Saturday, July 2, 2011

Government Shutdown in Minnesota

Yesterday, a government shutdown has begun in the state of Minnesota. From a socionomic perspective, a government shutdown is the result of division, discord, and polarization in the political arena. This would indicate that a government shutdown is far more likely to happen during a bear market than during a bull market. Not too long ago, the United States government went on the brink, averting a government shutdown by just 90 minutes.

I would even theorize that the duration of a government shutdown is correlated by the degree of the bear market and where we are in the bear market. Larger bear markets have the potential of producing government shutdowns with a longer duration. For example, Minnesota had a government shutdown in July 2005 that lasted 8 days. There have been a number of government shutdowns at the state level in the last 10 years, such as the New Jersey shutdown in 2006. All of them lasted from a few hours to a few days.

The reason for the short duration of the government shutdowns within the last 10 years is because social mood was trending positive with Cycle wave b up (2003 - 2007) unfolding. Increasing willingness to compromise and increasing ability to reach a consensus in the political arena meant that any government shutdown that unfolded would be brief.

Politics is much more polarized now than it was in 2007. Social mood is going south with increasing momentum as Cycle wave c (2007 - 2021) starts its next leg (Primary wave [3]) down.

Given where we are in the bear market, I am predicting that the government shutdown that is currently in progress in Minnesota will last at least 21 days, with a substantial possibility of lasting a month or more. Another aspect of the development is that both Tim Pawlenty and Rep. Michele Bachmann endorsed the government shutdown, calling it an act of fortitude for the state GOP to stand firm. The shutdown could have a substantial impact on the state's economy, and indeed, 23000 state employees have already been laid off.

In the longer term perspective, the trend of increasing polarization in politics will continue until 2021. The result of increased polarization, of course, will be government shutdowns lasting several months and occurring with greater frequency at both the state level and federal level. A shutdown of the United States government is in the forecast for 2012 with a duration of 4 to 6 months.

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