On Tuesday morning, traders and investors alike were shocked at the massive drop concerning bullion and accompanying commodities accompanies by the commodity market news about the US government shutdown.
A few days back, several news articles from the likes of Reuters and other reliable sources started gracing the world wide web with a title stating ” US Government Shutdown imminent”.
Basically what this means is that the US government services would be disrupted and 1000s of federal workers would be told to not work if Congress failed to provide funding for the fiscal year starting October 1st.
However, the Senate intervened in the final moment and cut it close at 12:01 AM.
The Senate had passed a last-minute spending bill at the break of Midnight as all things good happened after that. Doing so, the US averted a complete government shutdown that would have triggered a devastating economic slowdown which would affect the American public and economy.
This bill was going to allow the government to stay open for 45 days, giving the House and Senate more time to finish their funding legislation. The 71-page shortened-term bill, crafted by House Speaker Kevin McCarthy, allocates disaster relief funds but does not include new financial assistance for Ukraine’s ongoing war with Russia.
However, the question on everyone’s mind is what would have happened if this final intervention had not happened.
So as per Reuters and the white house’s contingency plans, this is what would’ve happened:
Law Enforcement and Government Facilities:
Law Enforcement:
Agents that are a part of the FBI, Drug Enforcement Administration (DEA) and other federal law enforcement agencies would remain on the job and prison staffers would continue to work. The majority of staff would continue to work, and the Secret Service and Coast Guard would also continue their duties.
The majority of the Federal Trade Commission’s consumer protection staffers as well as half of its antitrust staff members would be placed on vacation.
Federal Courts:
In the event of a shutdown, the Federal courts would have had enough money to stay open until at least October 13, however, activities would have had to be scaled back after that point of time. The Supreme Court would stay open as well.
Criminal prosecutions would continue, however, civil litigation would be postponed.
Foreign Affairs:
The U.S. embassies and consulates would remain open. Passport and visa processing would continue as long as there were adequate payments to sustain operations.
Speeches, other activities, and non-essential official trips would all be cancelled.
Some international aid initiatives might also run out of funds.
The White House:
Looking back at the 2018 – 2019 shutdown, the White House furloughed 1,100 of 1800 staff in the executive office of the President. Some offices, such as the National Security Council, continued at full strength, while others like the Office of Management and Budget were scaled back sharply.
The White House furloughs could make it harder for Republicans in the House of Representatives to get information for their impeachment investigation of Democratic President Joe Biden.
The U.S. Constitution specifies that the president continues to get paid.
Social Security and Healthcare:
Military:
The 2 million U.S. military personnel would remain at their post, but roughly half of the Pentagon’s 800,000 civilian employees would have been ordered not to work.
Borders and Homeland Security:
Several Border Patrol and immigration enforcement agencies would continue to work, as would cost customs offices. Local government would not get new aid to shelter migrants.
Additionally, the Cybersecurity and Infrastructure Security Agency would suspend security reviews that help schools, local government and other institutions defend against ransomware.
Social Security, Medicare and other benefits:
The Social Security Administration would continue to issue retirement and disability benefits, though the agency might have to deal with its announcement of its annual increase in payments.
Payments would likewise continue under the Medicare and Medicaid healthcare programs.
Benefits for military veterans will also be maintained, according to a contingency plan for 2021.
Nutrition benefits provided to 7 million mothers through the Women, Infants and Children program would be cut within days, according to Agriculture Secretary Tom Vilsack.
The Supplemental Nutrition Assistance Programme (SNAP) would distribute food help as usual in October, but anything after that could change.
Health:
As this is one of the integral sectors in the US, it is important to know what would’ve happened to this. The Centres for Disease Control and Prevention (CDC) would keep track of disease outbreaks, but other public health initiatives might suffer since more than half of the agency’s staff would be placed on furlough.
The national institutes of health would furlough most of their staff and delay new clinical trials for medical treatments.
Healthcare services for military veterans and Native Americans would continue.
Most inspections of chemical, drinking water, and hazardous waste sites would cease.
The Food and Drug Administration (FDA) inspections of food safety could be postponed.
National Parks and Natural Resources:
National parks, monuments and other sites would be closed to the public, though it would be impossible to keep visitors out of many of them. The rangers taking care of these parks would be furloughed and restrooms, help desks and other facilities would be shuttered.
The Agriculture Department’s 2020 contingency plan states that despite reduced timber sales in national forest areas and fewer recreation licences being given, wildfire suppression activities would continue.
Global Markets & Economy:
Financial Regulations:
This is one of the aspects that you’ll have to keep an eye on as it affects trading activities in the country and also the commodity market news emanating from it.
The Securities and Exchange Commission (SEC) would furlough roughly 90% of its 4,600 employees and suspend most activities, leaving only a skeleton staff to respond to emergencies,
The Commodity Futures Trading Commission (CFTC) would also suspend the majority of its regulatory activities and lay off nearly all of its staff as per the commodity market news received from several sources.
The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency would continue as normal because they are funded by industry fees rather than congressional appropriations and these are elements which will affect the commodity market news coming out of the nation.
The Financial Industry Regulatory Authority (FINRA), a brokerage monitoring organisation supported by the industry, will continue to function.
The Treasury Department would continue to handle the government’s cash balance and issue debt.
Economic Data:
Major U.S. economic data, such as reports on employment and inflation that are crucial for investors and policymakers, would no longer be published as per commodity market news.
Commodity Market News | A Note from Commodity Samachar:
The disaster was averted by the government in the final moment and US President Jo Biden posted this through his social media platform. “I just signed a law to keep the government open for 47 days. There’s plenty of time to pass Government funding bills for the next fiscal year and I strongly urge Congress to get to work right away.
The American people expect their government to work. Let’s make sure it does.”
Commodity Samachar’s, Head of Research, Ankit Kapoor had this to say about the US Shutdown and its direct impact on the global markets and the propagation of commodity market news.
” We could’ve witnessed a market crash in the US indices. With the crash in global indices, the market could have seen a sharp upside move in gold and silver. Additionally, there would have been a rise in the dollar index which could’ve led to an uncontrollable situation for global markets to handle.
The tensions looming over the US economy have not yet been seized, as the 45-day countdown to resolve this continues. However, the US is a resilient economy and they will be able to overcome this. “
Commodity Samachar
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