ECONOMIC catastrophes do not grab headlines as much as gruesome acts of terrorism do. This is perhaps because of the large immediate death count and the fact that the perpetrators had specific malicious intent. The world sees evil that day. Not so in financial crises. These are caused by fiscal mismanagement, greed from the private sector, corruption, bad international conditions and perhaps, yes, even the occasional bits of malicious intent. But they do contribute to making life miserable. As in terrorism, economic crises make life "nasty, brutal and short." Contrary to what the naysayers might say, the Pakistani economy is not in a free fall. There was no reckless seigniorage a la Zimbabwe; no hyperinflation. There is no dollarization. The institutions of the state are not in a state of Rwandan collapse. Low standards to compare with, granted, but necessary for keeping things in perspective in times with much rhetoric of gloom and doom. Things are, however, far from ideal. Our currency has devalued in terms of the dollar significantly, increasing the quantum of external debt that we have to pay off in rupee terms. Our forex reserves have been plummeting rapidly and we have a severe case of inflation. And then there is the fiscal deficit that the government just cannot control. These are all interrelated variables. The inflation is due to the mismatch between aggregate supply and demand. There needs to be supply side restructuring to that effect. But that is a long term effort. More immediately, there is a need to cut the fiscal deficit down to the 4.7 percent of the GDP that the government had pledged. The steps required to that end are going to leads to public resentment but are necessary. The subsidies on electricity and fuel need to go, in addition to other measures. A way for the political leadership to assuage the masses, however, is to undertake a strict austerity drive themselves.