From The Economist (Dec. 19-25): For their own sakes and for the rest of the world, Americans need to tighten their belts in 1988.

This simple truth . . . has been obscured by the befuddling details of budget deficits, exchange rates, foreign-currency intervention, international economic cooperation and the rest, so much so that in the minds of many American policy-makers these complicated things have become ways of avoiding pain altogether, rather than ways of tightening with the least distress. In an election year that delusion is a tempting one for many American politicians. But it is storing up trouble that may not have the good manners to wait until America has chosen its next president.

. . . {T}he country has no choice but to consume less or produce more. If it is already working at full stretch, it cannot easily produce more. Therefore it has to consume less. It can do that by dulling its appetite, in which nothing too drastic need happen. Or it can wait until the plate is rudely snatched away by forces beyond its control.

All this is familiar enough to Europeans, who are experts in set-piece balance-of-payments crises. In the 1960s and 1970s they learned, above all, that currency depreciation by itself is not enough to correct an external deficit. America has less experience in this field. That is why, for all its gnashing of teeth over the trade deficit, it has still not grasped that it is in the middle of an old-fashioned European-style balance-of-payments crisis, and that there is no painless way out ofit.