Government Shut Down
April 7, 2011 by USA Post
Government Shut Down, A Federal government shutdown damages the U.S. economy still fragile? A closure is effective from Friday night if Congress cannot agree on a budget. Of course, the longer the government is closed, the devastation it could cause. At this point, however, many experts are predicting a short stop possibly lasting just a few days. If the federal government was closed for weeks or months, then the economic impact could be important in a variety of sectors and is felt by most Americans. But how to manage the economy of a closure of only a few days?
From all parts of the economy, the housing market remains the most problematic. A closure could make things worse for the sector; housing finance remains highly dependent on federal funds. But the impact on shortstop is likely to be muted.
Only the housing units financed by the Federal Housing Authority would be affected, according to an article in the political. Those represent about 30% of new originations. Fannie Mae mostly finances the other 70% and Freddie Mac Despite being controlled by the government, its operations are not expected to be affected. The Treasury states that the government’s efforts to amend the mortgage and other programs to prevent foreclosures would not be affected by closure.
In any event, the biggest problem that a government shutdown poses for the housing market is uncertainty. Could yield results in terms of housing in April and took more questions about the lack of progress in the sector could experience a growth in sales.
In a short closing scene, financial markets will not be affected significantly. Federal regulators are largely turned off, but the Securities and Exchange Commission keep some key functions of living, according to an article in The Wall Street Journal. Market surveillance will continue, for example. The stability many important functions of the Federal Reserve will also be affected, as its budget is separate from the federal government. The Federal Deposit Insurance Corporation will also remain open to clean the mess of all failed banks.
But again, the uncertainty can be a problem. Government departments that calculating and economic reports to be closed during the shutdown. This takes the reports, leaving the market wondering how the recovery is going. Next week, the government intends to publish the results of retail sales, inventories, manufacturing and trade sales, trade deficit and inflation.
Financial markets have a big problem to deal with government payments, if the interests of Treasuries left for a federal government shutdown. But the Treasury says that these and other essential payments will continue, no matter how long it takes Congress to agree a budget.
If the federal government is closed on Monday, then about 800,000 employees come to work, according to the Washington Post. These employees will be payable to any period of time the government closes. In other cases, however, as for military personnel on active duty, employees will continue to pay for closure, but the controls will be delayed until the government initiates a backup.
These workers must have a minimum impact on the economy, however. A little expense can be lost to those who are forced to leave, but other spending would be delayed only for anyone that payment is deferred until the closing of the ends.
If Congress were concerned about getting paid, you will be relieved to know that will not go hungry. Their wages would not stop just because they agree on a budget. That is, unless a bill passes before that they stop payment on a stage of closure. House of Representatives, John Boehner (R-OH) would support a measure to freeze their wages during the closure, reports the New York Times.
The economy of the DC area would be disproportionately affected by the closure. After all, federal workers are concentrated in the capital. The local economy will be affected, as temporarily out of public employees, will likely have to cut expenses. It will also affect tourism. The national museums are closed. This could not come at a worse time for DC, as a tourist magnet cherry blossoms are in bloom, and the annual parade of Cherry Blossom is set for Saturday. May be canceled if the closure occurs, according to a Washington Post article that details of a closing effect on DC
You may have noticed that the stability of a number of sectors and markets over government shutdown depends on is cut. If it extends a couple of weeks or months, then the emergency funds that some federal agencies and departments have to get through a closing scene will be exhausted. On the other hand, if you have a closure with no end in sight, the increased uncertainty in markets such as housing and finance. So off the CD, the economic impact of a short government shutdown does not seem too important. But if the politics of division makes the closure persist indefinitely, so it could be much more devastating for the recovery.
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