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Found 6 results

  1. MintChip There is a prize to be won, $50,000 worth of gold. Best of luck.
  2. China's Arithmetic When It Comes to the Dollar “It will be helpful if Geithner can show us some arithmetic” -Yu Yongding From the lens of a global risk manager, this morning has to be one of the more fascinating that I have ever woken up to. At the same time as the US Government is setting themselves up to announce one of the largest bankruptcies in US corporate history, we have a squirrel hunting US Treasury Secretary telling the Chinese to “trust us” and America’s currency. That a boy! Providing leadership to the world’s increasingly interconnected economy is by no means an easy task, and maybe that’s why the world is voting against America holding the world’s reserve Currency Conch any longer. Timmy Geithner’s effectiveness with the Chinese translators overseas this morning is borderline laughable. There was a time when the Wizards of Wall Street’s Oz could fly overseas and make a comment like “we are committed to a strong dollar” and it would actually matter. Rather than getting on a plane and shaking hands with The Client (China) himself, President Obama opted to send the same guy that called the holder of $768B in US Debt “manipulators"... Nice! When it comes to financial market sophistication, other countries aren’t as gullible as they used to be. An internet connection and You Tube screen have effectively changed all that. On the heels of Timmy’s “reassuring” comments, the US Dollar is getting spanked again, trading down another -0.73% to lower-lows at $78.63. Rather than fading Geithner from my soapbox, now the world is – it’s sad. I understand that this is all doesn’t matter yet because someone on CNBC is hopped-up about where the US futures ramped into Friday’s close and look here on today’s open. That manic behavior really helps America’s reputation. At the end of the day, the US stock market could go up another 6% to 9% today, and it would still be amongst one of the worst performing stock markets in the world. The Dollar moving into crisis mode matters. First, all of the reflation trades pay themselves out in full. Second, all of the global political capital associated with the almighty Petro-Dollar gets redistributed. And Third, well… rather than analyzing this as the said Great Depression Part Deux… how about another Third Quarter of 2008 in US Equities? Nah, that’s crazy right? Like they say in the Canadian Junior Hockey Leagues, “crazy is as crazy does”! There are loads of unintended consequences associated with a US Dollar crashing – the only other sustainable break we’ve seen in the US Dollar Index below the $80 level since 1971 (when Nixon abandoned the gold standard), was that one that led us to that 2008 Third Quarter… After locking in another +5.3% month for May, the S&P500 is up a whopping +1.8% for the YTD. Unlike most global equity markets that are charging to higher-highs this morning, the S&P500 is still trading below its January 6th high of 934. On the heels of another strong, albeit not herculean PMI manufacturing report last night (it decelerated slightly month over month), China’s stock market charged to higher-highs, closing up another +3.4%. The Shanghai Composite Index is now +49.5% YTD, and we, as our British philosophy competitor likes to say remain “long of it.” From Hong Kong to Russia, stock markets are up +4 to +6% this morning. Why? Because, much like the only other time we saw the US Dollar break down to these levels, everything that China needs reflates. Oil prices and the promises of a potentially empowering Chinese handshake have the Russian Trading System Index (RTSI) up +83% for 2009 to-date. Now that and the price of oil trading up +19% in less than 2-weeks is getting someone paid - and it isn’t the American Consumer! As she trashes her currency, America will continue to lose political capital both domestically and abroad. After all, a -12% three-month swan dive in the US Dollar has hacked over $90 Billion of value from the Chinese position in US Treasuries. Creditors and citizenry hush yourselves! All the while, 17 out of 23 Chinese economists polled are calling holding those Treasuries a “great risk” this morning. I know, I know… an economist or a billion US Dollars ain't what it used to be… At some point, China’s interpretation of the arithmetic is going to really matter.
  3. http://www.montrealgazette.com/business/independent+Quebec+might+benefit+from+currency+report/9637904/story.html An independent Quebec might benefit from its own currency: report Parti Québécois leader Pauline Marois said an independent Quebec would accept the loonie, along with Canadian monetary policy, and consider asking for a seat at the Bank of Canada. Photograph by: Jonathan Hayward , THE CANADIAN PRESS An independent Quebec might be better off with its own currency rather than following Parti Québécois leader Pauline Marois’s suggestion that it keep the Canadian dollar, a report says. A Quebec currency and separate monetary policy could bring “potential benefits” in the long term to Quebec, Paul Ashworth and David Madani of Capital Economics said in a research report. “The basic problem Quebec faces is that it is a manufacturing-orientated province tied to the resource-rich provinces in the west. The energy boom has boosted the economic performance of those western provinces, saddling Quebec’s manufacturers with a high exchange rate and higher than needed interest rates.” A Quebec currency would presumably depreciate against the Canadian and U.S. dollars, particularly if interest rates were lower than the rest of Canada. The resulting boost to Quebec competitiveness should trigger a rise in exports and a reduction in imports, the report said. But a referendum on separation would have negative consequences — including on investments in Quebec and higher yields on Quebec provincial debt — while a new Quebec currency would bring additional challenges, the economists noted. “If the Quebec currency depreciated in value against the Canadian dollar, then it would make it harder for the new government to repay any debt still denominated in Canadian dollars. The same goes for Quebec households and businesses that had borrowed Canadian dollars.” Separation would bring the loss of equalization payments — $9.3 billion this year, equivalent to about 2.5 per cent of Quebec GDP — while contending with higher debt servicing costs. “The bigger problem is the legacy of provincial debt, equivalent to 49 per cent of Quebec GDP. Assuming that an independent Quebec assumed responsibility for a per capita share of federal debt, too, we estimate that its overall debt burden would rise to 89 per cent of GDP. Under those circumstances, Quebec might find its borrowing costs rising, which would only add to the budget deficit and, in conjunction with the loss of equalization payments, force the new government into a sizable fiscal consolidation. “The risk of default would also be greater if an independent Quebec allowed the Bank of Canada to control monetary policy, since it couldn’t resort to printing more currency.” On the campaign trail last week, Marois said an independent Quebec would accept the loonie, along with Canadian monetary policy, and consider asking for a seat at the Bank of Canada. Her comments sparked discussion over the economic costs of sovereignty even though polls show support for independence running well below 50 per cent. Capital Economics, known for its bearish views of the Canadian housing market, weighed in on Wednesday. “Politicians who are striving for independence, whether it is in Scotland or Quebec, know that talk of adopting a new currency makes the electorate very nervous, so they have a tendency to argue that the new sovereign state would be able to keep its existing monetary arrangements,” the economists wrote. In any event, Quebec should be looking to adopt a looser monetary policy than the rest of Canada, the report’s authors said. “The evidence is overwhelming that interest rates should be set lower in Quebec, to provide more support to the depressed economy.”
  4. (Courtesy of The Globe and Mail) Weak loonie or strong loonie we get screwed I bet if C$1 = US$1.20 we would still get ripped off.
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