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Giles Slade Headshot

Loonie for Greenbacks

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Stop an old guy flying a Canadian flag at a filling station on the interstate, and he'll tell you "Jimmy was a great President." He says this for the same reason that snowbirds like him are flocking to the sunny south early this year.

It has nothing to do with Democratic policies or the onset of a bad winter. With the Canadian dollar at 102 cents, old Canadian tightwads can stay longer and eat better in the home of the brave than at any other time since 1976.

This means there will be an especially strong winter tourist season in the sunshine states even though more visits by wintering Americans are already anticipated this year given the weakness of the greenback abroad and the decline in American purchases of vacation or retirement homes.

Canadians share the current edginess about buying American real estate, so more and more of them are traveling south in trailers, RVs and campers or staying in seaside motels for the season. Also, an increasing number are shopping in American border towns despite the inconvenience of having to line-up and show their passports.

Nowadays, these visits often feature the purchase of high-ticket items like cars because vehicle prices in Canada were set when the loonie was worth 0.62 USD. The average Canadian saves about $10,000 by purchasing a higher end vehicle when visiting America.

One of the best things about shopping in America, of course, is beating the Canadian federal and provincial sales taxes. Unlike many border-states, Canada enjoys a punitive sales tax system that can add between 15 and 20% to any purchase.

The trouble is that few Canadian economists went to Harvard, or the London School of Economics. They don't understand the premise excessive tax kills business. Inability to comprehend this basic principle accounts for the fact that the Canadian feds often strip away 30% of a citizen's annual income. It is a country, you see, that never had a tea party.

For this same reason, Alberta, an oil rich province selling itself as 'Texas North', is currently ramping up the royalties paid by American investors in the oil sands. They're doing this despite years of promises that the province would remain hospitable to foreign business and keep these fees low in order to guarantee the influx of foreign capital.

Canadian is not a country based on free enterprise. The economy here grew out of royal monopolies exploiting raw material wealth like furs, trees and ore. So as soon as a Canadian Pol sees wool, he starts to shear it. -- It's genetic, like having one eyebrow.

But Canadians themselves are now eagerly ducking domestic taxes by shopping online with American electronic retailers. L.L. Bean has experienced double-digit growth among Canadian customers recently as have many other online catalogue stores. Poste Canada says there's a 38% jump in deliveries of retail packages from American firms to Canadian customers.

I live in Vancouver and just bought a copy of Dennis Palumbo's excellent Writing from the Inside Out through It cost me $15.95 CAD and a few bucks for shipping. If I'd bought it in Canada, it would have cost me $29.19 CAD from a Canadian shop once the 17% sales tax was added. Ow!

So, where am I doing my holiday shopping this year? You bet! 2007 is the year that Canada buys American online. My wife will be getting some of those beautiful Pendleton blankets she loves. My sons will be getting video iPods (oops!). My toddler will get some lead-free wooden CN and CP engines made in Louisiana, Missouri by the Whittle Shortline Railway.

And what about me?

At long last, I'm going to break down and buy myself an expensive, wooden puzzle from Stave Puzzles in Norwich, Vermont. -- There's just nothing like them in Canada.

Okay, call me frivolous. But if I'm participating in the new trend of Canadians buying American goods, Canadian companies are now getting into the act too. Toronto Dominion bank just purchased Commerce Bancorp of New Jersey. This is part of a wave of foreign firms taking advantage of the sagging greenback by purchasing American companies. So far this year these purchases have totaled $257.4 billion.

Unfortunately, if this appears to be a clear statement of foreign faith in American assets (good news for the American economy in the long run), it is not a faith currently shared by many in the United States.

Increasingly, worried Americans are investing in non-dollar-denominated foreign assets as a hedge against deepening domestic recession, hence Wall Street's alarm about the Alberta royalties.

Because of America's increasing trade deficit, soaring prices for imported goods will continue to rise in the United States for months to come and foreign travel will become increasingly expensive through the winter months. These facts will likely fuel America's economic crisis of confidence, and there's little resolution in sight until the next Presidential election.

Meanwhile, Bill Clinton is standing behind his wife smiling. "First thing, Hil," he whispers, "Ahm going to show you how to balance that thing...Then we gonna get rid of them damn Canadians."