Canadians Seek Loonie Bargains

Cynthia Bowers is a CBS News correspondent based in Chicago.
The Canadian dollar with its funny nickname, the loonie, used to seem like such an earnest currency -- trying hard but never able to muster much of a threat to the mighty U.S. dollar. And when the U.S. dollar was worth a dollar-forty Canadian, trips across the border were fun and a bargain. I came home with books, make-up, and clothes.

Now that the loonie has caught up with the U.S. dollar, everything has changed. The traffic that used to be travelling from the U.S. to Canada for bargains is now travelling to the U.S. from Canada. It's a proud moment for the even Greater White North, and a bruising moment for America's ego. In the last five years the dollar has fallen 37% against the Canadian looney, 23% against the British pound, and 30% against the upstart Euro.

The blame goes primarily to America's $580 billion trade deficit. Economist Martin Eichbaum of Northwestern University says that for years the US has been buying "real cool stuff" from other countries and paying for it with "pieces of paper with pictures of dead presidents." There is so much of our 'paper' out there it's becoming less desirable and therefore less valuable. The world markets want America to sell less and buy more. And lowering the value of the dollar against other currencies will do. Already foreign tourists are enjoying bargains at American malls and vacation resorts. This winter and next summer many American families will opt to vacation here at home.

Over time, experts say, the cost of imported products such as TVs and foreign cars will go up-- and we'll buy fewer of them. And with our dollar worth less on the world market our stuff- everything from tractors to planes to automobiles- will be easier to sell overseas. That's good news for beleaguered American manufacturers. The battering of the once almighty dollar might hurt our pride and feel like punishment but it will help our pocketbooks.