Friday, August 25, 2006

Duceppe and his common currency delusion

Wants debate on a "common currency" in the "Americas" in the wake of the takeover of Domtar by a U.S. forestry company. Common currency with the Americans? Any bet on how well that idea would go over with them? That's not really the significant point anyway.

A common currency is one of the separatists' ongoing strategies to enable separation. A move to a common currency helps the separatists. Experts agree that under present day conditions, with the Canadian dollar being used in Quebec, Quebec post-separation would have to either establish its own Quebec currency or adopt Canada's. If they keep Canada's, they lose control over monetary policy of a new country of Quebec. That's a problem. And some think Quebec using the Canadian dollar would not prove workable given Quebec's financial situation in any event. It has to do with Quebec's high debt and the amount of borrowing it would have to do in order to achieve independence. That would cause a liquidity crisis in Quebec and a flight of capital to more stable currencies, such as the American.

And if Quebec chose their own currency, they face a much stronger currency next door, Canada's (and the U.S.dollar). There could well be a movement of capital out of Quebec as a result in that scenario as well.

So if Canada moves to a common currency with the U.S., as Duceppe most helpfully suggests, we greatly help the separatist cause.

Thanks but no thanks, Gilles.