El Falling Dollar

Oh. Here's another question from Tuesday TAG member meeting: "Is the rising Canadian dollar going to keep jobs here?"

Before I tell you what I said, let's look at what Starz Media's CEO thinks:

"If you're going to do CGI, the dollar (exchange rate) has no bearing, [Starz Entertainment Group Chairman and CEO Robert] Clasen said Tuesday evening as he cut the ribbon on Starz Animation Toronto, a 45,000 square-foot 3-D cartoon and visual effects factory.

First off. What do you expect the Starz Media CEO to say as he's opening a big 'toon studio in Toronto? ("Ooh. Look at the rising Canadian dollar. This place is getting sooo un-economical. We are so outta here!")

Don't think so.

Of course it has an economic impact. We're talking $$$ here folks. Moolah is always a big lever on corporate decisions. Just ask the laid off inkers and painters at Hanna-Barbera in the 1980s. (Now, Mr. C. is also right -- partly -- about a stable and trained workforce being a factor. Toronto will be a player into the future because it has a pool of skilled artists and technicians. But the rising Canadian dollar having zero impact? Come on already. We didn't just step off the Metrolink train from Chicken Run, California.)

Second off. I said that the falling dollar will certainly have an impact on employment. You can see it in the rising export statistics, in the American factories that are humming along with foreign orders.

More and more, we're becoming an international bargain.

This is one of the results of running an aggregate deficit (government and trade combined) that totals 6.5% of GDP.

As Reagan's assistant secreatry of the treasury Paul Craig Roberts said on the radio yesterday: "We're getting close to having the currency of a banana republic."

So stuff at Costco will start costing lots of money, but we'll all have plenty of work.