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1 Oct 2013
U.S. government notifies federal agencies to shut down operations
FXstreet.com (Barcelona) - After days of pulling back and forth by the two main political parties in the US, no 11th hour vote came to unravel the ongoing political farce, confirming what many were already expecting, that is, a US government shutdown.
Postures between Republicans and Democrats to reach a compromise never saw any chance of closing down, resulting on a headline published by the Washington one hour before the official 'shutdown' time confirming "the US House will not attempt more votes tonight" following a last failed proposal to pass a funding bill.
It is the first partial US government shutdown in 17 years, in what follow a pitiful behaviour by both elite party members, with House Republicans, led by Speaker John Boehner, wanting to delay President Barack Obama’s health care law for a year, while Democrats defended tooth and nail its conviction that this won’t happen.
What this means for public institutions?
Earlier on the day, President Barack Obama gave a public speech at the White House anticipating the conditions the US will have to face under a temporary shutdown, saying social security checks will still be sent out, US troops will remain on duty, while social Security, Medicare, mail and gov't operations on national security will continue if government shutdown. Obama, however, warned that "a shutdown will have a very real economic impact on real people — right away."
The shutdown, believe it or not, does not become the pivotal issue here, that spotlight passes to what a brief government closure may lead to, with the Treasury Department’s forecast expecting the country to reach its debt limit on Oct. 17.
Debt ceiling fears loom near
Bloomberg cited Greg Valliere, chief political analyst for Potomac Research Group Holdings in Washington, saying that “a shutdown is not the issue” because default is more important. “If we even talk about default, if we come within a day or two of default, that’s a terribly negative story for the overall economy,” he said.
Potential for a default is “massive uncertainty for at least another month, and markets don’t like uncertainty" Valliere added. As a result, traders should expect a hostile 'risk-off' environment at the very early stages, only intensified should politicians provide hints that no compromise will be reached in the near future, otherwise, market may quickly fade the moves.
No NFP Friday on a US shutdown
The U.S. Labor Department will not release the latest employment numbers if the federal government is closed on Oct. 4, according to an Obama administration official.
As Bloomberg reports: "The official, who wasn’t authorized to discuss the process and spoke on condition of anonymity, couldn’t say how the report might be affected if the government is shut down and re-opens before the end of the week."
Postures between Republicans and Democrats to reach a compromise never saw any chance of closing down, resulting on a headline published by the Washington one hour before the official 'shutdown' time confirming "the US House will not attempt more votes tonight" following a last failed proposal to pass a funding bill.
It is the first partial US government shutdown in 17 years, in what follow a pitiful behaviour by both elite party members, with House Republicans, led by Speaker John Boehner, wanting to delay President Barack Obama’s health care law for a year, while Democrats defended tooth and nail its conviction that this won’t happen.
What this means for public institutions?
Earlier on the day, President Barack Obama gave a public speech at the White House anticipating the conditions the US will have to face under a temporary shutdown, saying social security checks will still be sent out, US troops will remain on duty, while social Security, Medicare, mail and gov't operations on national security will continue if government shutdown. Obama, however, warned that "a shutdown will have a very real economic impact on real people — right away."
The shutdown, believe it or not, does not become the pivotal issue here, that spotlight passes to what a brief government closure may lead to, with the Treasury Department’s forecast expecting the country to reach its debt limit on Oct. 17.
Debt ceiling fears loom near
Bloomberg cited Greg Valliere, chief political analyst for Potomac Research Group Holdings in Washington, saying that “a shutdown is not the issue” because default is more important. “If we even talk about default, if we come within a day or two of default, that’s a terribly negative story for the overall economy,” he said.
Potential for a default is “massive uncertainty for at least another month, and markets don’t like uncertainty" Valliere added. As a result, traders should expect a hostile 'risk-off' environment at the very early stages, only intensified should politicians provide hints that no compromise will be reached in the near future, otherwise, market may quickly fade the moves.
No NFP Friday on a US shutdown
The U.S. Labor Department will not release the latest employment numbers if the federal government is closed on Oct. 4, according to an Obama administration official.
As Bloomberg reports: "The official, who wasn’t authorized to discuss the process and spoke on condition of anonymity, couldn’t say how the report might be affected if the government is shut down and re-opens before the end of the week."