Help me out with this

London Telegraph News item:

(...) Fears that a recovery in the world's biggest economy is running out of steam were heightened as official figures showed GDP in the US rising 1.3pc in the second quarter, against expectations of a 1.8pc rise. In a chastening statement the Commerce Department also downgraded first-quarter growth from an initial estimate of 1.9pc to just 0.4pc.

(...) The extent of the uncertainty hanging over the US economy was underlined as the head of the World Bank warned that politicians were courting "calamity" by not coming to an agreement ahead of a deadline on Tuesday next week. "To be blunt, to have a debt default in the United States would not only be a financial calamity but should be an embarrassment for every American," said Robert Zoellick.

Okay, so if I understand this correctly, our ecnomy is running out of steam, and the thing we are patently expected to do is raise the debt limit. I had to read that twice. I might be dense (or is it daft), or maybe the London Telegraph's version of The Queen's English is a little imprecise on this, but I don't quite see how raising the debt limit improves the GDP situation. In fact, by raising the debt limit, we will have yet more capital reallocated to government programs and less available for productive work.

Shouldn't everybody be calling on us to lower the debt limit? As Mark Thornton writes:

(...) reducing the debt ceiling would force the government to stop borrowing so much money from credit markets. This would leave significantly more credit available for the private sector. The shortage of capital is one of the most often cited reasons for the failure of the economy to recover.

Lowering the debt ceiling would force federal-government budget cutting on a large scale, and this would free up resources (labor, land, and capital) and force a cutback in the federal government's regulatory apparatus. This would put Americans back to work producing consumer-valued goods

It's clear that the current administration has positioned us between the proverbial rock and the hard place. The confidence in the economy depends on raising the limit. The future of the economy requires that we lower it. Both of these must happen. The "When" of when these triggers are pulled will be defining and historic. It is going to create many millionaires, and ruin many thousandaires. Paul Volcker might have been able to prescribe the right sequence, but the administration chased him away. No one left in the executive branch who knows what to do.

Even the big boys (outside of perhaps Soros and Immelt) don't know which road to take right now. There's no reason to be confident that the right levers will be pulled, or even in the right order. But when the newspapers (especially the ones in Europe) start to lecture us with the kind of conflicting advice we're getting, it's high time to tune them out.