Another decade… another government shutdown.
Well… partial shutdown might be more accurate. Despite the hand-wringing and tears of rage by pundits and pols, less than half of federal employees have actually been furloughed. The rest are obviously keeping busy finding creative ways to spend your money… just like always.
Investors keeping their eyes glued to the TV and their cursor hovering over the “sell” button probably shouldn’t worry: Stocks actually traded up during the 1995 shutdown, according to Bloomberg. Stocks were down about 4% when the shutdown of 1995 hit, but rallied more than 10% as it ended.
“For smart and savvy investors, this could be the perfect opportunity to make some money,” declared Trish Regan of Bloomberg TV on Tuesday. Analysts such as Scott Martin from United Advisors noted that good companies will still make you money, shutdown or no.
Indeed, markets don’t seem to be impressed thus far. The Dow Jones took a hit, but is still over 15,000.
Some congressmen, of course, believe we are speeding headfirst into the apocalypse. Rep. Devin Nunes (R-CA) described members of his own party as “lemmings with suicide vests. It’s kind of an insult to lemmings to call them lemmings, so they’d have to be more than just a lemming, because jumping to your death is not enough.”
The “lemmings with suicide vests” analogy might be more appropriate for the coming debt ceiling fight, but most analysts are predicting Congress will ultimately agree to raise it at the last second… just like always.
Nevertheless, investment guru Jim Rogers has some cautionary words for investors: Be careful. Rogers warns that the next cyclical recession is probably not more than three years away. When it hits, the fake prosperity being supported by the Fed will melt away quickly.
“This is the first time in recorded history that we have every major central bank in the world printing money, so the world is floating on an artificial sea of liquidity. Well, the artificial sea is going to disappear someday, and when it does, the catastrophe will be even worse. Yes, it’s coming,” Rogers said. “If I was smart enough to tell you when it’s going to happen, I would get rich.”
Rogers still believes it’s too early to sell, however. “I don’t see any reason to rush out and sell stocks now because of these artificial currents which are taking place,” he said. “I’m not buying U.S. shares at the moment, but I’m not shorting either, because I am concerned this may turn into a huge bubble. So I’m sitting and watching.”
The real problems are still in play… waiting… simmering… until the next time a crash exposes the decay within. Just like always.
For The Daily Reckoning
P.S. If you’re not subscribing to The Daily Reckoning, you’re only getting half the story. Read the exclusive analysis reserved for our subscribers by clicking here.
2013 represents another turning point in the demise of the American Empire. Viewed in economic terms, the high water mark of Empire was probably in the late 1990s. Greg Canavan expounds on the downward trajectory of the US economy and how rising debt levels contribute to its downfall...
Jason M. Farrell is a writer based in Washington D.C. and Baltimore, MD. Before joining Agora Financial in 2012 he was a research fellow at the Center for Competitive Politics, where his work was cited by the New York Post, Albany Times Union and the New York State Senate. He received his BA in Political Science from the University of California Berkeley.
The dollar in your pocket is worth a whole lot less today than 100 years ago. And you have the Federal Reserve to thank for you. So, as the Fed approaches its 100th birthday, Gregory Bresiger reflects on the controversial institution, relaying the criticisms of several of the Fed's most vocal opponents. Read on...
There's been a lot of press lately about the 3-D printing revolution - much of it right here on The Daily Reckoning. But there is one technology that's already threatening to make 3-D printing yesterday's news. Josh Grasmick examines a new kind of printing... that takes place in the 4th dimension. Read on...
Rejoice! What was perhaps the freest market in the entire world is now ended. Crushed. Wiped out by the swift hand of the state. Wait... That's NOT a good thing? (Sigh)... Oh well. It was fun while it lasted. Dominic Frisby explains why the shutdown of the Silk Road is such a travesty. Read on...
There is one chart, just one chart, that market analysts and gold bugs alike could learn a lot from. It displays clearly the ebb and flow of one critically important trend, where it's headed through the end of the year, and how you can use it to your advantage. Greg Guenthner explains...
China's push towards a more market-based economy could kick into high-gear, as recently proposed economic reforms are some of the country's most radical policy changes in over three decades. But what will that mean for foreign investors and how could it shape the global economy? Frank Holmes takes a closer look...
John Mauldin spoke with Steve Forbes on the future of gold and the Federal Reserve in an interview released yesterday. What he said may surprise you.