At the height of the Cold War of the 1950s and 60s we learned a new word — brinksmanship. It is a description of what leaders on either side of the great gulf between the United States and the Soviet Union routinely practised. At the heart of this face-off was The Bomb. As the word suggests, brinksmanship is the idea of moving ever closer to the brink — the point at which the other side would feel so threatened that it would seriously consider using its bomb; then, at the 11th hour, pulling back to safety. It was much like a game called "chicken" which well-off American youngsters played. Two teenagers would choose a secluded place where they could race their souped-up cars directly at each other and the one who veered off first to safety would be declared a "chicken".

Fortunately for the world, in spite of a few close shaves, we never got to the point where either side was sufficiently foolhardy to set off a nuke. And, fortunately, the fear of what such an event would lead to still keeps itchy fingers off the nuclear trigger.

We can't say the same for the world's economic situation. Many governments have, in the past few years, adopted something close to an economic nuclear weapon. Contrary to common sense and the advice of serious economists, politicians have scared themselves — and, in the bargain, the rest of us -- into swallowing the bush medicine of austerity. Cut, cut, cut, is the solution for the moribund economies of countries as disparate as Britain, Greece, Italy, Spain, Ireland and the United States. And as we have seen in Greece, Spain and elsewhere, people are rebelling.

This week, Italians voted in a parliamentary election and the result was a rejection of the status quo. Three-fifths of the voters chose parties with no demonstrable aptitude for managing even a pizza stand, while the other 40 per cent voted for two blocs with a more practical approach to managing a country. A little less than 30 per cent of the vote went to a coalition assembled by Silvio Berlusconi, Mr Bunga-Bunga himself. You perhaps recall that this was the man who, as prime minister, bungled the enormous financial crisis which befell Italy along with other European countries while he cavorted with young women who could have been his grandchildren.

He was squeezed out of office just under a year ago and replaced by a dour technocrat, Mario Monti, who ran the country without an elected mandate and whose prescription for reforming Italy's economy was -- you guessed it -- austerity, austerity, austerity. He was favoured by the rest of Europe, the United States and the big international financial organisations, but he picked up a mere 10 per cent of the votes.

One of the big winners is a movement calling itself Five Star, led by a compulsive blogger and former comedian, Beppe Grillo. Its prescription for reforming Italy is for all the traditional political parties to "go home" so that parliament could be dissolved and be replaced by "rule of the people". For a dozen years he has blasted away at politicians, the church, the corporate world and the news media. To him, they all are a bunch of liars, thieves, even criminals, interested only in looking after themselves and satisfying their own vices. But his election promises to go nowhere, as he says he has no desire to join in a coalition to try to govern the country.

Here lies the problem. His movement has garnered the single biggest bloc of votes, while the other groups are just that -- coalitions of the centre-right or centre-left. And his obsessive campaign against the old-line politicians resonates with Italians, who have grown totally fed up with their scandals, corruption or the inability to do anything effective. It will take a lot of manoeuvring to get Italy out of this mess.

The byword is 'cut, cut, cut'

Austerity, belt-tightening, budgetary rigour, call it what you will -- is what Germany and its allies in the euro zone prescribe for Greece, Italy, Spain, Portugal and France. It's also the policy imposed by Britain's Conservative prime minster, David Cameron, who is pledging to move ahead in vigorously chopping the deficit after influential financial rating agencies downgraded Britain's AAA rating one full notch. He told the House of Commons: "This credit rating does matter, and it demonstrates that we have to go further and faster on reducing the deficit." Official figures demonstrate the ineffectiveness of the austerity regime: in spite of the boost from the London Olympics, Britain's economy grew by only 0.3 per cent in the final quarter of 2012.

Across the Atlantic, the American political system is in gridlock over this very problem. As of yesterday, the federal government is in a state of "sequestration" -- the fancy term for a draconian programme of cuts imposed by the Congress on the federal government. It arose in 2011 when President Barack Obama and the Congress, bullied by the Republican party, were unable to agree to schedule about US$1.2 trillion in deficit reduction over 10 years. They came up with what appeared then to be a far-fetched plan so outrageous that it would probably never go into force.

But guess what? It has!

The Budget Control Act stipulates that the Treasury would take (sequester) a year's worth of savings at the start of this year -- half of it from the Defence Department. At New Year's, a tax deal between the president and the Congress delayed and reduced that cut, so now it's $85 billion instead of $1.2 trillion. Because the "sequester" applies equally across the board, it prevents department managers from choosing how to implement it. It's an extremely blunt instrument intended as a deterrent, but in the days leading up to the deadline the dysfunctional Congress made only token attempts to avoid it.

Republicans -- especially a bloc elected since the rise of the Tea Party movement four years ago -- have a deep-seated antipathy to government and taxes and have directed particular animosity at Barack Obama and his initiatives. Many of them claim he is a socialist or even a communist, and have resorted to every device they can to block his efforts. So they are quite content to see the government grind to a halt, with everybody from park attendants and airport security agents to food inspectors and air traffic controllers laid off. Obama has taken his message over the heads of the politicians directly to the people, appealing to them to put pressure on their elected representatives to end what he calls these "manufactured crises".

The Republicans have shot themselves in the foot like this before. In 1995, President Bill Clinton vetoed a spending bill the Republican-dominated Congress sent him. As a result, the federal government put what it calls non-essential workers on furlough -- leave without pay -- for 28 days between the end of November and the beginning of January the next year.

The Republicans should be very careful about allowing this sequestration to proceed. During the shutdown of the 1990s the public appeared to blame Clinton, but once it ended his approval ratings shot up to their highest since his election.

OBAMA ...animosity directed at him by Republicans

CLINTON ... public appeared to blame him