as easily.

Wait a minute whatever happened to just in time production costs. You know the Toyotaization of the economy, where goods are produced and shipped as needed. Should the rising loonie be reflected almost immediately, give or take a month, in the actual production of items. Well of course, but to reprint all those book and cd covers costs money. So the price stays the same on the source label. It's up to the retailer to drop the cost.

Many of the town’s largest retailers say consumers can expect price cuts due to the rising Canadian dollar.

Local management at the big three - Canadian Tire, Wal-Mart and Zellers - wouldn’t comment personally, but passed the question on to press releases or spokespeople at their head offices.
Canadian Tire spokesperson Lisa Gibson said the chain has already dropped prices on over 1,000 items and more will come. The company is committed to being competitive, but Gibson said the exchange rate is only one factor in retail pricing.

"It’s a little more complicated than it seems," she said. "The products you see on the shelves we purchased months and months ago. If the dollar stays high there will be more savings."
A press release from Hudson’s Bay Company, parent company of Zellers, said price cuts started to take effect on Oct. 19. Zellers stores will feature a price cut promotional progam to signal to consumers the products where savings are being obtained.

"HBC is fighting for Canadians," said Rob Johnston, president. "We have worked with our vendors to obtain better deals on merchandise at Zellers. We understand that the rising Canadian dollar has led to a demand for lower pricing and this is our attempt to provide real savings for Canadian families."

According to a press release from Wal-Mart Canada, the company has been negotiating with suppliers for a year to turn the higher loonie into lower prices for its customers. As a result, thousands of items have seen price rollbacks each week. Wal-Mart is committed to 7,000 rollbacks weekly for the holiday shopping period.

Maybe before the Christmas sales rush the loonies rise will be reflected in a mark down of the American prices we pay. Well of course after all it's the Christmas rush. All retailers deal in volume, so we should expect to see prices drop.

MacKinnon said it may be a temporary blip, but even if, in the long run, the Canadian dollar stays exactly the same as the U.S. dollar, you can't expect prices to be exactly the same. Transportation costs, competition and a variety of other factors contribute to the price of goods: the exchange rate is only one part of the picture.

His advice for getting the best deals?

Do your shopping online.

Even though books and magazines that have been slashed to U.S. prices at places such as Wal-Mart, consumers can save even more money by shopping online and paying U.S. prices in Canadian dollars.

"That's what I'm going to be doing this year," MacKinnon said of the upcoming holiday shopping season.

And don't expect to get ten cents on the dollar if you trade in that old folded money from your last trip south of the border.

And beware of all the whining in the resource and manufacturing sector that accompanies the daily news of the loonies flight. Its a mirage. The real impact is declining prices for some resources.

The merger of Abitibi-Consolidated Inc. and Bowater Inc. is complete, but today both companies are expected to report their third-quarter financial results separately in the midst of an industry-wide newsprint slump.

And the final profit report for Abitibi is not likely to be good as its results are expected to be adversely affected by the strong Canadian dollar, rising costs and depressed newsprint prices. Analysts forecast Abitibi's loss at 29 cents a share during the third quarter.

The high loonie is only exacerbating problems in an industry beleaguered by stagnant natural gas prices and by changes imposed by the royalty review, industry watchers said yesterday.

The government's concern surrounds the fact that natural gas prices have remained stagnant and, thanks to the high dollar, Albertans are getting less cash today than they were for the same amount of the resource six months ago.

And even companies with American investments have made record profits despite the price differential between the loonie and the greenback.

Manulife Financial Corp. now earns so much of its $1.07-billion in quarterly profit from outside Canada that one analyst even asked yesterday why the company still reports its numbers using the soaring loonie.

"How do you justify using the Canadian dollar?" asked Desjardins Securities analyst Michael Goldberg of the company's executives on a conference call .

The Canadian dollar's rise cost Manulife's bottom line more than $56-million in the third quarter of 2007, while more than three-quarters of the company's premiums and deposits are from the United States or Asia, and almost 60% of quarterly profit comes from international operations.

In fact, Manulife has considered reporting in the U.S. dollar, said chief executive Dominic D'Alessandro.

But with more than half of all shareholders resident in Canada, it is unclear whether investors want U.S. dollar numbers, he said.

He might have added that the negative impact of the loonie's rise is hardly a dent in the longer-term growth of his powerhouse global insurer, one which had profit increase 10% over last year despite unexpectedly sharp currency movements.

And there is a silver lining to the rising loonie when it comes to some folks salaries.

Surging loonie giving Montreal Canadiens financial leeway,

And remember the Brain Drain not much in the news about that lately, but just wait the loonies rise will contribute to that too.

Your dollar will now go further than it has in quite some time. The US$40,000-a-year tuition bill is going to be, well, C$40,000. Duh, I know, but think about just five years ago, when that US$40,000 tuition bill was $60,000.

And it has not impacted Canada's hotel industry because that industry is relying more on internal travel than tourist accommodation.

According to Statistics Canada’s fourth-quarter survey of travel accommodation providers carried out in the second half of September, a majority of the survey’s 1,300 respondents expect to be busier in the fourth quarter of this year than they were in the third quarter and much busier than they were a year ago.

Because the travel accommodation industry is quite sensitive to exchange rates, the fact that its prospects strengthened in the fourth quarter sends two messages. First, it reinforces the view that domestic demand in Canada is strong heading into 2008.

Second, given the fact that accommodation providers expected demand to strengthen even before Mr. Flaherty’s recent mini-budget, the effects of lower taxes should give another boost to domestic travel and accommodation demand well into 2008.

And the rising loonie is helping Newfoundland pay off its debts. The same goes for the Federal government, and all other levels of government, provincial and municipal that borrow money in U.S. funds. Time to pay down those debts while the loonie is high, and damn the penalties.

The loonie's surge to historic highs means the provincial government will save more than $10 million in debt payments this year.

As of the beginning of the 2007-08 fiscal year, Newfoundland and Labrador had US$1.15 billion on the books in debt payable in American currency.

The province borrowed the cash in seven instalments - ranging from US$100 million to US$200 million - between 1987 and 1993.

One of those issues - for US$100-million, borrowed 20 years ago at an interest rate of 11-5/8 per cent - came due in recent weeks.

According to the Department of Finance, the province paid off that US$100-million debt, without re-borrowing, on Oct. 15.

Money socked away by the government in sinking funds over the years covered off more than US$89 million of the repayment.

The province had to pay the shortfall of US$11 million.

The good news is the strength of the Canadian dollar made that payment millions cheaper than it would have been even six months earlier.

And even car prices are dropping so wait before buying that new 2008. Especially if you live in Ontario and near the border. You can save a far amount thanks to the rising loonie. Add to it the supposed federal green rebate on some models, whenever that comes into effect, and the cut in the GST you can make some real savings.

One by one, the price dominoes are falling. Less than a week after Chrysler announced a series of incentives to keep your dollars from travelling across the border comes news that two more auto giants are joining in the stay-at-home fray while the loonie, already at an all-time high, continues to shatter its own marks.

Honda is planning to give you back $5,500 if you pay cash for a Pilot crossover utility vehicle, $1,500 if you choose a Civic and $4,000 on some Accords.

Ford has also put its foot on the rebate accelerator, offering to lower prices on some of its models by $7,000.

"Right now the MSRP on the car is $2,654," said Ted Hogan from Dixie Ford while talking about a deal on a brand new Fusion. "Ford has added an additional $1,200 E-bonus, they've added a $3,500 and an additional one per cent GST rebate."

Last week, Chrysler introduced a "3 For Free Program" that will see incentives put on almost all its best selling models, including 2007 Chrysler, Jeep and Dodge vehicles, along with its 2008 Grand Caravan, Town Country, Avenger, Ram 1500 and Ram Heavy Duty. Cash rebates of up to $10,750 are being offered depending on what you buy and when.

Ironically, all the rebates come at a time when Canadians are becoming frustrated in trying to buy cars in the States. Many dealers near the border have been ordered not to sell their cheaper vehicles to those from the Great White North or risk losing their franchises.

Honda and Nissan have also followed suit.

"There's also trade-in dollars up to $5,000 on some of the vehicles to try and encourage people to buy Canadian, to buy in Canada," said Honda executive vice president Jim Miller.

"Nissan is in the middle of doing all the adjustments to bring the prices down to what the market is bearing," said Dixie Nissan salesman Greg Carrasco. "We've been waiting for this, so I think it's finally going to happen."

While the Economist reminds us once again it is not workers in Canada that are unproductive, but the capitalist class. Their failure to invest can have a far more negative effect on the loonie than any other factor.

A strong currency reflects booming commodity exports and sound public finances. But not everyone is cheering

the industrialisation of China has boosted the world price of Canada's exports of oil, gas, minerals, metals and farm products. But the country has also done its housework: ten years of federal budget surpluses and a current-account surplus contrast with the twin deficits in the United States. In the end it was the “subprime” mortgage woes south of the border that elevated the loonie over the sickly greenback (or should that be the “Yankee lira”?).

Or perhaps it is Canada's weak productivity and unambitious businessmen. Company profits are healthy but investment remains sluggish. Because of the exchange rate, the price of capital goods fell by 10% over the past year, but purchases rose by only 5%, according to Philip Cross of Statistics Canada.

And then there are the naysayers. They are of course Americans.

Canada should put its loonie pride on hold

Despite the naysayers the reality is that the Loonie is getting stronger while the U.S. Dollar is in free fall. Even if the U.S. dollar rebounds the strength of the loonie may remain according to some market analysists.

FX – USD/CAD

Crude oil at record highs, market-wide weakness in the greenback and a rate cut by the FOMC has allowed USD/CAD to continue to fall like a rock. Most recently the pair hit a multi-decade low of 0.9328, but this support level does not appear likely to hold up as a bottom which leaves USD/CAD open to further declines. Indeed, Canadian economic data and strong oil prices support the case for additional gains for the Loonie, and Tuesday is unlikely to prove differently. Building permits are anticipated to rise 1.8 percent while Ivey PMI is forecasted to fall back to 55.0 from 56.0, but it is the latter report that has the greatest potential to be a market-mover given the risks for a surprisingly strong reading. If Ivey PMI is indeed better than expected, USD/CAD could push down through 0.9300 towards the next level of support at 0.9223. On the other hand, signs that the Canadian economy has taken a sharp hit from the Loonie’s rally could allow the pair to bounce above the 0.9400 level.

Chalk up merger-related demand for Canadian dollars as one more reason the loonie may strengthen against the U.S. dollar in the near term.

Dealing rooms yesterday were rife with chatter about the impact of the US$38.1-billion ($36.8-billion) offer by Anglo-Australian mining giant Rio Tinto RIO.LRIO.AX for Canadian aluminum producer Alcan Ltd AL.TO as the deadline loomed.

Retail investors typically wait until the last minute to tender their shares and so the currency conversions would likely take place over the next few days. Rio is going to pay off the deal in U.S. dollars, a company spokesman said. While the exact amount of the flows from U.S. dollars into the Canadian currency were far from clear, analysts said the loonie still had room to rise against the greenback as a result of the deal's timeline.

"The Canadian shareholders aren't going to want U.S. dollars, so they are going to have to convert them into Canadian dollars," said David Bradley, director of foreign exchange with Scotia Capital in Toronto. "There definitely could be significant flows."

Mr. Bradley estimated flows of U.S. dollars back into loonies would range between US$4-billion to US$12-billion. Alcan's shares outstanding are nearly evenly divided between its dual listings on the Toronto and New York stock exchanges.

The Canadian dollar has been on a tear this year, rising more than 20% to 33-year highs against the U.S. dollar. Surging commodity prices, stable growth, a robust equity market and a weak greenback have all helped the loonie. Merger-related demand has also played a role. In particular, the Rio deal, which would create the world's largest aluminum producer, has been a big driver for the Canadian dollar.

"I certainly do believe that the Rio Tinto bid for Alcan has certainly helped Canada trade to new highs," said Liz Bussanich, senior vice-president for foreign exchange at Bank of Montreal in New York.

See:

The Return of Keynes

Loonie Tories Blaming The Victims

Softwood Sell Out

Americans Recognize Canada

Parity

If It Ain't Broke

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inflation,, Canada,, jobs,, Keynes,, Canada,, unemployment,, loonie, workers,,,David Dodge, Bank of Canada,
Harper, Emerson, softwood, US, NAFTA, free-trade, trade, loonie, dollar, retail sales, petro-buck, Canada,

Loonie Tories Blaming The Victims

Like their Green Policy the Conservative Government likes to blame the victims. In this case Finance Minister Jim (Halloween Surprise) Flaherty takes a shot at Canadian consumers and retailers. He wants retailers to reduce their prices based on the strength of the Canadian dollar.

The Canadian government plans to try to persuade retailers to cut prices more quickly as the Canadian dollar rises "Cross-border shopping quite frankly is not good for retailers in Canada, nor is good for tax revenues for the governments in Canada," Flaherty said.

And instead of intervening in the market he asks us as consumers to do his job for him.

He is posturing of course, and like his asking banks to reduce ATM fee's he is blustering and blathering knowing that it is all for naught expect to appear to be doing something.

Now if he really wants to do something he would get together with Foreign Affairs, call in the U.S. Ambassador and put pressure on American exporters to drop their prices. But of course considering that this government is willing to sell out Canadian industry, the softwood lumber agreement comes to mind, for better political relations with their Republican cousins in the White House, well that would be a bit much to expect wouldn't it.

Diane Brisebois, Retail Council of Canada president, said the true culprit behind high prices is not the retailers but the suppliers of big recognizable national brands. She said she hopes she can set Mr. Flaherty - and Canadians - straight about why prices in Canada are generally higher than those in the United States. Suppliers of national or global brands charge Canadian retailers 20 to 50 per cent more than they charge a U.S. retailer for the same item, she said.

SEE:

Canadian Banks and The Great Depression

Forward To The Past

America's Debt Economy

Tax Cuts For The Rich Burden You and Me

Greenspans Legacy

Blaming The Victim

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Harper, Emerson, softwood, US, NAFTA, free-trade, trade, loonie, dollar, retail sales, petro-buck, Canada,

Parity

The loonie made parity with the U.S. dollar today.

Then it slipped to 99.9 which gave it parity with the average cost per litre for gas in Edmonton.

Highest Regular Gas Prices in the Last 60 Hours
Price	Station		Area	Time	Thanks
	Hyw 21
	Petro Canada		Edmonton - NE	Fri 7:51 PM	dancingiet
	36St & 144Ave
	Superstore		Edmonton - North	Fri 6:42 PM	Traciekl
	12350 - 137 Ave
	Shell		Edmonton - North	Fri 6:42 PM	Traciekl
	152 AVE & 127 ST
	Safeway		Edmonton - North	Fri 6:42 PM	Traciekl
	12950 - 137 AVE
	Petro Canada		North End	Fri 6:42 PM	Traciekl
	127 AVE & 127 ST
	Domo		Edmonton - West	Fri 6:42 PM	Traciekl
	St Albert Tr & 118 Ave (posted price)
	Domo		Edmonton - North	Fri 6:42 PM	Traciekl
	130 AVE & 127 ST
	7-Eleven		Edmonton - North	Fri 6:42 PM	Traciekl
	127 ST - Cumberland Rd
	7-Eleven		Edmonton - North	Fri 6:42 PM	Traciekl
	127 ST & 153 AVE
	Superstore		St Albert	Fri 3:50 PM	The_Parker
	St. Albert Tr
	Petro Canada		St Albert	Fri 3:50 PM	The_Parker
	ST Albert Tr N
	Esso		St Albert	Fri 3:50 PM	The_Parker
	Giroux Rd - St Alb Tr
	7-Eleven		Edmonton - North	Fri 3:50 PM	The_Parker
	97 St - 128 Ave

Legal Issues: As this site depends on visitor price updates, Edmonton Gas Prices is not responsible for information inaccuracies, inconsistencies or errors. Edmonton Gas Prices reserves the right to make changes to any of the site content at any time without notice.


SEE:

Gas Gouging

If It Ain't Broke

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