Ambrose Evans-Pritchard: Our horrible fiscal choice

With debt levels approaching, if not at, unsustainable levels, the Western democracies are aiming for what is called an "expansionary fiscal contraction", or, in plain English, growth during a period of budget cuts. This is a risky maneuver, though, one not attempted on a large scale since, wait for it, the 1930's. Yeah, those fun times.

While it has succeeded in individual countries in the past, in those instances government retrenchment was coupled with currency devaluation and an export boom. "This is not possible for Spain and Italy within EMU, nor for the combined West at the same time. 'We can't all devalue together and export to Mars,' said Jamie Dannhauser from Lombard Street Research."

Damned if we do (cut budgets), damned if we don't.