Week Two of the Shutdown: The Economy in a Tail Spin

Stress over stocks and 401k funds as the Dow falls 160 points, but what lies ahead could be worse.
2:25 | 10/08/13

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Transcript for Week Two of the Shutdown: The Economy in a Tail Spin
in the middle of a shutdown, the second full week of the government shutdown and a new crises is bearing down on the u.S. Economy as well, that showdown over the debt ceiling, the market in a slump tonight, the dow calling 160 points. We wondered what else can you expect in your life and your pocketbook in these nine days before the big crises on the debt ceiling hits? White house correspondent jonathan karl now. Reporter: D day for default is nine days away but already the markets are spooked, the dow down 900 points over the past three weeks. It could get a whole lot worse by the middle of next week. Just look at what happened the last time congress flirtd with default. America's credit was downgraded and the dow had its 6th biggest drop ever, over 600 points in a single day. A HUGE HIT TO 401(k)'S AND College savings plans. Economist warn that as we inch closer you're likely to see higher interest rates on new mortgages and car loans. Nobody knows exactly when economic disaster would strike but the pain would begin with the fear of default before it actually happens. Insane, catastrophic, chaos. Those are some of the more polite words. Warren buffett likened it to a nuclear bomb. Reporter: Some republicans say the warnings are exaggerated. It's a big deal but it's not an economic calamity. Reporter: Most economists warn congress is playing with fire. Which caught the attention of china and japan which own $2.4 trillion of debt and both warn today that the u.S. Must deal with this issue quickly. But the divide is as deep as ever, the president saying again today no negotiations before the debt ceiling is increased and republicans demanding spending cuts first. The president said if there is unconditional surrounder by republicans he'll sit down and talk to us. That's not the way our government works. Reporter: Perhaps the only sign of progress or hint of progress today was that the president and the speaker of the house actually spoke to each other. It was a phone call that lasted about ten minutes. Diane, after the two men hung up the phone, they were exactly where they were before the call. Neither one of them willing to budge. Jonathan karl at the white house again tonight.

This transcript has been automatically generated and may not be 100% accurate.

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