Friday, February 06, 2009

Recession & Snobby Kitty

Today I *drove* to work so had the opportunity to listen to the radio on the way. It was the Global Financial/Recession Update, so I listened to the sad stories of Canadian job loss (except in Saskatchewan, if I heard correctly). Then, as per usual, my brain started to wander a little bit. Would the recession be so big, mean, and evil if there were more communication barriers? What if we didn't know that the economy collapsed in Iceland? We would not had become quite so nervous, stashing our pennies in a box under our bed. What if we, as Canadians, did not know about the Dow Jones or NYSE? How would our own economy be chugging along? It's hard to imagine though, as we do not live in a special Canada bubble, and watch our currency shake up, exports decrease, imports become more expensive/cheaper, or whatever happens. Canada is massive, could we function without importing/exporting? I quite think we could, but crap I would miss bananas.

If we gradually stop importing and exporting, what would be the consequences? Clearly many products would not be available, and, likely, many products would become more expensive. Looking around my office, I search for something that was 100% made in Canada. I see very few things:
  1. Coins on my desk (while minted in Canada, not sure where the actual metal comes from)
  2. Paper?
  3. My ancient Northern Telecom phone (though this is questionable)
  4. ME! (only thing I'm 100 percent sure)
I think recession fears greatly accelerate the start of recessions. Scary! Bad things *may* happen! So people and organizations start acting like it *will* happen, sooner rather than later. Yes, it's nice to be proactive, but maybe being too proactive has its downsides. I'm trying to think of an example but not pop quickly to mind... Imagine a rumour got started that we heading towards a global shortage of eggs. People panic, and start stocking up on eggs. All of a sudden, the eggs are gone, and it turns out the prediction of the egg shortage was correct. Never mind that the sudden increase in demand (actual shift of the demand curve instead of shift along the demand curve) is actually what changed.

But really, what do I know?

I don't really follow exchange rates very much unless I'm leaving the country. Even then, there are only a few currencies I randomly look at: USD, GBP, Euro, etc. The ones I have used in the past extensively. The others I used I don't follow so much (DKK, SFF [or whatever the abbreviation for Swiss Franc is]).

Right now the Euro-CAD exchange rate is pretty close to the same (I think) as when I galloped around the EU in 2004-05. The USD is stronger than my super happy fun US playground days (2005-06), which isn't surprising. I don't think anyone thought the CAD would sustain its power over the USD for too long. I recall talking about it in fourth year (fall 2003) how no one though the dollar could sustain itself over $.83. We easily surpassed that for a nice 5ish year run, and are close to that level again now.

Then there is the GBP - the pound. Which I have no symbol for on my keyboard.

What happened and why did I not notice?! I recall when first moving to the UK in May 2004 the exchange was a hairball inducing $2.60 - 1GBP cost $2.60CAD (or, .38 GBP bought $1CAD). Now the rate is $1.83CAD to get 1GBP (.55GBP gets $1CAD).

Apparently I live under a rock, albeit a pretty rock most likely. That's a rather substantial drop, although a good chunk took place while I still on the other side of the sea. When I left in August 2005 the exchange rate was about $2.10. Still, to drop another $.30 on top of a $.50 is rather substantial.

Currency exchange is a very curious game.

The plus side of this is that my US money is worth much more now than it was than when I came home in Nov 2006! I literally made an extra 7% or so by doing nothing. Mind you this is eliminating the possibility that I could have invested it in Canadian funds at a higher return rate... but that seemed like so much work :P

Regarding my Snobby Kitty, last night I slept at my parents' house for unimportant reasons (I had their car and returned it late). This morning Mr. Cat was sitting on the floor. I sat down next to him and patted him on the head. He looked at me, sat up, and walked about three feet away, sitting down where I could no longer reach him. Hmph, I thought. So I shuffled over to his new location and enjoyed his company for about five seconds before he left the need to, again, rise to his feet and promptly sit down about four feet away.

Kitty and I aren't friends anymore.

Friday! Long weekend! Happy "Islander" Day!


JG said...

A good example of being proactive with good consequences was with the ban on CFC's to mitigate the effect they were having on the ozone layer which seems to be working.

Shannon Courtney said...

I don't think I'd call what peeps and organizations are doing about the possible recession proactive, I'd call it acting out of fear. Not always the best reason for taking action ..or not taking it.

I like your blog. It makes me think about my research thesis on local food. the more I think about it, the more I realize how vulnerable we all are as we depend so much on a globalized, centralized system that we have NO control over. That's a pretty scary thing isn't it? when the basic necessities of life are accessible only via large corporations that ship stuff from places like China and Mexico all the way up here to Canada. Hmmmmm. I recommend buying into a CSA this summer. It would be a start. A