Balance Sheet

Assets

Remarkable Recovery. The economy chugs along wonderfully, despite all predictions of recession. Every time the data indicate a downward trend, the next month's numbers point up. One drawback to the good news: It lets politicians—and the public—blather about drugs, child care, and sex scandals. Push unemployment up a few notches and we wouldn't be hearing much about crack.

Pole Vault. Poland seems to show that a Communist country can liberalize, even democratize, if it has enough institutional counterweights to the party—in this case the church, the union, and, yes, even the army. Whether its coalition government can unscramble the economy is the trickier question.

Eastern Values. Japan's arcane distribution system starts to crack up, confounding the Western notion that gouging consumers is as Japanese as sushi. Discount stores, mostly homegrown, open in the suburbs. Many offer foreign goods. Sales run $4.2 billion a year and are growing fast. Once-hostile bureaucrats relax enforcement of the law limiting retailer size. As Fortune puts it, "The Japanese are traveling overseas in record numbers, seeing for themselves that not everyone pays $40 for a melon."

Hungary for Freedom. One little rip in the Iron Curtain, and suddenly the whole thing looks about to disintegrate. Some 100,000 East Germans are expected to emigrate to West Germany this year—mostly through Hungary's newly open frontier. Refugees from Third World Communist states find Hungary a hospitable place to stay, as do thousands of Romanians, prompting the Ceausescu government to build a seven-foot fence to keep them in.

Liabilities

Deng Heap. As China continues its crackdown, the Bush administration privately adopts the Chinese line that the media exaggerated the importance of the protests and the massacre. High-level contacts continue, contrary to announced policy. China's $780 million in World Bank loans—held up since June—will likely be restored, as will sales of military goods. Chinese refugees find little sympathy at U.S. embassies; many turn to France or West Germany instead.

Bankrupt Policy. Congress bails out the S&Ls at a cost of at least $150 billion—"enough money," writes P.J. O'Rourke, "to pay for a New York City taxi ride from earth to the planet Uranus and back thirty-six times, including tip"—but refuses to reform deposit insurance, the source of the problem. And the bailout, notes economist Allan Meltzer, will leave the feds with loads of foreclosed land and buildings, ripe for all sorts of backroom deals.

Cable Snit. The General Accounting Office calls for "reregulation" of cable TV, because fees rose 25 percent in two years—four times the inflation rate. The National League of Cities whines about cable operators' "monopolistic powers" but doesn't offer to give up cities' power to grant those monopolies. The Wall Street Journal rightly dubs the desired regulation "pseudoregulation," noting that the Consumer Federation of America estimates that competition could halve monthly fees.

Burmanent Record. Burma, renamed Myanmar, arrests opposition leaders, expels foreign correspondents, and cuts international telex and phone lines. The U.S. embassy reports "commonplace" torture and beatings of political dissidents. The State Department says recent actions "cast serious doubts on the Burmese government's repeated promises to hold free and fair elections by May of 1990." Oh really.