New unemployment claims jumped by 66,000 last week to 374,000 after months settling down toward 300,000. This doesn't begin to show the real effects of the government shutdown as contractors are only now beginning to kick people to the curb. The effect this will have on the rest of economy will begin to show soon as the lack of spending by those affected by the shutdown starts to mushroom into a reduction in US GDP. This is one of those self reinforcing feedback loops that are commonly referred to as a 'death spiral'.
You see, the problem isn't confined to the simple math of less spending, but is actually multiplied by the fact that the natural mitigators of an economic downturn that we commonly refer to as 'government safety nets' are also being removed. State run programs are running out of 'pass through' money, and the charities will be affected soon. Right wingers are always saying churches could care for the poor better and somehow do it at no cost, but the christian charities get 2/3 of their money from the Feds. With Uncle Sam out the picture, their private donations will dry up too.
President Obama is going for broke, he's told the Republicans he will accept no half measures. They will accept the will of the people as he and the majority of Congress represent it, or they will leave the world economy to be resolved by what ever emergency powers that Obama elects to use.
It appears that Obama is placing his hopes in the Federal Reserve bank to back his play with his announcement of Janet Yellen to replace Ben Bernanke as Chairman. The 'hard currency' crowd is freaked by the nomination of someone even more committed to 'money printing' than the current Chair 'person'. These people don't think that women should be able to vote and wear pants, let allow control the world's reserve currency. All of the gold that they bought from Glenn Beck at $1900/oz is now trending below $1300/oz despite the ongoing Apocalypse, and they know 'girl cooties' have got something to do with their world being upside down. The thing is, once Bernanke steps down, Yellen as his Vice Chairman will assume the position even if the Republicans in the Senate attempt to block her.
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