{"id":11214,"date":"2015-08-19T06:49:45","date_gmt":"2015-08-19T11:49:45","guid":{"rendered":"http:\/\/olduvai.ca\/?p=11214"},"modified":"2015-08-19T06:49:45","modified_gmt":"2015-08-19T11:49:45","slug":"canada-getting-clocked-by-something-far-bigger-than-oil","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=11214","title":{"rendered":"Canada \u201cGetting Clocked\u201d by Something Far Bigger than Oil"},"content":{"rendered":"

Canada \u201cGetting Clocked\u201d by Something Far Bigger than Oil<\/a><\/h3>\n

Canada is likely in a technical recession, after the economy shrank for the first five months of the year. It\u2019s heavily dependent on commodities. The oil bust and the broader commodity rout have been blamed liberally. The theory goes that the problem is contained. The oil patch may be wallowing in the mire. But no problem, the rest of Canada is fine.<\/p>\n

The swoon of the Canadian dollar against the US dollar has caused a bout of false hope that this would make Canadian exports of manufactured goods more attractive to buyers in the US and elsewhere, and that\u00a0the economy could thus export its way out of trouble. This theory has now run aground.<\/p>\n

Because the threat to manufacturing in Canada comes from Mexico.<\/p>\n

\u201cI think Mexico\u2019s just a cheaper place to produce, and you have enough human capital and engineering skills to produce almost everything you can produce in Canada and do it a lot cheaper,\u201d Steven Englander, Citibank\u2019s global head of G-10 currency strategy, told\u00a0Bloomberg<\/u><\/a>.<\/p>\n

And the multi-year swoon of the Canadian dollar against the US dollar isn\u2019t going to help. Over the last three years, the loonie has lost 25% against the US dollar, the peso 21%. Over the past 12 months, the loonie lost 16% against the dollar, but practically in lockstep with the peso.<\/p>\n

This chart shows the move of the two currencies against the dollar as a percentage change from three years ago. It\u2019s like a downhill tango:<\/p>\n

\"Canadian-dollar-Mexican-peso-US-dollar-2013-2016-08\"<\/a><\/p>\n

So devaluing the loonie sounds like a good old central bank solution. But it hasn\u2019t boosted exports of manufactured goods:<\/p>\n

 <\/p>\n

The US dollar value of non-oil exports from Canada to the US reached $32 billion during the peak month in 2008, crashed during the Financial Crisis, and recovered, but by 2012 started petering out at $30 billion a month, has since lost ground, and remains below where it had been before the financial crisis.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

Canada \u201cGetting Clocked\u201d by Something Far Bigger than Oil Canada is likely in a technical recession, after the economy shrank for the first five months of the year. It\u2019s heavily dependent on commodities. The oil bust and the broader commodity rout have been blamed liberally. The theory goes that the problem is contained. The oil […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[103,1861,1851,1099,1784,7656,517,1775,839,4254,4255],"class_list":["post-11214","post","type-post","status-publish","format-standard","hentry","category-economics","tag-canada","tag-canadian-dollar","tag-commodity-price-collapse","tag-currency-devaluation","tag-exports","tag-mexican-peso","tag-mexico","tag-oil-price-collapse","tag-us-dollar","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11214","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11214"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11214\/revisions"}],"predecessor-version":[{"id":11215,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11214\/revisions\/11215"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11214"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11214"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11214"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}