Wed 8 October 2008, BBC News

Armageddon avoided

By Robert Peston
The symbolism couldn't be worse. Gordon Brown commits £400bn of taxpayers' money - equivalent to about a third of our entire economic output - to rescuing the banking system. And central banks from Asia to Europe to North America slash interest rates . In other words, there's been a co-ordinated global attempt to prop up the financial system and save individual economies from a deep dark recession. Yet the FTSE 100 plumbs new depths. What on earth's going on? Are we all doomed? Well, the symbolism is a bit misleading, because the FTSE 100 is massively unrepresentative of the British economy. The main reason it's fallen is because of sharp falls in the prices of giant mining companies that are listed on the London exchange. So does that mean the FTSE 100 drop doesn't matter? No, for two reasons. First, one of the untold horror stories of the credit crunch is that it's wreaking havoc with the investments that underpin the value of millions of people's pensions. Also, the reason for the fall in those mining companies is that there's been a further sharp drop in the price of commodity and energy prices. Good news in a way, if it leads to lower household bills. But the cause of those drops is a slowdown in economic activity throughout the world and the onset of recessions in several developed economies. So what Gordon Brown and central banks have done today should stave off economic Armageddon - but it's probably too late to save us from months, or even years, of sluggish growth.
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