OFFS. Firstly Greece is still overspending. It is failing to match national income to national expenditure (a profoundly difficult thing to do, when debt service has become an unbearably high cost). Secondly, if you have been spending yourself into oblivion for decades, would you seriously expect the consequences to disappear after a few months of attempted prudence?

No perfect free markets have ever existed, because the cancer of government has always been (and always will be) a problem. For most of its history however, the best way to get on in the USA has been to make a buck, rather than to become a politician. That's a pretty good test of a free society. If you have talent and find yourself drawn to politics, you probably don't live in one.

In recent times, Hong Kong from 1961 to 1971 is probably the best example.

That's an easy one. Because political votes cost the voter nothing directly. They are decisions (ultimately) on how to spend other people's money. Give me the right to decide how to spend yours and watch out! Your wealth will be in the tank of my car (or yacht, if you have more) before you can blink - and you can starve. Economic votes in the market have to be earned. Getting them wrong (buying the wrong good or services, or overspending) have direct consequences for the "voters".

That *would* be mad. Which is why I say (again) straw man. Of course they are my apples to waste as I wish and I scorn the idea that others will come up with better uses than the person whose investment and labour produced them. In practice, if I can find no use for the surplus nine (e.g. cider, charitably feeding the poor, pelting economic illiterates) I will scale back my horticulture and invest money and time in something else. This is a silly argument and described no free market in history. If you want to see actual examples of such waste on any meaningful scale, try the Soviet Union or the current EU CAP.

The original and best Tom Paine had lots of interesting ideas but was very clear that government was a necessary evil to be constrained.

Had he seen the effects of the 20th Century's wicked experiments in infantilisation who knows what he might say?

I don't claim to speak for him. My use of his name is a tribute to him, not a claim about me. I had no other thought than that he had earned the title "The most dangerous man alive" by writing mere pamphlets and that if he lived today he would blog.

Deficits don't "allow" (there's that Freudian indication of your posture to the state again) saving, they divert it from productive use by deploying the credit of taxpayers as yet unborn. 

They wanted to invest and mistakenly saw government as a safe bet. Any borrower who treated his creditors like government does would be gaoled. It's hard to garner your meaning here but you seem again to be confusing investment (which people are not doing because government is suppressing returns to protect feckless voters) and mere spending.

In which bank do you and your uncle bob have shares? If you mean you are depositors, that makes you a creditor, not an owner. Depositors are protected (up to a maximum per account) by a national scheme paid for by the banks. You would have got your money back if the bank where you deposited it had been allowed to go down. The bailouts didn't protect you they protected the shareholders (and their incompetent employees).

You will find a long list of sovereign debt defaults by countries in control of their own currencies here http://en.wikipedia.org/wiki/Sovereign_default.

The point (according to Keynes, not me) would be to set funds aside to smooth out boom and bust. Personally, I would rather leave the economy to its own devices and have everyone understand that if there is a bust and they are exposed to it they will take the losses (just as they took the gains in the boom). Government intervention to smooth things out has always historically protected the feckless and punished the prudent. That's not even the politicians' fault, because the feckless have more votes.

Reducing the size of the state does NOT reduce production because it produces precisely nowt. It consumes wealth created in the productive part of the economy in order to provide "services" varying from the useful and necessary (police, courts, army) to the useless (equality co-ordinators). Please be honest enough to acknowledge that there would not be a single such co-ordinator if people had to choose to pay for them.

Many of the state services people *would* choose to pay for (healthcare, education) are demonstrably inferior in their socialised form. Compare for example the cancer survival rates in the USA with those in Britain. Consider for example, the constant demand of leftists to close down the superior private schools because they deliver unequal (i.e. better) outcomes than state education.

Like all leftists you are confusing "the state" with both "society" and "the economy." Hence the nonsensical idea that reducing public spending is "taking money out of the economy." Of course it isn't. The value represented by the money concerned is *in* the economy (where else would it be?) and has to be taken by force by the state in order to be applied to its goals. Don't take it by force and it will be used for the goals of the people from whom the state would have stolen it.

The state *can* put money into the current economy (just as you could do it in your household budget) by borrowing. That might feel good for while as more cash becomes available, but the piper does eventually have to be paid. Sadly the state has been doing that for decades and debt service costs are now one of its major expenses. We are paying through our taxes to fund the profligacy of the state on behalf of our parents and grandparents.

Of course that debt service money is finding its way back into the private sector via banks, insurance companies and pension funds holding government debt. So long, that is, as the state doesn't (a) default or (b) cheat its creditors by devaluing/inflating the currency.

Can you please explain that, Mark? I am sorry, but I just don't get it. I have waited for others to tease out of you what you mean, but it hasn't happened yet.

Try running a business and explaining to its proprietors and their creditors that debts are spiralling out of control but it's ok because there is "more than one reason" for the defecit.

Even by Keynesian standards Labour misconducted itself to the point of treason. The "stimulus" of which we hear so much was intended by Keynes to be funded from savings made during the boom years for the purpose, not by layering **more** debts on those irresponsibly (and I would argue corruptly since they were used largely to bribe and increase the Labour payroll vote) run up during the boom.

That bribery of the payroll vote and the consequent alignment of public sector workers and other state dependents against the economic interests of the nation, is the reason Labour's vote held up and is now recovering. This, despite the fact that - all other things being equal - Labour Party members should now be scared to appear in public for fear of meeting the fate of the Ceausescus.

As for the myth that all was well until it was necessary to run up huge public debts to bail out the banks; firstly it was **not** necessary and libertarians would have let them fail.
Of course, had they known that they would not be bailed out, they would never have fallen into moral jeopardy and misconducted themselves as they did. Secondly, Labour had been steadily increasing the State's take from the economy throughout the boom and had increased the public sector payroll by an entirely unnecessary million.

Finally, where do you get this delusional idea that is impossible for a country to live beyond its means? Countries everywhere have been doing it on an enormous scale. There are plenty of historical examples of sovereign defaults as you will find if you google the topic.

Creditors are not just other countries but private institutions and individuals - including you if you are in a pension scheme or have life assurance. They may and do miscalculate the risk of buying government bonds. They certainly did in relation to the PIIGS and - in my opinion - continue to do so in relation to Britain.

Only two countries in the EU (Slovakia and Finland) currently meet the economic criteria set to join the Euro. Even Germany, pompously lecturing the others, does not meet them. Britain comes nowhere near.

The main weapon governments have to maintain your delusion is their capacity to print fiat currency. That amounts to paying creditors back in bad coin and will - if taken to excess - cause credit to dry up (or become pricier). "Printing" money not backed by real assets also steals money from the prudent by inflating away their savings and rewards the feckless - thus saving up greater problems for the next cycle. The incentives from the current artificially low interest rests (for "stimulus" of course) are perverse in the extreme.