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QUEST MEANS BUSINESS

US Government Closed, Obamacare Open; Closed for Business; US Stocks Up; Merck Cuts 8,500 Jobs; Global Debt Threat; Eurozone Unemployment Flatlines; Youth Unemployment; European Markets; Italy's Center-Right Revolt; Golden Dawn Charges; Kenya Attack Aftermath

Aired October 1, 2013 - 16:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(NEW YORK STOCK EXCHANGE CLOSING BELL)

MAGGIE LAKE, HOST: A new order with new optimism, stock markets on Wall Street recover their losses despite the partial shutdown of the US government. It's Tuesday, the 1st of October.

There's no optimism in Washington. President Obama accuses the Republicans of mounting an ideological crusade.

Alcoa's chief executive will tell us what he thinks of the crisis as soon as he finishes ringing the opening -- closing bell.

And leaders from Greece's far-right Golden Dawn Party face criminal charges.

I'm Maggie Lake and this is QUEST MEANS BUSINESS.

Good evening. As the doors are flung open on President Obama's new health care marketplace, the doors of the federal government are being slammed shut. The president addressed the nation on day one of the government shutdown.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Congress generally has to stop governing by crisis. They have to break this habit. It is a drag on the economy. It is not worthy of this country.

(END VIDEO CLIP)

LAKE: This is what governing by crisis looks like. Closed signs popping up on some of the most iconic American sites. Barricades set up around the Lincoln Memorial in Washington, DC. In New York, a symbol of the American dream closed for business, the Statue of Liberty no longer greeting visitors.

The Republican senator Rand Paul said while no one wanted to see this situation, it was time to make a stand.

(BEGIN VIDEO CLIP)

SEN. RAND PAUL (R), KENTUCKY: I think what we ought to do is argue about right and wrong. So, for example, right now, we're borrowing $30,000 every second. We have $17 trillion in debt, we're adding nearly a trillion dollars in debt every year. That's because we continue to spend, what's called a continuing resolution, without reforming it.

So, I don't think we can go on. And while I don't want to shut down government, and I would be for short-term solutions to keep it open, I think we do sometimes have to make a stand and say enough's enough.

(END VIDEO CLIP)

LAKE: Robert Shapiro is co-founder and chairman of Sonecon. He served as US Undersecretary for Commerce and Economic Affairs under President Clinton, and he joins me now, live from Washington.

Thank you so much for being with us today, Robert. What do you make of this? We're looking at a situation where the government shuts down. We talk a lot about the Republicans taking a stand, but we're not talking about the entire Republican Party. Can you put into context who is really blocking the progress here?

ROBERT SHAPIRO, CO-FOUNDER AND CHAIRMAN, SONECON: This is really being blocked by a small faction of extreme conservatives in the House, the Tea Party faction in particular, that has enormous political leverage because they keep on threatening to revolt against Boehner or mount primary challenges to Boehner, to McConnell, to a whole host of kind of proud conservative Republicans who they will claim are not conservative enough.

I have to say that Rand Paul was being a little disingenuous. The fact of the matter is, the two parties have agreed on the spending levels in this resolution. There's no argument about the spending levels. The Democrats and the administration accepted the Republican levels of the previous levels minus the sequester.

That's significant cuts, and in fact it's probably bad for the economy, it's probably slowing the economy. That's what the IMF believes, that's what the CBO believes, that's what most economists believe.

LAKE: And --

SHAPIRO: So, this is not about spending, this is about an ideological fixation of a small factions of the House.

LAKE: I think it's hard, Robert, for people on the outside to understand how it is that this small faction is able to wield so much power. We're not talking about a coalition government and a parliamentary situation that we have in other countries. Is it money? Do they have money behind them? Is that why they are able to do this?

(LAUGHTER)

SHAPIRO: No. It's actually not that they have money behind them. What they have is a House tradition, and the tradition is that the majority leader will not bring a bill to the floor of the House unless he can pass it with only Republican votes, or majority votes.

It's called the Hastert Rule. It's not a very old rule. It started with Dennis Hastert, which is less than a decade ago. But Boehner has said he will follow that rule, though he at times has not. And the Tea Party faction, who are less than a quarter of the Republican caucus in the House, they do hold the balance of power with respect to passing legislation with only Republican votes.

And as I said, they have threatened to support Tea Party organizations' challenges in primaries to Boehner, to McConnell, to John Cornyn, to lots of big conservatives, and the fact is, they have succeeded in knocking off some. Rand Paul is an example.

LAKE: So Robert --

SHAPIRO: Rand Paul --

LAKE: -- political fighting within the Republican Party, but meanwhile, everyone's worried about what this is going to do to the economy.

SHAPIRO: Yes.

LAKE: You have business leaders from both sides of the party, the US Chamber of Commerce, you're going to have the bank executives in Washington tomorrow. What's the exit strategy? How do these two sides get themselves out of this mess?

SHAPIRO: Well, I think there are two possible exit strategies. One is that Boehner goes to his caucus and says, look, we've had six votes, we cannot do the -- the president is not moving the Senate is not going to move, we have to acknowledge reality, and they pass a clean CR.

The second possibility is that this gets, in effect, melding with the debt ceiling, which is, in fact, a much more important problem for the economy if we fail to pass it than a continuing resolution, and that as part of an agreement to both fund the government and to enact at least one year-long increase in the debt ceiling that there is some concession made by the administration.

It will not involve anything significant with respect to Obamacare. The president has made that clear. He could not back away from that politically. But you could see, for example, an agreement to immediately start serious negotiations over corporate tax reform. That's something that both sides want.

LAKE: Well, let's hope they can find some middle ground. Robert Shapiro, chairman of Sonecon --

SHAPIRO: I hope so.

LAKE: -- thank you so much for joining us.

SHAPIRO: My pleasure.

LAKE: The government shutdown is a major concern, as we were just talking about, for corporate America. Alison Kosik is at the New York Stock Exchange with Alcoa CEO Klaus Kleinfeld, who just rang the closing bell. Alison?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Hello to you, Maggie. And I am here with Klaus Kleinfeld, the CEO of Alcoa. And it's a special day here, because you rang the bell. An employee with you today is a fourth generation Alcoa worker. What do you make the state of US manufacturing today?

KLAUS KLEINFELD, CEO, ALCOA: I think it's in a great recovery, we have a lot of great things. If you look at Alcoa, 125th anniversary to the day, and here we are, we are investing. We're investing in the US. We are building out our valued businesses.

We're at the same time restructuring on our commodity business and going into the next phase. And our corporate logo is advancing each generation, and that's why we had many generations today on the podium celebrating this very special day.

KOSIK: And we were just talking about this earlier, obviously the government shutdown on everybody's mind, but an even bigger problem that's coming our way in about two weeks is the debt ceiling debate. Do you think that the lawmakers here are going to raise it in time?

KLEINFELD: Well, we've seen what they are capable of doing at a time when the economy is just in the course of recovering here in the US. The last thing we need is those type of disruptions. What I think we should do is raise on a short-term the debt ceiling and start a very serious discussion on fiscal reform, and that should happen. And I think with grown-ups, that typically happens.

KOSIK: OK. Now, we know Alcoa is no longer in the Dow. How do you feel about that today?

KLEINFELD: Well, look, we have a very simple philosophy in the company. We really care about those things that we can control ourselves. We have a lot of exciting things going on, we concentrate on those, building out our valued business.

We today have about 57 percent of our revenues already coming from valued business that make up for about 80 percent of the profit. It's growing, aerospace, good growth, and the automotive, we are going through an unbelievable change in the environment here.

Consumers care about fuel efficiency, light-weight is the name of the game. In the next ten years, we're going to see basically a tenfold growth until 2025 in the demand for aluminum for automotive in the US alone. That's pretty exciting.

KOSIK: OK, Klaus Kleinfeld, CEO of Alcoa, I'm going to throw it back to you, Maggie.

LAKE: All right, thank you so much, Alison Kosik, down there with the CEO of Alcoa.

Well, this government shutdown failed to rattle investors. The Dow, the NASDAQ, and the S&P 500 actually closed with gains, as you can see. Investors -- I think many of them betting that any type of government shutdown might actually force the two sides to get together to prevent something more serious from happening on the debt ceiling.

We'll see if that comes true. But with gains of about a little less than half a percent from blue chips. Markets had, of course, sold off in the past few days leading up to the shutdown.

In corporate news, Merck announced it will cut 8,500 jobs worldwide. This comes in addition to a previous announcement of about 7,500 layoffs. Combined, the drug maker is reducing its workforce of more than 80,000 employees by about 20 percent.

Of course, the only people with the power to do anything about the shutdown are in Washington. CNN's political director, Mark Preston, is there, and he joins us live.

Mark, we've been asking this all day, we've been talking about whether there's an exit strategy. If they're going to come up with one, the two sides have got to be talking. Anything to give us any hope, I will ask you know, at this point, that anything is going to happen overnight that these two sides have any plans to talk at all?

MARK PRESTON, CNN POLITICAL DIRECTOR: I think they're going to be talking, they're certainly going to be talking past each other, maybe not talking to each other, certainly, in a fruitful way. I don't think we're going to see anything happen in the next 24 hours.

What I can tell you what's happening at this hour right now is that House Republicans are looking for an exit strategy at this point, and part of that strategy right now is to try to pass individual bills that would fund certain elements of the United States federal government at this point.

So, for instance, they're talking about passing a bill that would fund Veterans' Affairs, that would pay for anything that has to do with veterans. They're also talking about passing a bill that would fund the District of Columbia government, where the nation's capital is located. Congress controls basically how this city uses its money.

So, we're seeing them try to move certain things and certain chunks. They're also talking about, Maggie, passing a bill to fund the national monuments, and partly that's because there was a lot of pressure on them today because there was a group of World War II veterans that came here to Washington, DC.

They were not allowed to see the World War II memorial, and they basically knocked down the barriers themselves and marched on. A terrible picture right now for lawmakers here in the United States.

LAKE: Absolutely, Mark. A lot of people talk about the Republican Party, there's a civil war going on within the Republican Party. Is that the key to breaking this? Are we going to see some of those more moderate members -- I don't even know if we can call them moderate, just not the ultra-conservative members of Republican -- break ranks?

PRESTON: Well, we've seen that last night. In fact, how about we settle on the word "centrists." These are lawmakers that tend to be a little bit more economically-driven, not socially-driven, and certainly represent areas of the country where voters don't enjoy seeing what's happening here in Washington, DC.

So, there is a civil war right now in the Republican Party. There's just enough conservatives, hard-line conservatives right now, that are able to control what's happening. At some point, though, there will be a breaking point.

We're one year away from a midterm election. And right now, if you talk to pragmatic Republicans, they are very concerned that this is going to hurt them next year. Certainly, this is hurting the US economy in the short-term. Politically, this could hurt them in 2014.

LAKE: Sure. And voters certainly making their voice known, 10 percent approval rating, I think, Congress has right now. That tells you all you need to know. Mark Preston, thank you for joining us with the very latest from Washington.

PRESTON: Thanks, Maggie.

LAKE: Eurozone unemployment is flatlining. We'll look at whether it's a symptom of recovery or relapse. That after the break.

(COMMERCIAL BREAK)

LAKE: As we've been telling you, there are political convulsions in the US and Italy, and in Japan, the government says it's going ahead with an unpopular new tax. While the symptoms and the proposed remedies may differ, the sickness is the same: massive, crippling debt.

David Bloom is head of FX strategy at HSBC. I asked him earlier how much impact this political instability is having.

(BEGIN VIDEOTAPE)

DAVID BLOOM, GLOBAL HEAD OF FX STRATEGY, HSBC: The problem in the United States was financial conditions were tightening, the ten-year bond was rising, and Fed hits it on the head.

Well, in Europe, financial conditions are rising, the euro is rising, and that'll become a problem. And I wonder if Draghi's going to do the same thing and try and smash that euro lower.

LAKE: The ECB and the Fed find themselves in a very different situation. Does Draghi have the firepower to do that? Will the market follow his lead?

BLOOM: Well, this is the problem. You hit the nail on the head. He might talk about another LTRO, or maybe cutting rates, but when you've got tapering and the debt ceiling hanging on top of you and a US shutdown, how much power do you have? So, maybe he'll keep his powder dry, wait it out a bit, and then come in strong and try and hit the euro lower.

LAKE: And if we slide over to Japan and take a look at the yen and what's happening there, Abe finally released some more of the long-awaited reforms, the toughest part of the plan he's got to put into effect. Is it the right policy mix? What do we expect to happen with the yen on the back of that?

BLOOM: Well, our fear stems from the idea that in about 1996 they raised the consumption tax, which they're talking about a 3 percent consumption tax rate hike, and last time they did that, Japan fell into a recession, basically, for another 15 years. So, we're waiting to see.

Now, he's talking about monetary looseness from the central bank and fiscal tightening, but we're not quite sure what this means for the currency. The yen used to be the go-to currency when you had a crisis in Italy, you had a crisis in the United States, everything looked ropy in the world. The yen was the defensive currency that everyone wanted to buy.

But local issues are so dominant that it's no longer the go-to currency. So, it's leopard that's changed its spots, the yen.

LAKE: So, let's finish out, what is the go-to currency? Where can investors hide or protect themselves in this environment? Do we go back? Is it sterling?

BLOOM: Well, I think it is sterling. I think that in this ugly contest, that one that just sits by the roadside not having a political crisis, not having an economic massive change, it looks quite solid. We're talking about a triple-dip recession in the UK, and now everybody's buying it for the wrong reasons and by default.

If you don't like the dollar, you're worried. You don't like the euro, you're worried. You're not sure about the yen because of massive changes in policy, so you look at these uglies and sterling wins that ugly contest. And at the moment, it's the go-to currency.

(END VIDEOTAPE)

LAKE: Let's take a look at the unemployment rate in Europe right now. It remains painfully high at 12 percent in August. That's pretty much where it's been all year, apart from the temporary rise you see right here between April and June.

Now, some analysts see this as a positive sign, suggesting that maybe unemployment in the eurozone has peaked. For others, though, it highlights the fragile nature of the bloc's economic recovery.

It's joblessness among the young that is most worrying. In Italy, youth unemployment reached a record high in August. Jim Boulden joins me now, live from London with more. And Jim, every time I see these numbers, especially when it's youth unemployment, we're not talking about recession. Youth unemployment, we're talking about depression levels.

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Yes, and you're talking about something that's systemic and could wipe out an entire generation's ability to get work in the long run.

But interestingly, the eurozone youth unemployment number did fall slightly, Maggie, to 23.7 percent. Obviously, putting that into context, 23.7 percent is terrible. But as you said, in Italy, the unemployment rate, 12.2 percent, Italy, so just above the average. But look at that: youth unemployment, 40.1 percent.

Let's look at how that compared to some other countries. Germany, of course, different altogether. Its unemployment rate much lower than the eurozone. Its adjusted number, 6.9 percent in August. But youth unemployment, 7.7 percent, which is high for Germany, it must be said.

But of course, you look at something really -- Spain, 56 percent youth unemployment. This number is not getting any better, even though you have seen Spain unemployment continuing to be around 26.2 percent.

Now, I put in the UK, of course, not eurozone, but as a comparison. You see 7.7 percent unemployment rate, not bad, really, here in the UK. But its youth unemployment, very, very high for this country, over 21 percent, Maggie. That number is really the problem. But again, we look at Italy, look at that: 40 percent youth unemployment.

LAKE: And Jim, these high unemployment numbers generally -- and especially the youth unemployment -- making it very difficult for governments to sort of push through some of the reforms, some of the austerity measures that it's going to take to get their budgets in line with EU guidelines.

In Italy, we're facing a situation where yet again there's political crisis brewing. What are we expecting? What are the markets anticipating with this vote of confidence that we're facing?

BOULDEN: The vote of confidence tomorrow in Italy is crucial because the former prime minister Berlusconi pulled his government out of the prime minister Letta's grand coalition. So, they have this confidence vote tomorrow.

But the markets were cheered today when it looked like some members of Mr. Berlusconi's party said that they would spit and they would go with the government, the idea being you don't want to have yet another Italian government fall and yet another election.

So right now, late this afternoon, the markets were pleased to hear -- they think that Prime Minister Letta will survive this confidence vote, but we will obviously have to wait to see that vote on Wednesday. Maggie?

LAKE: It's a cliche, but cautiously optimistic, I have a feeling, is what we're getting here, Jim, overnight.

BOULDEN: Yes.

LAKE: Thank you so much, Jim Boulden for us in London.

European markets shrugged off the partial government shutdown here in the US. Most finished in the black, suggesting they'd already priced in this particular political impasse.

Milan's equity markets, meanwhile, rebounded after leading figures, as Jim was just telling us, in Berlusconi's own party defied him. They called on lawmakers to back the Italian coalition government in a confidence vote due tomorrow. We will, of course, be tracking that closely for you.

Four leading members of Greece's far-right Golden Dawn Party have appeared in court. The men, all of whom are members of the Greek parliament, face charges in the connection with the murder of musician Pavlos Fyssas. They were asked -- arrested over the weekend, along with the party's leader. Diana Magnay has more on the seemingly irresistible rise of Golden Dawn.

(BEGIN VIDEOTAPE)

DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT (voice-over): A Golden Dawn rally November last year. Party leader and member of the Greek parliament, Nickolaos Michaloliakos, addresses a clearly near-Nazi following.

"We may do the Hitler salute," he says, "but at least our hands are clean." Now, prosecutors are questioning just that, charging Golden Dawn's top leadership with running a criminal organization.

The crackdown was sparked by last month's killing of anti-fascist hip hop artist Pavlos Fyssas, who was stabbed, allegedly, by a Golden Dawn supporter. There have been a host of other attacks, too, including the killing of a Pakistani immigrant in January.

Golden Dawn denies any involvement in the deaths, but its fascist roots are clear. In the home of Golden Dawn's deputy leader, Christos Pappas, chilling evidence of just who he identifies with. The prime minister has seen enough.

ANTONIS SAMARAS, PRIME MNISTER OF GREECE (through translator): This government is determined not to allow the descendants of Nazis to poison our lives, to commit crimes, to terrorize, and to undermine the foundations of the country that gave birth to democracy.

MAGNAY: But Golden Dawn has a firm hold. It is Greece's third-most popular party, with 18 of the 300 seats in parliament, boosted by Greece's financial crisis, which has hardened attitudes towards immigrants.

This time last year, we obtained video of a mob attack on the Tanzanian community center in central Athens. Francis Williams, who ran the center, said then he felt the police were complicit.

FRANCIS WILLIAMS, PRESIDENT, TANZANIAN COMMUNITY, ATHENS: They expect maybe the police could have given us a hand, to at least confront these people, at least arrest some people.

MAGNAY (on camera): But nothing?

WILLIAMS: But nothing. Of course, just looking at them, and -- that's why we think the police are part of them.

MAGNAY (voice-over): Since Fyssas's murder, several senior police officials have been suspended or replaced, accused of not doing enough to investigate possible illegal activity by Golden Dawn. But the police continue to deny a common belief that there is widespread collusion between them and Golden Dawn.

And after the arrest of so many of the party's leaders, it will take the police's best efforts to make sure they can control Golden Dawn's notoriously violent ranks.

Diana Magnay, CNN, Berlin.

(END VIDEOTAPE)

LAKE: Kenya has delivered a diplomatic rebuke to Washington. As the East African nation held a prayer service for victims of last week's terror attack, it called on the US to behave in a more friendly manner.

(COMMERCIAL BREAK)

LAKE: Kenya's prime minister has led prayers for the victims of last month's attack on a shopping mall in Nairobi. Uhuru Kenyatta and other top officials attended an interfaith prayer service for those killed. During the service, the president defiantly answered the al-Shabaab threat to stage more attacks if Kenya keeps troops in Somalia.

The Kenyan government has objected to a travel alert issued by the US warning its citizens about traveling to the East African country following the attack. Kenya called the alert "unfriendly" and has asked the US to lift the warning.

I'm joined by the spokesperson for the Kenyan state house, Manoah Esipisu, live from Nairobi. Thank you so much for being with us tonight, sir. Can you tell me what it is exactly that upset you so much about the travel warning?

MANOAH ESIPISU, SPOKESMAN, KENYAN STATE HOUSE: Well, we were attacked by terrorists. Terror is a global problem. Part of why we were attacked is the general war on terror, often targets the United States. So in a sense, one side of us is slapped because of our relationship with the United States.

The US is supposed to be our friend. Friends help out each other during trouble. So when a friend says, look, my friend has been beaten up, so don't go and help, we think that is offensive.

LAKE: But surely officials -- and I'm sure you are as well -- concerned about average tourists, maybe some who've never been to the country before who are looking for guidance, and their safety is at the top -- should be the top priority.

In the travel advisory, there were warnings about fears that maybe some of the people involved in the attack may still be at large. What can you tell us about that?

ESIPISU: Well, we would be concerned about that as well. Obviously, we would expect the US having its representatives here, who've been here over a long time, they know what the situation here is, they know we are the marathon people, we are a strong and solid as the lions on our coat of arms.

So, we go out there, we enhance security, we put in place more measures to ensure that people are safe, especially in tourist areas. Those areas haven't had any problems in the past year or so, so when then we are told, look, tourists should be warned, they shouldn't be making this journey, we think that that is not right.

Instead, what the US government could do is talk to us a little more about what measures we are taking so that they and we feel that everyone has a clean slate.

LAKE: Well, share with us, what are the enhanced measures that you're taking? What are you specifically doing to ensure that visitors to your country are safe?

ESIPISU: Well, I'll tell you, for instance, look, six weeks ago, the main terminal at our airport burned down. We put it back into operation within 36 hours. That airport is now fully back to operation, security there is enhanced. Surveillance at immigration points is higher. Our border security is enhanced.

Patrols in tourist areas are there. Our police patrols -- visible police patrols -- at malls can be seen. So, we are doing everything possible to improve the security, and you can see that physically on location.

We think that these measures are sufficient to be able to allow tourists to continue with their business as normal, and those ones that are here would attest to the fact that they are going about their business.

LAKE: All right. Manoah Esipisu joining us live from Nairobi. Thank you very much for responding to the alert and sharing the measures with us. We appreciate it.

Well, the Statue of Liberty has joined more than 400 national park sites that are closed to visitors. We'll go to nearby Battery Park when we come back.

(COMMERCIA BREAK)

LAKE: Welcome back.

I'm Maggie Lake.

This is CNN.

Time now for a news update.

Israel's prime minister has described Iran's president as a wolf in sheep's clothing in an address to the United Nations General Assembly. Benjamin Netanyahu warned the international community not to be fooled by Hassan Rouhani's recent charm offensive.

CNN has obtained a first look inside the Westgate Mall in Nairobi a week after the deadly four day siege came to an end. These exclusive pictures come as another two bodies were pulled from the rubble Tuesday. President Uhuru Kenyatta and other top officials attended a prayer service for victims earlier today.

A chemical weapons team has arrived in Damascus and is now planning a difficult and potentially dangerous mission, destroying Syria's chemical arsenal. The team is carrying out a U.N. Security Council resolution unanimously passed last week.

The U.N. says almost 1,000 Iraqis, mostly civilians, were killed in attacks last month. This puts the death toll well above 5,00 for the year, the highest level since 2008.

And there are fears Iraq is falling back into all-out sectarian conflict.

Republican lawmakers in the U.S. say they'll vote on individual bills to fund specific government agencies in the absence of an agreement to fund the entire government. That failure has led to a full government shutdown. The White House says the Republicans' new strategy is, quote, "not a serious approach."

It's lights out for Lady Liberty and her iconic torch. The New York landmark is one of more than 400 National Park Service sites closed across the country because of the government shutdown. During its peak season, Liberty Island welcomes 20,000 people a day. Now, tourists and journalists are only able to see the statue from afar.

Poppy Harlow is live in Battery Park for us tonight -- and, Poppy, it's such a shame. It's such a stunning day. This is usually when we would see hundreds -- just boatloads of tourists heading over.

POPPY HARLOW, CNN BUSINESS CORRESPONDENT: You're exactly right. It is one of those picture-perfect New York days. So I can't tell you how many tourists I've met today, Maggie, from all over the world that are beyond disappointed. They came to see the Statute of Liberty and they can't.

You know, this country brings in $450,000 a day from people visiting our national parks from coast to coast. They're not getting any of that now because of the shutdown.

And ironically, Saturday was named by President Obama National Public Lands Day. Today, all the parks across this country that are part of the federal government are shut down.

(BEGIN VIDEOTAPE)

HARLOW (voice-over): Another sign of the government shutdown...

UNIDENTIFIED MALE: Due to the U.S. government shutting down, now the Statue of Liberty is closed.

LINDSAY SIMON, STATUE CRUISES EMPLOYEE: I'm worried more, in general, for the American economy as a whole and all the jobs that people are losing as we speak.

HARLOW (on camera): Liberty Island sees up to four million visitors a year.

Stacy Garcia was one of the last to visit.

(on camera): What does it mean for you to visit the Statue of Liberty?

STACY GARCIA: Freedom, liberty. That's why I'm in American. So to hear that the government is shutting down, it's like, what have we come to?

HARLOW (voice-over): With more than 280 million visitors a year, from Yellowstone to Yosemite to the Grand Canyon, more than 400 national parks are now closed.

(on camera): It's closed?

UNIDENTIFIED MALE: It's closed.

ANN MARIE KENNY, TOURIST: We came all the way from Australia and we really wanted to see the Statue of Liberty. And tourists come here to see this beautiful thing. And, obviously, the government doesn't put much value on it.

HARLOW: Michael Lawlor came from London for his birthday.

(on camera): So the U.S. government, it shut down and that's why it's closed.

MICHAEL LAWLOR, TOURIST: Yes.

HARLOW: What do you think of that, looking from an outside perspective?

LAWLOR: I'm very surprised. I've seen this as, you know, most people, the number one country in the world, and, also, the most, you know, democratic (INAUDIBLE) country will not go -- go on in Europe as much.

HARLOW (voice-over): This is as close as he'll get to Lady Liberty.

UNIDENTIFIED MALE: New York City is (INAUDIBLE) in New York City, guys.

HARLOW: More than 21,000 national parks employees furloughed and thousands more like cleanup crews and concession stands workers all left without jobs.

VICTORIA DUNCAN, EMPLOYEE ON LIBERTY ISLAND: I have to find another job if, like, they are not paying us while we are laid off or file for unemployment. But it's still not going to be enough.

QUINN AGARD, EMPLOYEE ON LIBERTY ISLAND: Things like that can have such a big impact on the people that aren't in the limelight, you know, the people that are working hourly positions at spots. This whole island would be shut down. So that's a ton of different positions that people won't be working and won't be getting paid for.

UNIDENTIFIED MALE: It's killing our business down here.

HARLOW: Already?

UNIDENTIFIED MALE: Yes. The people are -- the people are not coming. This is what we do daily. So if people are we not coming, so we are not starting (INAUDIBLE). We're not making money.

(END VIDEO TAPE)

HARLOW: Needless to say, Maggie, it's already hurting the tour operators down here, all those peripheral businesses.

But I have to tell you, all the tourists that I talked to from outside of the United States, when I asked them, you know, do you know about the shutdown or do you understand why it's happening, the fight over health care reform, ObamaCare, none of them could really wrap their head around it or understand how we could come to this in this country -- Maggie.

LAKE: I can't wrap my head around it, Poppy. I don't blame them. It's baffling to all of us.

You know, you bring up an interesting point, talking about, obviously, the people who are not federal workers, but who work in the concessions. You can imagine the hardship they're going to have.

But any time we have this, when people talk about the economic impact, there's a lot you can't quantify that's not on paper...

HARLOW: Yes.

LAKE: -- that ripple halo around all the people who come down to the small businesses, not just the tourists, it's the delis. It's the restaurants. It's all of that -- the taxi drivers that are impacted.

HARLOW: Yes, it's all of it. I mean the National Park Service put out a number and that is $76 million a day that they believe that the -- the communities around these national parks bring in, from hotels to restaurants, etc.

Do what you will with that number, but we're already seeing it play out here in Lower Manhattan. I mean it's obvious. I was looking at the tour buses that are usually full to the brim. They were like a quarter full this morning.

A real key point here is we're not going to know until Washington figures this out whether or not the government workers are going to get back pay, like they did in '95, in the last shutdown, after that ended. What we do know is workers like Victoria and Quinn, who you heard from in our piece, that just these hourly jobs at the concession stands, they desperately need this money. You know, they're living paycheck to paycheck to pay the rent and they're not going to get paid for any days of work when -- when they're not working. And that -- that's a -- just really difficult to -- to manage...

LAKE: It is...

HARLOW: -- for so many of those people.

LAKE: -- it is. And it seems very unfair. And many small businesses, restaurants, they -- they also...

HARLOW: Yes.

LAKE: -- go month to month. They can't be shut down for a week. It matters. Every day matters -- Poppy, you mentioned, I saw when you were asking some people, they're -- we're obsessed with it. This is all we're watching. It's all investors are watching.

But are some ordinary people who aren't aware of how much is closed and impacted, aren't there?

HARLOW: Yes, I mean they're -- they're not. They're coming down here. You saw the tourists that we went up to and we said, you know, sorry, you can't go, it's closed. They weren't fully aware.

I think people are -- a lot of people didn't think this was actually going to happen. And then it happened and now they're sort of grappling with, well, we're already on vacation, we already planned this, we already bought our tickets, what do we do?

The cruise line that takes people out to the Statute of Liberty behind me, they had to scramble and now they're selling an hour long cruise around the island instead of to the island, because they still have to stay in business some way, somehow.

So people are getting their heads around it.

Now the big question is, is this a day's long thing, a week's long thing, a month's long shutdown?

Who knows?

LAKE: Well, we're hoping for the shorter end of that.

All right, Poppy Harlow, great to see you.

Thank you so much.

Well, during the shutdown, many of the Twitter accounts for parks, museums and federal agencies are going on pause, too. But not before they Tweeted out a signoff message.

Our correspondent, Samuel Burke, has the lowdown on how the government is winding down it social media accounts -- and, Samuel, I'm sure there's an awful lot happening out in social media revolving around this.

SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Well, let's start with the parks Poppy was just talking about national sites here in the United States.

And look at the Google Doodle. You know, every day on Google.com, they change that drawing. Today, it just happens to be that they have a -- a doodle in honor of Yosemite National Park in California, its 123rd anniversary of its opening. But of course today, it's closed. So there's that on Google.com.

LAKE: Coincidence or planned objection by Google?

We're not going to get an answer from that, but it do makes you wonder, knowing those guys.

What about -- what about from average people?

Are we hearing about -- is this trending on Twitter?

I mean we kind of live our lives on social media now.

Are people reacting?

BURKE: Eight of the top -- top trends on social media, of the top 10 trends, I should say, all have to do with the government shutdown. Just look across the United States. You see hash tag, government shutdown, shutdown, shutdown from the West Coast to the East Coast.

And what I found most interesting is how many people were saying that they were affected by the shutdown and they had no idea that was going to happen. They were on Twitter saying I called up an agency today that I didn't think I was going to have to call. It turns out, they're closed.

I went to go on a Web site, the Web site is even down.

I had to do some research about NASA today. The Web site was closed.

So you're finding people saying, I didn't think this was going to affect me and here I am without being able to contact my government.

LAKE: Yes, and I see a lot of anger, saying they should all be fired, too.

You mentioned NASA, by the way, doing some research. In addition to - - to the anger, the frustration, the confusion, people are also saying, listen, if we can't do anything else, we've got to laugh about this -- or at least inject a little humor into a situation that seems to be so lacking elsewhere.

I love that we got some from NASA.

BURKE: And apparently, NASA has a great sense of humor. This is a Twitter account for NASA Voyager 2. And usually, it's just automated Tweets around the world of where that space probe is. But today, the Twitter is, "Due to government shutdown, we will not be posting or responding from this Twitter account. Farewell, humans. Sort it out yourselves."

So that was a funny one from them.

And then you have another, another one that's buzzing on social media. This is the Panda cam from the National Zoo in Washington, DC. Just a few weeks ago, we were all watching the birth of this little cub panda that you see right there.

LAKE: Irresistible.

BURKE: Those black and white critters. Well, take a look at it today, no black and white critters, just black. The camera is down because it's part of non-essential government programs. So you can't go on there and see that. And that's what everybody is buzzing about at social media.

But don't worry, the pandas are still being taken care of, even though we can't see them.

LAKE: With all the stress this is imposing on us, who decided that was non-essential, Samuel?

I have no idea, but we'll have to take it up. Maybe this will be its own bill that they're passing piecemeal in order to keep the voters happy.

Samuel, great stuff.

Thank you so much.

A lot of fun, but also a lot of serious anger being vented, as we are seeing in the polls, as well.

Well, start spreading the news -- the Empire State Building is set to make its public debut.

How can you be a part of it and get a piece of a New York landmark?

We'll tell you, when we come back.

(COMMERCIAL BREAK)

LAKE: While many landmarks closed down, one of New York's famous buildings is going public.

Starting this week, you could own a piece of the Empire State Building. We're expecting the owners of the art deco tower to offer 71.5 million shares priced between $13 and $15 a share.

It could raise over $1 billion.

(BEGIN VIDEOTAPE)

LAKE (voice-over): It's been at the heart of the New York City skyline for more than 80 years -- the Empire State Building. The skyscraper King Kong tried to conquer, where star-crossed lovers met in "Sleepless in Seattle."

(BEGIN VIDEO CLIP FROM "SLEEPLESS IN SEATTLE," COURTESY TRISTAR PICTURES)

TOM HANKS, ACTOR: It's you.

MEGAN RYAN, ACTOR: It's me.

(END VIDEO CLIP)

LAKE: And where Jay-Z and Alicia Keyes find themselves in "An Empire State of Mind."

(singing)

LAKE: Now the star attraction is making its debut at another iconic building, the New York Stock Exchange.

(on camera): Smile.

That's the closest many of us come to owning a piece of the Empire State Building, a photograph. But that's all changed with this initial public offering.

(voice-over): The Empire State Building is not going public alone. It's part of a basket of properties owned by a company called The Empire State Realty Trust that are being bundled into one IPO.

The path to the NYSE has not been easy. Some private investors didn't want an IPO. But real estate watchers say the buildings made money for investors before and could do so again.

DANIEL GEIGER, "CRAIN'S NEW YORK BUSINESS": People 50 years ago have bought into the Empire State Building. People 10 years ago, people 20 years ago have bought into this ownership structure, the current ownership structure that's about to be replaced. And they've all made money because Manhattan real estate has been a winning bet. It's been an upward trajectory. Certainly the Empire State Building has appreciated.

If you have a long-term ownership hold, you will make money.

LAKE: That is, of course, if demand for New York City real estate holds up. Indeed, the 102-story Empire State Building has seen its share of economic challenges over the years.

Completed in 1931, in the midst of the Depression, it recently underwent a top to bottom renovation, attracting new tenants like social media firm LinkedIn.

One big draw for investors, the tens of millions of dollars in revenue that comes in from the world famous observation deck, where you may run into a couple tying the knot or movie stars.

(VIDEO CLIP)

LAKE: Like Uggie the Dog.

So don't listen if someone has a bridge they want to sell you, but investing in the Empire State Building, analysts say you could see the shares climb.

(END VIDEO TAPE)

LAKE: Wow, how special effects have changed, huh?

Well, Twitter is set to make its IPO filing public any day.

Simon Cook is the CEO of the venture capital firm, DFJ Esprit and was an early Twitter investor.

I asked him earlier whether it could thrive as a public company in spite of the challenges the company faces when it's in the public eye.

(BEGIN VIDEOTAPE)

SIMON COOK, CEO, DFJ ESPRIT: The great thing about being category leaders, companies which invent entire new markets really do belong as independent public companies. I think because they are, you know, expanding and changing and developing the markets all the time. Obviously, that brings with it, you know, quarterly reporting challenges, but these opportunities are so large and so immense, and as a category leader, they really deserve to be independent companies with a stock market listing.

LAKE: Can innovators go on to run successful huge companies as they mature?

We've seen some spectacular falls of grace, whether it's looking at BlackBerry, at Nokia, companies that used to be market leaders who failed to see the challenges coming around the corner.

Can innovators also run mature companies?

COOK: Yes, I think this is the challenge of innovation, because you have to take a lot of risks. And we are very comfortable losing two out of three investments and making an awful lot on our winners.

It's hard for a corporate manager inside a big company to take that level of risk.

So I think what's interesting is how you can outsource innovation. So a lot of companies -- big companies -- buy, you know, smaller companies from us and then they can take those products and make them hugely successful.

So the relationship between venture capital and large companies is an important way of innovating and letting the market take a lot more risk than a big company stepping in and acquiring companies when they're proven, as you saw with, you know, Instagram and Facebook, etc.

So I think, you know, there's a very strong relationship between us and the big companies and those that keep an eye on what the venture capitalists are doing do better than those that totally focus internally in terms of innovation.

LAKE: And it's interesting you say that. A lot of people have been asking whether Apple's sort of time as an innovator is over.

Is that how they're going to maintain their edge?

Is this innovation by acquisition?

Is that the path that Tim Cook should be following?

COOK: Well, as a venture capitalist, I suppose, yes.

(END VIDEO TAPE)

LAKE: And we'll be back with a check on the world weather forecast after the break.

(COMMERCIAL BREAK)

LAKE: Time now for a check on the world weather forecast.

(WEATHER REPORT)

LAKE: Well, we will have a final check on the day's stock market action just after the break.

(COMMERCIAL BREAK)

LAKE: Time for one last look at how the trading day ended on Wall Street.

Stocks finished slightly higher despite the onset of the government shutdown.

Apple's shares finished around 2 percent higher after Carl Icahn Tweeted that he pushed CEO Tim Cook for a $150 billion share buyback. No idea whether Cook is fighting on that, but it was enough to push the shares up.

Meanwhile, Merck announced it will cut 8,500 jobs worldwide. This comes in addition to a previous announcement of about 7,500 layoffs. Combined, the drug maker is reducing its workforce of more than 80,000 employees by about 20 percent.

European markets finished mostly in the black, as well, despite the partial government shutdown in the US. The immediate reaction suggests they had already priced in the political impasse, the impasse over the shutdown, that is.

Milan's equity market rebounded after leading figures in Silvio Berlusconi's own party defied him. They called on lawmakers to back the Italian coalition government in a confidence vote due on Wednesday.

I'm Maggie Lake in New York.

"AMANPOUR" is next.

END