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What do the Statue of Liberty and WTC Towers have in common?
I know this has nothing to do with Forex but I though some (all) of you would be very interested in this. This board is made up of some very cool people who love America and the great ideals it stands for. There are a few very very rotten apples in the US that have to be taken care of. Enjoy!
http://100777.com/node/1074
The Statue of Liberty had to be repaired due to galvanic corrosion in air. Not what most think is possible but in ocean environments, very possible. Normally galvanic corrosion is only a factor in an electrolyte such as sea water and the stern drive on the boat - having steel and aluminum components - erodes, turns brittle and snap - it fails - if electrolytic grounding plates are not installed.
"""The galvanic reaction between iron and copper was originally mitigated by insulating copper from the iron framework using an asbestos cloth soaked in shellac. However, the integrity and sealing property of this improvised insulator broke down over the many years of exposure to high levels of humidity normal in a marine environment. The insulating barrier became a sponge that kept the salted water present as a conductive electrolyte, forming a crude electrochemical cell as and Volta had discovered a century earlier."""
In 1989 - there were plans to erect scaffolding and disassemble the WTC towers and rebuild them. Cost projection was around $5.6 billion. One of the architects shows up to work one day and the MIB's were there - had confiscated all of the plans, specs, details, etc for WTC. They even confiscated their office cubicles and had tape on the floor outlining where they went.
Reason - the exterior cast aluminum WTC panels had been directly connected to the steel superstructure of the building, thus causing galvanic corrosion. In short, the "life cycle" of the WTC was not 200 - 300 years, more like 30 years or so.
The exterior skin of the building - in being aluminum and connected directly to the super structure - was making the building weaker every day.
That could explain why there appears to be explosives set only about every 25 floors. Once the failure started, the brittleness of welds, rivets, bolts, etc would fail much easier as the loads became progressively greater on the way down.
That same process would also explain why the concrete was "powderized" over time because electrolytic processes weaken concrete too by "debonding" the Portland that causes concrete to bond in the first place. However, bear in mind that the "concrete floors" were not load bearing reinforced concrete. They were supported by what was a weakening by the day superstructure and cross members.
There was a 1989 meeting and the folks at the architectural firm Emory Roth, the project architect that took over after the design architects completed the conceptual drawings that had their office, records, plans and specs seized - were told that the $5.6 billion "take it down, rebuild it" project was cancelled and in about "10-12 years" they would "blow it up and start over". Consider that - and consider that NYC and the US Govt could not stand the global embarrassment of being so stupid or negligent that they did not consider the effects of galvanic corrosion on the superstructure. That is structural design 101 in architectural school and why they want architects to take physics and chemistry for Christ's sake. I did.
I am an architect by the way, quit practicing in 1988.
http://www.npl.co.uk/ncs/docs/the_electochemistry_of_corrosion_figures
http://www.npl.co.uk/ncs/docs/the_electochemistry_of_corrosion.pdf
http://www.corrosion-doctors.org/Aircraft/galvdefi.htm see bimetallic corrosion to get to the two links above
http://www.corrosion-doctors.org/Landmarks/statue-saddle.htm
Guess what?
The fat lady HAS SUNG. You know, the one in New York Harbor with the torch of Liberty and Freedom held high.
I want to find the sick bastard that thought it would be a cute idea to have close to 3,000 in the building and use that as an excuse to go take on a whole new energy policy, war policy, and lining the pockets of just certain people.
I think a Statute of Liberty hanging for that person would be most appropriate.
best regards,
Patmos Nanotechnologies, LLC
Karl W. B. Schwarz President, Chief Executive Officer
See also:
Galvanic/Dissimilar Metal Corrosion
The 9/11 WTC Collapses: An Audio-Video Analysis
What Really Happened
Amen. It feels like I did not trade for weeks. The alcohol did not help ... took me to far away places and new worlds. :) Glad to be back home.
I was gonna post my setup but after seeing some instructional videos from pristine i discovered new strategies to test out. Forever learning!
Elder, what do you think of the Pristine method of trading? Ever heard of it? Me and Glance saw 2 cd presentations so far and it looks pretty good. Intraday and guerilla trading.
http://www.pristine.com/store/PTUHome.aspx
I gotta go for the night. Catch you tomorrow. Your setup looks good. Will post mine tomorrow or Sunday. Have fun!
Still here? No rest for the wicked! Are you using pivot points for scalping? They are very helpful to see the range. Sure I would love to share. I am not a fan of moving averages though. I know that I am going to have to use incorporate them more. RSI, stochastic and MACD are the only ones I use. The video pretty much tells you the time periods you need.
I was on vacation all week. Too bad it was slow. Do you have a day job? For me it sucks that i cannot trade the US session cause I start work at 8:30am. I can only trade Asian and London when I am not ready to drop into bed. London makes my eyes half open and forces me to have that second cup of coffee
Have a great weekend dude!
I just may see some cats in this matrix too.
If I can recommend one video for you to watch it is the one Atagance2 posted the other day. It is filled with an unbeleivable amount of information. Maybe you went to charting school and you know abou this stuff but man you just gotta study this video.
I love the way he explains in detail the signals that that stochastics can give you. He explains in detiail how you would exit the trade. I am studying it as we speak.
The more I explore this forex obsession the more i realise that I do not know shit about trading.
https://www.etvnet.ca/cgi-bin/video/access.cgi?action=start_video&media_file=40359&lg=en
( the third one down from the site http://www.fxclub.com/video/ )
One day I will look at a chart and see it like the matrix. No indicators ... just the price action ... highs, lows, number of days at this price etc.
Have you ever traded stocks? Maybe it comes from that. To this day I feel much more comfortable shorting a currecncy pair than buying it because of my stock trading days. I saw so many stocks fall and wished I could easily short them without the hassle of opening a margin account.
Now I can short all I want LOL!
Do you feel more comfortable trying to catch a falling knife or averaging up? I would be interested to hear the opinion of others from a psychological point of view.
Ultimate
Livin, to add to that question. Is it rather doubling down? 1 lot doubles to 2 , 2 lots doubles to 4, 4 lots doubles to 8 etc.
Which way do you do it?
Good question. was about to post the same. Livin when you say 1,2,4,8,16,32 do you mean adding the double of your position in additon to your present position?
Example 1 mini then you add 2 so that makes three and from three you add 4 which makes 7 and then you add 4 which makes 11 and so on?
Thanks!
I understand where you are coming from. Do you find that certain times of the day are not worth trading? Japan session is slow many times but it is rangey. I guess you trade during all hours ... what times is your favorite? 8:30 - 10pm? 4am-6am?
Also, I have been meaning to ask this question .. always forget ... do you pay attention to the "grade" of trendlines? .. I mean do you find that the EUR rises "too fast" and you know that it just has to correct i? Is this the technique you used to short the EUR at 1.3376ish a little while ago? I assume that you studied the price pattern also and probably saw that it tried for 5 days to pierce the 1.3400 mark.
Thanks man!
Do you use pivot points to determine the trading range? I find them very useful in determining the trading range especially during the Japanese session.
Livin, are you saying that you double down every 1000 pips the amount you have at the moment and get your money from interest?
Way to go bro! Better for them to be jealous of you than feel sorry for you I say!
I guess you would be one of these dudes. LOL!
Sorry for your loss but it is damn funny.
[16:43 EUR/USD: Bouncing Off Lows and Sovereign Bids Ahead Of Stops] New York,
December 28. EUR/USD has bounced back up to 1.3150 after a second downside test
which failed this time at 1.3134. Dealers reported running into sovereign names
on the machine between 1.3134-37, however they also caution that decent sized
stops are located around 1.3125-30. Traders report little rhyme or reason to
current fluctuations - and it seems that "go with the flow" is today"s mantra.
There still seems to be good supply at the 1.3150 level, rumoured to be some
longs caught in the US data blast trying to contain losses.
lol!
And even if they raise rates who cares? They will raise a measly .25 and be at .5 while AUD will be at 7.5.
7% Interest a day? Still good.
I know dude ... just foolin with ya. But what if Japan gets laid to waste by a tsunami ot something ... who knows.
Ya .. the top trendline is the neckline for the reverse head and shoulders ... It is gonna break it ... you watch.
It is all about the carry.
will the EUR break to the downside or what tonight? You staying up?
You mean 130
OK now it works. Ihub is weird sometimes. Actually she is sleeping and I am trading. Maybe I should marry her
So what do you think?
Don't beleive what these idiots at forex.com say. History is about to repeat itself with the USD/JPY. Third time is a charm I say.
It seems that the best bet is to buy usd/jpy on dips. Japan will not raise rates until february and the US will not lower them and keep them steady.
I can't post the image for some reason. paste it in a new browser window.
img206.imageshack.us/img206/6019/usdjpyhq5.jpg
Ya I am sure about that. I read numerous stories ... the big boys make the same mistakes newbies make. Did you ever go to any of those seminars at fxstreet. I go there from time to time to have a good laugh. The things they say and the way they think is ... unreal.
There is still hope for me lol!
AMEN! Most of these forex brokers (hedge fund workers) that work with millions are pimple faced kids out of college. They know squat! They have all the feeds from the major banks and place trades this way. One day I tell you .. one day!
Make or break for the EUR/USD? It might go down another hundred pips but will be gobbled up quick methinks.
This is my chart setup with pivot points. Finally I can trade less blindly now with the pivots. The lines in red are the PP, R1 and S1. The pivot values are "similar" to the values at allpivotpoints.com. I say similar cause the retards at GFT close the trading day at midnight GMT instead of 10 GMT (5 pm ET). There is NOTHING you can do to fix that so I will live with it .. they are off by 2-5 pips. So right now the EUR/USD is between the R1 and the PP.
I use GFT forex.
[QUIRKS IN US NEW HOME SALES DATA] As we noted prior to the release of the home sales figures, November data are not the most reliable. That is nobody's fault. It's just seasonal fact of life. Quirks in today's data show what we mean. Sales in the Midwest rose 22.4% m/m after seasonal adjustment, because they managed to hold perfectly flat before seasonal adjustment. That took sales from down 26.7% y/y in October to flat in November. Sales in the West were up 19.0% m/m after seasonal adjustment, even though in the raw data, they were up just 1k, or 5.2%. The months supply ratio rose to a new cycle high of 7.7 months sales, but fell to a recent low of 6.3 months, after seasonal adjustment. This is not the kind of data to take very seriously.
[POST-HOLIDAY US SALES UPDATE] After a disappointing pre-Christmas showing ...
[POST-HOLIDAY US SALES UPDATE] After a disappointing pre-Christmas showing for retailers, attention is now on the second leg of holiday sales, starting the day after Christmas. The strategies that were used to boost pre-Christmas sales were tried again, with early openings and big discounts on offer. USA Today carries news from mall operator Taubman Centers that traffic was moderate, with parking lots 90% full by 1pm, but no lines to speak of at shops. Gift-card recipients will be met with discounts up to 70% at some stores, which means far narrower margins for retailers than on pre-Christmas sales. That is the merest hint that the post-Christmas period won"t improve much on pre-Christmas sales.
A very large percentage (60-70%?) of the GDP is retail sales for the US. If that is shit then look out below kids.
Fascinating! You just can't win over the US. Money rules the world, economic power and not military.
If you where to calculate pivot points for trading would you use 5pm to 5pm EST ( http://www.allpivotpoints.com/pivot_points/pivotcore-exchange-forex-symbol-EURUSD.html )
or
7PM to 7PM EST?
What do the pros use?
The LOC values are what is needed to calculate pivots and they are from 0 GMT (midnight to midnight). Even if I change the local clock the are still gonna be calculated from 0 GMT cause it is HARD CODED in their software right? There is a start time in the ctl file and i played with it for hours. Anybody else have this problem?
Most other pivot point sites calculate from 5pm EST.
Indicator Avail_PPoints;
input
StartHour = 21; /* hour of start of day. I use 2100 (for GMT chart)*/
draw R3("R3"), M5("M5"), R2("R2"), M4("M4"), R1("R1"), M3("M3"), PP("PP"), M2("M2"),
S1("S1"), M1("M1"), S2("S2"), M0("M0"), S3("S3"), line("EMA");
vars i(number), /* index */
lst(number), fst(number), /* index of first and last items in the data set*/
Whigh(number), Wlow(number), /* Working H&L */
Lhigh(number), Llow(number), Lclose(number), /* Last HLC used for calc PP */
i1ststart(number), /*index of start of first whole day*/
i2ndstart(number), /*index of start of second whole day*/
daycount(number), /* used to find first 2 days */
L_PP(number), /*last calculated PP, only changes at start of new day */
L_R3(number), L_M5(number), L_R2(number), L_M4(number), L_R1(number), L_M3(number), L_M2(number),
L_S1(number), L_M1(number), L_S2(number), L_M0(number), L_S3(number);
begin
/* init Variables*/
lst := back(close);
fst := front(close);
daycount := 0;
if lst < fst then
return; /* exit on erroneous data */
/* Scan array, find 1st and 2nd days. Ignore first partial day*/
for i:= fst to lst do begin
if hour(timestamp) = starthour and minute(timestamp) = 0 then begin /* look for start of day based on input starting hour */
daycount := daycount + 1; /* start counting at begin of first day */
if daycount = 1 then begin /* do only at begin of first day after we have skipped partial day's data */
i1ststart := i; /*found index of first day */
Whigh := high; /*Change working HL to current HL at start of first day */
Wlow := low;
end;
if daycount = 2 then i2ndstart := i; /*found index of start of second day */
end;
if daycount = 1 then begin /* find HL of first whole day */
if high > Whigh then Whigh := high;
if low < Wlow then Wlow := low;
end;
end;
if daycount < 2 then return; /* if not at least 2 days of data started then exit */
/*Main routine*/
for i := i2ndstart to lst do begin /*starts plotting only at start of second whole day */
if hour(timestamp) = starthour and minute(timestamp) = 0 then begin
Lhigh := Whigh; /* if we are at the begin of a new day then change HLC and recalculate Pivots */
Llow := Wlow;
Lclose := close[i-1];
Whigh := high; /*Change working HL to current HL at start of day */
Wlow := low;
L_PP := (Lhigh + Llow + Lclose)/3; /* Calculate PP based on yesterday's HLC*/
L_R1 := (2 * L_PP)- Llow;
L_S1 := (2 * L_PP)- Lhigh;
L_R2 := L_PP - L_S1 + L_R1;
L_S2 := L_PP + L_S1 - L_R1;
L_R3 := 2*L_PP + (Lhigh - 2*Llow);
L_S3 := 2*L_PP - (2*Lhigh - Llow);
L_M0 := (L_S2 + L_S3) / 2;
L_M1 := (L_S1 + L_S2) / 2;
L_M2 := (L_S1 + L_PP) / 2;
L_M3 := (L_R1 + L_PP) / 2;
L_M4 := (L_R1 + L_R2) / 2;
L_M5 := (L_R2 + L_R3) / 2;
end;
PP := L_PP;
R1 := L_R1;
R2 := L_R2;
R3 := L_R3;
S1 := L_S1;
S2 := L_S2;
S3 := L_S3;
M0 := L_M0;
M1 := L_M1;
M2 := L_M2;
M3 := L_M3;
M4 := L_M4;
M5 := L_M5;
if high > Whigh then Whigh := high; /* check for HL on current day, used for tomorrow's Pivot calculations */
if low < Wlow then Wlow := low;
end;
end.
GFT Forex is retarded!
These guys calculate their HLOC (high.low.open,close)from 0 GMT to 0 GMT ie 7pm EST instead of 5pm (the end of a normal trading day)
SO I get this ctl file for Dealbook 360 to calculate the pivot points and the damn thing is not calculating according to the HLC of the day.
It is only after the conversation below that I found out what they are doing.
Pretty damn retarded right?
Or am I retarded?
The end and beginning of a trading day is 5 pm Eastern right?
Or is it the beginning of the Japan session at 7pm EST (that would be stupid cause Sydney has already started at 5pm)
http://www.forexmarkethours.com/
Please shed some light on this!
Thanks!
Ultimatepick
Welcome to Global Forex Trading! Please wait for a site operator to respond.
You are now chatting with 'David'
David: Thank you for contacting technical support. How may I help you?
Joe Black: Hi! How do you calculate your HLOC values? from 17:00 EST to 17:00 EST? I asl because I see problems with the values
Joe Black: daily chart
David: they are from 0:00 gmt to 0:00 gmt
Joe Black: for the EUR/USD the daily chart says we closed at 1.3101 but the minute chart says 1.3096 on the minute chart at exactly 17:00
Joe Black: oh
David: that make more sense on your values?
Joe Black: Is there a way to change it to 17:00 from 19:00 ? it put my pivot point calculator ctl file out of whack ... The new trading day starts at 5 oclock EST right?
Joe Black: ot does the trading day start at 19:00 GMT?
David: ctl file is based on your clock on the computer
David: you probably wont' be able to use it on daily charts
Joe Black: japan gmt
Joe Black: oops wrong windows
Joe Black: use what? the pivot point ctl?
David: okay start again.. which ones are you trying to change?
Joe Black: actually the question is the following ... do you guys consider the start of a new session the beginning of the japan session at 19 GMT?
Joe Black: or is it the end of the new york at 17 GMT
Joe Black: 19 gmt = 0 gmt sorry
Joe Black: damn time zones
David: okay... session for your pivot point?
Joe Black: i want my povot point to start at 22 gmt and end at 22 gmt the next day .... end of new york to end of new york
Joe Black: as it is right now the daily starts at 0 gmt
David: what is the time on your computer set to
Joe Black: -5 gmt
David: and you are using the pivot point that was sent to you in a ctl file
Joe Black: yes
David: now that pivot point is based of your clock on your computer
Joe Black: what does that mean? I would like the daily charts to show the HLOC from 22 gmt to 22 gmt instaead of 0gmt to 0 gmt ... is that possible?
Joe Black: forget about the pivot point software
David: no
David: it is set to 0:00 gmt
Joe Black: set by you guys right? hard coded?
David: hard coded into the software correct
Joe Black: ok i get it .... but why did you do that? the end of the day is the end of new york
Joe Black: just curious .. thanks
David: yeah not problem
David: Is there anything else that I can help you with today?
Joe Black: lol
Joe Black: No it is ok
Joe Black: thanks for your help
David: not a problem
David: Thank you for contacting GFT, have a wonderful day. Please do not hesitate to contact us again
I am still here but London is closed today .... gonna be real real dead.
LOL! Bambi? LOL! You must tell really great bedtime stories. I am about to keel over for the night ... wanna try one on me?
Oh the web we weave ... this is nuts. Now the US is making China the bad guy and turning everybody against them. What is wrong with this world?
Ataglance this article is for you! Read it through it is worth the read. Especially the part about Iran!
From what I have heard, when the Chinese floated their idea (threatened) to go ahead and actually dump the USD this last week, first the EU told them they would not sell them enough Euros. Then, the Mid East Oil nations said they will not sell China oil if they dump the USD. China, however is not the type of nation to like being dictated to. They won’t let the US dictate to them with trade sanction threats, and they won’t take any EU interference in this situation well either, nor will they take Arab oil hostility well either.
Also, the moderate Arabs are concerned that a paralyzed US would leave them wide open to a hostile domineering Iran.
SD - 07 A Final Year?
By Chris Laird
December 21, 2006
www.prudentsquirrel.com
This article is going to discuss the growing world discontent with the USD. Previously, although the US fiscal and trade deficits were in danger territory, the US trade partners were willing to continue to accumulate USD foreign reserves as they sold masses of everything under the Sun to the US.
They benefited from massive economic growth, and let the USD hot money circulate in their economies as washed hot money (hot money comes in as USD and then is changed into local currency or lent out in local currency – this causes lending and asset bubbles locally, creating a seeming endless prosperity bubble until that comes to the inevitable end and they have massive inflation or asset bubble collapses). Ultimately this hot money issue will decide the USD fate anyway, but there are sinister looking issues, particularly with China, that may cause a USD crisis in 07.
Effect of a serious USD drop on your savings
As far as the USD is concerned, there is a growing consensus that our trade partners are getting tired of accumulating the USD. If this becomes severe enough, the USD will experience a rapid fall in value on the order of over 30% in a year. The US stock and bond markets would collapse, and US interest rates rise into the teens at the least. The value of your 401k savings and other cash type accounts would drop 30% in USD terms based on the rising prices of everything, and another 30 to 50% in nominal USD value as well as the stock and bond markets collapsed. Net USD/real value of losses to your 401ks? Very possibly over 60% - in one year.
If the USD devalues heavily in 07, we could be talking losses on the order of 60% net real value of USD financial assets. I get the impression that most people only think their dollar accounts would devalue modestly – perhaps 10% if the USD were to devalue heavily in 07. They are mistaken. The value would drop more on the order of what I just calculated in real terms – in any case probably over 50%. The losses would be from a lower USD value combined with dropping stock and bond market values – things which every 401k and other retirement account is based on.
The US and every trade partner is hoping the USD could gradually devalue. They will work together for that end. That may happen. However, there is a serious level of risk the USD decline could get out of control. Central banks don’t have all the cards. Markets can panic and outrun central bank efforts to stabilize things.
That exact same calculus is understood by our trade partners and will affect their USD holdings in the same exact way. The only reason why the USD has held up so far is because our trade partners do indeed understand this calculus, and have been so far able to stem any serious USD mini crises. The problem is, at some point there will be one mini crisis that is not stemmed, then we look over the edge of the precipice. It would not all happen in one fell swoop, but, at the end of a year, we could easily see a net 50% loss of real value of any USD holding.
The present USD situation with China and the US arguing over revaluing the Yuan has the potential to be the crisis that finally is the USD’s undoing. Particularly since the US Congress is probably going to go ahead with US trade sanctions on China. China will threaten to retaliate by dumping the USD- a kind of economic doomsday weapon. Whether they actually do that, to their own great harm, is not clear. But the latest crisis is very revealing on the dynamics we are looking at going into 07. China appears absolutely determined to stay the course, and not move much in the direction the US wants – they need millions of new jobs a year to deal with about 800 million poor and angry Chinese who have yet not benefited from their economic miracle. China considers their economic growth as central to resolving this. China is having 70,000 public demonstrations a year now. That number is rising as well.
Latest rumored USD mini crisis
Last week, there were meetings between Treasury Secretary Paulson and Fed Chair Bernanke, and other ‘A’ team US trade and banking representatives with China. This meeting resulted in a number of internet rumors and some verifiable comments that China is not giving in to US demands for a revalued Yuan/RMB. That is causing the US congress to get very mad, there are trade sanctions coming in 07. The Chinese evidently threatened to dump the USD – they have about a $trillion. Then a very interesting development – the Mid East oil nations stated they will be severely harmed by a collapsing USD if China dumps it. They threatened to embargo oil to China should they dump the USD. All of this shows how high the stakes are going into 07 for the USD – and how serious this USD situation is now. I think we can say, the USD situation is now at a crisis stage.
Formerly, the gold and other financial community has been tracking the financial mess the US has found itself in, with huge trade and fiscal deficits combined well over $1trillion a year. There has been so much written about this that people probably are saying ‘you guys have been talking about this for years – and not much has happened!’
Well, I can say that, having tracked this issue closely now for years, we are at a definite turning point. The once ‘far off’ end of the USD is now at hand or at least very much at risk of happening. The recipe is now in place, irreconcilable differences between China and the US over their undervalued Yuan, and pending US trade sanctions with a bold Democratic US congress.
From what I have heard, when the Chinese floated their idea (threatened) to go ahead and actually dump the USD this last week, first the EU told them they would not sell them enough Euros. Then, the Mid East Oil nations said they will not sell China oil if they dump the USD. China, however is not the type of nation to like being dictated to. They won’t let the US dictate to them with trade sanction threats, and they won’t take any EU interference in this situation well either, nor will they take Arab oil hostility well either.
Also, the moderate Arabs are concerned that a paralyzed US would leave them wide open to a hostile domineering Iran.
The problem China has is it cannot give much ground on the Yuan (their view), or else something worse they fear will happen to them -an economic contraction and millions of rampaging peasants who already feel the economic largess has bypassed them.
These factors add up to a very good chance that China will retaliate against the USD anyway in 07. I don’t see them escaping from US trade sanctions this year, and the Chinese apparently believe they cannot do the things the US is demanding. SO, somehow, this year, the Chinese may pull the plug on the USD.
Who will blame whom?
I don’t see this happening in the first part of the year. First, it will take time for sanctions to be voted on, then Bush will probably consider vetoing them. Then congress needs enough votes to override a veto. And so on. But, then, after a lot of hyperbolae, and ranting in the press, by June or July, we could see an attack on the USD as the rest of the world with USD holdings gets scared. Then, even a minor move by China could tip the whole thing into chaos. Then who could blame whom? We might even see a speculator front run on the USD that tips the whole mess downward.
Some financial alternatives in this situation and some pros and cons
If I have already convinced you that the USD is in serious trouble in the coming year, then let us move to what-if scenarios about your savings.
Let us assume for the purpose of discussion that the USD devalued 30% in 07. What would happen?
First, I would like to point out that the EU has done financial war games relating to this. They did simulations involving derivatives, and found that if one or two huge hedge funds went insolvent, there would be financial panics in their respective stock markets due to forced liquidations. The same EU bankers have also stated that a precipitous drop in the USD would cause financial flight out of world stock and bond markets. There would be a huge financial panic and flight to safety. I am not going to go into all the many aspects of this but:
Not only US stocks would crash, but likely most major stock markets due to financial flight and contagion. To see these as safe havens from a USD collapse is probably overblown.
There would likely be derivatives panics as the value of the USD and other currencies fluctuated wildly and caused huge losses on these incredibly leveraged positions.
There will be massive Foreign exchange volatility, chaos, and possibly restrictions.
Now, many of your USD accounts will have stocks, bonds and such. If the USD were to lose something on the order of 30% in a year, you will not only see prices of everything skyrocket but also see actual drops in the USD values of those stocks and bonds because investors will dump USD assets to escape the falling dollar. As I said, that will be a double hit on your USD accounts.
IF the USD were not to fall to zero, (I doubt it will in one year) then stock accounts for real type assets such as gold stocks and energy will have a two phase reaction.
First, many of these will initially drop due to forced liquidations of various investors. However, eventually a flight to financial safety will force these back up.
Possible foreign exchange controls
However, if the USD were to eventually completely collapse, many USD accounts will be frozen and there will be foreign exchange controls. Meaning you will be forced to ride whatever the outcome of the USD becomes. If the situation got really bad, I believe many mines will be nationalized world wide – that is already happening anyway. A gold stock is not as safe as a gold coin. Of course, these can be confiscated too, and they have been in the US once already in the Great Depression when US gold coin was recalled by the US government so they could run big deficits.
However, anything can be attached by the government in an emergency, so, in a way, this point is moot. It is not likely a paid off house would be so confiscated though, or apartment building or some other real thing. If you were to buy one now, just find one in a non bubble market. There are many areas in the US and Canada that would apply here.
Any protective movements of USD accounts will have to be done in advance of these coming USD drops. That means you would have to be willing to forego some of the coming stock gains that all the financial newsletters and media say are still coming for the US stock market, and not have as much in actual stock accounts and such, but be more in liquidated and protected mode.
Paid off real assets in your actual possession
Now, I have written before about how I prefer something like gold bullion or other paid off real assets, a non bubble house, apartment building or something like this. Paid off assets should survive a real USD devaluation. Some people like the idea of owing money on these things, to take advantage of a devalued USD, then to pay off these with depreciated dollars. The problem is, should you find your income reduced/frozen and unable to make the payments on the mortgages, then you are still subject to losing the asset until you actually pay the thing off. I think borrowing money hoping to pay off in devalued dollars is a dangerous way to have a real asset. Better to just have a smaller one paid off without a mortgage. You can always live in it if you have to.
One other consideration is that real estate will appreciate in value in a serious USD crisis and the taxes will go up, but, compare that to having some stock account collapse by over 50%, and paid in USD that are now worth 30% or more less. There are No perfect solutions that cover all aspects of a currency collapse. One has to make some trade offs.
Besides, even if the USD stabilizes, any capital gains will be taxed on financial accounts.
Euros
Of course, other alternatives would be buying Euros, or other currencies. This can be a stop gap alternative. Personally, I think most of these are still inferior to paid off assets in a currency crisis. The problem is, people still need some cash to pay bills during such a crisis, so one can’t put all of their cash into real assets necessarily. So, one needs to balance the idea of having all real assets- (gold or silver or other PMs , a house, or other real thing that you actually own and have possession of.) and having some necessary cash type assets.
Bonds
US bonds will do terribly if there is a serious USD crisis. Interest rates will skyrocket and bonds will tank. Also there will be the co debasement of the USD value of those bonds.
Other nation’s bonds will initially do well, but if they raise interest rates to compete with the weakening USD then their bonds will also drop considerably. IF their economies fall into recession, their bonds will ultimately suffer as well. They could be a stop gap for the initial USD situation however.
Foreign stocks
The same goes for foreign stocks. Most foreign stocks are very dependent on the present status quo of the US/West centric economy. IF the US stock market crashes, eventually that will spill over into foreign stocks as well. Most foreign nations are not well situated to do well economically should the USD system take a big hit. Their economies will slow badly and so will their stock markets. SO these are not automatic havens from a serious USD crisis either.
And, resource stocks will be hit (perhaps except for PM stocks) because of declining economic demand for resources should there be a big economic slowdown in the US and consequently in the rest of the US trade partner world.
These are just some thoughts about what could happen if there is a serious USD crisis in 07. I am not an investment advisor, but a gold commentator.
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http://www.kitco.com/ind/Laird/dec212006.html
Nice analysis. I just got back from my aunt's and am still kinda drunk and cannot really focus but I have to says this. Remember what the GDP rise for january 2006 was? It was damn high. I am goin to bed now and when I wake I will have a coffee, 2 aspirins and will proceed in finding all the Monthly GDP data for the last 5 years and will correlate with the chart movements.
Fundamentals rule the day. It is all about GDP now and for the past couple of months it is shrinking (MoM - YoY) but january will de a deadcat bounce.
I really like the site http://www.crystalbull.com/dashboard.php
I need a graph of all of these things superimposed on the chart.
Until tomorrow then.