Weil on Finance: Red October Shutdown
Good morning, View fans. And now on to your morning links.
The hard part about playing chicken is knowing when to flinch, as the fictional submarine commander Bart Mancuso said in the 1990 movie “The Hunt for Red October.” We’re inching closer to that point in the debt-ceiling showdown. Treasury Secretary Jack Lew sent Congress a letter yesterday saying the Treasury “has begun using the final extraordinary measures” that it has available “to be able to continue, on a temporary basis, to pay the nation’s bills.” Those will be exhausted by Oct. 17, he said. (Click the first link for the letter.) Another line from the movie seems fitting here, this one from the Navy admiral played by Fred Thompson, who later became a U.S. senator: “This business will get out of control. It will get out of control and we’ll be lucky to live through it.” Of course, we will live through this. Pimco’s Bill Gross said so on TV yesterday, calling a U.S. default on Treasury securities “unimaginable.” So there you have it.
Martin Wolf on the shutdown/debt-ceiling drama
The Financial Times columnist starts with a sensible question: “Is the U.S. a functioning democracy?” He was asking rhetorically, but the short answer seems to be: not really, at the moment. “In a democracy, people overturn laws by winning elections, not by threatening the closure of government or even an outright default,” he writes. “It is impossible to run the government of a serious country under blackmail threats of this kind. Every time the administration gives in, it stores up more difficulty for itself. It has to stop doing so.”
A push for Bill Gates to step down as Microsoft’s chairman?
Reuters says this is happening: “Three of the top 20 investors in Microsoft Corp are lobbying the board to press for Bill Gates to step down as chairman of the software company he co-founded 38 years ago, according to people familiar with matter.” It’s an odd story, though, because the three investors aren’t named in the article, either. Reuters said the unnamed people it relied upon for its information “requested the identity of the investors be kept anonymous because the discussions were private.” So stay tuned, I guess, to see if anything ever comes of this.
Wells Fargo back in court soon over mortgage deal
From Bloomberg News this morning: “Wells Fargo & Co. will face an enforcement action today by New York state over the bank’s alleged failure to uphold terms of a $25 billion mortgage-servicing settlement, a person familiar with the matter said. The action, in the form of a motion to compel compliance with the 2012 accord, is to be filed by New York Attorney General Eric Schneiderman in federal court in Washington.” Now there’s a novel idea: A regulator enforcing a prior settlement agreement with a big bank. Maybe Schneiderman is a different sort after all.
It will never happen, he says: “The card is vaporware; it will never exist, and the best you can realistically hope for, if you donate money to the cause, is that at some unknown point in the future the organizers will give up and find some way of getting you your money back.”
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)