WSJ What’s News - Shutdown Nears Record as Crucial Week Begins

Episode Date: November 3, 2025

A.M. Edition for Nov. 3. Democrats are pressing President Trump to come to the table as the government shutdown nears a record 35 days. Plus, WSJ’s Chelsey Dulaney breaks down why Europe’s former economic heavyweights are falling behind their southern neighbors. And we dig into the surprising comeback of one of the housing market’s riskiest loans — and why homebuyers are taking the gamble. Caitlin McCabe hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Congressional scrutiny over the Trump administration's lethal strikes on alleged drug smugglers heats up. Plus, Democratic senators call for the president to join talks as the shutdown nears a record. If the president engages, we will find a deal, I think, within hours. And we take a look at why the countries once praise for their fiscal discipline are now becoming Europe's new problem cases. It's Monday, November 3rd. Caitlin McCabe for the Wall Street Journal, and here is the AM edition of What's News. The top headlines and business stories moving your world today. We begin in D.C. where Democratic senators are urging President Trump to engage directly in talks to

end the government shutdown, which is nearing a record 35 days, the longest lapse ever. Lawmakers last week made progress on talks to reopen the government with a possible deal on health care, which is the main condition for Democrats to vote on ending the shutdown. Democratic senators came out in force over the weekend, urging the president to get involved. Here's Virginia Senator Tim Cain on ABCs this week. We're asking the president to simply sit down and do what all presidents do. We can find a budget deal that puts us on a path to a health care fix. I don't need all the eyes dotted and tees crossed.

I just want to be on a path so that people's bills don't spend. bike. And I want the president to agree, stop the wrecking ball. Trump in recent days has urged Republicans to change Senate rules to bypass Democrats, potentially upsetting the delicate negotiations. The White House gave no indication Sunday that Trump would jump into the talks. Meanwhile, we're reporting that the White House believes it can continue its lethal strikes on alleged drug trafficking boats without congressional authorization. Even as lawmakers from both parties grow increasingly frustrated by the lack of legal justification for the attacks. A senior official says the administration doesn't believe these strikes count as hostilities under the war powers resolution. That's the

173 law requiring presidents to end any military action after 60 days unless Congress approves it. But the ranking Democrat on the Senate Intelligence Committee, Mark Warner, isn't convinced. convinced. Appearing on CBS's face the nation over the weekend, he criticized the administration for only briefing Republicans on the strikes. I got an aircraft carrier from Norfolk that's in the Caribbean right now. How do I answer the families of those sailors about whether this operation is even legal? This document needs to be shared with every member of the Senate this week so that as we get into this discussion about war powers, we've got the basis of how the administration is claiming that it's legal.

GOP House Speaker Mike Johnson pushed back on that assertion on Fox News Sunday. We had a gang of eight briefing with the Secretary of State himself about a week and a half ago, and you had Republicans and Democrats there, the top leaders on both sides in intelligence and in elected leadership. We have exquisite intelligence about these strikes, and I can't get into the classified parts, but that information is well known. It is very reliable. And what the president and the administration are doing is protecting the homeland. The U.S. military has killed roughly 65 people in 15 airstrikes in the Caribbean Sea and eastern Pacific Ocean so far. And President Trump is threatening potential military action in Nigeria as well as halting aid,

citing the perceived targeting of Christians by Islamist terrorists. Violence against Christians has escalated in Africa's most populous country, with Islamist extremist group Boko Haram responsible for 43,000 deaths between 2,000. and 2021, according to a Nigerian non-profit. Posting on social media over the weekend, Trump said the U.S. could go in, quote, guns ablazing with the goal of wiping out Islamist militants in the country. Nigeria's president pushed back in a post on X, rejecting claims of religious intolerance and stating religious freedom is a core national principle. Warren Buffett's Berkshire Hathaway reported quarterly resists.

over the weekend, including a 17% increase in earnings thanks to a pickup in its insurance business. But as the journal's Heather Gillers explains, it's unlikely to boost Berkshire stock, which has trailed the S&P 500 as shareholders have wrestled with the news that Buffett will be stepping down as CEO at the end of the year, handing the reins to his successor, Greg Abel. We did see KBW lower their verdict on Berkshire Hathaway to underperform. see some business headwinds ahead. And then they also are raising this question about whether investors are going to be willing to put as much trust in Greg Abel as they have in Buffett. Berkshire doesn't hold quarterly calls. It doesn't issue financial guidance. So that's a little less transparent than

other companies. And that historically hasn't been much of a problem for Berkshire because Warren Buffett just has such a loyal following. So one question going into this change in leadership is will those practices change? And if they don't change, will investors be just as content with someone new in charge? The unaffordable housing market in the U.S. is causing a growing number of buyers to take on riskier loans to cut their borrowing costs. According to the Mortgage Bankers Association, about 10% of purchase mortgage applications were for adjustable rate mortgages in the week ended October 3rd, the highest rate since 2023. Adjustable rate mortgages initially offer cheaper rates compared with a fixed-rate mortgage, but they can reset, potentially leaving

borrowers saddled with higher monthly payments if mortgage rates have risen over time. Despite the risks, many buyers are betting that mortgage rates will fall in the coming years, especially if the Federal Reserve continues to lower interest rates. However, the Fed's decisions have been complicated by the ongoing government shutdown and lack of economic data releases. Coming up, risky loans are something we last encountered during the 2008 financial crisis, and which reverberated through Europe, too. But seven years on from the debt crisis that swept the continent, Europe's economic powerhouses are faltering. More on that story after the break.

When you think back to the European debt crisis of the early 2010s, you might remember there was a lot of focus on southern Europe. The countries of Portugal, Italy, Greece, and Spain were seen as the continent's spendthrift troublemakers with big debt problems. But as the journal's Chelsea Delaney writes, those countries have emerged as a rare bright spot for European growth, while Europe's northern countries are now the ones facing a problem. Countries like France and the UK have rising budget deficits and debt. Even famously frugal countries like Germany are taking on debt too, albeit from lower levels. Chelsea, seems like we're getting a bit of a role reversal here. Yeah, definitely. I mean, 15 years ago, these southern European economies, there was a lot

of concern over their finances. They almost broke apart the Eurozone when they had these debt crisis. And now they're doing actually really well. So Spain was one of the fastest growing economies in the developed world last year, grew 3.5%. Portugal, Greece, all growing around 2%. these are actually a really big numbers. So on the growth perspective, they're doing really well. And also on the budget perspective, they've really gotten their finances in check and they're not running huge deficits anymore. And they're bringing down their debt levels. Is there something in particular that they're doing that's driving this out performance? Well, one part of it is sort of the measures they were forced to take during the Eurozone debt crisis as part of these bailout packages. So countries like Greece, Spain, Portugal, they were forced to do a And that was really painful. They're still really long-lasting scars from that. But they did a lot of things that set them up to grow later on. So they slashed bureaucracy.

They reformed their labor laws. They privatized a lot of businesses. So I think that sort of planted the seeds. But there have also been some idiosyncratic factors over the past couple of years. One is tourism has been a huge boost for these economies in the past couple of years since the pandemic. But there also have been more structural changes to the economic. makeup of these countries. So you have Barcelona and Seville and in Lisbon and Milan. They're these big tech and finance and media hubs these days. So we've seen a shift in the makeup of the

economies as well. So it's no longer that these are just tourism, like hotel, like low pay, low-skilled jobs that are driving these economies. Now they do have these high value sectors that are starting to become a bigger part of the economy. And so then what's the issue facing Europe's core countries now? Yeah, the core of Europe is having a lot of problems right now. If you think of Germany, which has been the growth engine for the European economy for a long time, it's facing threats on many, many fronts. The economy is basically stagnating its economic model, which was based around high value manufacturing, around exports, around free trade. That's all been really challenged by not just the tariffs we've seen this year, but the rise of China as a big competitor. Volkswagen and German automakers are just having their lunch eaten by China. You also had Russia's invasion of Ukraine, it caused a lot of problems for industrial sectors and Europe because energy prices just went through the roof. And cheap Russian energy had been a key reason why these industries had been quite competitive. So that's a big part of it. As well, you have just the size of the welfare states in some of these countries are getting quite

large. Populations are aging. And so the spending requirements are starting to really weigh on countries like France, where welfare spending is a big part of the economy. And it seems like one issue here is that governments that have tried to tackle this have faced resistance. We've seen that in the UK. We've seen it in France. Where does this leave these countries? Is there a way out of this? It's hard to see a way out of this. The only way out of this is really to cut spending or raise taxes. And if you look at France, if you look at the UK, it's really difficult. We've seen Emmanuel Macron has tried to raise the pension age in the UK. The Cures, Sharmer tried this year to roll back some disability benefits not all. And both of those things have been quite politically toxic. So Kier-Starmer had to roll those back. And then just recently,

as part of the political chaos in France, the French prime minister has rolled back some of Macron's pensions reform. So it's really politically difficult. And so the other option is raise taxes. And I think that's what we're seeing in the UK and France. But it's contributing to the political fragmentation that we're seeing across Europe, the fact that they cannot get their budgets in order and that there's no consensus on how to address these spending problems. That's journal finance reporter Chelsea Delaney. Chelsea, thanks for joining us. Thanks for having me. And that's it for What's News for this Monday morning. Today's show was produced by Kate Bullivant. Our supervising producer was Sandra Kilhoff. And I'm Caitlin

McCabe for the Wall Street Journal. We'll be back tonight with the new show. Until then, thanks for listening. Thank you.