Recapping the day's news and newsmakers through the lens of CNBC.
The reason U.S. Treasuries are the gold standard of debt is pretty simple: everyone everywhere believes the government will make good on its debt obligations, come hell or high water. But on Day Two of the government's partial shutdown, there were dire warnings that the unthinkable could happen if Washington's standoff worsens into a debt-ceiling freeze that causes a Treasury default. That would likely cause interest rates to skyrocket.
"This shutdown is bad. It's painful. It does hurt some people. It costs the taxpayers some real money. But it's not catastrophic. [If] we hit this debt ceiling, That's catastrophic."—Erskine Bowles, former co-chair of the president's bipartisan debt commission and co-founder of the Campaign to Fix the Debt
Will the shutdown slow Tesla?
Obviously, the shutdown will have the biggest effect on the 800,000 federal workers who won't get paid, but business people are worried about ripple effects. The auto industry, for instance, has been riding high on consumers' recent willingness to loosen the purse strings. Well, those furloughed federal workers are consumers too, and they're not likely to buy cars when they have no paychecks. Other consumers, seeing the shutdown as an ill wind for the economy, may postpone car purchases, too. If the shutdown lasts a week or longer, as many as 300,000 federal contract workers would be affected, many by being furloughed themselves. Moody's says a shutdown of only a few days will trim fourth-quarter growth by two-tenths of a percent, a longer shutdown by more.
"If the thing drags out a couple weeks, then ... it starts to [become] a bigger factor on business."—Kurt McNeil, GM's vice president of U.S. sales operations
"If we have 20 people on a network help desk, [a federal department] may reduce that to 12."—Fernando Galaviz, chairman of the National Federal Contractors Association
Shutdown good for the markets ... Really?
Is there a silver lining in all this? Well, there could be a stock market bounce. After eight of the 11 shutdowns since November 1981, stocks have racked up gains. On average, stocks gained 2.5 percent in the month after the 11 shutdowns. The best performance followed the one-day Sept. 1982 shutdown, when the S&P 500 jumped 12.7 percent in a month. All bets are off, however, if the Washington does not raise the debt ceiling and defaults on Treasuries.
"We remain confident that while congressional leaders have been unwilling to compromise on the less risky shutdown question, they will do what is necessary on the debt limit."—Goldman Sachs economist Alec Phillips
It seems like such a no-brainer: pay your employees with pre-paid debit cards instead of checks. It's cheap and easy for you, and gets pay into the employee's hands for immediate use, without the hassle of making a bank deposit and waiting for the check to clear. But the Consumer Financial Protection Bureau has sent employers a letter warning that it's illegal to force employees to accept payroll cards—they have a right to be paid the old-fashioned way. Some workers, especially in fast food and retailing, have complained they are paying high fees to use their payroll debit cards, though the cards can be convenient for workers without bank accounts. Employees who do opt for payroll cards must receive clear fee disclosures, the CFPB says.
"No one should be forced to pay a fee to get their hard-earned wages. They were taking advantage of people who cannot afford to pay these fees."—former McDonald's employee Natalie Gunshannon
Hard to be less-liked than Microsoft's Ballmer, but ...
You work hard, you found a fabulously successful company, you give oodles to charity, and you're generally seen as one of the good guys. So how are you repaid? Well, if you're Microsoft founder Bill Gates, some of your top shareholders say thanks, but they'd really prefer you hung your hat somewhere else. That's right: three of Microsoft's 20 largest shareholders want Gates out as chairman. Don't expect it to happen anytime soon, as those three together own only about 5 percent of the shares. But the oust-Gates campaign is another sign—on top of the recently announced planned exit of CEO Steve Ballmer—of shareholders' worries that once-almighty Microsoft is losing traction.
—By Jeff Brown, Special to CNBC.com