unfortunately, congress has not fulfilled its responsibility. it's failed to pass a budget. and as a result, much of our government must now shut down. >> the first time in 17 years the u.s. government has been shuddered. >> how sad. what a shameful day this is. in the history of the house of representatives. >> it's brutal. it's brutal. >> republicans and democrats took the battle to the tipping

point. neither side willing to budge. >> this law is not ready for prime time. >> there you have it. i'm natalie allen. >> this is "cnn newsroom." >> the battle over the u.s. president's signature health care law has just forced a partial shutdown of the federal government. the deadline came and went an hour ago after neither house republicans senator senate democrats backed down. the senate has repeatedly refused to use a stopgap spending bill to derail obama care. >> now, it means many government offices will close and furloughs begin today for 800,000 federal workers, even as a key part of obama care goes into effect today. >> and all of this is fueling a much bigger concern about what sort of battle to expect when it comes to raising the nation's

debt ceiling just a few weeks from now. >> president obama has signed a bill ensuring on-time pay for active duty military members. he also issued a video statement a short while ago explaining what the shutdown will mean for them. >> i know the days ahead could mean more uncertainty, including possible furloughs. i know this comes on top of the furloughs that many of you already endured this summer. you and your families deserve better not that dysfunction we're seeing in congress. your talents and dedication help keep our military the best in the world. that's why i'll keep working to get congress to reopen our government and get you back to work as soon as possible. finally, i know this shutdown occurs against the background of broader changes. the war in iraq is over. the war in afghanistan will end next year. after more than a decade of unprecedented operations, we're moving off a war footing.

yes, our military will be leaner. as a nation we face difficult budget choices going forward. >> now, right now the house is still in session. all of this is still going on, even though it's just after 1 a.m. in washington. so for the very latest, joe johns joins us from washington. joe, government shuts down. what happens now? >> reporter: well, in the short term now, the house of representatives is just wrapping up that vote on the house floor that was a vote on a measure to seek to go to conference or to negotiate with the senate with these matters. after that the house speaker john boehner is expected to give a news conference some time shortly afterwards. and then it will probably calm down here for the next few hours. the government has shut down. the senate will probably come back into session tomorrow, we're told, and they will say, no, we don't want to go to conference. the government most importantly

has been in the process of letting hundreds of thousands of employees who are affected by this impasse know whether they're supposed to report to work today. the law divides the government employees into categories. they're now called accepted and nonaccepted. essentially what that means is some are considered essential, some are considered nonessential. the nonessential ones will not come to work. the essential ones will come to work. the elected leaders of the government will try to find a way out of this impasse. it will require negotiation, either a short-term fix or something otherwise. >> this was an extraordinary night in congress. it's been an extraordinary few days. the last few hours of the bill going through the senate and house. how did we actually get to this point. >> reporter: because the senate, the house, the white house, could not agree on a spending proposal to keep the government operating. it's all about attempts to

undermine president obama's health care law, which is despised by, frankly, some conservatives and some republicans. this is occurring because they just can't agree on anything. the latest proposal from house republicans essentially was to try to get some type of negotiation going. as we all know, the democratic leader of the senate rejected that. and this is the kind of thing that has not happened in washington, d.c. for 17 long years. the last time it happened was during the clinton administration. and we went through weeks of back and forth until some type of agreement was reached. >> as you mentioned, we are waiting for that statement from the speaker of the house, john boehner. we're expecting the speaker to walk out any moment to make a final statement after what has been an incredibly long few hours there, i guess, for everybody in congress. as soon as that happens, we'll

bring it to you live here on cnn. but despite all of the rancor, joe, there was agreement on one issue. >> reporter: that's right. that one issue was agreeing, the member of the armed forces would be paid in the event of a government shutdown. funding for their salaries for fiscal year 2014. the president issued a video statement about that. listen. >> those of you in uniform will remain on your normal duty status. the threats to our national security have not changed and we need you to be ready for any contingency. ongoing military operations, like our efforts in afghanistan, will continue. if you're serving in harm's way, we're going to make sure you have what you need to succeed in your missions. >> reporter: that bill the president's referring to was passed by both the house and senate and signed by mr. obama this evening. >> it won't just be the military

getting paid. congressional members getting paid. joe johns, late night duty in washington. >> even though the government has shut down over obama care, as it's often called, the irony is today is the first day americans can sign up for it. what exactly is the affordable health care act? that's the official name. the patient protection and affordable care act. approved by congress and signed into law by president obama in 20 10. supporters say it will provide affordable medical care to the 48 million americans who currently lack health insurance. october 1st is the day those who want to buy health insurance through obama care can do so. the law requires every american have some form of health insurance by 2014. anyone without coverage by next year, will be fined at least $95. so, looking at the political calculus here, who among washington's power brokers stands to benefit and who stands

to lose? john king shows us where the opinion polls are right now. >> it can get confusing watching the political ping pong between house and senate but there are some simple truths to the shutdown debate. a big majority of americans do not want a shutdown to happen. nearly 7 in 10 say it would be a bad thing to shut the government down for a few days. only 27% say that would be a good thing. on the defining question, is it more important to shut down government or continue the fight some republicans want over spending and the president's health care law? 6 in 10 americans say avoid the government shutdown rather than blocking the president's health care law. but these are national numbers. it's important to look at local politics in all this. because 30 or so house republicans, most conservative house republicans, driving this debate. a handful of the most conservative senators driving this debate. they think they're on safe ground at home because among tea party supporters, 56% say it

would be a good thing to shut down the government. so those people say the people back home back them. who are the key players in this? the president who could be a key player in cutting any kind of deal enters this politically weakened. 53% of americans disapprove of how the president is handling 4iz job as president. only 44% approve. some republicans aworried he could use this controversy to his advantage and change those numbers. among democrats, 8 out of 10 support him. independents, 6 out of 10 disapprove and more than 80% of republicans don't like the way the president is doing this. the most important person at the moment is john boehner. only one-third of americans have a favorable opinion of the speaker. nearly half unfavorable. this is more interesting. he's the most powerful republican in the country, the

most powerful republican in washington, yet only 54 % of self-identified republicans have a favorable opinion of john boehner. that in part is because of those conservatives who don't trust him. they think he's too willing to make a deal. as all this plays out, maneuvering in the united states congress, how about this for a number you would have to describe as pathetic. only 10% of the american people approve of the job their legislature, the united states congress, is doing right now. only 10%. that's half of what it was just earlier, just a month ago, in september. 10% of the american people approve of the job congress is doing. and we know that nearly 7 in 10 do not want a shutdown. >> and we're still waiting for that statement to come from the speaker of the house, john boehner. there is a stakeout right now in the capitol building. we know the senate has finished for the day. we are expecting some kind of statement from mr. boehner. the senate will be back in session in about eight hours, just over eight hours from now.

>> we will see what, if anything, he says does to his approval rating. >> oh, yes. >> a lot of people may be watching right now. well, most americans may not want a federal government shutdown, but the shutdown is now here. so, how did this actually happen? straight ahead we'll look at some of the politicians who may be blamed. and we'll see how global markets are reacting to what's just happened in washington.

one hour and 12 minutes, the u.s. government has been shut down. it is now a reality and the finger pointing well under way. a group of republican congressmen who refused to compromise have been taking a lot of the heat. brian todd on who they are and what they want. >> reporter: by most accounts house speaker john boehner didn't want it to get this far, didn't want to use the prospect of a government shutdown to push for defunding the president's health care law. according to a recent report, a small corps of republicans were the catalyst and forced boehner's hand. it started with a letter to boehner in august from obscure freshman congressman from north carolina, mark meadows. the letter said, we urge you to affirmatively defund the implementation and enforcement of obama care in any relevant appropriations bill brought to

you house including any continuing appropriations bill. >> some conservative groups got behind his effort, including freedomworks and some conservative senators, ted cruz, marco rubio, lee. >> reporter: then it was signed by 8 0 republican senators but some conservatives slammed the strategy. karl rove wrote in "the wall street journal," it was an ill-conceived tactic that would alienate independents. columnist called this the suicide caucus. one of the letter's signers, blake farenthull responded. >> we have to use some of the leverage points we have and continuing resolution is one of them. we can't move anything unless we have leverage. >> reporter: he says the vast majority of people in his district don't want obama care, but if he's only one of 80 republicans who signed on early on, why did boehner go for it? >> he has 233 members and it

takes right now 217 to get a majority in the house of representatives. if he loses just a few members, he doesn't have his majority. 80, even though it's -- it's not even a majority of the republicans, it's enough for him to have to listen to them or he can't pass legislation. >> reporter: other faks to, boehner doesn't have earmarks, and outside conservative groups who raise money for hard line congressmen in their districts have also siphoned power away from the speaker's office. we couldn't get a response specifically to that or the criticism from other republicans of this strategy from boehner's office. brian todd, cnn, washington. >> let's talk a little more with new york columnist ryan lizza, you saw him in brian todd's report. the sue said caucus, as they've become known, 80 members. we're going to put it on hold because john boehner is making a

statement. >> made his position known very clearly. we believe we should fund the government and there should be basic fairness for all americans under obama care. now, the senate has continued to reject our offers. but under the constitution there's a way to resolve this process, and that is to go to conference and talk through your differences. and i would hope that the senate would accept our offer to go to conference and discuss this, so we can resolve this for the american people. questions? >> reporter: mr. boehner, mr. speaker, the stakes have really been raised in this now. and you have members in both parties who want to vote on a clean -- you said you would like to work. will you vote on a clean c.r.? >> we're hoping they'll take our offer to go to conference and resolve our differences. >> reporter: tomorrow, later today, 800,000 federal workers will receive workers they're no longer needed on the job. what's your message to them and do you have a plan to restore

back pay to them? >> the house has voted to keep the government open, but we also want basic fairness for all americans under obama care. >> reporter: what do you say to the workers, sir? >> that was, indeed, a very brief statement by john boehner, cutting it very short when asked, what do you say to the 800,000 workers furloughed. walking away. ryan lizza in washington. want to talk about the hard core right wing conservatives being blamed for all this. i want to get your response to boehner's comments right there. he talked about taking this to conference. >> yeah. >> how does that work? is that a realistic alternative here? >> i mean, technically he's right. that is the way we resolve differences when the house and senate disagree on something. what's so strange in this case is they brought this thing right up -- well, to the finish line. let the funding mechanism for the government run out. and now he says he wants to go

to conference. of course, the way the system's supposed to work is that conference was supposed to have been appointed months and months ago. the position of the republicans is they didn't want to go to conference. look, to me, you saw -- he looked exhausted. and he looked like someone who did not want to be in the situation he's in right now. remember, john boehner publicly said he did not want this fight. he publicly said he did not want to use the threat of a government shutdown to extract the policy concession from obama of trying to overturn the health care law. and it was, frankly, forced on him by several dozen members of the house of representatives. >> yeah. let's talk about, this is the suicide caucus, as known, because everyone thought they were on a suicide mission. you've written about this. you say they live in a very different america in the sense it's much whiter, much older,

and in those districts obama lost in a landslide. >> look, obama won by four points nationally. it was a pretty important re-election. and the story of the re-election is about an america that is becoming more diverse and less white. but if you look at the 8 0 members that signed onto that letter in that report you had before, those 80 members won their districts by an average of 34 points. barack obama lost those districts by an average of 23 points. and those districts are about 75% white. so, our system is distorted. look, there's some of this that goes on on the democratic side, too. democrats have members far to the left and districts don't represent the country. what's unique now is how this faction has been able to influence national policy and literally set us on the course to a government shutdown against the wishes of most of the senior republican strategists and even

the speaker of the house. that is what is historically unique about this. it's the power they have been able to exercise. >> essentially it's -- it's a situation now where boehner is not really running a republican party. he's sort of running a coalition. and he's lost control. >> he's lost control. he's a very weak speaker of the house. weaker than any of the recent speakers. nancy pelosi was a very strong speaker. she could basically get anything she wanted passed because she ruled the democrats with an iron hand and she didn't let her far left faction control hoer her. as brian todd point out in that report, the speaker doesn't have the tools that the old speakers had. they don't have money, basically. they can't buy off members with pork and earmark and they can't buy them off with campaign cash because a lot of that is raised by outside groups or entrepreneurial politicians like ted cruz who have independent identities outside of the party structure.

so i think that's the story of how we got to this government shutdown, is a -- not a tiny faction, but 80 members out of 233, pushing this tactic on john boehner, who didn't want to do this. as you saw in those brief comments he made, he did not look like a man who was happy to be in the situation he's in. how does he get out of it? well, i think he's got to show his team that, look, we're suffering because of this. the republican brand is suffering because of this. and we need to move beyond. we need to move beyond the government shutdown, which as all the polls shows, is going to be blamed on the republicans. >> as we're talking, the house of representatives is actually still in session. they're on their feet. they're still talking. it is 21 minutes past 1:00 east coast time. lease have live images coming to us from the floor of the house. it's an extraordinary night, becoming an extraordinary morning. i'm just curious, how much does this crisis have to do with the

past presidential election, which the republicans lost? you have these ultraconservatives who believe they lost that election because they had squishy moderates. looking forward to the next election, 2016, they want a hard core conservative as their nominee. >> that's what's interesting about the re-election of obama is. a lot of folks argued before that election that the way to break the deadlock in washington was for obama to have a decisive victory or for romney to have a decisive victory. either way you would break this partisan debate and get a little bit -- you would at least get a year of negotiation over some of the tougher issues before everyone returned to focusing on the campaigns. that has happened in previous presidential elections. the other side accepts it and tries to -- you know, tries to play the best hand they can, win policy concessions but does negotiate. what happened this time is different. as you pointed out, the republicans decided that -- or

many republicans at least decided that their loss was due to a moderate candidate and that the thing they needed to do going forward was to move to the right. and this is -- you know, this is the problem with the republican party having such a lock on the house of representatives. and that lock on the house of representatives being due to these districts that are carved perfectly to ensure that they win in super majority elections. >> yes, some call that a gerrymander. >> yes. it's rationale from their day-to-day point of view. they get up every day, hearing from constituents who hate obama care. as that one congressman said in brian todd's package, they think, i won my election. i was sent here to defeat obama care. i'm going to use every single tool at my disposal. >> sorry. we're out of time. very quickly to the debt ceiling. there's a very long list of demands which republicans are

laying out unprecedented on many levels. are we setting the stage for a bigger crisis now a couple of weeks away? >> i think anyone who assumes that washington will work out these fiscal crisis as they have in the past two years and that we -- it will all work out. you cannot be that optimistic anymore. have you to -- the percentage chances of default -- of a default are much higher after tonight. >> okay, ryan, sorry to interrupt. we really appreciate your insight. it's been great having you here. thanks for joining us. ryan lizza, a columnist with "the new yorker". >> much to think about what has just happened. you're watching live coverage, reaction to shutdown of the u.s. government. the stock market is something we're going to talk about now. a lot of people will be watching. hong kong and shanghai are closed for the holiday. here's how other exchanges are doing after this news. the nikkei is up 0.44%, so is the s&p asx 2000, just barely

and the seoul kospi up 0.04% on an early day in asia. let's get more reaction to the government shutdown. we're joined from new york. what will you be watching and what kind of indication is asia as we press on as these markets open around the world? >> reporter: wow, big day today. you talked about the markets, world reaction is pretty quiet. asian markets posting small gains in early trading. the dollar was little change so we were watching that. also, let's break out and talk about japan a little bit. japan got a positive manufacturing confidence report. that's what ended up boosting stocks. japan's prime minister reportedly just announced a sales tax increase from 5% to 8%. so, he's going to unveil details about an economic stimulus package a little later on today. of course, that's really aimed at reducing japan's debt burden. as you know, japan carries the

world's biggest debt. all of this could have greater consequences for asian markets. do also want to point out we spoke to someone who said this is a very good indication that japan is taking its debt seriously right now. not a lot of reaction other than that in asia markets as far as the government shutdown. again, as you said, nikkei was up at last check. in terms of u.s., we'll be watching for futures and see how that impacts -- how the government shutdown impacts that. but big, big, big day. we're watching all of it closely. >> right. aren't the u.s. markets, aren't they supposed to be affected the most? >> reporter: we -- you know, we don't know. sure. the markets are such a funny thing. the markets hate uncertainty, but right now we have certainty. the government has shut down. if we talk about where we were before, let's talk about a little history. we were able to rebound pretty quickly. i think the question that investors and the markets are looking for right now is how long this shutdown will last. will anything happen as we go

through the night or will this be a longer period? >> right. if there is a correction, the size of it will be dependent on the length of the shutdown, or showdown. they both work, i guess, in this case. thanks so much. >> natalie. you're watching live coverage of the government shutdown. this may just be the tip of the iceberg. why the looming fight over raising the debt ceiling could be a whole lot worse for the global economy.

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coverage of the u.s. government shutdown. it happened about an hour and a half ago when the clock struck midnight. >> another problem looming, the debt ceiling. many are calling this shutdown silly and dumb but calling any messing with the debt ceiling dangerous. >> economic armageddon. >> reporter: take a look right over there. october 17th. that is the red letter date, according to the treasury. that is the date upon which the government will have $30 billion to pay its debts. that's a lot of money but not compared to the money we owe. about $60 billion on that day. what are they going to do? same thing you do if you had this problem in your house.

they'll pick some priorities. for example, they might put money into social security because that's an important program a lot of people count on. maybe money into the interest on the debt to keep it from getting any worse. highway about money into medicare and maybe something into veterans and the military and perhaps money into supplemental security income. and then there's the problem. the money's all gone and yet hundreds of thousands of federal workers are now being unpaid. all sorts of agencies are not being serviced. the fbi, the faa and many others. so what can they do? well, first of all, they can realize that revenue keeps coming in. and because a little bit comes in every few days, they could try to fund everybody to sort of subs subsistance level. not healthy but keep them from shutting down. that's not the solution. the solution is to get the debt ceiling solved to get everything

funded fully. that's a whole different fight. so until that's solved, the red letter date keeps looming. >> mark your calendars, october 17th. that's the day when the government needs to raise its debt ceiling or it's going to defau default, essentially. let's bring in lisa desjardins. at the very least, not raising the debt ceiling is now on the table. >> reporter: absolutely. i just came from several news conferences with republicans and democrats over here. as democrats walked away from their news conference, unhappy about the shutdown, i asked some leaders, what do you think this means for the debt ceiling? the second democrat in the house, his name is steny hoyer, stopped and said, well, it's obviously not good. you think about this. the shutdown debate is something that generally was not expected to take this long. as of a month ago, i think most people thought only the debt ceiling would have this kind of

snag. the debt ceiling, most everyone here agrees, is a much bigger deal. this is the time that congress would usually start negotiating, trying to figure out how to start dealing with the debt ceiling. instead, congress is backed up trying to figure out a partial government shutdown. indeed, as that one leader told me, it really is not good news for the debt ceiling debate. >> let's talk about the impacts here. we also know that the house is actually finished for the day. they've called it a night at 1:32 in the morning there in washington. they're all heading home. no doubt they'll be back in the next couple of hours. lisa, you talked about the financial impacts when we look at the government shutdown. that's nothing compared to what will happen if the debt ceiling isn't raised. >> reporter: no. this is a rough metaphor, and it's 1:30 in the morning so forgive me, but the government shutdown is sort of like a town with a broken bridge. the debt ceiling is almost like a dam that has cracks in it behind that town.

a much bigger deal that will have much farther reaching consequences. the debt ceiling will affect not only government workers but u.s. credit, potentially u.s. credit ratings and the u.s. doesn't even have to break the debt ceiling. kind of go up to the limit in order to begin these credit rating problems. just the problem of the u.s. congress being unable to solve this, just the deadlock that congress is experiencing, if this continues, that alone may be enough to bring the credit rating of the u.s. down. already the u.s. has seen a fallen credit rating from one credit company. there's two more out there. so, right there that affects stocks, bonds, world markets, economies around the world, and certainly the economy of the united states, which is one of the more positive stories right now as the rest of the world knows, even though the u.s. isn't growing so strongly, it has been growing. that could be at risk depending on how congress handles both of these fiscal crises.

>> could be a self-inflicted economic wound. thank you, lisa desjardins in washington. >> she did well with that metaphor. i think we get it. a lot of americans are fragile lives anyway due to the economy and a lot of people working for the government worried right now. we'll have more on the impact of the shutdown coming up. >> up next, what will happen to the military, including the disabled, and the retired and those on active duty. though details just ahead. also, how will this impasse between the white house and congress impact america's image abroad? we'll talk with people about that. much more in our live conch of the government shutdown coming up here on cnn. customer erin swenson ordered shoes from us online

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welcome back to "cnn newsroo newsroom". this is live coverage of the u.s. government shutdown. >> both the house of representatives and senate have gone home for the night, but the deadlock continues over a spending bill that has led to a partial shutdown of the government. >> it's all tied to republican efforts to derail the affordable care act known widely as obama care.

and it is far from over. joe johns joins us live from cnn washington. we just heard from john boehner. looking defeateded a short while ago. very quick in his comments. now the house has gone home, so we're all wondering, what's the next step here? >> reporter: well, he's sternl stuck between a rock and a hard place, i think. the speaker of the house can't possibly want a government shutdown to go on for very long. the truth of the matter is, he's stuck between a lot of people in the government who want functions to continue and a small faction within his own party, the tea partyers, who are very concerned about the deficit, very concerned about government spending, and they want the republicans in the united states congress to take a stand. so, how he negotiates this and allows for a spending bill to get the government running is anybody's guess right now, natalie. >> joe, just tell us. it seems the president, president obama and the

democrats, are really taking a hard line here, especially when it compare it back to 2011 when many democrats believed the president caved. so, why is obama taking such a tough line here when dealing with the republicans? >> reporter: well, a lot of reasons. i think the first reason is polling. if you look very closely at the polling, it's pretty clear the american public doesn't like the idea of using the issue of the president's signature health care bill as a reason to stop the functioning of the government. so, he seems to have polls on his side. the second, obviously, is the fact that this health care bill is very important to this president and very important to the democrats in general. and i think the third part of it is the configuration of the government, john. democrats control the united states senate. they control the white house. republicans control just the house of representatives. so they feel they have the advantage and they're going to try to use this and probably the

last thing, and that's the talking point we've heard so many times, is the fact that down the road we have the issue of the debt ceiling to deal with. they feel if they don't take a stand right now, it will be even tougher to try to get across that bridge once they get to it, john. >> joe, thank you. joe johns with us again live. this has been such a nasty debate between the republicans and the democrats. there's been so much name calling. it really is different from what it was just two years ago. >> john king just pointed out, the likability americans have for their congress is down to 10%. >> that's just family and friends at this point. no one else is approving of the job they're doing. some u.s. government services will stay open despite the shutdown, including air traffic control and airport security. so, if you do have a flight out of the united states, you will not be affected by the shutdown. also, u.s. embassies and consulates overseas will remain open. most passport offices will also

be in operation. unless they are in a federal building that has been closed as a result of the shutdown. but government officials say passports and visas will be processed. and the mail will still get through. the u.s. postal service will stay on duty. >> you'll get your bills. the u.s. government shutdown could delay paychecks for veterans and other military families. pentagon correspondent barbara starr reports on what else can go wrong. >> reporter: for 3.3 million disabled veterans, the budget mess in washington is about to affect them in a big way. >> veterans, who sacrificed for their country, will find their support centers unstaffed. >> reporter: if the government shuts down and it stretches into late october, the department of veterans affairs will run out of money. and that means disability and pension checks could stop for elderly and ill veterans. advocates are outraged. >> it's what they need to pay rent, to pay food.

it's not their total income but it is a significant part of it. and taking that out of the mix because the government can't get its act together is really dangerous for these men and women who need it the most. >> reporter: disability payments can reach $3,000 a month. for the nation's war wounded, it can be a financial life line. tom tarantino is an iraq war combat veteran. >> member of congress, members of the administration, any politician needs to understand that if you are holding veterans hostage for the sake of political gain or if you're trying to balance the budget on the backs of the men and women who have served and sacrificed their country, you are going to pay a political price. >> reporter: for america's 1.4 million troops still on duty and their families, the prospect of a shutdown has also brought worry about delayed paychecks, even though congress has moved to ensure men and women in uniform, including those in afghanistan, are paid on time. but eileen huck, a navy wife, says there's still plenty of

anxiety about what may happen. >> short term the commissaries where we do a lot of our shopping, will be shut down. for those who get our health care or children's health care at military facilities, that could be affected as well. routine appointments won't be available. >> reporter: still, 400,000 civilian defense department personnel will be furloughed until congress and the white house reach an agreement. barbara starr, the pentagon. >> so, how deeply the shut jouven will affect america and the rest of the world, it depends on how long it will go on but it's having an immediate impact. 8 00,000 government employees are getting furloughed and they are not getting their paychecks. that could cost the u.s. government $1 billion a week. government contractors could go unpaid. the government will not issue any economic reports. visa applications will still be

processed but visitors will find locked gates at national monuments, museums and national parks like yosemite. with the u.s. government shutdown and looming debt ceiling crisis, the u.s. image abroad is taking a beating. joining us via skype from istanb istanbul, martin is with us. there's a perception the u.s. is ungovernable, lurches from crisis to crisis. how does this affect the image overseas? >> good morning, early morning, from istanbul. it doesn't help. we've seen this a couple years ago when we had a similar situation. i don't think the impact of the shutdown is significant yet. the asian markets have not yet been particularly depressed. i think they're up in early trading. we'll see how that pans out into

europe. so no panic in the markets yet. but from an image point of view, you're right, it doesn't look good. those who run businesses really want to be left alone to get on running their businesses. we had the sequester impacting u.s. gdp growth in the first half of the year. instead of being up 2% or 3%, it's been in the 1%, 1.5% range. so, i think people are troubled by it. it's not good from an image point of view. the government does look like it has nowhere to go. the crucial issue is how long will it take politicians to sort out the crisis and come to an agreement and, of course, deal with the debt ceiling crisis we have coming down the road, too. >> martin, americans here, they have crisis fatigue. they've been through this. they've seen it. they've seen the standoffs. what about the rest of the world, is there crisis fatigue when people look at the united

states, they've heard this so many times before? >> no, i'm bullish on the u.s. i'm bullish, on the fast growing markets, the mint markets, mexico, indonesia, nigeria and where we are at the moment, turkey. we have a board meeting coming up here next week. i'm bullish on those markets. i'm also bullish on the u.s. energy self-sufficiency, improvements in manufacturing techniques such as 3d manufacturing means america is going to grow. i was talking to a fast-growing market investor, all this cap ex will be in the united states, all in the energy sector in the next couple of years. so, i would be bullish in the longer term. this, i hope s a short-term blip. you're right in a sense i think the electorate and, indeed, business is really fed up with government arguing amongst themselves. and really given that we've been in a sort of recessionary mode

since lehman, we just celebrated, if that's the right word, five years after lehman, the terrible weekend in september of 2008. really we want to get away from that and out of it and see stronger economic growth. so, things like this really don't help imagewise and psychologically. i think long-term prospects for america are good. they're not mediocre or poor. they're good. this doesn't help certainly in the short term. >> absolutely. martin sorrel in istanbul, turkey, a view from europe about what they may be thinking about the united states' image right now. not particularly good. thanks, martin. >> thank you. >> a lot of countries are around in the world past couple of years have been battling within themselves and their governments, people taking to the streets. it will be interesting to see how americans react as well. the u.s. government may be shut down. >> but stock markets in asia have been rising today. we'll try to explain why they are higher. that's coming up next. ♪

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i wouldn't trade him for the world. who matters most to you says the most about you. at massmutual we're owned by our policyowners, and they matter most to us. if you're caring for a child with special needs, our innovative special care program offers strategies that can help. and welcome back to our continuing coverage of the u.s. government shutdown. it's about five hours until dawn in washington where about 800,000 federal workers will be getting out of bed but not going to work, not getting paid. republicans in the house of republicans and democrats in the senate did not come to an agreement on how to keep the government funded.

we expect u.s. markets to react when they open. markets in asia seem to be shrugging off the shutdown. let's take a look at the latest numbers. nikkei up by 0.5%. seoul up by almost 0.5. shanghai and hong kong are closed today for holiday. >> ben collette, sunrise brokers, joining us live from hong kong. what do you make of this ho hum so far reaction from the asian markets? >> well, you know, i think by and large it really sums up the fact that no one, certainly investors in asia and outside of asia, looking in know what to do. know what to do in response to this. we've seen, as far as the southeast asian currencies go, we've seen those come off significantly ahead of ben bernanke's expected tapering, but wasn't actually to be. now we're seeing the those

invested in the market, how to interpret this information. we thinks that the net outcome of this for the next two weeks is going to be essentially a lack of volume going through the market. we really -- we really seeing an absence of direction here. without wanting to -- without wanting to be vague, i think the markets are very, very confused. one thing that is actually not confusing is the risk appetite is very, very low right now. >> right. during the last shutdown, way back in 1995, the markets just suffered a jolt and that lasted about a month. things are very much different in 2013. so much fragility out there in the world. it could be anyone's guess just how much of a pull back we might see. >> yeah, for sure. i think first just based on this shutdown, i don't think it's unreasonable to expect the markets to hold up. but what it does, i think, make more likely is the tapering and

lower interest rates are a natural conclusion to this event. the event has created more uncertainty. given in a period of uncertainty you go to your historically safer assets. treasuries aren't that safe but under certain circumstances, tapering, cha ch has been taken off the table, is not going to be put on. the natural response from an asian point of rue is probably more towards dollar weakness. more towards repatriation of funds and yen strengthen. there's no follow through in equity market, certainly. there's no new information and uncertainty on old information. generally speaking we are expecting the markets to drift off. that's more because volume, we think, is going to dry up. in risk appetite, we are turning a table, which is historically a

potentially high-risk environment to initiate new loans. we think the market will lose momentum and so we should see them come off. >> we appreciate your input. we'll wait and see. thank you. >> thank you. >> now, are you watching our continuing coverage of the u.s. government shutdown. we'll take a short break here. >> she also showed him her thong. ♪

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you're watching cnn's live coverage of the u.s. government shutdown. it's happened before and just in the past, this one has gotten politicians' blood boiling and comedians plenty of material. as jeanne moos reports, a stalemate set the stage for an infamous sex scandal. >> reporter: the clock was ticking. >> tick, tick, tick, a ticking time bomb. >> reporter: sometimes two clocks. people seemed to be getting ticked off. >> congressman, that's not fair. don't you put this back on me. >> you know full well -- >> hold on. >> you know you attacked obama care. >> who's bidding are you doing? >> reporter: even bidding someone good morning could set them off. >> good morning. good to see you. >> is it really? >> reporter: shutdown to leave an anchor off balance. >> back to the house. >> reporter: and apparently some

lawmakers on the house floor saturday needed a drink. a politico reporter tweeted, i can smell the boosz wafting from members as they walk off the floor. congress found itself the butt of shutdown jokes. >> what does that mean to me? >> how will we be able to tell? >> here's what i don't understand, okay? >> reporter: let's take a trip down memory lane to the last government shutdown. 1995. the year o.j. walked. >> not guilty of the crime of murder. >> reporter: and "e.r." was the number one show. >> i was young. i was a fool. >> you're still a fool. >> reporter: seal had the song of the year at the grammys. ♪ kiss from a rose >> reporter: but republicans and democrats weren't kissing. >> you don't hold the government hostage. plain and simple. >> we are not -- >> you are. >> reporter: sound familiar? 1995 -- >> don't put a gun to the head of the president. >> reporter: 2013. >> but you can't do it at the point of a gun.

>> reporter: wolf blitzer looked a little younger back then, but covered the same old ground. >> so, a very high-stakes game of chicken is at hand. >> reporter: 1995 was the year drew barrymore got on david letterman's desk and flashed him. the shutdown affair with the lieu w lewinsky started. it was the second day of the shutdown when she found herself alone with president clinton. >> she confessed she had a crush on him. she also showed him her thong. >> reporter: from there things progressed. the movie line that was big in 1995 applies just as well today -- >> houston, we have a problem. >> reporter: jeanne moos, cnn, new york. >> that makes you miss the '90s, doesn't it? >> so much so. yes, i was here as well.

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