Shut Down? We Don’t See No Stinking Shut Down

Posted: Oct 11, 2013 12:01 AM

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.

Political watchers are flummoxed on the liberal news channels of CNN and MSNBC on why stocks soared in the first week of the government barely idling itself, but those left-wing analysts fail to recognize that their woefully inadequate ideology actually destroys jobs and limits economic growth. Government has expanded so much under President Obama's liberal agenda, and regulations have increased so far-and-wide, that to have just 17% of the U.S. government cease working is like applying cold water to a sunburn.

The Obama Democrats wanted to scare people, and they claimed that damnation and locust would come when the Sequester went into effect, but that too was exposed as ludicrous propaganda. Now this very small federal shutdown - and Mr. Obama's pitiful scare-mongering - will also be shown as a big 'whatever'. I don’t have time today to discuss the sickness of the President of our country trying to scare and manipulate American’s by shutting out veterans from their memorial and denying money to the families of fallen soldiers. What the markets really seem to care about at this point from Washington is the debt ceiling, not whether 400,000 federal employees are on-the-job.

Social Security checks will still be mailed, the active military will still be paid, Medicare and Medicaid will still be spending all the money, and the IRS will still be looking for more taxes to collect.

It would be a magnificent mistake if Republicans buy into the media's manufactured hysteria over this 17% temporary shuttering of federal operations. Most of America simply does not care, and the stock market, well, markets love it when you reduce uncertainty and run things fiscally responsibly.

At this point Republicans should not capitulate to the Democrats' demands, and give willy-nilly what the Democrats' public employee union bosses want. The American people can put up with a few federal park closures (how many will just jump over the sign anyway?), or having to delay (perhaps) by a month its IPO, in exchange for a bargain that scales back the economically destruction of ObamaCare and gets our government's spending under control.

The Democrats have shown themselves in the debate with Texas Senator Ted Cruz - in which they refused to let him add even the most minor of amendments to ObamaCare - and also in refusing to accept the rather moderate provisions of the House government funding proposal - to be outrageously stubborn and openly anti-negotiation. It is appropriate behavior for a political party that has a Donkey as its mascot, but it is not behavior that Americans should reward at all.

So far stocks don't really dislike the shutdown, and I don't either.

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