The U.S. government’s continuing resolution passed, clearing the way to end the government shutdown. How long will this farce continue?

In the early hours of the 22nd, the U.S. government’s interim funding bill was approved, and the reopening of government agencies that had been partially closed began.

Counting from the 1970s, this is the 19th partial shutdown of government agencies.

Budgetary stalemate has been repeated, a kind of half-bicycle operation budget.

Even the government shutdown that occurred under the Obama administration in 2013 was not passed until the last possible moment, and the media was certainly buzzing about it.

Around 2013, the U.S. economy was just recovering from the Lehman Shock, so the market was still highly sensitive to risk factors.

In the current optimistic market, even this level of risk factors seems incapable of provoking reactions, a strongly bullish, unwavering market.

This time, as with a continuing resolution, the budget is only until February 8 next month, and if another budget bill is not passed by then, government shutdowns will occur.

This time too has strong political performance aspects, but ultimately if the budget does not pass, the United States would effectively default on its debt.

The recurring U.S. debt ceiling issue.

So far budgets have passed at the last moment many times, and I worry about the market’s reaction that “it will surely be okay again.”

During the Lehman Shock, many people believed the government would eventually rescue the country, but as you know, the result was not so.

Ordinarily, it is unimaginable for the United States to default in the end.

However, it isn’t 100% safe.

If debt ceiling increases have been passed at the last moment repeatedly, the market becomes accustomed to it.

And that familiarity is scary.

If the truly dangerous moment ever comes, from past experience people will think, “this time too it’s a farce, it’ll be okay.”
And when that time comes, the real moment will arrive.

When that real moment arrives, the market will be shocked, and the degree of that surprise will be expressed as volatility in price movements.

From a cyclical perspective, a crash as severe as Lehman or even greater could come at any time.

The cause of a crash cannot be known until the future, but a U.S. default cannot be ruled out entirely.

Let’s remain prudent with cash management, plan for the unexpected as expected, and be prepared for anything that may happen.

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