Those crazy bastards actually did it!
Kudos to the Republican Party for standing by their principles. It's too bad for us that their principles are INSANE and destructive to the American way of life – but at least they have conviciton. In fact, some of them and many of their donors have already been convicted – with luck, more will follow (we're looking at you, Jamie!).
Shutting down the Government is not an instant thing, it comes in various stages but Stage 1 already sucks for 800,000 Federal Workers that have been immediately furloghed without pay. One might wonder what kind of monsters would take the paychecks away from 800,000 innocent people whose jobs are to HELP millions of other people get through their day but I'm not going to point any fingers – you can draw your own conclusions.
At National Parks, Rangers are advising campers they have 48 hours to vacate but they can't use roads that go across Federal Lands – they're closed too. The EPA is completely closed (big victory for the GOP and the Kochs there!) as are Veterans Centers and even the Pentagon is at half-staff, so the GOP is also opening up America to a terror attack for which we are now totally unprepared to respond to (and good job announcing it in advance boys!).
Ironically, the Affordable Care Act, the ones the Republican'ts are trying to shut down, WON'T be shut down because it's already fully funded. Again, someone is an idiot – but I won't point fingers… The IRS has to cancel all audits, another victory for the tax-cheating constituency and, in one of the stupidest cuts of all, Members of Congress will begin losing staff – at the same time as they're supposed to be working on a solution to the funding issue! The National Weather Service is shut down, so there may be a hurricane comming – we just don't know. We also don't know anything about the economy, as all statistics are on hold – including Friday's critical Payroll Report!
Of course, not paying 800,000 people $1,000 this week is "only" $800M but that's $800M that they, in turn, are unable to spend in their local economies and, of course, Government Spending accounts for 20% of our GDP so just one month of zero knocks 2% off our entire GDP, which was only up 2.5% for the year at last estimate. Also, we should consider the actual cost of a Government shut-down, which is estimated at $300M per day. Ironically, battling the debt in this insane fashion increases it by another $2.1Bn per week.
It has been postulated that the GOP's actual agenda here is, in fact, to wreck the economy, which was simply going too well and creating too many jobs and this is the last Jobs Report before the November election and the last thing the GOP wants is for there to be a happy glow among voters crediting the President with fixing the Economy – especially after recently avoiding a war with Syria with diplomacy (what's that?) and getting the first dialog going with Iran in 40 years and giving 40M American's access to affordable Health Care for the first time since Kennedy.
On the left is the schedule of major bills (in Billions) that must be paid over the next month and, officially, we only have enough money to get us to the 15th before we run out. The 15th is key because we hold debt auctions that week on 3-year, 10-year and 30-year notes and Any uncertainty in the ability to settle the entire auction without breaching the debt limit would require one of three choices:
- delaying the auctions and issuing cash management bills instead,
- scaling down the auction sizes to only roll over maturing issues,
- or auctioning the full amount and scaling down the regular bill sizes ahead of time to create enough headroom
That's the day then, that's the official day when we are no longer allowed to borrow any more money but, until then (in theory), we can muddle through. After that, it really hits the fan on November 1st, when we would certainly default on $67Bn in payments for Social Security, Medicare, Medicaid, Military Pay and Veterans Programs. America would officially be in default internally, with external defaults coming by mid-November that would play havoc with the Global Bond Market (assuming they wait that long).
This is the path we're now on and, as I said to our Members in this morning's Alert, the markets are, so far, shrugging it off in the stage of the market cycle known as DENIAL:
We're already shorting the Futures this morning at 1,075 on the Russell (/TF) and $102.50 on oil (/CL) and, if you don't know why, then you weren't reading what I was just saying. This is serious stuff folks, it's not a joke – which is what they scychophantic media morons are trying to paint it as as their Republican Masters have pushed the Doomsday button and now they have to cover up the mess they've made before the voting (and investing) public wises up.
In fact, if you are one of my Conservative readers, you've probably been reading this whole post thinking I'm just on one of my Liberal rants and making a big deal out of nothing and that's because you've been hearing (from your usual media outlets) that this is not a big deal. Well it is – it's a huge F'ing deal! This is our elected "leaders" fighting like children who don't get their way because a law was passed that they don't like (which occasionally happens in DEMOCRACIES) so they are having a temper tantrum to make sure everyone is as miserable as they are until they either get their way or finally get punished.
When the GOP shut down the Government in November of 1995, they were severely punished a year later when the Democrats took back the Senate, which they then held for the next 10 years (along with the House, which they had held since 1948). The GOP took back the Senate and the House in 1996, Bush was elected in 2000 and our economy collapsed in 2008. The GOP took the House back in 2010 and here we go again!
That's American history 101 – I hope we survive long enough for 102…
