Yes, you could put it like that. But somehow I doubt they are going to what you call “switch in earnest to deficit spending”, the turnround in the deficit has just cost so much sacrifice for it to be simply thrown away, and in addition if they slacken now the dangers of a post 2012 spiral with pension and health costs coming are just too big for any of those responsible for decisions to take lightly.

On the other hand, the net true cost to the governmment from the bank bailout is still an unknown, and this could amount to the same thing on a worst case scenario of having to make a substantial write-down of the underlying assets.

“Secondly, what would happen if Spain really couldn’t sell bonds?”

I try not to think about this. I am still managing to sleep at night on the thought – but only just. Greece will be the first to go anyway – see my last post. The Greek dynamics are now, imho, impossible in the current climate.

I suppose everyone will off to the arms of the IMF, to join the East European contingent, but they will need to build a large extension to their hospital, and I have not the faintest idea of when any of the new patients will be able to leave.

I’m still trying to puzzle out whether Russia will be back to the IMF if oil stays down and the reserves run out.