Investors usually applaud this sort of thing, and this time has been little different. However, so deep will cuts have to be that the private sector is bound to face strong headwinds too, and that is naturally harder for equity markets to deal with.

To quote one recent example, U.K. cuts mean planned building work on some 700 schools will now not go ahead, including the construction of new ones. This will save the State some cash, but the private constructors who were eyeing the work are out in the cold. This is just one example, from one country; there are going to be lots more.

No wonder nerves are getting a little shredded. There remain bright spots, of course; you can still find plenty of analysts upbeat about corporate profits and, with so much cash on their books, one day U.S. boardrooms are going to start throwing it around again.

But even so it should be no surprise that the worst case scenarios of a few months back have moved a little closer to the middle of the road.

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