The USA is turning into a sorry state of affairs. But, it only has itself to blame. The successive governments for the past decades have done nothing but increase the debt ceiling in the country. The successive Presidents have done nothing but see their own personal interest and the vote-winning policies of spend, spend, spend. It’s all about spending to keep the country in the rat-race and on the international scene. The spending goes on, because the ones that follow in the wake will just have to deal with and it’s a tacit agreement that you blame the one that preceded you in office. But, now President Obama will go down in history as the man that broke the USA. He has brought the country literally to its knees in the wake of the successive spending policies of previous governments. Former presidents will just go into hiding as Obama will probably also do. He should take Ben Bernanke [14], of helicopter fame, with him as he goes. The last one to do a runner should turn the lights out as they slam the door; that’s if the electricity hasn’t been turned off for non-payment of the bills.
There are signs that are emanating from the House Majority Whip Kevin McCarthy (California) that it might just be possible to get a few days respite for the government and stop the country imploding on itself. That might be enough for there to be a long-term solution some have been saying. But, if there were a long-term solution that might have been found, then it would have been found a lot earlier. This is neither the first time that the debt ceiling has been reached nor the first time that the USA is in dire financial straits (there have been 17 debt-ceiling overshoots leading to shutdowns in the past four decades). But, it’s perhaps the first time that the government is down to the wire and looking as if it will get a ‘late’ notice slapped on it for not paying its bills earlier. Slowpayers are never good. Bad payers are even worse.
Tonight there could be hundreds of thousands of US workers that get told not to turn up for work tomorrow. But, does that mean that non-essential departments will get closed down first? Why does the US have non-essential departments anyhow?
A shutdown might well be short-lived. The credit rating of the US will be definitely reduced, thus reducing the image of the USA in the face of the world and their borrowing power. The financial markets will drop as a result and it’s doubtful if the guys at the House of Representatives or in the government have even considered what is happening outside of their closed world.
What to Expect?
Trading will be volatile. It will shift quickly and a lot. The reckless optimism of the past weeks will vanish into thin air as the Dollar will fall (the US Dollar Currency Index has fallen today by -0.19%, down -0.15, trading at 80.15) and theDow Jones Industrial Average will take a hammering (it is down -96.78 points to 15, 161.46, which is a decrease of0.63% today).
The US stock markets will be affected probably more than others and anyhow, the S&P and the DJIA have increased so much over the past few months that they were in for a pullback. Analysts believe that there might be a minimal drop in the stock market if the shutdown is a temporary thing that is going to last only a couple of days. If it lasts a few weeks however, then we can count on a 7%-drop in the markets at least.
That being said, it will more than likely be more as panic sets in and confidence in the ability of the US economy to pull back in the next few months soon wane. Catastrophic scenario? Probably. But, the government of the US will only have itself to blame for that. Anything that the Federal Reserve has tried to do withQuantitative Easing and the injection of $85 billion every month into the economy has done little except make the banks richer and the markets artificially inflated.
- Analysts are advising to buy oil, and resource stocks in the wake of the decision.
- Gold will more than likely increase as soon as the shutdown is announced and then it will drop when the solution is found (which it will be as the US is not going to just turn off the lights and go elsewhere).
- The Yen and the Australian Dollar will also more than likely see a rise and will be safe havens.
- But, the Euro won’t get much of a benefit as the disagreements between member states there hamper any possibility of reaping the benefits of US failings.
- If the shutdown does go ahead, then there’s no point expecting the jobs report to come out on time.
- Wouldn’t be any good to see thousands added to the claimants’ list at this time. Anyhow, maybe the guys that compile that report will be the first to get laid off (remember it’s the jobs in the departments that are unnecessary or non-essential that will go first).
- The Bureau of Labor Statistics stated on its website: “All survey and other program operations will cease and the public website will not be updated”.
The USA is going to reach its final shutdown at midnight tonightand there are a few in the world that will be rejoicing that the economy has collapsed, that the money will just stop rolling out of the Federal Reserve and that Obama will get the blame. The 11thhour might just be there to save the pieces and glue them back together, so long as the House of Representatives actually includes the money they will be needing for that too in the voting of the increased debt ceiling.
But, Obama will get the blame whatever happens and some might say rightly so after inflicting Obamacare [16] on the economy when it could have been postponed to another time. There are politicians that lie through their back teeth and give us pledges and promises that are never upheld even if they stay in office for more than one term. Then, there are the few that actually stick to their guns, come what may. It’s the latter that we wish would do something than giving the people what they promised them when the coffers are empty, the debt of the country has skyrocketed as if it were launching us into space.
Are the lawmakers, the government, the administrators and the people at the top aware of what it all means to have unleashed insurmountable debt on a country that has been failing in the face of the financial crisis? Are they aware of what it means to have no money left at all? Do they plan to have a big fund raising party and charity in the name of the good old US of A?
It may well serve the country right. It may well serve as a lesson for the US government, but, I don’t like lessons that teach the government that they made mistakes to the detriment of the people. It’s not the government that will suffer from the bankruptcy of the US. It’s happening and the US is still in denial, unable to admit that it is going to take place in the here and now. This is no longer a bed-time story that Obama has been reading to Bernanke every night. It’s happening now in the US. The US is a failed state.
It’s teetering on the edge of the cliff. Who’s going to push the country completely off into the precipice?
Originally posted: USA : Last One to Leave Turn Out the Lights [17]
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