After the shutdown, a big rally?

1:30 PM after, rally, shutdown No Comments

| By Jim Jubak

Assuming that end the shutdown without disaster, can investors to expect a rally in December. But then old sure how China and the United States will creep back.

It's hard to take your eyes off the Government shutdown/ceiling debt crisis in Washington, for the same reason, that we in a car accident rubber corner:

Disaster is fascinating.

But let us for the time being to snatch way our eyes and look further down the road.

Solved provided, this crisis is behind financial Armageddon--get and I believe that it, although probably only with a debt of U.S. bad global financial markets - then clatters what?

Even let me to forward to look at the rest of the year, and in 2014, what probably is on the markets.

First, and I think we can all agree, we get a relief rally, when this mess is over. (This almost universal belief in a relief rally may be of course the reason stocks declined yet not very far and that the markets have created very many bargains.)

We have already seen a good example at the end of last week, if the optimism, the White House and House Republicans were close to a deal in the amount soared. We have a very impressive 2.2% rally in the standard & poor's 500 ($INX) on Thursday, the 10th October, and a decent 11 follow 0.63% on Friday, Oct.

Recovered even more strongly than the U.S. markets, the markets and stocks, which was harder hit by the fear of a US default and the resulting flight to safety. This applied in particular to emerging markets, which had suffered from their usual relatively larger decline, if anxiety among the Anlegern--increases, even if they are not the source of fear. iShares MSCI Indonesia ETF (EIDO), for example, 3.6% increase on Oct. The iShares MSCI India ETF (INDA) climbed 3.2% and iShares ETF MSCI Turkey (TUR) increased by 2.8%.

How long the relief rally is and how big it is, depends on it, how quickly the economic anxieties that mind were preying on the market at the forefront of investors think back. Keep in mind, back against the US budget and debt ceiling? The fears were pointed tapered from its $85 billion in monthly buying of US Treasury obligationen 1) as inevitably get you start with slow growth in China and 2) of the US Federal Reserve, and mortgage-backed securities?

Over the weekend, the Chinese Government announced exports fell unexpectedly in September. Exports fell by 0.3% from September 2012. economists survey by Bloomberg 5.5% had expected export growth. In August exports had increased by an annual rate of 7.2%. (Imports climbed 7.4% in September more than economists had predicted.)

Jim Jubak

You will recall, is the concern that China's economic growth below the Government target of 7.5% for the year will fall. Last week, China's Prime Minister Li Keqiang, that China's GDP grew up by more than 7.5% in the first nine months said 2013.

It is unlikely that China's official any deviation from the target of the Government in the run-up to the November meeting of the Central Committee of the Communist Party, the economic policies used and discuss are devoted to how the economic policy of the country and of the socialism with Chinese characteristics to integrate. The official data is extremely unlikely to rock the boat before this meeting, but whether this data is reliable is another question. And if it is not, the real growth of the Chinese economy what is evident in the performance of the world economy say the official Chinese figures. A forecast that growth in China will miss the Government ' goal was a key reason that the International Monetary Fund its forecast for the economic growth of the world 2014 to 3.6% in 2014 from a July forecast of 3.1% in the year of 2013 and 2014 3.8% and 2.9% in 2013 cut.

On the evidence of what happened this year fears of Chinese economic growth lower than I expected, if emerging economies hard hit, believe a return on emerging markets would cut by these fears in a. Worries about the speed of growth China would also downward pressure on their stocks and raw materials management, as well as and could revive doubts about the speed of economic recovery in the euro area.

Second back at markets some time to try to predict when the Federal Reserve of their cone starts. Markets moved strongly in September as markets ever more convinced that the US economy was weak enough and uncertain enough to each candle on the Fed purchases in October pushed the situation in Washington or higher.

This view has been confirmed, if the Fed surprise at its meeting Sept. 18 cone does not.

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A 8 years partial Government shutdown?

11:00 AM government, partial, shutdown, years No Comments

| By Brianna Ebrahimi, Eric Pianin, the fiscal times

Sequestration is hardly the debt reduced. It exacerbated fiscal problems affect structure, national security and hinder the economic recovery.

Not long ago, the nation was pierced by $85 billion, looming, linear cuts of in public spending that President Obama and many others would predicted tank the economy, undermine defense and forcing drastic cutbacks of government programs and staff.

This automatic cuts or storage, are still chipping way spending on defense and national programmes with the Government, but they have a first largely by the Government shutdown and the threat of the shadow by default on the U.S. debt.

Widespread furloughs of Federal Republic forced workers to shut down the cuts, contracts required billions of dollars in reductions in Department of defense weapons and strong reduction of e government services and programs, to average Americans. The on State-funded programs assigned as lead, meals on wheels and residential consulting all the bite of sequestration have felt.

First announced last month, Department of health and human services provides for the head start program, that provides services such as meals, transportation, and medical care to low-income, preschool aged children, services for more than 57,000 children had cut. The $8 billion-budget for head start could already be reduced by 5.27 percent, and it will absorb probably even more cuts if the second wave of the seizure becomes effective.

Higher during the cuts hardships for the poor earn less than $30,000 points in said 74 percent of Americans who recently from the United Technologies/National Congress connection survey surveyed journal, they sequester no effect of cutbacks have noticed, which entered into force in March.

They sequester was while the designed negotiations of the 2011 debt ceiling as a poison pill, which would be nobody thought, ever take effect. The idea was that mindless, linear cuts would be so unattractive that Washington lawmakers motivated by new and to replace less disturbing reductions. The goal of the 2011 budget control Act was about $2.5 trillion savings over the next decade by meeting strict spending caps to reach, which would gradually narrow the budget.

But as a "super Committee" by House and Senate Republican and democratic leaders following failed, on about 1.5 trillion $ total savings some began last March the first installment of the automatic cuts occur.

The early reviews of the impact of freshmen of this automatic cuts are very mixed. Many conservative opponents once sequestration now are programs because of its negative impact on defense because of his forced savings sing his praises.

There is some evidence that sequester the discipline reign as the only real budget in Washington. Entire federal spending fall from a high of $3.6 trillion in the fiscal year 2011 to an estimated $3.45 trillion in the fiscal year 2013, which ends on June 30. If no recession and the compliance with the caps, continue federal spending as a share of the economy in the later this year of the Obama Presidency shrink.

"It's off is the best political influence Republicans have a concession by Democrats win - on Obamacare or anything else," conservative editorial page of the Wall Street Journal wrote recently. "Even tighter spending caps on domestic spending are the Liberal constituencies that squeeze life by the Government. Because planned parenthood and welfare and other transfer payments squeezed get, increased the political pressure on Democrats something tangible in return for the loosening of caps give up.

The Federal Government tightened the belt in the amount of $85.5 billion in the year, the end of September 30, and cut an additional $100 billion in the coming year, unless to blunt Republican and Democratic votes, or affecting sequester the as part of a larger budget to end the Government shutdown and debt crisis.

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Shutdown could bruise housing recovery

11:00 AM bruise, could, housing, Recovery, shutdown No Comments

| By Morgan Brennan, Forbes

One of the biggest questions regarding the shutdown and how it will affect housing has revolved around the mortgage market, specifically prospective buyers' access to new home loans.

The government shutdown is here. Whether it's not being able to get a new Social Security card or visit a national park, Americans will immediately feel the effects. But there's one bright spot of the economy that stands to be affected as well: housing.

One of the biggest questions regarding the shutdown and how it will affect housing has revolved around the mortgage market, specifically prospective buyers' access to new home loans. After all, more than 90% of all loan activity is underwritten, insured, or owned by the government and its affiliated entities.

Initially at least, the mortgage market is likely to be only minimally impacted. New loans will continue to push through most government agency pipelines. What will change is how long the process takes, as many agencies expect to experience delays.

Mortgages purchased and securitized by Fannie Mae Fannie Mae and Freddie Mac Freddie Mac will be unaffected because their operations are paid for by fees charged to lenders. And the Department of Veterans Affairs will continue to guarantee mortgages for Americans that have served in the military since these loans are funded by user fees as well.

But if the government shutdown of 1995-1996 is any indicator, the process will take longer than usual. "Loan Guaranty certificates of eligibility and certificates of reasonable value were delayed," the VA warned in its September 25th contingency plan.

Where there has been mounting concern is the Federal Housing Administration, which currently endorses about 15% of the entire single-family mortgage market. Several media outlets recently reported that the FHA would be unable to endorse any single-family loans and that no staff would be available underwrite and approve new loans.

That prospect would be somewhat worrisome -- if it were actually true. The FHA's Office of Single Family Housing will indeed remain open for business, albeit with a smaller staff. "FHA will be able to endorse single family loans during the shutdown. A limited number of FHA staff will be available to underwrite and approve new loans," the report now states. In other words, other lenders' loans will continue to be insured and some in-house lending will continue to take place at a reduced rate.

The reason for that mix-up: the initial draft of the U.S. Department of Housing and Urban Development's contingency plan mistakenly stated that single-family loan operations would cease. The report was amended over the weekend.

The FHA's single-family loan operations are funded through multi-year appropriations, meaning their budget is not tied to the government's standoff over funding for the new fiscal year that starts in October. On the other hand, what will be more affected is the agency's Multifamily Housing Office, which is funded through yearly appropriations.

"Because we are able to endorse loans, we don't expect the impact on the housing market to be significant, as long as the shutdown is brief," continues the HUD report. "If the shutdown lasts and our commitment authority runs out, we do expect that potential homeowners will be impacted, as well as home sellers and the entire housing market."

One government lender that will indeed suspend its home loan activity, however, is the Department of Agriculture. The USDA says that no new housing loans or guarantees will be issued through its Rural Development programs in a shutdown. The department also warns that such a scenario could cause "a setback in construction start-up," and if the shutdown lasts for an extended period, "a substantial reduction in housing available in rural areas relative to population."

"The government doesn't generally approve loans, they basically just insure them," says Don Frommeyer, president of the National Association of Mortgage Brokers and a vice president at Amtrust Mortgage Funding. "For the most part you aren't going to see much of a hit in the mortgage market unless it goes for a long period of time."

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13 ways a government shutdown could hurt you

9:00 AM could, government, shutdown No Comments

| By Maureen Mackey, The Fiscal Times

If a shutdown does occur this time around, it would inconvenience the public in ways large and small. Consider the impacts of the shutdown in 1995.

As the possibility of a government shutdown moves into sharper focus with each passing hour, all eyes are on the ways it could hurt everyday Americans.

Back in 1995, when funding for the government expired, non-essential services came to a halt. National parks and museums were closed; passport processing was delayed. Even the National Weather Service cut back on its regular reports.

But in coordination with the Office of Management and Budget, the president has broad discretion over what departments and agencies should be kept open, making it difficult to quantify exactly how much it would cost the government -- and how it would affect the public -- if a shutdown were to happen.

"Although a government shutdown would be disruptive, the impact will depend on the duration and the degree, on how tight or loose the exceptions are," Patrick O'Keefe, director of economic research at J. H. Cohn and a former Deputy Assistant Secretary in the U.S. Department of Labor, said in 2011, when another shutdown loomed. "But the bigger impact is its demonstration of political impasse regarding the country's unsustainable fiscal posture... The financial market implications of such an impasse should not be underestimated."

"I don't think there is a full appreciation of the impact of a shutdown on the bottom line of government," said Max Stier, president and CEO at the Partnership for Public Service, a nonpartisan think tank. "Most agencies are ill prepared for the disruption."

A significant majority of Washington budget and policy experts surveyed by The Fiscal Times in 2011 said they expected a government shutdown of at least a few days after the latest stop-gap spending measure expires. (A shutdown was narrowly avoided that year.)

If a shutdown does occur this time around, it would inconvenience the public in ways large and small. Consider some of the impacts of the three-week shutdown back in 1995-1996 -- all of which could be repeated this time around:

1. New patients were no longer accepted into clinical research at the National Institutes of Health. In addition, NIH disease hotlines and CDC disease surveillance were stopped.

2. Work on more than 3,500 bankruptcy cases in the federal court system was suspended.

3. Hundreds of thousands of "non-essential" federal workers were furloughed for three weeks, from mid-December 1995 to early January of 1996. (Some of those workers eventually received back pay for their missed days.)

4. Of $18 billion in Washington, D.C., area federal contracts, $3.7 billion (over 20%) were affected adversely by the funding lapse.

5. Some 368 National Park Service sites closed -- a loss of 7 million visitors. The National Park Service administers 84.4 million acres of federal land in 49 states and other federal territories.

6. National museums and monuments closed, including the Smithsonian and other government buildings, with an estimated loss of about 2 million visitors.

7. Over 600 toxic waste dump sites went untended and uncleaned during the last shutdown. Some 2,400 Superfund employees did not work.

8. The recruiting and testing of new law enforcement officials -- including 400 Border Patrol agents -- were suspended.

9. During the last shutdown, 20,000 to 30,000 applications for visas by foreigners went unprocessed each day, along with 200,000 applications for U.S. passports. Airlines also suffered: Many prospective travelers were unable to fly.

10. The Department of Veterans Affairs had to cut many of its services, including health care, welfare, travel, and finance; the department could not process compensation claims.

11. The shutdown in 1995 meant a delay in processing alcohol, tobacco, firearms, and explosives applications by the Bureau of Alcohol, Tobacco, and Firearms (ATF).

12. The National Weather Service did not produce its regular reports during the 1995-1996 shutdown.

13. New Social Security claims were not processed because the agency furloughed over 61,000 employees. As the shutdown continued, the agency regrouped, recalling workers to start processing new claims again.

It's clear that government shutdowns can be nasty business: They've required the cessation or the reduction of government activities and affected all sectors of the economy, according to a report by the Congressional Research Service.

Former House Speaker Newt Gingrich was one of the architects of the 1995 government shutdown which lasted 21 days. It was settled when President Clinton submitted a budget that proposed to eliminate the federal deficit in seven years, according to Time magazine.

The issues that were presented then and ultimately triggered the 1995 shutdown were the same as in 2011 and eerily similar to 2013 as well. June O'Neill, who was CBO director in 1995, says that Congress couldn't agree on a budget resolution for the coming year and was haggling over whether to raise the debt ceiling in 2011. The economy was also recovering from the 1991 recession and growth was sluggish, which is also similar to today. "There was a great deal of posturing then as there is now," O'Neill recalled in 2011. "The world would come to an end if the debt ceiling wasn't raised."

But in 1995, it was more about Gingrich proving he was just as powerful as the Clinton administration, she said.

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What a shutdown really means

3:00 PM means, really, shutdown No Comments

| By Eric Pianin and Brianna Ehley, The Fiscal Times

With no deal in the offing to pay the government’s bills beyond midnight Sept. 30, much of the federal government could begin to shut down when the new fiscal year starts next Tuesday.

As President Obama and congressional Republicans move dangerously close to a government shutdown early next week, it's time to take stock of how a shutdown would affect federal workers, the military, government contractors and average Americans reliant on government programs and benefits.

The last two government shutdowns -- in late 1995 and early 1996 -- were chaotic for federal workers, posed major inconveniences for the public, and prompted a political backlash against Republicans who controlled the House and Senate at the time.

This time may be different. Americans today are almost equally divided over the issue of culpability -- with 39% saying they would blame the Republicans and 36 percent saying they would blame the Obama administration, according to a study released today from the Pew Research Center.

The dispute, this time, is over congressional Republicans' attempt to defund the Affordable Care Act as part of a stop-gap spending bill to keep the government operating through Dec. 15.

With no deal in the offing between the Republican-controlled House, the Democratic Senate and the White House to pay the government's bills beyond midnight Sept. 30, much of the federal government could begin to shut down when the new fiscal year starts next Tuesday.

Here are the nine most important things to keep in mind as the first government shutdown in 17 years approaches:

$150 million a day. That's the price-tag to taxpayers for closing down the government. In 1995, the record three-week closing cost a $1.25 billion or $1.9 billion in today's dollars.

A shutdown would not block Obamacare. House and Senate Republicans say they are willing to go to the mat to defund the Affordable Care Act. But Obamacare is essentially an entitlement program with mandatory spending. This means that -- short of enacting legislation to repeal or sideline the new health care law -- most of its funding is beyond the reach of a continuing resolution or CR, which relates to discretionary spending.

So, for example, the money for tax credits and Medicaid expansion would arrive on schedule. State and federal exchanges would still operate. The individual mandate would still be in place. The CR approved by the House last Friday avoids this trap by approving the text of a bill that would sideline Obamacare. Yet that measure will die in the Senate.

Uncle Sam would limp along but not collapse. Many federal agencies are deemed essential to protect life and property, or to provide benefit payments. These agencies would be allowed to operate, although their workers could not draw a salary -- at least not immediately.

In the past, that has meant that employees involved with border and coastal security, protection of federal lands and buildings, the care of prisoners, law enforcement and criminal investigations, emergency and disaster assistance, the Treasury and financial system and maintenance of the power grid, were all kept on.

But plenty of services would disappear. The last government shutdowns were grim times for federal workers, with about 800,000 being furloughed.

The Centers for Disease Control and Prevention halted disease surveillance. Toxic waste clean-up work at 609 sites was halted. And while zookeepers continued to feed the pandas, the National Zoo in Washington, D.C., was closed to the public. So was the Washington Monument, the Lincoln Memorial and 368 national park sites, which resulted in the loss of some seven million visitors.

With non-essential workers on furlough, 200,000 applications for passports went unprocessed. U.S. tourism and airline industries incurred millions of dollars in losses; and more than 20 percent of federal contracts, representing $3.7 billion in spending, were affected adversely.

Social security benefits would keep flowing. Social Security is a mandatory program that would continue during a shutdown, but the entire system would be gunked up. During the 1995 and 1996 shutdowns, claims from 112,000 Social Security applicants went unprocessed, 212,000 Social Security cards were not issued and 800,000 toll-free calls for information went unanswered.

You'd still get mail. The U.S. Postal Service is an independent agency and doesn't directly receive revenues from the Treasury, so it will continue deliveries through sleet, snow, rain and government shutdowns.

Many federal employees and contractors would work for no pay. According to an OMB advisory memo to agencies last week, employees who stay on the job would not get a paycheck at first. But they would be entitled to retroactive pay once the government is running again. This includes all military personnel.

The situation is much less clear regarding nonessential employees. They would have to come to the office on the first day of a shutdown to secure files, fill out time and attendance forms and "otherwise make preparations to preserve their work," according to the OMB.

Contractors won't get paid on time. Federal contractors would likely have to push back project deadlines, because the agencies that hired them wouldn't be able to issue the necessary paperwork.

Garbage would pile up. Congress would heap one more indignity on the District of Columbia if there's a shutdown. The city's trash collectors would be furloughed, along with other D.C. workers whose operating budgets are approved by Congress. That's going to be a messy situation, since D.C. produces about 500 tons of garbage each week, according to The Washington Post.

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