Past the debt crisis -- what now?

United States flags are seen on the outside of the New York Stock Exchange on July 29, 2011 in New York City.

Kai Ryssdal: I offer, as we get started today, two statistical representations of the debt limit debate just mercifully brought to a close. First of all, the Dow Jones Industrial Average. Down 265 points today, almost 2.2 percent. Also, the 10-year T-note. The yield on the benchmark Treasury fell today down to 2.61 percent. Crazy low, but a big vote of market confidence.

So one is left with this: After all that's happened -- default, no default, whatever -- where are we?

For that, we've got our New York bureau chief Heidi Moore on the line. Hey Heidi.

Heidi Moore: Hey Kai.

Ryssdal: So we got the deal; everything's set and fine. But are we better off now than we were like 48 hours ago?

Moore: Well the good news is, we're better off than we were four months ago, when we first started debating this. But the question is: how well off are we going to be starting now? The whole debt ceiling debate made us look dysfunctional; we all know that. But just because it's over doesn't mean we're going back to our regularly scheduled programming. We're a different country now. Everything that Congress has decided is that we are going to enter a period of belt-tightening, right? Economists called it "austerity." And this is the first time that we're really entering austerity in a really long time. So when you look at it from the point-of-view of Wall Street, of investors who buy Treasury bonds, who make decisions on whether to buy into the U.S., we're no longer that great, big expanding power. We're now a power that is contracting. We have a lot of internal problems to take care of, and one of the things that people on Wall Street are really concerned about is entitlements: Social Security, Medicare, Medicaid. Those are obviously huge flashpoints for people, but investors want to see the costs for those come down before they really have confidence in us.

Ryssdal: Let me back you up for a second, Heidi, and ask you about that bit about people buying into the United States. When they do that most of the time, what they're buying is Treasury bonds and bills, and we've been talking for weeks now about the possibility of a downgrade of our credit rating, about whether or not people are going to want to keep on buying our stuff. Has anything of that changed?

Moore: Yeah, that's another 'Meanwhile back at the ranch' right now that we have to re-focus on where we actually stand. Our credit rating may be safe, but we've made this huge public spectacle of ourselves in terms of our debt. And we have this huge debt, these huge revenues and the math just doesn't work. And so that indicates something about where we are as a country and whether investors can trust us. I talked to Michael Mata at ING Global Bond Fund, and I asked him what he thinks and what Wall Street's saying about this.

Michael Mata: I think it actually does impact the country's ability to project power. We're just another struggling giant, just like the European Union in a sense, or the Japanese or the British. The amounts of power that the U.S. has is declining. We can't issue more bonds to fight more wars, let's put it that way.

Basically, what that tells us is that investors are now thinking twice about what to do with their U.S. investments. They're diversifying a little bit; they're buying debt in other countries like Australia, New Zealand, Canada. And they're buying gold, which we've seen happen for years now.

Ryssdal: All right, back up for a second and put this in the very macro context of the recession that we thought was over a year and a half ago. The president, when he spoke today after the Senate vote, talked about the recession in present tense, like it's still going on. Do you believe that? And if you're not sure it's still going on, could we be looking at a double-dip now?

Moore: It's really hard to tell people that there's not a recession. It looks like a recession, it walks like a recession, it talks like a recession and it pays like a recession -- which is to say, not at all. And so it's very difficult to tell people, 'no, this isn't a recession, who are you going to believe -- us or your own eyes?' There's an economist, Kenneth Rogoff; he says that we're actually in the second great contraction. And it may worry you to know that the first great contraction was actually the Great Depression.

Ryssdal: Yeah, it does worry me.

Moore: Exactly. And it does take into account the fact that we have to cut our debt, and until then, we're going to have very low growth as an economy. In fact, some people think zero growth. But the good news is, as long as we don't tank, we're still winning.

Ryssdal: Heidi Moore, our New York bureau chief, with the somber economic news of the day. Heidi, thanks a lot.

Moore: Thank you, Kai.

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