Governments and politicians should feel much less smug.

Sir Martin Wolf shows us to be between a rock and a hard place in “Why dealing with the huge debt overhanging is so difficult” January 28. On one hand “liquidation” and bankruptcies would result in a depression and so “that option must be insane” but if, central banks are aggressive enough, we would “relapse into inflation [which] would be a huge policy failure”.

What are we to do? Just the realization of where we find ourselves is a better place to start. That way at least we will have a chance to avoid the push to spend and stimulate massively and fast, no matter how, and begin to behave more rationally in terms of the implementation so as to get the most effective stimulus of sustainable growth out of every cent of new public debt invested; and in terms of thinking about the taxes that will be needed to pay for it all.

But to have any chance to get it right we also need governments and politicians to stop feeling so smug about the current interest levels and to think that markets are brimming with confidence in their actions. If we disregard what markets are paying in premiums for access to a temporary safe haven in the midst of an initial confusion, many sovereign public debts might have already surpassed their long term sustainable levels.