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  1. #1
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    Debt default in United States?

    Hi traders!

    You know me as price action trader, normally I’m careless about news, but this time things can be different.

    Let’s talk a bit about possible default in United States. How it will affect markets and real sector?

    First of all, I think that default scenario doesn’t absolutely make sense to politicians, either democrats or republicans. Every serious politician knows that he will do political suicide if US will go bankrupt. I should mention that market probably is not too serious about default in US. Otherwise, Gold futures would rally and trade somewhere near 1500 USD per ounce.

    Is Gold rising?

    Look at the Gold futures chart (GC) with expiration in December 2013, we see that market obviously has no interest in Gold. As you know, during financial crisis demand for gold is very high. It seems that broad market doesn’t bet on this scenario

    Attachment 1874



    Why is this happening?

    It started not yesterday or even not 2-3 years ago. In 2001 (!), when USA had positive trade balance, they were unable to cover a single penny of their debt. So, not surprisingly they can’t do it today. Their economic model is designed to consistently raise debt ceiling. If years before that it was considered as necessary but optional, now they simply can’t stop. So, I think, they will not allow United States to go bankrupt – dollar is the only valuable commodity for export in this country.



    If it happens, what to expect?


    First of all, don’t panic. Remember – markets will tend to act «flight-to-safety» scenario. But in this case, I would play against the crowd. We might see temporary decline of US dollar, and it would give good price to invest some cash in dollar buying cheap (of course, I’m talking about keeping ones money in currency, not about speculating and trading).
    Psychological reaction of decline is expectable, but don’t be with the crowd – step aside! In longer term perspective demand for US dollar will increase because QE program will be terminated after the default – termination of QE will bring deficit of dollars and increased demand.


    Bottom line:

    I don’t believe in default, but keep an eye on markets and be very careful if flight-to-safety scenario will start happening. No short term techniques will be reliable in this case – no levels will be working, volatility can become tremendous. Just keep an eye and be aware.

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  2. #11
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    Sometime the US government letting the US Dollar keep in weak condition for their own purpose. For an example to make their products won't be that expensive so their products still can be sold in affordable price. Imagine if they still make the dollar stronger then the demand for US products will be decreased and it will be bad for US condition as well. As forex trader we should know about this kind of economic situation too.

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  3. #12
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    I surprised by their economical crisis. I tried to thinking about that why a country like United States fall in such kind of economical condition. In the chart i think it clearly shows that gold price will fall and its a clear hint for the bad economy. I am new in trading so cant tell more. I think we need to be cautious if we want to join any kind of activity with USA. Thanks to all..

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  4. #13
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    right now the issue of debt default has been put to rest until 2014 in February before the issue will come up again because right now the many problems facing the biggest economy in the world right now is the lack of economic improvement and that is why the dollar is under-priced at the moment because many traders are running away from the dollar.

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  5. #14
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    Being a beginner I am not familiar with many factors of currency dealing and thus I am trying to understand from each and every line. Through this line I am able to get concept on department standard in U. s. Declares which gives me some concept on unexpected industry activity. Even I can see there are many effect of information in the marketplace activity. Trading with information seems to me very essential because any genuine information can modify the picture/trend of any activity quickly.

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  6. #15
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    A quick refresher: the US government spends more money than it collects in taxes. So to make up the shortfall, it raises funds by asking investors to buy US Treasury bonds. Investors, such as the Chinese government and pension funds, do this because these bonds are seen as a safe place to invest money.

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  7. #16
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    Quote Originally Posted by Value trader View Post
    Hi traders!

    You know me as price action trader, normally I’m careless about news, but this time things can be different.

    Let’s talk a bit about possible default in United States. How it will affect markets and real sector?

    First of all, I think that default scenario doesn’t absolutely make sense to politicians, either democrats or republicans. Every serious politician knows that he will do political suicide if US will go bankrupt. I should mention that market probably is not too serious about default in US. Otherwise, Gold futures would rally and trade somewhere near 1500 USD per ounce.

    Is Gold rising?

    Look at the Gold futures chart (GC) with expiration in December 2013, we see that market obviously has no interest in Gold. As you know, during financial crisis demand for gold is very high. It seems that broad market doesn’t bet on this scenario

    Attachment 1874



    Why is this happening?

    It started not yesterday or even not 2-3 years ago. In 2001 (!), when USA had positive trade balance, they were unable to cover a single penny of their debt. So, not surprisingly they can’t do it today. Their economic model is designed to consistently raise debt ceiling. If years before that it was considered as necessary but optional, now they simply can’t stop. So, I think, they will not allow United States to go bankrupt – dollar is the only valuable commodity for export in this country.



    If it happens, what to expect?


    First of all, don’t panic. Remember – markets will tend to act «flight-to-safety» scenario. But in this case, I would play against the crowd. We might see temporary decline of US dollar, and it would give good price to invest some cash in dollar buying cheap (of course, I’m talking about keeping ones money in currency, not about speculating and trading).
    Psychological reaction of decline is expectable, but don’t be with the crowd – step aside! In longer term perspective demand for US dollar will increase because QE program will be terminated after the default – termination of QE will bring deficit of dollars and increased demand.


    Bottom line:

    I don’t believe in default, but keep an eye on markets and be very careful if flight-to-safety scenario will start happening. No short term techniques will be reliable in this case – no levels will be working, volatility can become tremendous. Just keep an eye and be aware.
    my dear friend thanks so much my friend for thes useful and valuable information about the united states and defaults could
    be counted upon if politics is not involved most times. and it is better to check data before things goes rogue. with all these
    the usa is still maintaining their stand due to politics,

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  8. #17
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    Quote Originally Posted by thenight View Post
    Sometime the US government letting the US Dollar keep in weak condition for their own purpose. For an example to make their products won't be that expensive so their products still can be sold in affordable price. Imagine if they still make the dollar stronger then the demand for US products will be decreased and it will be bad for US condition as well. As forex trader we should know about this kind of economic situation too.
    Possible this way it could be done by other countries as well, as I have read that Japan also do that way. Related with an attempt to stimulate the export activities of the country. This is already common in a country. To be honest I still do not understand fully about things like this.

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  9. #18
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    Without a doubt, I was also surprised from the debt crisis in the states, why are tremendous great state that adheres to that of a sudden hold the latest information with regards to their debt huge. But I know that the American economic turnaround can be quite stable and boasts a very broad scope internationally, because the currency they use remains to be popularly used in several countries.

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  10. #19
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    thanks dear that you do gave us a this great a informetion so that when we do start this business then becare full and do work in with interst dear forex business is very risky so dear if you have good knowledge and experience then you become definatly got good earning in forex businesss and makes his life good and easy.

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  11. #20
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    The raising of the debt ceiling didnt seem to have an across board effect.The euro autralian dollar seem to be the most affected with loses of about 270 pips and 200 pips respectively sine yesterday.the credit rating stigma might be the reason for the effect not being across board.I believe not being across board i believe how ever that we might see a further down trend in the EUR/USd if the 1.4150 level is broker .there will be a down trend for teh AUD/USD pair.

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