Staring into the abyss (continued)...

The British economy shrank for the first time in 16 years between July and September. Economic output fell by 0.5%, according to the UK Office for National Statistics, amid fears of a global slowdown and huge volatility on world share markets. UK shares tumbled further on the news, closing down 5%. The pound was also affected, falling to $1.52 before recovering to $1.5889 - the first time it has fallen below $1.60 in the past five years.

The New York stock market opened about five per cent down although shares regained some of the losses in later trading. The Dow Jones Industrial Average eventually closed 3.6% down, while the Nasdaq index finished 3.2% down.

European and Asian markets also suffered heavy losses. Frankfurt slid more than 5% and Paris was down more than 3.5%. Tokyo fell 9.6%, Seoul plunged 10.6% and Hong Kong dived 8.3%. In Latin America, Brazil's main market fell 7%. In Moscow, share trading was suspended on both main share indexes until 28 October, after they plunged more than 10%. The euro dropped to $1.25, its lowest level for two years.
Shares hit by recession worries

“We will never return to the old boom and bust," declared Prime Minister Gordon Brown in March 2007. That vainglorious comment has returned to slap him in his face. Britain's boom has turned to a bust - with a vengance. Charlie Bean, deputy governor of the Bank of England, describes this as “a once-in-a-lifetime crisis, and possibly the largest financial crisis of its kind in human history”.

Gordon Brown did not create this global crisis. However I feel his government's policies has made the impact of a downturn more pernicious for the UK. The question I ask myself is: are David Cameron's Tory party, who favoured “Laissez-faire” capitalism (before the current financial turmoil), the solution to the Labour party, when the next General Election comes upon us?

And as for the recent public clamour to punish the bankers, the "greed is good" mantra wasn't just confined to Wall Street and the City of London. Why did hundreds of thousands of UK savers deposit their money in Icelandic bank accounts, before that country's financial system all but collapsed? Because those banks offered higher rates of interest.

Folks, the party's over - now it's time to pay the bill...