Markets Shrugging Off Shutdown?
Board: Macro Economics
I confess I'm surprised that the stock markets haven't reacted more negatively to the shutdown. At no point were stock market declines larger than might be expected on any given day. The declines rarely exceeded 100 pts on the DJIA. As I write this at 12:30 PM on October 1, the first day of the shutdown, the NASDAQ Composite is up a percent and the S&P500 is up 3/4ths percent.
The problem, I think, with this blase attitude is that government shutdowns will become and annual event, just as government by continuing resolution has become an annual event rather than appropriations.
I guess the problem with the shutdown is that it really is only a 40
% of the civilian workforce shutdown. So you can't go to the Smithsonian or Yellowstone Park. So what? This seems to be the problem. Solders still get paid (because of a special bill), airports are open so congressmen are not inconvenienced going back and forth to their constituencies, and, I don't know, will meat still be inspected? I think this shutdown could go on for a long time, for example all the way to the debt increase fiasco.
It wouldn't be a surprise to me now if we even go over that brink and find out what the consequences will be. I'm already hearing on CNBC that it won't be all that bad. If we do this, going over the brink will also become an annual event. If there are no consequences, why not?
And the worse government becomes, the less popular government is likely to be. This seems to be what a critical number of voters want.