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Brian #31: To lend money the government has to have it in the first place, that means borrowing it... That said, in my blog I did point out the difference between revenue spending (on day to day stuff like wages and benefits) and capital spending on infrastructure. The deficit is a revenue spending problem, we are spending more than we have in income on day to day stuff, and it is that which is the big problem. There is some very limited room to take advantage of low interest rates to borrow for some carefully identified infrastructure spending as long as the deficit reduction is not slackened, indeed more cuts are needed to cover the extra interest of this borrowing. That said infrastructure spending is not the be all and end all, as we have seen with the Olympic building it sucked in overseas workers to do the job.
Reg #32: Do you only do 'trite'?
Ross #33: Agreed. We need growth but deficit reduction needs more public spending cuts to accommodate growth policies such as those I have mentioned.
Alexander #34/#37: Default is part of the answer, but managed partial default. A bigger problem with decoupling is capital flight which will need to be addressed before the PIIGS leave the Euro. You speak of QE as a painless cost free solution, it is not. QE means debasing our currency, more inflation in other words. It takes approx 2 years for QE to work its way through to inflation. If you were a pensioner on a fixed annuity income it would be disastrous. QE1 added 1.5% to 2.5% pa to inflation, we are yet to see the impact of QE2. DTC, by the way, are not rate capped and are not limited on their precept and can decide themselves on what to spend on and how much to raise. They get nothing from rate support grant so the government have not cut their budget. That is not to say they should just raise their precept willy nilly or that they are wrong to exercise restraint.
