In a world in which everyone has become an
ultra-short term pathological gambler, and every outcome is a zero-sum
prop bet, it was only a matter of time before someone tried to quantify
the probability of the event that the market (for some inexplicable
reason) is so transfixed on: the government shutdown (inexplicable,
because anything more than a few day shutdown risks a full blown mutiny
by the tens of millions of government workers). So without further ado,
here is Nomura, with its "estimate" of a government shutdown on October
1: 40%.
From Bloomberg, citing the Japanese bank:
http://www.zerohedge.com/print/479494
From Bloomberg, citing the Japanese bank:
- Not obvious how gap between House, Senate proposals will be closed, and time for negotiations is short, Nomura strategists led by Lewis Alexander wrote in note.
- Shutdown for a couple of weeks won’t have much of an impact on economy; impact of failure to extend debt ceiling "unknown, potentially very large and long lasting"
- Contentious and potentially chaotic fiscal negotiations over next few weeks likely to generate volatility, biggest threat to economy
- If govt shuts down for one week, assuming 36% of non-postal federal employees furloughed, temporary loss of wages, benefits would reduce annualized real GDP by ~0.1ppt
- If shutdown lasts longer, decision on back pay for federal employees likely decisive for consumption
- Week-long shutdown would delay Oct. 4 jobs report
- If debt ceiling becomes binding, Treasury may have to pay debts in order of due date, may not be able to prioritize debt payments
http://www.zerohedge.com/print/479494
