Cafe Hayek is the place to go for tireless education on why trade deficits aren't anything to worry about.
But another way of looking at them has occurred to me.
One thing that would make a trade deficit sustainable for a country would be if other countries contiually subsidised that country to sustain it.
That sounds a little far-fetched for a country like Britain or America, but I wonder...
I've probably mentioned before my amusement that at the peak of the internet and telecoms boom, a huge portion of Britain's internet and telecom sector was bought by Europeans at inflated prices: one-2-one and Orange to Deutsche Telekom and France Telecom, Freeserve to Wanadoo, most smaller ISPs to Tiscali, and some others.
That's a bit like a subsidy (because of the exaggerated valuations), but there's no reason to think it was anything but a one-off fluke.
But it's when an industry is in the throes of irrational exuberance that political pressure against foreign takeovers is strongest. And while France is the clear leader at resisting the sale of highly-valued companies for political reasons, the Blair administration has shown a very praiseworthy restraint towards such irrationality. Given that, I suspect there is a long-term bias towards overvalued assets being sold by less-protectionist countries like Britain to more protectionist countries like France. There may well have been buyers in Britain wanting to spend too much money on companies from France or Italy, but their governments would have prevented it.
One might conclude that these governments' bad policies are benefiting Britain, but it's important to bear in mind that we're only talking about trade deficits -- not about anything really important. The bad effects - spread globally - of protectionist policies reducing efficiency may well outweigh the benefits to people on Britain of having people near them restrained from beggaring themselves in global asset bubbles.
update: A case in point