Canadians Panic As Food Prices Soar On Collapsing Currency

If you’ve been following FX rates for a while, you will remember that the USD/CAD has been very steady for the last 15 years or so — normally around 1.05 with a few spikes into the 20’s and 30’s. The current rate at this moment is 1.4385. It’s the largest spread in at least 12 years. That’s 1.4385 Canadian Dollars (CAD) for every U.S. Dollar (USD).

The pictured bottle of pepper is roughly $13.22 (USD).

This isn’t limited to Canada, either. A global crisis is unfolding, as you will see in the coming posts.

 

 

It was just yesterday when we documented the continuing slide in the loonie, which is suffering mightily in the face of oil’s inexorable decline.

As regular readers are no doubt acutely aware, Canada is struggling through a dramatic economic adjustment, especially in Alberta, the heart of the country’s oil patch. Amid the ongoing crude carnage the province has seen soaring property crime, rising food bank usage and, sadly, elevated suicide rates, as Albertans struggle to comprehend how things up north could have gone south (so to speak) so quickly.

China looks to add yuan to IMF currency basket

China is in talks with the International Monetary Fund to include the yuan in the institution’s basket of reserve currencies, according to a central bank official.

“We are evaluating this and are actively in talks with the fund,” People’s Bank of China Deputy Governor Yi Gang said at a press conference in Beijing Thursday. “We hope it can fully consider the progress of yuan internationalization, allowing the yuan to be part of the SDR basket in the foreseeable future.”

Allegedly melted bills a matter of national security, says Bank of Canada

OTTAWA – Disclosing details of behind-the-scenes discussions about tales of melting banknotes could endanger national security or international relations, says Canada’s central bank.

In response to a formal request from The Canadian Press, the Bank Of Canada released 134 pages of internal records — almost completely blanked out — concerning allegations its new polymer bills melted in the scorching summer sun.

Canada’s Housing Bubble Is Stretched to the Limit

Since America’s housing bubble popped in 2007, Canada’s house prices have risen an astounding 22 percent. That has to be the definition of insanity—piling into the very investment that made your neighbor and most important economic partner virtually collapse.

But perhaps the biggest sign of a Canadian housing bubble is debt! Rising debt is the gas that fuels all bubbles. The average debt burden of Canadian families stands at a remarkable 153 percent of disposable income—and growing. It was only 150 percent three months ago. Canadians are now one of the most indebted people in the developed world, and just about as indebted as Americans before their bubble burst.

Based on this measure, the Economist figures the Canadian market is overvalued by over 70 percent. Even U.S. bubble epicenter Los Vegas has only seen house prices fall by 60 percent.

Last month, Merrill Lynch called Canada’s housing market overvalued, oversupplied and driven by speculation.

And in a report released last week, cibc argued that the people least likely to be able to afford new mortgages are the ones taking on new debt. One third of debtors hold about 75 percent of all personal debt. And who is this one third? According to cibc, it is boomers nearing retirement and those already burdened by high debt.

Canada’s bubble is getting close to bursting, and when it does, expect a massive economic implosion. Unemployment will soar, banks will fail or ask for bailouts, and the dollar will plunge in value. Millions of Canadians will be left paying a fixed mortgage on a rapidly depreciating asset that will destroy their financial lives.

Five years following the popping of America’s housing bubble, Canadians may be about to wish they had learned a lesson. Get your ear plugs ready.

Full article: Canada’s Housing Bubble Is Stretched to the Limit (The Trumpet)