US GOVERNMENT SHUTDOWN EXPLAINED

So what exactly is going on in the United States? Everyone is talking about the shutdown of the US government and news sites are in a flap. The simple version is that Obama was trying to get a funding bill passed that would finance the government into the future, and this had to be settled by October 1. The conservative majority of the senate insisted that Obama should delay or make changes to his plans for healthcare reforms, and Obama refused to budge.


While crucial government employees such as security and armed forces personnel will continue to work and be paid routinely, other government employees, up to 800,000 people will be unable to work and will not be paid until the matter is resolved.


According to the BBC News, this is the 17th time that a failure to agree on a budget has reached the stage of government shutdown, most recently when Bill Clinton was president. The BBC notes that each day that the government is at a standstill the country is losing money, and will only be able to sustain itself until October 17. After that it will technically not be able to pay the interest on its debts.


The situation caused minor fluctuations in both the USD and global share prices on Monday although Reuters reports that most investors are waiting it out. ABC News reports that investors are largely unconcerned by the shutdown and that in the long run it may even be positive for the share market, as has been the case following previous shutdowns.


Disclaimer: The postings on this site are my own and don’t necessarily represent the views or opinions of Total Financial Solutions Australia (AFSL# 224954)


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