At the brink — and it's a long fall from here

As of Wednesday's writing, the U.S. government is back in business, as the deal reached Tuesday night was approved.

So, sanity may have peeked out from under the desk where it was hiding in the Senate and Congress. If it hadn't, the North American economy would truly be tipping over the brink — and it's a long fall to come.

From here, it's hard to keep up with all of the economic deadlines the American government faces, but laying off 800,000 government workers constitutes a pretty costly down payment. (On a note that may satisfy some, one arm of government tshut down does income tax audits.)

U.S. government workers are no different from us; most live paycheque to paycheque. One missed payday is bad, but miss two, and real trouble soon follows.

Already it's being seen in consumer confidence. The lower the family income, the more people report they are cutting their spending. Even of families earning $100,000 or more, a third say they are eliminating plans to buy items like cars and appliances.

That's a shock that reverberates right to Ontario's manufacturing base, and Alberta's energy base. And once people lose confidence in the future, it is very hard to turn that around.

The new deal only allows the U.S. government to pay its bills until mid-February. At that, who would rush into financing a car over several years, if they are not confident they'll have a job at this winter's end?

So, what kind of government bills are we talking about? Here are some early deadlines I was able to find:

• Oct. 24: $93 billion in treasury bills come due. They are expected to be covered by a T-bill sale that begins Oct. 21, but if that goes off the rails because of lack of confidence . . .

• Oct. 31: $6 billion interest on government debt comes due (total debt now sits at about $17 trillion)

• Nov. 1: $25 billion in social security benefits need to be paid, plus $18 billion in Medicare reimbursements, $12 billion in military salaries, and $3 billion in other government benefit programs (think school lunches for kids)

• Nov. 15: another $15 billion in interest payments on the debt

And so on. . .

While I was trying to figure out what this means to us, I came across a lecture (a sales pitch, actually) from a New York financial consultant who was offering wealthy American clients assistance in moving their assets out of U.S. dollars.

He points to news reports (which I had actually seen myself — that's why a I stuck with the lecture, until I found out it was a sales pitch) of China, Russia, the European Union, India and countries in South America and Southeast Asia rushing to sign deals to trade in their own currencies, without converting to U.S. dollars as a go-between.

I also saw a story about European countries significantly increasing their holdings of Canadian dollars — which is really scary. Here's why.

The gist of the financial adviser's pitch was that as other nations drop the American dollar as the world's reserve currency, America will no longer be able to simply print money to solve its problems. The day that happens, the U.S. dollar will drop like a stone on global markets, and America will engage hyperinflation.

The scary part about Europe buying hundreds of millions of Canadian dollars — in that scenario — is that they probably paid for them with American dollars. In other words, we gave them real money, while they gave us paper.

A few days ago, a friend, wanting conversation, asked me what I thought of the shutdown crisis in the U.S. What the heck should I know?

It was just idle talk, so I said at least I have a house paid for, with a yard that can grow a lot of fruit and vegetables. I also put a big value on owning four laying hens. We both chuckled.

At least, I thought we were laughing. I hope to God we were trying to be funny.

It does no good to focus on worst possible outcomes. Besides, the crazy American brinksmanship may end up as just one more episode in their partisan game of thrones, and the money presses will just continue to run. For another few months.

But the shutdown of consumer spending has already begun — at least in 800,000 U.S. homes.

Maybe it's good the agencies that measure unemployment and consumer spending were shut down. Maybe we were better off not knowing whether our two economies are on the brink, or already over it.