Cry Wolf Is the Federal Fiscal Budget Policy

NEW YORK (TheStreet) -- Our neighborhood meeting was highlighted this week by a talk from the fire chief about CryWolf.

The program is aimed at reducing the toll of false alarms by having people register them and pay fines when they go off needlessly.

But it's a pretty good analogy as to why this latest government shutdown threat isn't being heeded. Washington has no cry wolf program.

In the classic story, a shepherd boy gives the alarm of "wolf" when there is no wolf, repeatedly, until his neighbors ignore him and the wolf eats him. That's what is happening now with Congress. They've threatened to ignore the need to authorize spending, or borrowing, so many times that we're inured to it. Wall Street is ignoring the latest alarm, and this time the threat is real.

When the government shuts down for real it costs everybody money. Work doesn't get done, laws don't get enforced, people don't get paid. Even the threat is costing us because no planning can take place.

But most people only notice the obvious things that don't happen. When national parks close, or your new passport doesn't come through, people notice that. Even in the event of a shutdown "essential" spending goes on. The NSA keeps spying, the drones keep flying, even Obamacare continues. Less than half of the federal workforce actually stays home.

The city of Washington has declared its entire workforce essential. The whole thing looks like a way to sell t-shirts.

So some groups, like the conservative Heritage Foundation, insist even a prolonged shutdown is nothing to worry about.

Another reason Wall Street is ho-humming the threat of a shutdown involves the sequester. This was supposed to be a terrible thing, a slow motion train wreck. But most businesses aren't noticing it. It's cutting economic growth, but most businesses aren't directly impacted so, again, we don't see a wolf.

That's partly because the most noxious cuts, like the lay-off of air traffic controllers, were averted. You can still fly from LaGuardia to National Airport for lobbying, so what's the problem?

The problem is that the economy is stagnating. Consumer confidence is down. Housing sales are down. Yet even that seems to have a silver lining, as it means the Federal Reserve may continue quantitative easing.

I think the threat of a shutdown should be easy for Wall Street to avert. If the funders of the Republican Party seriously threaten their Congressmen and Senators with a funding shutdown, or threaten to give to (gasp) Democrats, I think the problem would go away.

But that call hasn't come. And, again, I suspect an increasing number of Congressmen would see even that threat as a cry wolf moment.

Because Wall Street would never do that. Wall Street would never cut off the money spigot to Republican campaigns. Wall Street is as devoted to the cause of less government as Ted Cruz, and the only difference is tactical. In the end Wall Street has nowhere to turn.

Who are you going to give your money to, Republicans ask. Bernie Sanders? Elizabeth Warren? Hillary Clinton?

So this government shutdown will happen, and we'll see what the damage is. The sequester will certainly continue, and in time we'll see what the damage is from that, too.

The next move of the market is down. But until that market move is tied to Washington directly, and Wall Street starts screaming in pain from it, the wolf will just keep eating.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Dana Blankenhorn has been a business journalist since 1978, and a tech reporter since 1982. His specialty has been getting to the future ahead of the crowd, then leaving before success arrived. That meant covering the Internet in 1985, e-commerce in 1994, the Internet of Things in 2005, open source in 2005 and, since 2010, renewable energy. He has written for every medium from newspapers and magazines to Web sites, from books to blogs. He still seeks tomorrow from his Craftsman home in Atlanta.

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