Bailout, the $700 billion dilemma and world markets

[C0ldf1re]

Do you think that the Canadian dollar will become a safe haven currency if we have a US$ crisis?

[kgun]

Do you think that the Canadian dollar will become a safe haven currency if we have a US$ crisis?

One thing is sure. There are stronger or weaker links between the two currencies since the two economies are very interlinked. If you want to deversify away risk, find an instrument that is uncorrelated or negatively correlated with the financial instrumentw whose risk you want to reduce or eliminate.

How interlinked the American and Canadian banks are in a real crisis like the great depression is another question. Today, I would have been more comfortable with some of my savings in Canadian than 100 % of my savings in US banks.

A thorough answer requires months of study.

[deepsand]

Do you think that the Canadian dollar will become a safe haven currency if we have a US$ crisis?

Doubtful, as there simply aren't that many available.

[kgun]

That is the heading of the last article from http://www.elliottwave.com/.

Elliot's / Prechter's wave principle has been mentioned in this thread, so I thought it was correct to publish the story. To sum up:

Elliott's 70-year-old forecast applies in 2012
October 1, 2012

By Elliott Wave International

Adversity often visits people just as their future seems brightest.
At the same time, other people learn that when one of life's doors closes, a window will open.
Both of these truisms describe the life of Ralph N. Elliott (1871-1948 ), the founder of the Wave Principle.
In the 1920s, Elliott became a successful business consultant. But his life of accomplishment and financial independence were in peril when he fell gravely ill. During months of recuperation, Elliott occupied his mind with a meticulous study of the stock market.
In other words: The door closed and the window opened. At 67, Elliott made a discovery.

Through a long illness the writer had the opportunity to study the available information concerning stock market behavior. Gradually the wild, senseless and apparently uncontrollable changes in prices from year to year, from month to month, or from day to day, linked themselves into a law-abiding rhythmic pattern of waves. This pattern seems to repeat itself over and over again. With knowledge of this law or phenomenon (that I have called the Wave Principle), it is possible to measure and forecast the various trends and corrections (Minor, Intermediate, Major and even movements of still greater degree) that go to complete a great cycle.

Ralph N. Elliott, R.N. Elliott's Masterworks, pp. 154-155

In 1941, Elliott drew a chart of his long-term forecast based on the Wave Principle. The final label on that chart is the year 2012! (That chart is republished in the February 2012 Elliott Wave Theorist)
Amazingly, wave analysis thus far confirms Elliott's 2012 forecast.
In the August 2012 Elliott Wave Theorist, subscribers receive a specific stock market overview through early 2013.
Indeed, EWI's timing tools appear pointed to the exact month of a major stock market turning point.

Two observations lead us to the same month for the last upside gasp in the stock market.

The Elliott Wave Theorist, August 2012

Imagine: Today's price pattern is in line with a forecast R.N. Elliott published 70 years ago!

I can reccomend Ralph N. Elliotts book: "R.N. Elliott's Masterworks The definitive collection" edited by Robert R. Prechter.

for those who want an alternative view of financial markets.ISBN: 0-932750-37-0

[kgun]

Ben S. Bernanke for the first time pledged that the Federal Reserve will buy bonds until the economy gets closer to his goals, cementing his place as the Fed’s most innovative chairman and signaling the battle against unemployment eclipses any concerns about inflation for now.

The central bank yesterday announced its third round of large-scale asset purchases since 2008, with the difference that it didn’t set any limit on the ultimate amount it would buy or the duration of the program. Instead, Bernanke said stimulus will be expanded until the Fed sees “sustained improvement” in the labor market.
Bernanke is “going to fight and fight until he sees a real improvement in the economy,” said Ethan Harris, co-head of global economics research at Bank of America Corp. in New York. “He’s not going to let his critics stop him. He believes quantitative easing can help the economy and the Fed can avoid inflation, so he’ll just keep at it until there’s a real turn in the economy.”

Source: http://www.bloomberg.com/news/2012-0...-concerns.html

That article is also commented wth the following

Federal Reserve Chairman Ben Bernanke really means it this time.

He will rescue the economy.

But we've all heard the definition of insanity: doing the same thing over and over and expecting a different result.

Why should we think QE-3 will work when the previous two failed? (Don't think they failed? Then ask yourself why we need a third one.)

Source: http://www.elliottwave.com/blogs/fre...ampaign=slider

words.

[cw1865]

Do you think that the Canadian dollar will become a safe haven currency if we have a US$ crisis?

No, and the reason is simple, if you have a $ crisis people will be attempting to sell US dollar denominated assets and there just aren't quite as many Canadian assets to swap them for. Problem also with Canada is that a significant percentage of their GDP is exports to the United States, unfortunately if we go down, we'll likely anchor them down with us. Gold....other commodities will reign I suspect

- - - Updated - - -

Source: http://www.bloomberg.com/news/2012-0...-concerns.html

That article is also commented wth the following


Source: http://www.elliottwave.com/blogs/fre...ampaign=slider

words.

OK, here's the plan guys, we're going to run massive deficits to stimulate the economy and to do that we're going to sell bonds. But when that's not enough, we'll have the Fed print money to BUY BACK some of those bonds and THAT'LL stimulate the economy.

Is there ANY coherence to this paradigm?

[C0ldf1re]

... we'll have the Fed print money... Is there ANY coherence to this paradigm?

It has just occurred to me that printing of money might make sense in a way. We had years of banks and credit cards extending easy loans, which was something that people could spend, so it was effectively an expansion to the money supply. Suddenly banks, etc have become scared to lend, and the credit contraction not only "feels" like there is less money around, but in this sense there really is less "money" around. This has been a shock to the economy, and the Fed is relieving the stress by printing "paper money" to replace the previous "credit money".

Does this make sense to anybody else? (These are my own thoughts, and I'm no expert, so please be gentle in pointing out any obvious absurdities in my idea. )

[Tubby]

None of it makes sense.

When you create money. To make it real, it has to generate a return. If you create a thousand dollars and it does not return a couple of percent the thousand dollars does not really exist.

The couple of percent it returns does not do anything except increase costs. The increase of costs merely whittles the money away. . Someone hoards it, Invests it. Because the money needs to make a return or it is not really money.

The end result is the person selling peanuts pays $1.00 for the nuts. The person he buys the nuts from spends $1.10 for the nuts . . and the consumer buys the nuts for 90 cents. . The 30 cents loss is covered by the cost of the nuts that is actually 10 cents . . Now you can re- invest in nuts costing 50cents.

They may well wonder why hungry people no longer buy peanuts, or even where the peanut sellers went?. . But they shrug their shoulders and say " Ahh well, We can get a better return on Cashew nuts". .

It does not really matter . . As long as the original currency makes a return. It is not really concern as long as you have shareholders . . It does not really matter when the market goes POP! . . because the shareholders take the loss.

The bit of money left, is still in existence has still managed to earn enough to generate growth and will continue to do so, as long as it can be re-invested in Cashew nuts.

(The growth is recorded in black and white that nobody can argue with)

[mikmik]

Our money in Canada is too fancy. Our $50 bills, and soon $20 and the rest, are now plastic. See, we have so much oil that soon everything here will be made of plastic.
SRSLY, it is a blessing, and a curse, being tied so closely with the US economy. For instance, when the US dollar is equal to 1.40CAN... Here is what I was looking for:

Why are Exchange Rate Changes Important for Farm Business?

Changes in exchange rates influence the agriculture sector. Exchange rate changes impact Canadian export prices, the price of imported inputs, and the competitiveness of the Canadian agriculture industry. The Canadian exchange rate versus the US dollar is arguably the most important as 32% of Alberta’s total agri-food export sales were to the US.

Changes in the exchange rate affect the competitiveness of Canadian exports in the international market. An increase in the loonie will influence the agriculture industry by making Canadian products more expensive for foreigners, unless Canadian producers accept a lower price for their product. A decrease in the Canadian dollar will generally increase exports and make producers more competitive. The exchange rate will also affect commodities that are priced in the US futures market.

We get a large market for our exports with the US, then, as 1836 was saying, we suffer when the US economy does as well. There is less investment from the US, OUR unemployment rate escalates, and the next thing you know, everyone blames it on the Liberals and then the hillbillies her in Alberta, and the rest of the country, vote bloody Harper in with a majority.... step by step, we inch closer to being a clone of the Americans. Privatizing healthcare is next.

It's like in the US where Koch et al (tea party) blame Obama for the crippled economy, even though he inherited in a very damaged and condition at the beginning of the crisis. He created many more jobs than Bush did, he actually spent far to little on the stimulus program - which still helped, yet the Fox Network, most mass media, and Carl Rove have everyone convinced that anything bad that ever happens is the fault of that commie, foreign born Muslim, Obama.
You see, even the idiocy markets are very closely tied to the US here, but I digress.

[mikmik]

I'm allergic to peanuts anyways, Tubby, but I can't eat cashews either because they are processed with peanut oil. I like almonds, though. Could you get your buddies to invest in them?
THX

LOL