I have just been reading this article on Reuters about how Canada was turned from a financial basket case in the 1990s into a well financed country which experienced a short recession in 2008-09 and no financial crisis:
Three passages stand out:
1. To win its budget wars, Canada first had to realize how dire its situation was and then dramatically shrink the size of government rather than just limit the pace of spending growth.
It would eventually oversee the biggest reduction in Canadian government spending since demobilization after World War Two. The big cuts, and relatively small tax increases, brought a budget surplus within four years.
2. Canada's experience turned on its head the prevailing wisdom that spending promises were the easiest way to win elections.
3. The ratio of spending cuts to tax hikes was seven-to-one.
I hope some of the mental pygmies in the charge in the UK, the Eurozone and the USA study this example and apply it soon.