I expect at least a country or two in Europe to collapse into revolution. Ireland will collapse but not sure if the public will rise up. Several east European countries will collapse, and Greece will probably become a military dictatorship again to restore order. Hungary looks very vulnerable as well. Though once the revolutions start watch the coalition abandon austerity just long enough to avoid problems here.

I expect at least a country or two in Europe to collapse into revolution. Ireland will collapse but not sure if the public will rise up. Several east European countries will collapse, and Greece will probably become a military dictatorship again to restore order. Hungary looks very vulnerable as well. Though once the revolutions start watch the coalition abandon austerity just long enough to avoid problems here.

The problem with the argument is that the “hard work” hasn’t paid off. After three and a half years of austerity, the outlook for the government’s finances doesn’t look any better than it did when Osborne entered office. In fact, it looks worse.

As Alan Taylor pointed out, the entire sorry episode only confirms what Keynes wrote seventy-five years ago: “The boom, not the slump, is the right time for austerity at the Treasury.

The other steps are more radical. Mr Osborne confirmed he will bring a “Charter for Budget Responsibility” around the time of the Autumn Statement in 2014. The idea is to get Parliament to vote for fiscal consolidation, making budget-balance a cross-party agreement, rather than just a policy of the coalition government. Alongside this he aims to put in place a cap on welfare spending. This would put a limit on the amount the state would pay out in tax credits, income support and housing benefit (pensions would be excluded). If the government of the day wanted to break the cap, Parliament would need to vote on it.

The long-term economics of this are interesting. Since the late 1970s academic economists have worried that economics and politics don’t mix well. The problem is timing: short-term political priorities can lead to a bias towards more inflation and higher budget deficits. Mr Osborne’s changes to Britain’s fiscal setup—first the Office for Budget Responsibility and now seeking new rules on balanced budgets—tie the hands of whoever is in charge of fiscal policy. Of course, there is short-term politics here too: asking Labour to decide whether or not they are responsible six months before a general election is a clever move. But in the long run, these changes stand a chance of making counter-cyclical fiscal policy—cutting during booms, spending during slumps—the norm. That would be good for Britain