Economic question for gurus

[malleefarmer]

Just watched a report on business channel and suggestions are a 90 cent aussie dollar presume Canadian will do the same.
Not that good for grain prices alas, errol whats the chances seems kinda likely to me.

Another quick one whats the difference between a deflationry pressure and a recession or both the same?

Big ticket machinery doesn't suffer deflation but machinery companies can be in recession???

Thanks guys

[bucket]

I have always wondered why my machinery depreciates by year but dealers equipment can sit for years at the same price?

[farming101]

One item I was mildly interested in and by now must have lot-rot setting in actually went up in price just sitting there for 2 years!

Concerning the CAD I would think 90 cents is some ways off.

[ajl]

When the talking heads on the TV are projecting something it is usually a sign of reversal. Most people have not got a clue they are using linear projection to predict the future. I am kind of surprised at the $Cdn move higher as oil is still in the toilet, but don't mind as I like being paid in a currency that is still worth something. High debt levels will drive a currency higher as most are short the currency and thus there is a demand. I think the B of C had to either raise rates are start on a quantitative easing program in order to continue to suppress them and they were not prepared to do that yet. The economy of Canuckistan needs ongoing stimulus otherwise unemployment would be around 25% right now. Almost every one works at a government job here directly or indirectly. Lots busy on infrastructure projects around Edmonton which are funded by government. Some of those projects are likely useful.

[biglentil]

They're all going down the toilet some go 1st. Right now its the usd spiralling lower.

[errolanderson]

mallee . . . didn't see the Bank of Canada hiking rates 1/2% of late . . . didn't see the loonie heading to 82 1/2 cents U.S . . . didn't see Canada's 2nd quarter growth rate at a stellar 4.5%. How blind was I?

But the question now may be; is this BOC rate move and Canada surprising growth actually real or just government spending blitz and did the BOC make the right move to hike rates?

mallee . . . my opinion, there may be some 'smoke 'n mirrors' in government growth data and Canada's current perception to the international investor. Just take a look at the current pathway of the Toronto TSX index . . . .

[burnt]

mallee . . . didn't see the Bank of Canada hiking rates 1/2% of late . . . didn't see the loonie heading to 82 1/2 cents U.S . . . didn't see Canada's 2nd quarter growth rate at a stellar 4.5%. How blind was I?

But the question now may be; is this BOC rate move and Canada surprising growth actually real or just government spending blitz and did the BOC make the right move to hike rates?

mallee . . . my opinion, there may be some 'smoke 'n mirrors' in government growth data and Canada's current perception to the international investor. Just take a look at the current pathway of the Toronto TSX index . . . .

I don't like this assessment at all but unfortunately, I believe it is accurate.

False "growth" coming from government borrowing from the future.

Rather like a young, startup big-time farmer a couple of years ago here, who ran all fancy equipment, paid the highest rent, went the furthest for land - all on borrowed money.

The crash n burn was just as spectacular and lots of landlords were left holding the bag.

Was kind of funny to watch, really.

But it won't be funny to watch a whole country incinerate because of stupid running the show...

Disclaimer - no economic guru here, just the observation of a dumb, small-time farmer.

[ajl]

Raising rates was the right thing to do as it is high time to stop the economic repression of the last 7-8 years. A least rates are now closer to free market rates. Remember government never raises rates, it just stops the money printing for a brief while so we have a rate set by supply and demand rather than the printing press. Same was true in the 1980.s The so called 4.5% growth was entirely fake and the sol result of a borrowing binge by Ottawa, Alberta and Ontario, so the printing press will get fired up again in a couple of quarters.

[errolanderson]

Mallee, you ask about the difference, if there one between a recession and deflation. This is purely an opinion, but the next market setback could be severe and led by deflationary pressures.

This would be a one of a kind recession/depression as central bankers are essentially powerless against deflation. Certainly, recent hurricane devastation will trigger bouts of inflation, but given out of control debt levels, deflationary risks are very high (IMO).

Gold may struggle in this rare economic environment. To me, gold will rally, but continue to get slammed unexpectedly. A rally based on investor emotion has a short shelf-life.

Recessions of the past have never had to deal with deflation. This time it's different. And central bankers are scared that total collapse of their inflationary policies will lead to another banking crisis.

I don't mean to scare the kageebers out of agrivillers, but believe what lies ahead in financial markets may be quite unique.

Getting our debt load down is paramount. Debt is our undoing as a government and as a consumer.

Mallee, you bring up a very good question. But in my view, the pied piper debt game is nearing a major crossroads in markets.

[farmaholic]

Getting our debt load down is paramount. Debt is our undoing as a government and as a consumer.

Tell that to spending addicted Governments and consumers. Buy now on lay-away, having credit card debt and using credit to pay off credit, mortgaging appreciated value of real estate(housing). Leasing vehicles. Wanting it All NOW. Starter homes...what are those?(the kids' first house is what their parents hoped to retire into). Hot holidays every year. Etc, etc, etc.....

The ****ing bar is set very high

[ajl]

Mild deflation is good for the little guy as a basic standard of living becomes more affordable. Best thing that happened for lower income people has been lower gas prices the past couple of years. Deflation is not good for governments buying votes and large leveraged asset holder such as most farmers. I do think that we have started the 30 year bear market for assets: stocks, bonds, precious metals, real estate etc, as the bubble has to get deflated sometime. If one had said to use low interest rates to reduce debt at any time during the last five years you would have been considered a lunatic.

[Guest]

Tell that to spending addicted Governments and consumers. Buy now on lay-away, having credit card debt and using credit to pay off credit, mortgaging appreciated value of real estate(housing). Leasing vehicles. Wanting it All NOW. Starter homes...what are those?(the kids' first house is what their parents hoped to retire into). Hot holidays every year. Etc, etc, etc.....

The ****ing bar is set very high

the bar is about to clothesline them