Great post by Paul Krugman.

Amid all the debt hysteria, it’s worth taking a look at the actual arithmetic here — because what this arithmetic says is that the size of the deficit in the next year or two hardly matters for the US fiscal position — and in fact the size over the next decade is barely significant.

Start with interest rates. What matters for debt sustainability is the real interest rate, since what matters is keeping real debt, not nominal debt, from growing. (World War II debt never got paid off, it just eroded in real terms to the point where it was trivial). As of yesterday, the US government could lock in 30-year bonds at a real interest rate of 1.25%. That means that a trillion dollars in extra debt would mean $12.5 billion a year in additional real interest payments.

Meanwhile, the CBO estimates potential real GDP in 2021 at about $18 trillion in 2005 dollars, or around $19 trillion in 2011 dollars.

Put these together, and they say that an extra trillion in borrowing adds something like 0.07% of GDP in future debt service costs. Yes, that zero belongs there. The $4 trillion S&P said it needed to see clocks in at less than 0.3% of GDP.

These are not, to say the least, make or break numbers.

Yep. But what’s going on the US Congress has nothing to do with reality. or rationality, come to that.

Came on this — UK’s secret policy on torture revealed in yesterday’s Guardian.

A top-secret document revealing how MI6 and MI5 officers were allowed to extract information from prisoners being illegally tortured overseas has been seen by the Guardian.

The interrogation policy – details of which are believed to be too sensitive to be publicly released at the government inquiry into the UK’s role in torture and rendition – instructed senior intelligence officers to weigh the importance of the information being sought against the amount of pain they expected a prisoner to suffer. It was operated by the British government for almost a decade.

A copy of the secret policy showed senior intelligence officers and ministers feared the British public could be at greater risk of a terrorist attack if Islamists became aware of its existence.

One section states: “If the possibility exists that information will be or has been obtained through the mistreatment of detainees, the negative consequences may include any potential adverse effects on national security if the fact of the agency seeking or accepting information in those circumstances were to be publicly revealed.

For instance, it is possible that in some circumstances such a revelation could result in further radicalisation, leading to an increase in the threat from terrorism.”

Now let me see if I’ve understood this correctly. My reading of it is:

1. Torture is illegal in Britain, but civil servants are allowed to make use of information derived from torture by balancing the ‘value’ of the information obtained against the amount of pain inflicted to extract it.
2. So any MI5 or MI6 officer who knowingly receives information obtained by torture is breaking the law, in much the same way that someone who knowingly receives stolen goods is breaking the law.
3. If the great British public were to learn that this was going on, then it would endanger national security because the news that British public officials were passively (but illegally) condoning torture would enrage muslims and cause some of them to be radicalised.
4. So the thing to do is to continue condoning torture but to make sure that nobody knows we’re doing it.

And this is a democracy?

One of the things that constantly amazes me is the way in which governments and large companies can do unbelievably stupid things. How do huge bureaucracies staffed by intelligent people come to believe utter nonsense? The Libyan adventure on which Cameron and Sarkozy embarked so cavalierly is a good example — as Simon Jenkins points out in a really good Guardian column.

With the humanitarian juices running strong, and America a suddenly timid policeman, London was tempted with a precious moment of glory. The inner cabal of Cameron, George Osborne and Michael Gove reportedly saw Libya as a neoconservative epiphany. It would be like Thatcher's Falklands task force, a moment when politics aspires to statecraft and puts on the armour of crusade. The Downing Street sofa went electric.

These were men who had never gone to war and never known what war requires of government. Sound advice is drowned by a tide of patriotism. Wisdom is derided as weakness. I doubt if any of those who got Britain into this mess had the foggiest idea how they would get out of it, with Gaddafi dead or alive. Yet ahead they charged. They now have ears only for reports of imminent victory from the front, and from an intelligence service whose susceptibility to political pressure has been revealed by the Chilcot inquiry.

The serious question is why in all this did the normal checks and balances fail to operate. Where were the soldiers, diplomats and civil servants who knew Libya well, who knew about military intervention and the likely outcome of specific operations? Where was the scepticism due to any project so implausible as a "no-fly zone to impede the advance of government forces", when this did not embrace ground action (other by bombing) or a legal entitlement to remove a foreign regime? Where were the law officers or the crown? Where was the adviser to say to Cameron, you may want to do this but it must be all or nothing?

When the army wanted no part of the operation, Cameron should have smelled a rat. By assigning Libya to airmen and sailors, Cameron put in the driving seat the two services without an ounce of strategic sense.

It’s clear that there is no rational strategy behind what the governments of Britain and France are now doing. It’s all based on fantasies that the raggle-taggle crew of anti-Gaddafi forces constitute some kind of potential democratic government. That’s not to say that Gaddafi and his crowd aren’t monsters. But if you decide to take on monsters then you need to have a game plan which leads to their extinction.

LATER: Everything I said about government adherence to unworkable ideas also applies to the Eurozone project.

If, like me, you’re rubbing your eyes in disbelief at the way the US debt crisis is being reported in the US, then Paul Krugman’s column may help.

The facts of the crisis over the debt ceiling aren’t complicated. Republicans have, in effect, taken America hostage, threatening to undermine the economy and disrupt the essential business of government unless they get policy concessions they would never have been able to enact through legislation. And Democrats — who would have been justified in rejecting this extortion altogether — have, in fact, gone a long way toward meeting those Republican demands.

As I said, it’s not complicated. Yet many people in the news media apparently can’t bring themselves to acknowledge this simple reality. News reports portray the parties as equally intransigent; pundits fantasize about some kind of “centrist” uprising, as if the problem was too much partisanship on both sides.

Some of us have long complained about the cult of “balance,” the insistence on portraying both parties as equally wrong and equally at fault on any issue, never mind the facts. I joked long ago that if one party declared that the earth was flat, the headlines would read “Views Differ on Shape of Planet.” But would that cult still rule in a situation as stark as the one we now face, in which one party is clearly engaged in blackmail and the other is dickering over the size of the ransom?

The answer, it turns out, is yes. And this is no laughing matter: The cult of balance has played an important role in bringing us to the edge of disaster. For when reporting on political disputes always implies that both sides are to blame, there is no penalty for extremism. Voters won’t punish you for outrageous behavior if all they ever hear is that both sides are at fault.

Let me give you an example of what I’m talking about. As you may know, President Obama initially tried to strike a “Grand Bargain” with Republicans over taxes and spending. To do so, he not only chose not to make an issue of G.O.P. extortion, he offered extraordinary concessions on Democratic priorities: an increase in the age of Medicare eligibility, sharp spending cuts and only small revenue increases. As The Times’s Nate Silver pointed out, Mr. Obama effectively staked out a position that was not only far to the right of the average voter’s preferences, it was if anything a bit to the right of the average Republican voter’s preferences.

But Republicans rejected the deal. So what was the headline on an Associated Press analysis of that breakdown in negotiations? “Obama, Republicans Trapped by Inflexible Rhetoric.” A Democratic president who bends over backward to accommodate the other side — or, if you prefer, who leans so far to the right that he’s in danger of falling over — is treated as being just the same as his utterly intransigent opponents. Balance!

It’s the latest manifestation of the “balance as bias” phenomenon. And it continues to disfigure American journalism.