Libyan Unrest Hits U.S. Dollar

The U.S. dollar may no longer be the 'safe haven' of old. The continuing crisis in Libya, as well as fears of unrest spreading throughout the Middle East has caused investors to seek safety outside the U.S. Specifically, the Euro, once a risky currency (due to the ongoing debt crisis in parts of Europe), is now considered (relatively) safe.

Oil prices have risen on speculation Libya has lost as much as 2/3rd of its oil production. Oil is hovering close to the $100/bbl mark.

Meanwhile, the Canadian Dollar is currently trading over par with the U.S. dollar. Given that the Oil prices are rising and investors are fleeing the U.S. dollar, the Canadian dollar will likely remain high for quite some time.

This does not bode well for Canadian exporters who are being hit both ways: reduced sales in the U.S. and higher production prices at home due to higher Oil prices.

If anything, this should be a wake up call for Canadian manufacturers. Improved efficiencies will be necessary if they wish to remain competitive.

GM going bankrupt and Chrysler all but finished

Mark Zandi, Chief Economist of Moody's Economy.com says GM will file for Chapter 11 protection and that Chrysler will broken up and sold to other companies.

Basically, Ford will remain the sole American auto manufacturer...at least on the current scale. GM will come back as a 'shadow of itself'.

What is most interesting is Zandi's final point about the lesson in all of this: if you have a fundamental problem in your business, it's better to fix it sooner rather than later.

GM was running a massive debt before the recession. All that has happened is that those companies that were poorly managed and in poor financial health have now been exposed.

The question is this: will other companies in other industries learn anything from this?