Great Recession/Timelines

The 1980s

• Financial deregulation [1], [2].
• The US Savings and Loans crisis - failure of 296 US "Savings and Loans" mortgage lenders [3]

1990 - 2003

• Progressive discount rate cuts by Federal Reserve Bank (from 7% in 1990 t0 0.75% in 2003 [4].
• The United States housing boom begins (prices rise by 8% between 2002 and 2003)

2003 - 2006

• The Federal Reserve Bank makes a series of discount rate increases (from 0.75% to 6.25% in 2006).
• The US housing boom continues [5] (Average 2006 house price about 70% above 2000 level)

2007

June

• 25 Two of the Bear Stearns Bank's suffer losses from mortgage defaults [6].

August

• 6 The American Home Mortgage Corporationgoes bankrupt [7].
• 9 The French bank BNP Paribas freezes its funds because it is unable to value their mortgage-backed assets. [8]
• 13 BBC's Robert Peston reports that the Northern Rock bank was seeking help from the Bank of England.
  

     The Northern Rock bank suffers a bank run [9]

2008

January

• The US mortgage lender Countrywide is sold to Bank of America after its share price drops by 48% [10].

February

• The British Northern Rock bank is "nationalised [11].

March

• The US Bear Stearns bank is rescued following losses relating to mortgage-related assets by its hedge funds. [12]

April

• Bank of England announces its Special Liquidity Scheme to allow banks to swap some of their illiquid assets for liquid Treasury Bills for up to three years [13].

June

• US house prices fall to 20% below their 2006 peak [14].

August

• The government-sponsored mortgage lenders Fannie Mae and Freddie Mac are rescued [15].

September

• 7 Fannie Mae and Freddie Mac are nationalised [16].
• 12 The Lehman Brothers investment bankgoes bankrupt[17] with losses of up to $160 billion to holders of its unsecured bonds prompting a sudden loss of confidence in Money market funds and the onset of a credit crunch.

October

• 3 The (modified) $700 billion Paulson Plan (to purchase toxic assets) approved by Congress [18].
• The Dutch Fortis and ABN Amro banks are "nationalised" [19]. The German Hypo Real Estate bank is rescued [20].
• Iceland suffers an economic crisis [21].
• 6 The US Wachovia Corporation is to be rescued by a takeover by the Wells Fargo bank [22].
• 7 More European bank rescues [23].
• 8 UK Chancellor of the Exchequer Gordon Brown announces a £500 billion UK rescue plan to inject capital or take equity in banks and to guarantee interbank lending) [24] [25].
• A coordinated discount rate cut of half per cent by the central banks of the United States, Europe, China, Britain, Canada, Sweden and Switzerland [26].
• 10 LIBOR-OIS spreads reach over 350 basis points (compared with August 2007 rates of around 10 points)[27].
• 12 European Union leaders agree to adopt the UK rescue plan[28].
• 14 US President Bush announces new plans to inject capital, take equity in banks and guarantee interbank lending [29].
• 19 A German bank rescue package is agreed [30].
• 21 The US Federal Reserve Bank offers $540 billion loan support to money market mutual funds [31].
• 25 Denmark's Roskilde is bank to be taken over by its central bank [32].

November

• 23 The US Citigroup bank is rescued (the US government makes $20 billion cash injection and guarantees against loss on $306 billion of illiquid assets [33] [34] [35][36]
• The US Federal Reserve Bank promises to buy up to $500 billion worth of mortgage-backed securities guarantee by Fannie Mae and Freddie Mac and up to $100billion worth of their direct debt [37].

December

• 16 The US Federal Reserve Bank begins credit easing - open market operations raise the amount of base money from $0.9 trillion to $2.2 trillion [38]

2009

1st quarter

World

• The value of world trade by the G7 countries is 23% below that of Q1 2008, and the vale of OECD trade in goods has fallen by 30%[39]. Trade protection grows - World Bank reports 47 trade restrictions by 17 G20 countries [40]. Developing countries lose exports [41].

United States

• The American Recovery and Reinvestment Act(H.R. 1) (a $839 billion stimulus package [42]). The Financial Stability Plan (mandatory stress tests for major banks - financial assistance to households and businesses [43]). The Term Asset-backed Loan Facility (TALF)[44]. The Public-Private Partnership Investment Program [45] (for the purchase of $1 trillion worth of toxic assets from banks).

Europe

• The European Central Bank cuts MRO rate to 2% [46]
• The UK announces a fiscal stimulus (including a temporary reduction of the rate of value-added tax from 17.5% to 15%, a bringing forward of £3 billion of capital investment, and a range of minor tax reductions). The Bank of England starts quantitative easing [47] and asset protection [48][49]. The Bank of England cuts discount rate from 2% to 1.5% [50]. UK banks arelent £185 bn under the Special Liquidity Scheme [51]
• Germany introduces a major fiscal stimulus package [52]

2009, 2nd quarter

World

Oil price rises - to over $70 per barrel

United States

• 10 banks repay Treasury loans' - received under the Troubled Asset Relief Program. The mark to market accounting rule is eased for inactive markets (to what an asset could fetch in an "orderly" transaction [53]

Europe

• The ECB discount rate is cut to 1 percent - the interest rate on the main refinancing operations of the Eurosystem be decreased by 25 basis points to 1.00%, from 13/05/09[54]. ECB quantitative easing starts - with plans to buy €60bn worth of bonds. [55] ECB balance sheet total reaches €2,000 billion [56].
• Ireland's supplementary budget - a number of tax increases and public expenditure cuts designed to reduce the deficit to 10.75 per cent of GDP for 2009 [57].
• The Bank of England discount rate is to reduced to0.5% and announces £75 billion asset purchase under its Asset Purchase Scheme [58] The Bank of England's balance sheet total reaches £227 billion [59]

Asia

The Bank of Japan's balance sheet total reaches Y110,000 billion [60].

The 1980s

• Financial deregulation [61], [62].
• The US Savings and Loans crisis - failure of 296 US "Savings and Loans" mortgage lenders [63]

1990 - 2003

• Progressive discount rate cuts by Federal Reserve Bank (from 7% in 1990 t0 0.75% in 2003 [64].
• The United States housing boom begins (prices rise by 8% between 2002 and 2003)

2003 - 2006

• The Federal Reserve Bank makes a series of discount rate increases (from 0.75% to 6.25% in 2006).
• The US housing boom continues [65] (Average 2006 house price about 70% above 2000 level)

2007

June

• 25 Two of the Bear Stearns Bank's suffer losses from mortgage defaults [66].

August

• 6 The American Home Mortgage Corporationgoes bankrupt [67].
• 9 The French bank BNP Paribas freezes its funds because it is unable to value their mortgage-backed assets. [68]
• 13 BBC's Robert Peston reports that the Northern Rock bank was seeking help from the Bank of England.
  

     The Northern Rock bank suffers a bank run [69]

2008

January

• The US mortgage lender Countrywide is sold to Bank of America after its share price drops by 48% [70].

February

• The British Northern Rock bank is "nationalised [71].

March

• The US Bear Stearns bank is rescued following losses relating to mortgage-related assets by its hedge funds. [72]

April

• Bank of England announces its Special Liquidity Scheme to allow banks to swap some of their illiquid assets for liquid Treasury Bills for up to three years [73].

June

• US house prices fall to 20% below their 2006 peak [74].

August

• The government-sponsored mortgage lenders Fannie Mae and Freddie Mac are rescued [75].

September

• 7 Fannie Mae and Freddie Mac are nationalised [76].
• 12 The Lehman Brothers investment bankgoes bankrupt[77] with losses of up to $160 billion to holders of its unsecured bonds prompting a sudden loss of confidence in Money market funds and the onset of a credit crunch.

October

• 3 The (modified) $700 billion Paulson Plan (to purchase toxic assets) approved by Congress [78].
• The Dutch Fortis and ABN Amro banks are "nationalised" [79]. The German Hypo Real Estate bank is rescued [80].
• Iceland suffers an economic crisis [81].
• 6 The US Wachovia Corporation is to be rescued by a takeover by the Wells Fargo bank [82].
• 7 More European bank rescues [83].
• 8 UK Chancellor of the Exchequer Gordon Brown announces a £500 billion UK rescue plan to inject capital or take equity in banks and to guarantee interbank lending) [84] [85].
• A coordinated discount rate cut of half per cent by the central banks of the United States, Europe, China, Britain, Canada, Sweden and Switzerland [86].
• 10 LIBOR-OIS spreads reach over 350 basis points (compared with August 2007 rates of around 10 points)[87].
• 12 European Union leaders agree to adopt the UK rescue plan[88].
• 14 US President Bush announces new plans to inject capital, take equity in banks and guarantee interbank lending [89].
• 19 A German bank rescue package is agreed [90].
• 21 The US Federal Reserve Bank offers $540 billion loan support to money market mutual funds [91].
• 25 Denmark's Roskilde is bank to be taken over by its central bank [92].

November

• 23 The US Citigroup bank is rescued (the US government makes $20 billion cash injection and guarantees against loss on $306 billion of illiquid assets [93] [94] [95][96]
• The US Federal Reserve Bank promises to buy up to $500 billion worth of mortgage-backed securities guarantee by Fannie Mae and Freddie Mac and up to $100billion worth of their direct debt [97].

December

• 16 The US Federal Reserve Bank begins credit easing - open market operations raise the amount of base money from $0.9 trillion to $2.2 trillion [98]

2009

1st quarter

World

• The value of world trade by the G7 countries is 23% below that of Q1 2008, and the vale of OECD trade in goods has fallen by 30%[99]. Trade protection grows - World Bank reports 47 trade restrictions by 17 G20 countries [100]. Developing countries lose exports [101].

United States

• The American Recovery and Reinvestment Act(H.R. 1) (a $839 billion stimulus package [102]). The Financial Stability Plan (mandatory stress tests for major banks - financial assistance to households and businesses [103]). The Term Asset-backed Loan Facility (TALF)[104]. The Public-Private Partnership Investment Program [105] (for the purchase of $1 trillion worth of toxic assets from banks).

Europe

• The European Central Bank cuts MRO rate to 2% [106]
• The UK announces a fiscal stimulus (including a temporary reduction of the rate of value-added tax from 17.5% to 15%, a bringing forward of £3 billion of capital investment, and a range of minor tax reductions). The Bank of England starts quantitative easing [107] and asset protection [108][109]. The Bank of England cuts discount rate from 2% to 1.5% [110]. UK banks arelent £185 bn under the Special Liquidity Scheme [111]
• Germany introduces a major fiscal stimulus package [112]

2009, 2nd quarter

World

Oil price rises - to over $70 per barrel

United States

• 10 banks repay Treasury loans' - received under the Troubled Asset Relief Program. The mark to market accounting rule is eased for inactive markets (to what an asset could fetch in an "orderly" transaction [113]

Europe

• The ECB discount rate is cut to 1 percent - the interest rate on the main refinancing operations of the Eurosystem be decreased by 25 basis points to 1.00%, from 13/05/09[114]. ECB quantitative easing starts - with plans to buy €60bn worth of bonds. [115] ECB balance sheet total reaches €2,000 billion [116].
• Ireland's supplementary budget - a number of tax increases and public expenditure cuts designed to reduce the deficit to 10.75 per cent of GDP for 2009 [117].
• The Bank of England discount rate is to reduced to0.5% and announces £75 billion asset purchase under its Asset Purchase Scheme [118] The Bank of England's balance sheet total reaches £227 billion [119]

Asia

The Bank of Japan's balance sheet total reaches Y110,000 billion [120].

2009 3rd quarter

World

Money market confidence improves: LIBOR-OIS spreads fall to about 25 basis points (from a Q4 2008 peak of over 200, and compared with pre-crisis levels of around 10)[121].

Europe

UK GDP down 0.4% on Q2

UK index of industrial production (August) 10.9% down on a August 2008.

Asia

Japan's consumer prices down 2.2% in September compared with the previous September.

2009 4th quarter

United States

The unemployment rate tops 10% in October.

Federal Reserve expects to keep its discount rate near zero until the end of Q1 2010, subject to stated circumstances [122]

Europe

Germany plans further fiscal stimulus - by tax cuts of about 1% of GDP#[123]

Bank of England increases asset purchase programme by £25 billion to £200 billion[124]

Aftermath

2009 4th quarter

United States

The unemployment rate tops 10% in October.

Federal Reserve expects to keep its discount rate near zero until the end of Q1 2010, subject to stated circumstances [125]

Europe

Germany plans further fiscal stimulus - by tax cuts of about 1% of GDP#[126]

Bank of England increases asset purchase programme by £25 billion to £200 billion[127]