Markets rattled as US government shutdown continues into second week The president urges Congress to reopen government, and pass the debt ceiling to avoid default. Senate Majority Leader Harry Reid (L) and Senator Charles Schumer leave a press conference on the government shutdown. THE US government shutdown entered its second week with no signs of an end starting to rattle markets. Five minutes into trade, the Dow Jones Industrial Average lost 134.22 (0.89 per cent) at 14,938.36. The broad-based S&P 500 sank 14.04 (0.83 per cent) to 1676.46, while the tech-rich Nasdaq Composite Index gave up 30.07 (0.79 per cent) at 3777.68. There was no progress towards a resolution over the weekend, as Republicans and Democrats blamed each other for the standoff that forced a partial closure of the government since October 1. Markets in Britain, France and Germany were all lower on Monday, following losses in Hong Kong, Japan and Singapore. "Clearly, there is still time to end the impasse, yet the lack of any semblance of progress in reaching a deal has created an unsettling backdrop to begin the week," wrote analyst Patrick O'Hare in Briefing.com. There are ominous signs that the United States was closer to the first default in the nation's history as Speaker John Boehner ruled out any measure to boost borrowing authority without concessions from USPresident Barack Obama. Just 10 days before the threat of a default would be imminent, animosity marked the stalemate with a statement from Senate Majority Leader Harry Reid, D-Nev., accusing Boehner of a credibility problem and calling on him to allow a vote on a straightforward bill to re-open the government. "There is now a consistent pattern of Speaker Boehner saying things that fly in the face of the facts or stand at odds with his past actions," said Adam Jentleson, a spokesman for Mr Reid. Americans across the country are suffering because Speaker Boehner refuses to come to grips with reality. A defiant Mr Boehner insists that Mr Obama must negotiate if the president wants to end the shutdown and avert a default that could trigger a financial crisis and recession that would echo 2008 or worse. The 2008 financial crisis plunged the country into the worst recession since the Great Depression of the 1930s. "We're not going to pass a clean debt limit increase," the Ohio Republican said in a television interview Sunday. Mr Boehner also said he lacks the votes "to pass a clean CR," or continuing resolution, a reference to the temporary spending bill without conditions that would keep the government operating. Treasury Secretary Jack Lew has warned that the budget brinkmanship was "playing with fire" and implored Congress to pass legislation to re-open the government and increase the nation's $US16.7 trillion ($17.7 trillion) debt limit. Mr Lew reiterated that Mr Obama has no intention to link either bill to Republican demands for changes in the 3-year-old health care law and spending cuts. The shutdown has pushed hundreds of thousands of workers off the job, closed national parks and museums and stopped an array of government services. The one bright spot on Monday is a significant chunk of the furloughed federal workforce is headed back to work. Defence Secretary Chuck Hagel ordered nearly 350,000 back on the job, basing his decision on a Pentagon interpretation of a law called the Pay Our Military Act. Those who remain at home or are working without paychecks are a step closer to getting back pay once the partial government shutdown ends. The Senate could act this week on the measure that passed the House unanimously on Saturday. Democrats insist that Republicans could easily open the government if Mr Boehner simply allows a vote on the emergency spending bill. Democrats argue that their 200 members in the House plus close to two dozen pragmatic Republicans would back a so-called clean bill, but the Speaker remains hamstrung by his tea party-strong Republican caucus. I would bet there are the votes to pass it," said New York Democrat, Senator Chuck Schumer. In a series of Sunday television appearances, Mr Lew warned that on October 17, he exhausts the bookkeeping maneuvers he has been using to keep borrowing. "I'm telling you that on the 17th, we run out of the ability to borrow, and Congress is playing with fire," Mr Lew said. Mr Lew said that while Treasury expects to have $US30 billion of cash on hand on October 17, that money will be quickly exhausted in paying incoming bills given that the government's payments can run up to $US60 billion on a single day. Credit markets could freeze, the value of the dollar could plummet, US interest rates could skyrocket, the negative spillovers could reverberate around the world. Private economists generally agree that a default on the US debt would be extremely harmful, especially if the impasse was not resolved quickly. Mr Zandi said that holders of US Treasury bonds would demand higher interest rates which would cost the country hundreds of billions of dollars in higher interest payments in coming years on the national debt. Senator Ted Cruz, Republican from Texas who is a force in pushing Republicans to link changes to the health care law in exchange for keeping the government running, spelled out his conditions for raising the borrowing authority. 3, we should look for ways to mitigate the harms from 'Obamacare,"' Senator Cruz said, describing the debt ceiling as an issue that is among the "best leverage the Congress has to rein in the executive." Some Republicans, such as Steve King of Iowa, dismiss the warnings about a government default as an exaggeration, suggesting US credit won't collapse and calling the talk "a lot of false demagoguery." Asked how the standoff might end, Mr Boehner said that he was uncertain: "If I knew, I'd tell you." Mr Boehner and Mr Schumer were interviewed on ABC's This Week, and Lew and Cruz on CNN's State of the Union. Mr Lew also appeared on CBS' Face the Nation, Fox News Sunday and NBC's Meet the Press.