The Democrats tough, Scarface like gangster talk - and their spreading of propaganda - that a partial federal government shutdown would drive the US economy off-the-cliff was humiliatingly exposed as canard with stocks rising the day after, and the NASDAQ capping the first week with a pretty nice 1% rise - taking the NASDAQ now up 200% since its 2009 low.
Of course, the market goes up and goes down for a multiple of reasons, but it seems clear that this so-called shutdown is not a primary catalytic element. Indeed, you could conclude after the first almost two week that stocks actually like what has happened in Washington (though, the markets might be a bit worried over the October 17th deadline for raising the debt ceiling - another situation entirely). And remember, too, how much stocks soared the first of this year when the dreaded Sequester went into effect: 10%-plus.
This partial government shutdown doesn't really economically matter so long as the Fed keeps printing money. No doubt the appointment of Janet Yellen as the next Fed Chair, has made the stock market take notice and expect even more money printing in the future. Hello, inflation and welcome back gold?
What's more, some Fed governors seem eager to issue all-too-subtle signals of fresh money printing now that the U.S. government has ceased 17% of its operations (83% of the federal government is, unfortunately, still at work). Indeed, this very partial shutdown looks to become even tinier now that the Department of Defense has been granted the power to recall 400,000 employees - half of the total 800,000 government workers furloughed - back to their jobs.
And, let's not forget, that 1.35 million federal government workers are still at work, and there are about 12.4 million local government employees in the US - with a monthly payroll of $51 billion - still at work too. And that's not counting the number of state workers or government contractors still at work as well; the government machine rolls on.
Whenever the federal government resumes full operations that may be the moment when stocks really take a hit, especially, if the markets see another year of “kicking the can down the road”-type of economic uncertainty.
Open Letter to Obama and Congress From Internet Giants Calls For Reining In Government Surveillance | Nick Sorrentino
(An important interview) Saving the Net from the surveillance state (And Crony Media): Glenn Greenwald speaks up (Q&A) | Nick Sorrentino