The probability of the US government shutting down again has increased. Will it shut down on January 31st? How big will the impact be? The probability of a US government shutdown on PolyMarket has significantly increased in the past few days, due to the enforcement issue of ice in Minnesota. Senate Democratic leader Schumer threatened to block the passage of a funding bill on homeland security in the Senate, increasing the likelihood of another shutdown. What are the differences between this shutdown and the one in October November last year? Let's discuss in detail: 1. The US Government Fiscal Year Appropriations Act The US government has a total of 12 sub appropriations bills in an annual fiscal appropriations bill, covering various aspects of the US government's operations such as defense, homeland security, legislative bodies, energy, State Department, commerce, domestic affairs, and environment. Without these appropriations bills, operational funds cannot be obtained from various parts of the government, leading to shutdowns. The 25 year shutdown from October to November was due to the subsidy extension issue of the Obama healthcare bill, which resulted in the failure to pass 12 appropriations bills for the fiscal year, completely shutting down the government, and preventing the Treasury Department from spending funds. Then combined with the end of the balance sheet contraction, the tight liquidity of banks led to a liquidity crisis, driving the adjustment of the Big Dipper and the US stock market in November. The decline of Da Bing in October is mainly due to the renewed intensification of the game between China and the United States. Last November 20th, https://(x.com)/qinbank/status/1991869352656994455? S=46&t=k6rimWSEbo2D2TXolYcM-A Here is a detailed analysis of various factors, so when I saw someone say that the government shutdown led to a sharp drop in the pie last year, I am slightly generalizing. The core issue is the liquidity shortage caused by the government shutdown. 2. What is the latest progress In fact, in the past month, the US Congress has adopted a "mini bus" approach (small bundle) to process these bills in batches, rather than a single omnibus package. Seven of the 12 government appropriation bills have passed the votes of the Senate and the House of Representatives (see Figure 2 for the list of approved appropriation bills), and Trump has signed or will sign the bills, three of which have been passed by the two houses of government in November last year, and the other four are recently passed by the two houses of government. There are still 5 appropriation bills (as shown in Figure 3 below) that have been passed by the House of Representatives and are still being debated in the Senate. The Homeland Security Act that Senate Democratic leader Schumer threatened to block is among these five bills. Simply put, even if these five failed bills continue to be deadlocked at the end of the month, 40% of the US government departments will be shut down this time, and the government departments covered by the seven appropriations bills already passed by the other two houses will not be affected. The scope of impact is much smaller than the shutdown in October last year. And it is expected that this week (January 26-30), the Senate will quickly review the remaining minibuses (especially the defense and Labor HHS Ed packages), with support from both parties. The biggest risk point for DHS is the immigration dispute, which may need to be handled separately, and the most likely reason is that the Homeland Security bill cannot be passed before the end of the month. 3. The biggest difference this time compared to October and November last year? In fact, the liquidity is better than at that time. Bank reserves fell below $3 trillion at the end of September last year, further dropped to $2.9 trillion in late October, and dropped to $2.8 trillion in mid November. Along with this, the market plummeted from just over $110000 at the end of October to $80000. Previously, here was https://(x.com)/qinbafrank/status/1991005823351611431? S=46&t=k6rimWs Ebo2D2TXolYcM-A has discussed the issue of liquidity At present, bank reserves are slowly rising from a bottom of $2.8 trillion to $2.93 trillion, and the Federal Reserve is continuing to purchase bonds to expand its balance sheet. The reserve size is likely to continue to increase. Liquidity will be better than at that time. Of course, it should be noted that the reserve requirement scale of banks in the middle of the month has already reached $3 trillion, but it fell back to $2.93 trillion on the 11th. We need to closely monitor the trend of the reserve requirement scale of banks in the future. From the above, it can be seen that the funding bill, which includes 60% of government department operating expenses, has been passed by both houses. If two more bills can be passed this week, it means that 80% of the funding bills have been passed. Even if the game continues, only 20% of government departments may eventually shut down, and the scope of the shutdown is much smaller than that in October and November last year. Therefore, the impact will be much smaller. At the same time, liquidity has improved slightly compared to before, and of course, we need to continue to observe the trend of bank reserve size. 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