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The last episode of traditional economic nationalism that I recall occured when foreign multi-national mining companies were taking over nickel companies Inco, Falconbridge, Lionore and others a couple of years ago.

Struck me as smart to sell resource assets near the top of the market, but others don't see it that way. Nickel is just over US$4/lb. now; back then it went over US$20/lb., clearly overshooting longer term fundamentals.

What this country could use is a sovereign wealth fund or two to take the froth off the commodity-driven booms.

My take back then (here) was "[t]he story is not that foreigners are buying Canadian assets. It's that Canadians are selling them in order to buy foreign assets."

Good post. Do we have any direct evidence as to where those takeover dollars end up?

The C$/US$ exchange rate was over $1.10 a the time making foreign investment attractive for those who reasoned that the Canadian dollar was well above PPP levels or some other fundamental longer term target.

I'm surprised that nationalists haven't picked up on the potential of large foreign capital inflows to drive up the currency and crowd out manufacturing and non-resource service exports.

Why did you screen my post?

I don't moderate posts, but I've been having problems with an overzealous spam filter. OTOH, I don't see anything from you in the spam bin. Could you try again?

Jon: try logging out, then logging back in again. Sometimes it seems to work with me, when TypePad gives a message "Sorry: cannot accept data". Is that what you were getting?

Jon, Flushing your browser cache may also help.

What I don't understand is: how do they know? How does anyone know who owns what where, and what it's worth? I expect you can watch forex transactions, but how do you know what it is spent on, current or capital goods? What about immigrants to Canada, and the assets they may have in the olde country?

Hence my questions Nick.

A Canadian miner is bought out. By the time the takeover occurs, the majority of shareholders may actually be foreign. Presumably some of them will repatriate some of their capital gains home.

Many Canadian retail shareholders and institutions may simply re-invest in the Canadian-based resource sector or other Canadian-dollar denominated assets.

Not until the 'party is over' might foreign shareholders flee back home, and some Canadian investors start looking for a non-resource levered bet outside of Canada. This 'story' only examines the potential behaviour of part of the capital markets but suggests how self-interested investors will reinforce momentum that drives the resource-levered currency higher and crowds out other economic activity.

Sprinkle in Prime Minister Harper's boom-time, fiscally stimulative cuts to the value-added GST tax and it all reinforces Canada's self-loathing status of hewers of wood and haulers of water.

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