Democrats and Republicans have been fighting over budgets and related
matters since before any of us were born and while the debate has been
heated at times, only recently has the credit of U.S. debt been called
into question as a result.
During the impasse that led to the government shutdowns of November
14-19, 1995 and December 16, 1995-January 6, 1996, for instance, there
was nary a whiff of panic in the air, as the VIX never made it above 15
and spent a good portion of the shutdown in the 10s.
The last three instances of party budget squabbling have been much
different than the Clinton-era budgetary battles. And one only has to
watch the trajectory of the VIX during these battles to get a sense of
the uncertainty, anxiety, and risk that was priced into SPX options
during the period...
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