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Jim Cramer: This Shutdown Would Be Different

Editor's Note: This article was originally published at 7:20 a.m. on Real Money on Sept. 30. To see Jim Cramer's latest commentary as it's published, sign up for a free trial of Real Money.

NEW YORK ( Real Money) -- Not all government shutdowns are created equal. If you go back to the 1995-1996 shutdown, you see a rather remarkable development: It had almost no impact on the stock market whatsoever.

Remember, there were two shutdowns back then -- one that spanned the time frame of Nov. 14 to Nov. 19, and one that went from Dec. 15 to Jan. 6.

During the first shutdown, the Dow actually gained 2%. It then proceeded to rally 3% between the shutdowns. Then it was unchanged during the second shutdown.

Following that, it embarked on a remarkable 40% run over the next year.

So, you could argue that the government shutdown actually had a positive impact on the stock market. Looking back, you could certainly draw that conclusion.

But it wasn't like this back then. We had a lot of confusion in Washington, but we really didn't bother to think much about it. We were very earnings-centric back then and totally separated the two. What went on in Washington was a total sideshow.

Now, on the 10-year U.S. Treasury, interest rates did go from 7.78% in January of 1995 to 5.65% on January of 1996, which is a significant and positive move. The Dow jumped about 30% in the same period. One could argue that rates went down because Washington grew disciplined in spending and therefore the showdown had a positive impact on the budget, which resulted in lower rates.

But rates then went back to 6.58% a year later, so even I am suspicious of that linkage.

I know this sounds naive in retrospect, but we really didn't think back then the way we do now. We were embarrassed by our government for certain. We knew that we looked bad to the rest of the world. But it didn't change the economic landscape all that much. We were in the midst of an economic expansion and we were riding the wave of new technologies and jobs were fairly plentiful, with the unemployment rate having fallen from 5.6% to 5.4% from 1995 through 1996.

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