Outlook: Blair's remedies

WHEN EVERYONE else is out for the count - Clinton Monica Lewinskied, Kohl facing electoral defeat and Japan in its usual state of political stupor, etherised upon a table - that is the time for a world leader of true stature, moral integrity and vision to come forward. Whether Tony Blair quite fits that bill is open to debate, but he certainly seemed willing and determined to take a stab at it in his speech to the New York stock exchange yesterday.

What he offered up was a reasonably articulate precis of mainstream thinking on the nature of the crisis afflicting the international economy and the sort of institutional reform that might be necessary to prevent it happening again. What he didn't do was offer any kind of short term solution, for unfortunately, much as Mr Blair might like to think he is capable of curing the world of all known ailments, he can't.

As this column has repeatedly stressed over the last month, there is only one way in which the developed world can head off the now very real threat of the crisis in emerging markets spreading to its own economies, and that is by cutting interest rates. More importantly, it requires action by the Federal Reserve in the US, an aggressively reflationary policy stance in Japan, and perhaps some action in Germany too. Of the three, only the first appears likely to happen in the immediate future.

Mr Blair made a valiant attempt in his speech to instruct central bankers to do the right thing - without in any way interfering with their independence, you understand - but in the end he's as impotent in these matters as Clinton, Kohl and Obuchi, and as head of a smallish offshore economy, possibly more so. If it is still possible to rescue the situation, it is Alan Greenspan at the Federal Reserve who holds all the cards.

As for Mr Blair's remedies, he's as entitled to pontificate as the next man and much of what he says makes sense. New institutions and better policing are all urgently required to deal with the often frightening world of free capital flows we now live in. But ultimately it will be the US that decides, with or without Mr Clinton, not Mr Blair.