building index that we have, that really has shown that the builders are feeling the benefit of the improvement that we've seen. >> then you started right around may seeing those interest rates pick up. it sort of slowed everything down a little bit. which is to be expected, and there are moments and places around the country where they're getting a little frothy in terms of the housing crisis. we know the effect of that. what has happened since then. what is this shutdown and uncertainty about the debt ceiling done to home buyer sentiment. >> it's all about confidence on the consumer side and builder side. the last time we had the shutdown in '95, '96, they measured it took a half point off gdp, the gdp growth. it looks like we'll see resolution here. that's good news.

the impact, the direct impact on gdp should be relatively small, maybe a .10 or two percent. but it's all about confidence. this is simply kicking the can down the road to the january and february deadlines, and we'll be back in the same situation back down the road. >> if you're someone looking to buy a house, if you're not directly affected by the shutdown does this whole nonsense--do you hear back from your builders that it does have an impact on people? people say let's sit this out and see what is going on with the economy. >> it rattles home buyers. we talke talked about the affecn retail sales. it's really about the confidence.

the entire economy is waiting on edge waiting to see what will happen. >> what message can you say to these guys over here to say please can you not do this again in january and february? can you please get this done. the slow down in home building is what cost us more than a million of those jobs that we lost in the recession. it's a very big part of our economy. >> that's true. home building employment peeked at 3.4 million. we lost 1.4 million. we gained back about 100,000 of those jobs in the last 12 months. it really has been slow. avoid these self-inflicted wounds of the government shutdown, the debt crisis. the interest rates have moved up a percentage point or so in the last few points since may. that is something to keep an eye on, but the thing to keep in mind is that they really have

bottomed out at 735%. it's moved up about a percentage point to 4.5. it's come back since the september, no taper from the fed. but that 4.5% or less-- >> that was a percentage point higher than 3.5, but it's still very low. >> that's right. we've seen the numbers wobble up and down, but when the dust settles the buyers say this is still a very favorable environment. >> thank you for talking. tell theft to get it done them . >> is it to late to give my 11th hour resolution? >> it's never too late around here. coming up on this special edition of "real money" some of the people who are most relieved

about a debt deal live about 7,000 miles from here. and stocks soared on today's news, but a man with three decades of expertise says the road ahead looks bumpy. stay with us. [[voiceover]] no doubt about it, innovation changes our lives. opening doors ... opening possibilities. taking the impossible from lab ... to life. on techknow, our scientists bring you a sneak-peak of the future, and take you behind the scenes at our evolving world. techknow - ideas, invention, life.

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that connect to you. [[voiceover]] they risk never returning to the united states. >> grounded. >> real. >> unconventional. [[voiceover]] we spent time with some members of the gangster disciples. >> an escape from the expected. >> i'm a cancer survivor. not only cancer, but brain cancer. america tonight 9 eastern on al jazeera america >> it doesn't make sense. the stock market is going up in washington. nothing is getting resolved. >> i wanting to back to the united states senate for a moment. take a look at what's going on. there is a cloture vote going

on. once that is concluded then the vote on the bill takes place. so some time in the next 15 minutes we expect the bill--the vote on the debate to end. the bill should be passed before the top of the hour. then it goes to the house of representatives where we hope the same thing happens. then it zips up pennsylvania avenue to the white house where the president signs this. this could be over in just a couple of hours. relief is the one word that captures the reaction of investors to the news that a debt deal is finally here. one place we saw the relief play out was in the 12 trillion-dollar market for government debt. that's known as the treasury market. prices rose. prices of bonds rose because they're in demand. when the price rises, it's yield of interest rate drops. if people don't buy the bonds

the interest rates go up. now that people are buying the bonds, the interest rates go down. and now those investors include some of the most powerful countries in the world including china. as patricia reports this financial saga has made them increasingly unhappy. >> over a quarter of u.s. debt is owned by trust funds like social security. the rest, $11.9 trillion is owned by investors, tried, corporations, as well as state, local and foreign governments. they sell the debt to the public to pay the government's bills. by 2011 the lion share of that was held by foreign investors. >> u.s. treasure is the gold standard of debt securities because they're backed by the full faith credit of the united states. the u.s. for better or worse is

the most stable country in the international financial system. it is at the core of the global market. >> reporter: japan and mainland china top the list of foreign owners of u.s. treasuries with china holding $1.3 trillion worth as of july. >> well, china has $1.35 trillion in reserves. they have to put it some place. there is not enough gold, pounds or euros. the only place they can put it is in treasuries. >> reporter: the u.s. has flirted with the debt, they avoided a potentially catastrophic debt default. over the weekend the china's news agency didn't mince world replacing the u.s. dollar with a world currency from the spill overof intensifying domestic turmoil in the united states. >> i don't think there is going

to be a replacement for the dollar no matter what the politician in washington do, at least not in the short term because there is no other instrument that can fill the void. >> reporter: until there is foreign governments will keep buying u.s. debt even if squabbling politicians in washington turn a deaf ear to their concerns. >> let's go back to the united states senate where we are expecting the end of the cloture vote on the debate, and after that the vote on the actual vote on the debt ceiling deal until the new year which ends the government united states shutdown. this will pass the senate and then go to the house of representatives, and is also expected to pass the house of representatives after which it will go to the president for approval. the critical question for the united states as patricia saga's story just indicated what

happens if foreign investors lose appetite for government debt in the long term? how much higher will the interest rise and what kind of effect will that have on the economy. robert, good to see you. i keep getting this question, would these countries, these pension funds, would these people who invest in the u.s. dollar, in u.s. treasuries, would they go somewhere else? could they actually go somewhere else? >> yeah, they do california. the reason why they invest in the u.s. dollar in treasury in the first place they're trying to offset or sterilize the trade surplus they have in the u.s. the u.s. imports from chain than they export. the u.s. imports a lot more products from japan than they export. so they are left with a trade surplus. they're left with an excess of dollars. if they sell those dollars in the open market it would put

upward pressure on their own currency which would diminish their competitive advantage. so they don't. they have to recycle their currency, and they can buy treasury with it. they can close accounts they have with the united states but that's challenging and difficult. or they can try to some how find another place for these dollars. now we've heard from the chinese, for example, they're looking into real estate more closely. they've been buying or there has been talk that they have been increasing their purchases of gold. gold is another way to sterilize your trade surplus. you got to put those dollars somewhere so you buy gold with that. they could go to other alternative investments such as stocks or security to reduce their exposure to the actual political dysfunctioning that they see not just once, but we've been going through this

since pretty much 2010. >> and we may see it again. hang on, robert, let's talk about the stock rally that we saw. the dow, s&p and nasdaq are all gaining a full percentage point. but the deal delaying the fight, what can you expect ahead of this. let's go to someone who has 30 years in the market and make sure that you have money in respected investments. one question i put to robert. the other question is we're going to go through this again in january and february. where do i put my money? >> corporate earnings with fourth quarter guidance, profits, and the usual traditional issues. that should lead to a little bit of a further increase in stock prices. but you point out very wisely that we are going to have to refocus on this again in the

early part of next year, and also next year we're going to have to refocus on the eventually fed withdrawal of stimulus on the margin. in the short term stocks should do well, but the intermediate problems remain. i tell people think long term. don't get whipsawed by what is going none washington. don't get whipsawed with what is happening to the fed. stay unemotional and right now stick with quality because the markets are up a lot. >> let me ask you about that. my viewers are going to want to know. i tell my viewers to get a pen and pencil and write this down. when you talk about quality, tell me the things you mean? >> so, i'm worried about the credit markets. there has speculation in the credit markets almost as bad in 2007. but it's not just in housing this time. there has been so much easy

money, that i'm afraid as interest rates and normalize and gradually go up, which they'll have to, someone who took on debt won't be able to service it and they'll wake up one morning and have to bankrupt. you want companies that don't have debt. they have global exposure. and good dividends. you want to stick with companies that can ride out tough times in the future. >> i want to show our audience that graphic that we had up there that make these points that you have made. i wanting to back to you robert in just a second. in china these are the things that jim just described as being quality. robert, china has talked about de -americanizing the world, and maybe even suggesting a different kind of currency, something that subplants the u.s. dollar in the world.

>> what china has been doing is developing an off offshore bond market on its own. the reason why they're doing this is eventually it will be big enough to allow trading partners to trade with them in their local currency as opposed to in dollars. for right now japan and china trade with each other. they trade with each other in dollars. if they develop this of offshore market, then the trading partners who are trading and selling goods from china and vice versa, they can offset the currency risk. that allowed china to wean itself off this dependence of the dollar. the canary in the coal mine is to look at what the currency is doing relative to the dollar. china has always had a history

of pegging it's currency to the dollar. right now it's rising to new highs. you see the relationship has manifested itself in the currency market. >> robert, good to talk to you. jim awod is with zephyr management. we have more when "real money" continues, and we're continue to go follow the vote. we're moments away from the vote that will pass in the united states senate. stay with us.

>> regulatory environment is severe for people who are running businesses. so i don't think--i don't have a

lot of confidence in the economy at all. >> and that is the president obama. i don't have a lot of confidence in the economy at all. the cloture vote to end debate has now finished in the united states senate. which means we're standing by on the vote to raise the debt ceiling and end the government shutdown. that's what you're seeing there, once that's done it goes to the house. i hear them calling names at the moment. it's a procedure vote. but still we're close. the neighborhood cafe and wine bar did not take a hit over the last 16 days of the shutdown but it's owner was worried that it could. ben gilligan said that he was more frustrated more than anything else. three miles north of where i am. i'm at the museum, by the way. ben, how is business, and is

there relief amongst d.c. dwellers that this thing is about to be over? >> absolutely. it's one of those situations that frustration seems to mount as things go on. i sense that a lot of people are happy, and hopefully this is coming to an end. >> in the end this didn't hurt your business, but you're a business owner. you have cash flow. you've got 35 people working for you full and part time. so you lost sleep over this even though in the end it didn't end up costing you anything. >> i have to say that we've been busier during the day. we certainly got more applications for employment over the last couple of weeks. but i think if it dragged on ail longer, sure there would have been palpable affects for us. for the first few weeks we were becauseyer, and then the last week we started to taper off a little bit. i mean, where we are, we're not

in the power center of dc, and we're kind of a small, local place, so we were still supported by people in the neighborhood. i don't know if we've seen a huge difference in business, but i would say if this continued for another month, yeah, this absolutely would be a drop off. >> let's be thankful that it didn't, benjamin gilligan is the partner in room 11. i think my crew is there, ben. perhaps you'll see me there if they pass these votes. don't close the place out until i reach you. ben gilligan. >> i really hope so. >> thank you, sir. yes, we'll raise a glass to it. let's go to allison fitzgerald for the center of public integrity. we're moments away from the end of the show. we want to see it happen before we're convinced that it's going to happen. but it does look like its happening. it looks like it will clear that hurdle. the senate was not the problem. >> the house was the problem.

yes, after it's at the senate then it will go to the house. >> that's when we'll be on the edge of our seats. >> yes, i was there when the house did not pass the bill in 2008. no one could believe it. everyone was in shock. >> that's when the market dropped 700 point because we thought it would get done. that's why you never take for granted what is going to happen under that dome. >> right, i believe the amount of positive energy going on in the assembly right now means that it is going to happen but we'll have to wait. >> is it back to normal, or do we think there will be a positive reaction in the economy and markets, or will we say oh, we have to go through this again in january and february. >> none if we'll see an immediate reaction. what i see in january is exactly the same set up that we have now. we have the budget ending and then three weeks later you have

the debt ceiling. if there is a desire among the christian republicans to play this game-- >> they can't. there is not much good to say about the government shutdown but we found one silver lining. there is an organization bloom bars. you've seen a 20% boost in business since the shutdown. >> at least. that's with our kids programs. yes, obviously there are a lot of parents out there who normally put their kids in daycare or they have a nanny. this has given them a lot of time to spend with their kids, which is a great thing. what do they do? they can't go to the smithsonian. they can't go to the zoo. they come to bloom bars, and it's been great. parents have been spending more time with their kids because of

the shutdown, and it's definitely helped our business. >> who have you got here? >> this is my daughter, ava maya. this is not her first interview but it is her first live interview. ava, can you say hello to ali. >> hi. >> this is a place where parents can interact with your kids. what is the sense that you can give us about parents with their kids. >> in the beginning there was frustration, but there was a little bit of happiness. they can spend more time with their kids. but this has dragged on. i definitely have seen the stress level increase, and parents are getting much--yeah. they're not so happy in the last few days coming in our kids programs. now there is just definitely a sense of relief that this might

end but they had a chance to spend more time with their kids and explore create i hav creati. we have had people we've never seen before, so they'll be coming more regularly. >> i'm glad to hear that somebody's business was up, it's up for the wrong reason. >> interest is a silver lining. >> there is a silver lining. thanks. >> ceo of bloom bars, and i finally have a little bit of news for you. let's go back to the united states senate. the cloture vote has passed, which is a very good sign that the vote on the actual bill will pass. they're taking some kind of roll call. i'm not an expert on what goes on in the congress. but john knows a little bit about this. john is standing by to tell us about what is going on. we'll go to him in just a

moment. i've got allison with me right now. you were saying that we had the benefit from this, you didn't sasaid wehaven't had that last n is here about u here with us. >> right now the cloture vote has concluded. they're about to vote on the actual bill which would end the government shutdown an that woud end in default. if you want to go on with your interview. >> i'll tell you the vote has begun but it's going to take a few minutes. >> fair enough. then let's talk about this. the markets have been trebling down 100 points a day but it's been 4.5% in the last month. >> it's definitely gone down. i saw today with the rebound that happened today after the

vote was at least announced, the deal was announced, that the market had reached the point it was at on october 1st. so at least it recovered in the last 15 days. interest rates on treasury, the yelled is what they call it, it was three times normal, and then it came down. i don't know if we'll see a huge celebration when that vote happens because that has been internalized. >> has anyone, do you think any lesson has been learned over there? >> i would like to think that the conservatives in the house who really wanted this to happen will see that there was not a lot of gain from that, or at least maybe the speaker will realize for the moderates in his party this has not been a win. bolo i can we talked about earlier, politics was local. >> they get to hold out and go back to their districts and say, i held out.

>> yeah, i was strong. >> we'll keep an eye on this throughout the course of the evening. we're not going to leave until this is done. i'm not hearing what they're doing in there right now, but we know they're not finished. so we're going to keep a close eye on that. john is going to take over. john is standing by. he'll take over in a minute. but we'll stay on this, mike viqueira is at the white house. i'm here at the museum so i can physically look at congress and give you visual confirmation of what is going on over there. what has happened is that the cloture vote, the vote to end the debate on the vote has passed. now they have to vote on the bill in the senate. it will go to the house of representatives after which it go "l" get vowill go to preside. >> we'll be getting back to you as well in washington, d.c. but as you mentioned the action

right now is in the united states senate. here's what we know. the cloture vote which ends the debate has taken place, and it has passed. now we're on the bill which would reopen the government, and it would for a period of time, and it would avoid a default for the u.s. government. that will once it has passed the canadsenate will head to the hof representatives. we're expecting that vote will take place the next couple of hours. we will see what happens, but standing by with me now is a mike viqueira hat the white at e house, and libby casey. what do we know about the vote in the house? >> well, we expect to see that unfold this evening, john, and as you mentioned we're watching the final vote take place. once that gets wrapped up we expect to see democrats in the senate do a little bit of a victory press conference. meanwhile, the actual go over and the house will unfold there. they will get the mag