The Problem : The Asian and Russian economic crisis is threatening to create an international recession. Investor confidence has been unsettled worldwide and is already pulling down global growth. Now the risk is that Latin America - on the US doorstep - may catch the Asian flu, with investors already pulling out funds from economies such as Brazil. This would deal a serious blow to confidence in the US, as many of these economies are major export markets.

The danger is that this will precipitate a further collapse on Wall Street, which would seriously curtail consumer confidence in the US and put further pressure on the international banking system, which might be forced to pull back on lending. Add this to the tumbling price of commodities, such as oil, and gloomier forecasters are warning of a move to depression and deflation - the meltdown scenario involving a period of falling prices and recession.

The Solution : If ever there was a time for the US to provide world economic leadership it is now. Confidence and certainty are everything for the stock market and investors need to see that President Clinton is actively dealing with the economic crisis. Instead, the US market has been unsettled by the political uncertainty in Washington and has lost ground heavily.

The President's speech last week pointing to the strength of the US economy and to the need for international co-operation to deal with the crisis was soon forgotten, as it became clear that he was really occupied elsewhere, fighting for his political life. A reduction in US interest rates would do much to restore confidence - although this is a matter for the independent Federal Reserve Board, not the President. And he needs to persuade Congress to give more funding to the International Monetary Fund, so that it can support struggling economies.

Finally, the US President is the only person with the clout to get a meeting of international finance ministers to address seriously the problems facing the world economy.