Tim Montgomerie in the Times writes one of the wrongest things I've seen in a while. In trying to defend fiscal austerity he says:

For every green light on the global economic dashboard (eg falling oil prices) there are more red ones (the slowdown of China, the euro crisis, Russia's militarism). And if a crisis does strike again the national credit card we maxed out after 2007 is still pretty maxxed out.

This is horribly mistaken. What's maxxed out is not so much fiscal policy - the UK government's debt-GDP ratio is actually below the OECD average - but monetary policy. Sure, there's room for more QE. But with gilt yields so low already, this couldn't push them down much further. It's unlikely that QE - at least on the scale the Bank would be likely to undertake - could much stimulate the economy sufficiently to offset both more austerity and an adverse global shock*.

By contrast, in the event of such a shock, investors would probably step up still further their demand for safe assets, which would mean that extra government borrowing is easily affordable.

Tim is therefore 100% wrong. The gloomier is the global outlook, the stronger is the case against austerity. As Simon says:

The problem with further fiscal consolidation while interest rates remain at their lower bound is that it makes the economy much more vulnerable to downside risks.

If I were trying to defend austerity, I'd take the exact opposite line to Tim. I'd echo Mark Carney (pdf) in claiming that "global growth is expected to continue" and say that a sunny day is the right time to fix the roof.

Tim's error, though horrible, is not an isolated one. He is echoing something Cameron said a few weeks back.

When intelligent men say something very stupid, ideology is at work. But what is the ideology here?

Part of the answer is that Tim has been sucked into mediamacro bubblethink - a world in which talk of the "national credit card" is taken seriously rather than scorned as sub-literate cretinism. It might be no accident that one of the few prominent politicians to see things as they really are works outside the Westminster bubble.

But perhaps there's something else. As Nick Barlow said the other day, politicians no longer offer any hope. (This might be because of the triumph of neoliberal scepticism about the possibility of successful collective action). What they can do, though, is trade on fear - as Cameron did to the BCC on Tuesday. As Frank Furedi has written, "governments use fear to sustain their authority."

The problem is that, so accustomed has the ruling class become to using fear rather than hope, that they now use it even when it justifies policies which are the exact opposite of those they are advocating.

Whatever the reason, understanding support for austerity requires not an economist but a psychologist.

* OK, it's theoretically possible that the Bank could undertake trillions of pounds of QE, which would stimulate the economy. But would Tories really welcome such a possibility?