Even More Austerity Hysteria

Want to know what's in store should the deficit hawks win out in the Obama administration and bow to a GOP Congress in 2011?

Take a sneak peek at UK's new PM, David Cameron.

While Mr. Cameron risks alarming investors by highlighting the scale of the U.K.'s debt problem, he is convinced that only by confronting British voters with the harsh truth of the nation's financial problems can he win support for the tough spending cuts that are to come.

"This is fraught with danger. This is a very, very difficult thing we are trying to do," he said. But he added that the government "must take the whole country with us."

"The effects of these decisions will stay with us for years, if not decades to come," Mr. Cameron said. "We must go about the urgent task of cutting our deficit in way that is open and fair."

. here's your harsh truth: the UK's deficit to GDP ratio is about 11%, where we are now. Cameron's plan is to completely revoers course and massively cut spending from all walks of British life. And so facing unemployment and a wobbling economy, the UK chooses to take the Neo-Hoover austerity route, all but guaranteeing serious and lasting pain that will sink the UK into years of stagnation and suffering.

The deficit hawks here are making the reverse argument from when Bush was in office. Then, it was "We need this multi-trillion quantitative easing package or we're going to collapse." Now the argument 2 years later is that we have to reverse course, cut taxes and then cut spending even more or we're doomed. The usual suspects are warning of armageddon if we let the Bush tax cuts for the rich expire and all indications are that the Democrats are falling for it.

The results will be politically disastrous as a demoralized Democratic base basically hands over the reins of power to the people who will make the cuts as painful as possible for everyone except themselves, gauranteeing we drive ourselves into a full blown depression.

And Obama will be blamed for it.