Government Shutdown Analysis

Impact of United States Market in Global Outlook As we, as Americans, move towards the end of another year, there is one thing that remains on the minds of many in the country – what impact will the governmental shutdown and the American debt ceiling have on the coming fiscal year. The United States governmental shutdown began on October 1th, 2013 and lasted for sixteen days, until October 16th, 2013. Although, there has been much speculation surrounding the specifics on why the American government shutdown took place, the general consensus is that Congress did not enact adequate funds for the upcoming 2014 fiscal year. Political debates aside, there was a great deal of division within the legislative branch that led to a clear disagreement
According to the aforementioned research, the estimation is that this means that the total cost of pay for furloughed Federal employees during the extent of the shutdown is approximately $2.0 billion (Fernholz & Yanofsky, 2013). Based on this approximation alone, one can then assume that the total compensation costs due to furloughed workers, which includes benefits, is around 30 percent more, which makes it a total of around $2.5 billion (Fernholz & Yanofsky, 2013). There were other negative aspects of the government shutdown, such as national parks being shutdown or programs being halted, each bearing their own future consequences such as lack of profit or assistance to the general populace; however, the largest consideration is the speculation on what this spells for the financial
Although, this comment can be taken as simply a call to action, or a desire for the American country to make good on its current debt situation so that a long-lasting partnership can be continued, the commentary also speaks primarily of the growing unease that exists in global markets with the view of the American financial sector. As of June of 2013 China holds approximately $1.28 trillion of the United States Treasury bonds, which speaks of the 23% Treasury bonds that are owned by foreign interests (Mattich, 2013). In addition, United States Treasury bonds make up “38% of China’s foreign reserves, with U.S. securities overall approaching half” (Mattich, 2013). China also owns around $3.5 trillion in dollar-dominated assets, which can be directly impacted based on the rate of the dollar to other currencies (Mattich, 2013). All of these factors are shaped by the current government shutdown, the debt ceiling, and other economic factors. Both Japan and China are the largest holders of United States debt, which is shown in the major concerns in Beijing surrounding U.S. debt (Fisher, 2013). The main problem with a potential economic downslide in the U.S. market, in the view of