When a regime as brutal, unpredictable and desperate as North Korea puts itself on a war footing and severs all ties with its bitter enemy to the South, then the world has every reason to be worried. Under the circumstances, a fall of just over 3% in the South Korean stock market sounds like a fairly moderate response.

The markets obviously think the risk of war is still fairly small. And I think – and hope – that the markets are right. The fact is that neither side has a real reason for wanting conflict. The North Korean government would risk a humiliating defeat and a loss of power. Unlike in the Korean War, it has no external backer to come to its rescue. South Korea is a rich, sophistictated society with a rising international profile – why should it risk all that, by being sucked into a conflict with its crazy neighbour to the North? Most South Koreans also have zero desire to shed the blood of their unfortunate compatriots.

So Bill Clinton returns in triumph from North Korea, with two grateful female journalists for company on the flight home.

Naturally, there is lots of speculation about what lay behind the trip. Was the release of the imprisoned journalists really pre-arranged? Was Clinton’s mission purely humanitarian, or did he discuss other matters in his long meeting with Kim Jong-Il?

I certainly hope that Clinton did stray onto other issues. There is obviously an urgent need to explore whatever scope there is for diplomacy, with an erratic and dangerous nuclear-armed government, headed by the sick-looking “dear leader”.

In fact, I think it would be a good idea to make Clinton the Obama administration’s special representative to North Korea. He knows the dossier well from his time in the White House. He has a reasonably close, if complicated, relationship with the US Secretary of State.  Obama has appointed special envoys for the Middle East and for AfPak – why not for North Korea as well?