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Sequestration Is Nothing Compared to a Shutdown: Kilburg


"Let me make the understatement of the year here: We are fed up with Washington," said Jeff Kilburg, Founder & CEO KKM Financial.

Joining Breakout for our live market special this morning from the Chicago Mercantile Exchange, Kilburg does a nice job of summing up the collective attitude towards the sequestration and everything else coming out of the nation's capital for the last few years.

The market may be able to shake off the implications of sequestration but we're not out of the woods yet. Comparing the market's mojo to baseball, Kilburg says the (fake) fiscal cliff was strike one, today's sequester is strike two. Looming in our immediate future is March 27th's deadline to strike a Continuing Resolution deal to avoid a government shutdown.

If the shutdown only applied to the politicians themselves, a shutdown would be embraced. However, failure to reach a CR deal would result in real people losing jobs. Even if the anemic economic recovery could withstand such cuts, Kilburg says investor sentiment and confidence would not.

There are already signs of erosion in the economy. Kilburg points to recent declines in crude oil, copper and other commodities as evidence that traders see growth starting to slow. Some of that is coming from Europe as evidenced by the stream of suddenly weak data, but the slide is also a function of the negative impact a CR battle and ensuing government shutdown would have.

The sequester is a relative pittance in comparison. "It's only $85 billion dollars, Bernanke can dial that up in picoseconds," Kilburg notes. Undoing a government shutdown wouldn't be so easy.

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