James Moore: Be warned by a nightmare in the sunshine state

Outlook The Coalition's methods might be madness but the OBR is right on the central point: the deficit needs to be addressed. Unfettered borrowing is a recipe for disaster.

But it can be used for good, say the siren voices, and every so often one of them suggests allowing local councils to borrow more through municipal bonds in order to fund worthy projects.

One suggestion which has passed through my inbox recently suggested their use to pay for new social housing. Interest payments could be secured against future rental income.

It sounds like a rather clever idea, particularly given that social housing is in desperately short supply.

Anyone tempted, however, might first cast their eyes westwards in the direction of the sunshine state. San Bernardino is a city of 200,000 souls in southern California that was name-checked in Chuck Berry's 1961 hit "(Get Your Kicks on) Route 66".

The municipality has taken too many kicks from a shrinking tax base, stagnant economy (see above) and employment prospects and a housing crash. It has become the third Californian city to go bankrupt in a couple of months.

California Dreamin' has turned into a nightmare.