Yeah, I know that #hackgate is important and interesting, but actually it’s very small beer compared to the looming catastrophe of a US debt default. Here’s Will Hutton’s take on it.

When President Obama, the supreme rationalist, says that there are just days to avert Armageddon, everyone should sit up and listen. For months, Republicans have used their new majority in the House of Representatives to block any move to lift the artificial cap on the amount the US government can borrow. If by this Friday they still refuse – insisting on up to $4trillion of spending cuts, excluding defence, and no tax increases as the price of their support – then the US will be unable to service its public debts. The biggest economy on Earth will default.

The results will be catastrophic, argues JP Morgan chief executive Jamie Dimon – a warning repeated by Obama. The US government will have to start to wind down: soldiers’ wages and public pensions alike will be suspended. But in the financial markets there will be mayhem. Interest rates will shoot up and there will be a flight from the dollar. Banks, uncertain about their expected income from their holdings of US Treasury bonds and bills, will call in their loans, creating a second credit crunch. Some may collapse. Even to get days away from such a prospect, says Obama, will now have costs: every creditor to the US has been shaken to the core by American politicians not taking their responsibilities as borrowers seriously. They will exact a higher price for lending in future, even if a bargain is struck now.

The prospect of a US default in early August is so apocalyptic that many people cannot believe that such a thing will happen. What they haven’t reckoned with is a Republican party in Congress manned by people who make Islamic fundamentalists look like Spinoza.

If the US defaults, we’re all screwed. Period.

See also: “Voodoo Economics Rules OK”

If you think that the economic problems of Greece, Italy, Ireland, Portugal or Spain are terrifying, then think again. The US is heading for default because the Republicans won’t agree to raise the debt ceiling. Here’s an extract from Paul Krugman’s latest NYT column.

Let’s talk for a minute about what Republican leaders are rejecting.

President Obama has made it clear that he’s willing to sign on to a deficit-reduction deal that consists overwhelmingly of spending cuts, and includes draconian cuts in key social programs, up to and including a rise in the age of Medicare eligibility. These are extraordinary concessions. As The Times’s Nate Silver points out, the president has offered deals that are far to the right of what the average American voter prefers — in fact, if anything, they’re a bit to the right of what the average Republican voter prefers!

Yet Republicans are saying no. Indeed, they’re threatening to force a U.S. default, and create an economic crisis, unless they get a completely one-sided deal. And this was entirely predictable.

First of all, the modern G.O.P. fundamentally does not accept the legitimacy of a Democratic presidency — any Democratic presidency. We saw that under Bill Clinton, and we saw it again as soon as Mr. Obama took office.

As a result, Republicans are automatically against anything the president wants, even if they have supported similar proposals in the past. Mitt Romney’s health care plan became a tyrannical assault on American freedom when put in place by that man in the White House. And the same logic applies to the proposed debt deals.

Put it this way: If a Republican president had managed to extract the kind of concessions on Medicare and Social Security that Mr. Obama is offering, it would have been considered a conservative triumph. But when those concessions come attached to minor increases in revenue, and more important, when they come from a Democratic president, the proposals become unacceptable plans to tax the life out of the U.S. economy.

Beyond that, voodoo economics has taken over the G.O.P.