The government shut down. Why doesn't anyone care?

nedyne
By nedyne on Sun, Jan 21, 2018 - 10:02am

So the government shut down because lawmakers couldn't agree on a bill to just continue the old and outdated budget for a few more weeks. How hard is that?

But then, nobody seems to care. Gold closed down in USD for the week, even though at the start of the week the odds of a shutdown must have been lower. The S&P 500 closed on a record high. Even DaveFairtex here devotes just a small paragraph to the shutdown in his daily update on gold and silver.

But I think it does matter. Everyone thinks that the US just cannot default because they can print dollars to mars and back. And that's technically correct. But that's contingent on lawmakers' ability to agree to it. And another shutdown is one more piece of evidence that politics is highly dysfunctional and unpredictable in the US, which means a debt default is not impossible in the future if Democrats and Republicans can't agree on their pet issue du jour. A default could trigger the great undoing of the house of cards that is the dollar and US debt (or not, people could just forgive the sins and keep piling on more US debt, everything is possible).

So why does a shutdown not seem to matter to anyone?

 

 

 

 

10 Comments

phusg's picture
phusg
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As a layman (and that's what

As a layman (and that's what I am in these matters as a European) I think the main reason is these shutdowns happen every few years don't they? They always seem to get fixed sooner or later.

Also I think most people assume the FED would always jump in with money printing to avoid any debt default, with or without lawmaker support. Just as Draghi's ECB, they would do whatever it takes. I think they don't do so for the federal budget as that would be overtly political.

 

nedyne's picture
nedyne
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Debt ceiling

As far as I know the Fed can't avoid a debt default if Congress won't raise the debt limit. Debt payments are an obligation of the Treasury, not the Fed.

However, this is a government shutdown and it's distinct from a debt ceiling problem. The debt ceiling is coming in March.

https://www.cnbc.com/2018/01/19/debt-ceiling-is-the-next-big-congress-fi...

phusg's picture
phusg
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Oh yes, the debt ceiling,

Oh yes, the debt ceiling, forgot about that one, thanks!

Would be good if we had one over here. Although I guess they are pretty meaningless if they just get raised every time it's approached, as the markets seem to be expecting again this time. Then again, at the very least there is a discussion of whether more debt is a sensible thing, which has been kind of absent this last decade.

mememonkey's picture
mememonkey
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It's political theatre

If there is one thing we can count on for our completely dysfunctional system to actually accomplish is to continue the debt and spending ponzi.

Ultimately there  will be some sort of a default but that will be a function of a runaway process that they lose control over.  It won't because 'our' representatives in DC stand on principle and actually turn off the spigots.

These shutdowns are political theater~ turf wars to gain a PR  edge in the fake left right battle for hearts and dumbed down minds.  These events always occur within the narrow bounds of what is 'manageable'.  

When push come to shove, the Banksters that own our lawmakers will always extend the debt ceiling.

The printing will continue until the rest of the world won't accept our paper.  Only then we will see some real adjustments to spending.

 

mememonkey

thc0655's picture
thc0655
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Posts: 1512
No one cares, nor should they

It's just political theater.  The rough outlines of the "solution" are known in advance and we know nothing will be "solved."  We will kick most of the cans further down the road.  Our reckoning with reality approaches inexorably.

https://www.theburningplatform.com/2018/01/22/what-to-really-expect-from-the-government-shutdown/#more-168510

It’s deja-vu all over again, as baseball legend Yogi Berra might have said. The politicians and media are telling us the world is coming to an end because a “compromise” could not be made at the 11th hour to keep the Federal government in business.

Republicans blame Democrats for the shutdown over their insistence on legislation to benefit about 700,000 “Dreamers” — immigrants who were brought illegally in to the country as children. Democrats make the shutdown all about Donald Trump, hoping to gain political points from his unpopular status. The media headlines are recycled from the last phony “shutdown.” It’s all about “partisanship” in Washington, mainstream media tells us. The same pundits are on television demanding that the parties put aside differences and work together for the American people.


Don’t let the politicians and the media fool you. Despite the appearance of ferocious partisan warfare, the truth is that both political parties agree on all the important issues.

Both parties support perpetual, undeclared war.

Both parties voted last week to continue suspending the Fourth Amendment, granting President Trump and his Administration the “authority” to continue spying on all of us without a warrant for another six years. So much for Democrat talk that President Trump could not be trusted: they have entrusted him with the authority to spy on us for six more years!

Both sides agree on no spending limits for the warfare-welfare state. Both parties agree that the Federal Reserve should continue to manipulate our currency to the benefit of big banks, well-connected corporations, and Wall Street.

While they want to frighten us by claiming the shutdown will shut down the US military, making us less safe, the fact is Pentagon operations overseas will continue without pause. Defense Secretary Mattis assured us over the weekend that “daily operations around the world – ships and submarines will remain at sea, our aircraft will continue to fly and our war fighters will continue to pursue terrorists throughout the Middle East, Africa and South Asia.”

In other words the Pentagon will function as if there was no Legislative Branch to rein them in. But that;s not new. That’s been true for a long time!

Americans should understand that much of the Federal government is on auto-pilot. The deep state holds the cards no matter who is elected or how long the government is shut down. The CIA will continue arming terrorists and plotting to overthrow governments overseas. The “Justice” Department will continue handing out long prison sentences for people using marijuana even in states that have legalized marijuana. The NSA will continue spying on us without a warrant and telling us it is to keep us safe and free.

We are told that all “non-essential” personnel will be furloughed until Congress agrees to begin funding the Federal government again. In fact, the real “non-essential” personnel are most Members of Congress themselves! Perhaps their pay should be docked for each day they pretend to be in conflict. The only danger of that, of course, is that they would reach the inevitable compromise even sooner.

 
cmartenson's picture
cmartenson
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Posts: 5568
Goverment "shutdown" is a tantrum

There are several reasons this shutdown doesn't matter.  The first, as already noted by Mememonkey and Thc055 is that it's simply political theater.

The second reason is that the ""markets"" no longer operate as true markets and under the control of the central banks.    In fact, the worse the apparent news the better the ""markets"" seem to do.  It's almost as if someone who had the ability to do so had an incentive to use the markets as signaling devices to proclaim "all is well" even more loudly at times when things are obviously not well.

My last observation is that a government "shutdown" at the Federal level follows the same script as when a local school system does not get all of its requested exponential budget increase....and then throws a hissy fit.  This takes the form of very publicly shutting down exactly the programs that will most immediately impact  and inconvenience the lives of the parents.

After school sports, subsidized lunches, trips,  teaching room supplies and extracurricular activities always get immediately chopped.  The superintendents' salary, principal's, and the assistant to the assistant vice principal's salary are never touched.  

So all you see in a government shutdown at the federal level is closed national parks, and suspension of visa/passport processing, etc.    Just stuff that costs almost nothing at all but inconveniences the most people.

It's sad, pathetic and completely par for the course.

Time2help's picture
Time2help
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DennisC's picture
DennisC
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Joined: Mar 19 2011
Posts: 271
Kabuki

At first, three-ring clown circus usually comes to mind but then I looked up this definition (emphasis added):

Ka·bu·ki

 (kə-bo͞o′kē)

n.

A type of popular Japanese drama, evolved from the older Noh theater, in which elaborately costumed performers, nowadays men only, use stylized movements, dances, and songs in order to enact tragedies and comedies.
 
https://www.thefreedictionary.com/Kabuki+theater
 

At least it's not exclusively men (i.e. congress dot gov), but pretty darn close.  I must say, the picture for this ZH article headline summed it up for me. (https://www.zerohedge.com/news/2018-01-22/global-markets-shrug-us-govern...)

DennisC's picture
DennisC
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Posts: 271
If I could have...

given you an extra "thumbs up" for mentioning the annual school budget drama, I would have most certainly done so.

Time2help's picture
Time2help
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Joined: Jun 9 2011
Posts: 2766
Back to "work"

Senate Votes To End Government Shutdown: Stocks Surge To New All Time High (Zerohedge)

Quote:

Update 2 and final: Shortly before 1pm ET, the Senate voted to advance a funding bill in an 81 to 18 vote, that will reopen the government, ending a three-day standoff that left federal agencies shuttered and hundreds of thousands of workers furloughed. Democrats agreed to advance a stopgap spending measure lasting until Feb. 8 after Senate Majority Leader Mitch McConnell promised to allow an immigration bill to reach the floor next month.

"After several discussions, offers and counteroffers, the Republican leader and I have come to an arrangement. We will vote today to reopen the government to continue negotiating a global agreement," Senate Minority Leader Charles Schumer (D-N.Y.) said ahead of the vote.

The three-week funding bill still needs to pass on a final up-or-down vote, but that is a formality now that the Senate has voted to end dilatory debate."

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