Exactly. The markets have got all excited because a Government has come along that realises it has to tackle the deficit and the underlying debt mountain, however, the economy does not have the ability to generate growth in the way it did in past recessions. Even if we did have a manufacturing base, as the pound rises it becomes less competitive. The service sector still needs to lose weight.

Personally, I think we're heading into a global second dip. This will affect Canada too (hopefully house prices!!). The US economy is on the ropes still, China may be about to see its property bubble deflate, and the European crisis has several more acts to play out in the long saga of tackling the PIIGS debts. But in the long term it will all be about energy. Who has Oil, who has Gas and who generates their own power through sustainable means. Canada is close to, if not at the top of the league if you combine all those categories (excluding Saudi of course).

Agreed. Someone has their eyes open

I mostly agree with your analysis. My view is that the "next big things" for the world economy are US debt, then energy.

Right now, the Euro nations are tackling deficits, as is the UK. The UK will actually be ok in the medium term because banking continues to take a disproportionate amount of the worlds wealth and London will remain one of the major banking centres. There is also the potential of the falkland islands.

Obama has tried to get the rest of the G8 to continue spending. They've refused which is good for them. However I just cannot see the US tackling its deficit, let alone its huge debt: the democrats have no political will for cuts; and the republicans feel the same way about tax rises. There is even a chance that the debt could become high enough such that it will bring the half century experiment with paper money to an end (the US has only had fiat for 40 years or so).

When this starts to hit, Canada is in for a very rough time. There are those that say Canada can trade with China etc, but China only needs resources to make stuff to sell back to the US. China's domestic market is still tiny.

Ultimately (in a small number of decades) TheBear is right - it will come done to energy. With current technology Canada is sitting pretty.

i guess Canada's future hope for the exportation of fossil fuels is reflected in its committment towards renewables for domestic use?

ie. leave as many natural resources available for export as possible. win win?

i just hope it continues along these same lines, rather than revert to the russian model of chernobyll type plants to reserve its gas stocks for export.

Yes, if you have oil, it's best if you can leave as much of it in the ground as you can for as long as you can. Note that Canada is also one of the few countries that has lots of Uranium.

Hooray, the rate finally gets back to 1.60.

How things change, last year I would have been horrified to exchange at that rate. Yesterday it was a big relief.

Looks like yesterday was the best rate since the 1st March. Lets hope the trend continues

Anyone think we are likely to get back to 1.8 in the next 8 weeks?

Ouch .. The good olde days of $2.40 to the £ are obviously long gone.

Possibly. 1.75 is where I'm guessing the rate will end up within the next 2-4 months.

Right now, the Euro nations are tackling deficits, as is the UK. The UK will actually be ok in the medium term because banking continues to take a disproportionate amount of the worlds wealth and London will remain one of the major banking centres. There is also the potential of the falkland islands.

Don’t agree with your views on the Euro Countries still plenty of strife there before the USA starts to go under
http://www.telegraph...ys-Merrill.html

Spain may need financial rescue, says Merrill
Spain's debt crisis may force the country to tap the EU-IMF rescue fund over the next two to three months and set off a political storm, according a confidential report by the Bank of America Merrill Lynch.

Obama has tried to get the rest of the G8 to continue spending. They've refused which is good for them. However I just cannot see the US tackling its deficit, let alone its huge debt: the democrats have no political will for cuts; and the republicans feel the same way about tax rises. There is even a chance that the debt could become high enough such that it will bring the half century experiment with paper money to an end (the US has only had fiat for 40 years or so).

Looks like the US is going to take a large stake in the UK first
http://www.independe...ds-2017227.html
Jewels of British industry at risk of falling into American hands

By Alistair Dawber

American companies are preparing to launch daring takeover bids for a host of Britain's biggest corporate names – including BAE Systems and AstraZeneca – thanks to the weakness of the pound against the dollar.

Sterling has lost about a quarter of its value against the dollar in the last two-and-a-half years, and combined with the feeble recovery in the UK economy, British firms have become much cheaper for American suitors looking for a good deal.

Following the controversial takeover of Cadbury earlier this year by the US food giant Kraft, and the buyout of Gatwick Airport by an American private equity firm, analysts at Standard & Poor's predicted last week that a number of well-known UK companies, including AstraZeneca, BAE Systems and the contractor Balfour Beatty, could soon fall into American hands.

When this starts to hit, Canada is in for a very rough time. There are those that say Canada can trade with China etc, but China only needs resources to make stuff to sell back to the US. China's domestic market is still tiny.

Ultimately (in a small number of decades) TheBear is right - it will come done to energy. With current technology Canada is sitting pretty.

Once the US starts to get hit every country will probably go into a depression but yes agreed when the Global economy starts to recover the countries with the natural resources will fare much better. Banking can and will be moved any ware.
Pound down to parity within 18 months

Banking is harder to move than you would think. In some ways it's harder than manufacturing as banking hasn't yet been sufficiently de-skilled.

Parity in 18mos? You really think the bond markets will have that much patience with the US? You want to look at how much of the US's tax take is forecast to be spent on interest payments over the next decade.

(and can you just put your replies in red or something, no need for a billion point font)

Edit: I should clarify that I don't think the euro-zone is safe. I was talking about what comes next - the euro problems are playing out now.

WooHoo.....go the pound £££££

I need to change sterling into CAD.

Is the general consensus to wait a while?

I say yes, Mike Gas above says no. The practical advice is to change a percentage depending on your tolerance to risk.

Bloody CTV nearly gave me a heart failure tonight. During the business section, they flashed up the CAD:Sterling rate as 1.95

Luckily, it's only 1.59, time to sack the dyslexic caption guy