Wing Ah Ling, I fully agree, I'm not arguing for government spending but taking a "second best" line, that given the government is determined to spend, it should do so in the most beneficial (or least harmful) way. While the opportunity cost for government infrastructure spending would normally be the alternative use of funds with the best risk-adjusted rate of return (and that would often be tax cuts), here I'm looking for better (even if still negative) returns on massive expenditure which will have to be recouped from the taxpayer eventually.

I find myself largely in agreement with the author -if not for reasons he might admire.
All the billions currently being spent will simply prop up a system which has proven itself to be fundamentally flawed.
The world is -typically- going with a 'better the devil you know' approach.
Hopefully, there may be a few long term changes, such as better regulation of money -if not outright nationalisation- but the essential problem is yet to be addressed.
Charging interest is nothing more than penalising people for the crime of being poor.
The problem is not so much what we consume, but how much -or how many times- we pay for our goods.
Rich people only have to pay once.
Ironically, Bono now has a real chance of seeing a moratorium on foreign debt.
Now that the USA is the most indebted country on the planet...

Grim
It is useful to compare the attitude of the mediaeval church in trying to understand the motions of the planets, or the origin of species. Instead of making sure that they understood the facts by sound theory, they started with an arbitrary moral judgment which they got from holy scripture, which they got from some anonymous goatherd in the Middle East 3,000 years ago.

The economic crisis has been caused by the great mass of people, including politicians, who
1. Didn’t bother to understand the facts about the economic phenomena they were talking about: they just started with a position of moral judgment (like “interest is morally evil”), and didn’t care that they were ignorant about the facts, and
2. Just assumed that there is a big magical thing like God, that can just fix things up without any economic cost – the State.

It is the State’s policies of lowering interest rates that have caused the following economic crisis. Those who do not understand this are merely displaying their ignorance.

Let’s understand the facts first. If I offer you $1,000 today, or $1,000 in fifty years’ time, which do you choose? Well guess what? The rest of the world is like you. It is part of human nature to prefer present satisfaction over the same satisfaction in the future. It derives from the fact that we are alive and our time on earth is limited. Because if it wasn’t so, and we preferred a future meal to a present meal, we would never eat.

Interest on capital is the monetary expression of this fact. The only way to make interest disappear would be to persuade the human race to value something now the same as the same thing in 50 years time. No-one can do it.

The idea that interest is some kind of evil wicked immoral exploitation of the poor goes back millennia, and has its roots in religion. But this is just another case of being so concerned about engaging in moral judgment, that they didn’t stop to find out what the facts were.

Today the lenders are far more likely to be the ordinary working people, through savings accounts, savings bonds and so on, while the borrowers are far more likely to be speculators on real estate, big corporations, and entrepreneurs trying to reduce their tax bill.

You are floundering in vacuous moralizing that is empty of factual explaining power, and is the main cause of the problem you are railing against.

When governments lower interest rates, they send false signals to everyone using money. These false signals are what causes both the bubble and the bust and all the resulting dislocation, bankruptcy, unemployment and hardship.

The essential problem is exactly the kind of ignorance you have displayed in calling for more regulation to fix a problem caused by government regulation of the interest rate in the first place.

If you want to move from publicly displaying your ignorance, to understanding the facts behind the economic crises, its causes and cure, you can find out here: http://mises.org/story/3128 .

But if you don’t, probably the less said the better eh?

I'm sorry, Wing Ah ling, but I find your attitudes on Mises/economics no more rational than Runner's on Creationism/evolution.
To claim that any economist has ever got it exactly right shows a greater degree of blind irrational faith than any religionist.
The essential problem in the world today is simply the level of credit.
The level of debt worldwide vastly exceeds the levels of available goods. This situation must always inevitably create times when a 'radical adjustment' is necessary; such as we are going through now.
Another 'recession we had to have', in other words.
The problem is not how we deal with credit, but the concept of credit itself.
In return for your link to Mises, let me recommend Steve Keen's Debtwatch:

http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredit/

I doubt you will give it a full reading; it contains that dirtiest of words:'Marx'. I hasten to add, Keen does disagree with Marx on many points.

"Charging interest is nothing more than penalising people for the crime of being poor."

Interest is a price, like any other price. It reflects, inter alia, how willing lenders are to relinquish control of their assets, and how much the borrower values access to assets. Both providers and borrowers make a judgement in the context of their broader values and options. As WAL says, no moral element.