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That crazy Loonie!

Discussion in 'Canada' started by Shawn Snider, Jan 15, 2016.

  1. Shawn Snider

    Shawn Snider Member

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    I've been planning for a LOOOOOONG time to buy a Model S, and just when I'm about ready to do it, our Loonie shits itself......

    Right now, on the design center, my 90D S comes in at $132,150 CDN. On the American site, same specs costs; $104,700 US.

    Does that mean when our Loonie shits itself to 0.59cents or lower, that my S will be like $160,000........ ???? Paying $50k more to cross a border makes me feel sick.:crying:

    I intended on waiting for the nose-cone change in Spring (Hoping they make the S look like the X in the front, I think the nose-cone looks hideous..*Dodges Bullets*...) :tongue:
     
  2. edwolb

    edwolb Member

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    Yes, eventually prices will come to equillibrium, so perhaps its best if you buy now instead of waiting :) I came to the same conclusion when I configured both options on both the CDN and US sites, did the exchange and found that buying in Canada would be 8% cheaper. I hit the buy button before they could update their prices.
     
  3. Lloyd

    Lloyd Active Member

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    #3 Lloyd, Jan 15, 2016
    Last edited: Jan 15, 2016
    This analogy is not correct. If your currency devalues it is because of the underlying government's actions. Spending by governments taxes the holders of the currency through devaluation. Vote to supress government spending and entitlements and your currency will be better able to retain it's value.

    You are not PAYING more, you are paying the same. If this happens its the instrument you are paying with is worth less. If you are worried about the devaluation buy a US dollar denominated investment as your savings for the car purchase.

    ..........Edit

    I believe that the US dollar is unusually strong at the moment. Best to leave your currency in the loonie at the moment. IMO
     
  4. Doug_G

    Doug_G Lead Moderator

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    Lloyd, this doesn't have much to do with the government. The reason the Loonie is taking a pounding is the low oil prices. The Canadian dollar is considered a petrobuck these days. (It's not sensible considering that, according to The Economist, crude oil contributes 3% to the Canadian economy... but reality can't interfere with economics sometimes.)
     
  5. green1

    green1 Active Member

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    Just be glad Tesla is being so generous with their exchange rates, at current values that 104,700USD should be 151,951CAD
     
  6. Lloyd

    Lloyd Active Member

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    #6 Lloyd, Jan 15, 2016
    Last edited: Jan 15, 2016
    It really does. Yes it is a petrobuck, but the governments take on taxing that industry will be decreased, thus their spending and taxing ability is decreased. Look at it this way, if they cut spending the same amount that they are loosing in decreased revenue, the currency would remain the same.

    Edit.....

    Right now the US $ is the cleanest shirt in the laundry, so it is unusually strong.
     
  7. green1

    green1 Active Member

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    Half right, Currency is almost all speculation by currency traders, so it's all about feeling, not about concrete things. That's why oil prices have such a disproportionate effect, they're in the news almost constantly.
    That said, government action does also play a large roll, not necessarily in the way Lloyd described it though. Things the government does that give confidence in the dollar cause it to rise, this can be lowering debt, raising interest rates, changing other monetary policies, etc.
    Our previous government saw the currency plummet near the end of their term due to how much they emphasized the link to oil, combined with their back to back deficits for years on end, coupled with lowering of interest rates and the subsequent increase in house prices and personal debt loads.
    This government has had very little time to do anything at all, however as of right now, the messages they have sent so far don't signal things that would increase the value of the dollar (talk of deficits (the merit of which doesn't really play on currency values) and no talk of reining in housing prices or personal debt loads, and a BOC governor who is also sending the wrong signals (hints of negative interest rates))

    All that leads to the likelihood of a low dollar for quite a while longer. But as I said, it's mostly based on sentiment rather than concrete things, so little things could make big differences in the dollar in the future.

    - - - Updated - - -

    It's not quite that simple, when our dollar was on par, the government was running bigger deficits than they were when it tanked. This is one factor, but not by any means the only one. The signals the government sends (most importantly things like GDP ratios and interest rate policies) make a far bigger difference than deficit or debt numbers.
     
  8. Jaff

    Jaff Active Member

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    Sorry Lloyd, but considering our incumbent Prime Minister's election promises, plus the fact that his previous career, he was a drama teacher, you do not realize how humourous fiscal conservatives find your quip! :biggrin:

     
  9. SmartElectric

    SmartElectric Active Member

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    We decided not to wait and bought last year. Just go for it. The moment you get the car and drive it every day, you'll be wondering how you ever waited!

    - - - Updated - - -

    Everyone has a theory on the devalued Canadian dollar.

    But somehow it always comes back to oil

    Canadian dollar whacked by ‘semi-historic’ Chinese devaluation - The Globe and Mail
    TSX tanks, loonie drops to 11-year low as oil crashes to below $38 | Financial Post
    Oil hits new low, dragging Canadian dollar close to 76 cents - Business - CBC News
    Will a weak Canadian dollar really lead to stronger exports?

    Our previous conservative government bet the farm (and Ontario manufacturing base) on oil.
    Given that Canada has restricted export markets, our primary export market is now producing cheaper oil due to fracking, we are at the mercy of world prices and currency traders when it comes to the export of oil.
    Meanwhile, the high Canadian dollar emptied out manufacturing exports during the Harper conservative 10+ year reign.

    No one answer here, but we do live in the best place in the world, lots of fresh water, clean sky (now that coal power in Ontario is gone we've had very very few smog days), and healthy population.

    We're way off topic, but what the heck, there's my 2c.
     
  10. Lloyd

    Lloyd Active Member

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  11. Battman

    Battman Member

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    I had run into a Tesla engineer in Disney Land and he told me that almost of their effort is now focused on the Model 3, so I'm assuming any changes to the model S won't be dramatic. Also I'm hoping any changes can be retrofitted. Chances are the price will go up by more than it would cost to modify the car to the new look.

    Even in the event that the car cannot be retrofitted, how much is the new look worth to you....$10k, $20k??? Because the one thing you can bank on is a significant price increase.
     
  12. S'toon

    S'toon Knows where his towel is

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    Incorrect. Government spending stimulates the economy. Let's say a road is built. The government tenders out the contract, and the contractor hires people, buys supplies, etc. The supply companies buy raw materials, hire people, etc. In both instances the employees take their salary, and spend it. The stores they spend money in buy goods to supply. All this is demand created in the economy. Thus government spending has a multiplier effect.

    I swear. Some people act like government spending is actually just burning it.

    Heck, the current administration hasn't even had time to spend money yet. They haven't brought down a budget yet. The current mess is because the previous administration openly stated that Canada was a petro-state and put all of Canada's resources in the oil-basket. Then, when the price of oil fell our dollar fell. This is a perfect example why a country needs a diversified economy, not depending on one single resource.
     
  13. Doug_G

    Doug_G Lead Moderator

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    The theories expounded above are all very good... but let's look a the empirical evidence:

    diagram770.jpg

    The correlation is significant.

    Conclusion: CDN$ = Petrobuck.
     
  14. 1208

    1208 Active Member

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    How does the Canadian tar sands correlate to this? Must be taking a hit from the low cost of oil.
     
  15. S'toon

    S'toon Knows where his towel is

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  16. wayner

    wayner Active Member

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    They are and that shows in the stocks of companies that have a lot of exposure to the bitumen sands. But the costs that they have denominated in Canadian dollars have taken a big hit and the price of WTI or Brent is not down nearly as much in Canadian Dollars - however some of the Canadian benchmark prices are much lower - Western Canada select being the lowest at US$15/barrel, however Edmonton Syncrude Sweet is closer to WTI at US$28.44.
     
  17. Lloyd

    Lloyd Active Member

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    #17 Lloyd, Jan 15, 2016
    Last edited: Jan 15, 2016
    Not really.... they talked realistically about the unfunded liabilities, but in their analysis did not include local and state governments.....

    Update: In a statement to the Powerline blog, a Coburn spokesman gave this column “Three Pinocchios,” citing in part a letter by economists that pegged the gap at $222 trillion.

    - - - Updated - - -

    You can't just look at one side..... After the government project is built someone has to be taxed, or the government has to print the money. Paying the tax or deflating the currency on the other side, causing a negative multiplier on the payment side. There's no free lunch!!

    The problem with our system of tax and spend is that the pain of paying the bill is disconnected from the preceived benefit of government spending. I would like to see a system with a balanced budget where the tax rates are determined directly by what was spent or saved from the previous year. Thereby making officials accountable for their actions more directly, and making the public feel the effect of governmental spending.
     
  18. edwolb

    edwolb Member

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    How did you guys turn this into a political / economic debate? The guy just wants to know if he should buy now or later, not what to tell his government to do.
     
  19. Doug_G

    Doug_G Lead Moderator

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    The price of the car is only going to go up with the exchange rate tanking like this. I'd jump now before it gets any worse.
     
  20. Lloyd

    Lloyd Active Member

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    The title is about devaluing currency..... totally on topic.:biggrin:
     

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