Great Recession/Timelines: Difference between revisions
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==2002- | ==2002-2007 US housing boom and bust == | ||
* The average price of a US house increases by about 70% between 2000 and 2006 [http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_112766.pdf]. | * The average price of a US house increases by about 70% between 2000 and 2006 [http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_112766.pdf]. | ||
* | * Two of the ''Bear Stearns'' bank's [[hedge fund]]s suffer losses from [[mortgage]] [[default (finance)|defaults]] [http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=aYDTeHYnV3ms] and yhe ''American Home Mortgage Corporation'' becomes [[bankruptcy|bankrupt]] [http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2208983.ece].. | ||
==2007== | ==2007-2008 International financial panic== | ||
* August 9: The French bank ''BNP Paribas'' freezes its funds because it is unable to value their mortgage-backed assets. [http://invest.bnpparibas.com/en/news/default.asp?Code=LPOI-75W9PV] | |||
* | |||
* September 12 The ''Lehman Brothers'' [[investment bank]] becomes [[bankruptcy|bankrupt]][http://www.lehman.com/press/pdf_2008/091508_lbhi_chapter11_announce.pdf] 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]]. | |||
* | |||
== | ==2008-2009 The international response== | ||
'''The Banking systems rescues.''' | |||
* The UK's Gordon Brown offers unlimited support to all UK banks by capital support, equity purchase and lending guarantees [http://news.bbc.co.uk/1/hi/business/7658307.stm] [http://news.bbc.co.uk/1/hi/business/7658277.stm], and similar action is agreed by European Union leaders [http://www.latimes.com/business/la-fg-euecon13-2008oct13,1,7737780.story] and the US President[http://www.whitehouse.gov/news/releases/2008/10/20081014.html]and there are rescues of individual banks in Europe [http://www.ft.com/cms/s/0/f93a9b08-91ad-11dd-b5cd-0000779fd18c.html][http://www.dw-world.de/dw/article/0,2144,3692522,00.html] [http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4894402.ece][http://www.newsvine.com/_news/2008/08/25/1782809-danish-central-bank-rescues-nations-no-10-bank] and the United States [http://www.dw-world.de/dw/article/0,2144,3692522,00.html]. | |||
'''The coordinated monetary stimulus'''. | |||
* A [[discount rate]] cut of half per cent by the [[central bank]]s of the United States, Europe, China, Britain, Canada, Sweden and Switzerland [http://news.bbc.co.uk/1/hi/business/7658958.stm]. | |||
* | |||
'''Agreement on a collective [[fiscal stimulus]]''' | |||
* November 15: The first [[G20 summit]] of leaders of the [[Group of Twenty]] countries agree to take expansionary fiscal action | |||
* The [[money market]] panic persists ([[LIBOR]]-[[OIS]] [[spread]]s reach over 350 [[basis point]]s (compared with August 2007 rates of around 10 points)[http://research.stlouisfed.org/publications/es/08/ES0825.pdf].) | * The [[money market]] panic persists ([[LIBOR]]-[[OIS]] [[spread]]s reach over 350 [[basis point]]s (compared with August 2007 rates of around 10 points)[http://research.stlouisfed.org/publications/es/08/ES0825.pdf].) | ||
'''Domestic measures''' | |||
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* 23 The US ''Citigroup'' bank is rescued from [[bankruptcy]] (the US government makes $20 billion cash injection and guarantees against loss on $306 billion of illiquid assets [http://www.nytimes.com/2008/11/24/business/24citibank.html?_r=1&scp=2&sq=Citigroup%20rescue&st=cse] [http://www.ustreas.gov/press/releases/hp1287.htm] [http://www.ustreas.gov/press/releases/reports/cititermsheet_112308.pdf][http://online.wsj.com/article/SB122747680752551447.html?mod=special_page_campaign2008_mostpop] | * 23 The US ''Citigroup'' bank is rescued from [[bankruptcy]] (the US government makes $20 billion cash injection and guarantees against loss on $306 billion of illiquid assets [http://www.nytimes.com/2008/11/24/business/24citibank.html?_r=1&scp=2&sq=Citigroup%20rescue&st=cse] [http://www.ustreas.gov/press/releases/hp1287.htm] [http://www.ustreas.gov/press/releases/reports/cititermsheet_112308.pdf][http://online.wsj.com/article/SB122747680752551447.html?mod=special_page_campaign2008_mostpop] | ||
* The US [[Federal Reserve System|Federal Reserve]] promises to buy up to $500 billion worth of mortgage-backed securities guaranteed by [[Fannie Mae]] and [[Freddie Mac]] and up to $100billion worth of their direct debt [http://www.economist.com/finance/displaystory.cfm?story_id=12689745]. | * The US [[Federal Reserve System|Federal Reserve]] promises to buy up to $500 billion worth of mortgage-backed securities guaranteed by [[Fannie Mae]] and [[Freddie Mac]] and up to $100billion worth of their direct debt [http://www.economist.com/finance/displaystory.cfm?story_id=12689745]. | ||
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===December=== | ===December=== | ||
* 16 The US [[Federal Reserve System|Federal Reserve]] begins [[credit easing]] - using [[open market operations]] to raise the amount of [[base money]] from $0.9 trillion to $2.2 trillion [http://online.wsj.com/article/SB122948091644013041.html] | * 16 The US [[Federal Reserve System|Federal Reserve]] begins [[credit easing]] - using [[open market operations]] to raise the amount of [[base money]] from $0.9 trillion to $2.2 trillion [http://online.wsj.com/article/SB122948091644013041.html] | ||
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==2009 Global downturn and recovery == | |||
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===January.=== | ===January.=== | ||
* 19 UK Fiscal and monetary stimulus [http://www.hm-treasury.gov.uk/press_05_09.htm] | * 19 UK Fiscal and monetary stimulus [http://www.hm-treasury.gov.uk/press_05_09.htm] | ||
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* 9 The UKs ''Fiscal Consolidation Plan''[http://www.hm-treasury.gov.uk/press_118_09.htm] | * 9 The UKs ''Fiscal Consolidation Plan''[http://www.hm-treasury.gov.uk/press_118_09.htm] | ||
* Greece’s [[credit rating agency|credit rating]] was downgraded to BBB+, with a negative outlook, by the ''Fitch'' [[credit rating agency]]. | * Greece’s [[credit rating agency|credit rating]] was downgraded to BBB+, with a negative outlook, by the ''Fitch'' [[credit rating agency]]. | ||
--> | |||
== | ==2009-201 The fiscal stability issue== | ||
Revision as of 06:18, 11 March 2010
2002-2007 US housing boom and bust
- The average price of a US house increases by about 70% between 2000 and 2006 [1].
- Two of the Bear Stearns bank's hedge funds suffer losses from mortgage defaults [2] and yhe American Home Mortgage Corporation becomes bankrupt [3]..
2007-2008 International financial panic
- August 9: The French bank BNP Paribas freezes its funds because it is unable to value their mortgage-backed assets. [4]
- September 12 The Lehman Brothers investment bank becomes bankrupt[5] 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.
2008-2009 The international response
The Banking systems rescues.
- The UK's Gordon Brown offers unlimited support to all UK banks by capital support, equity purchase and lending guarantees [6] [7], and similar action is agreed by European Union leaders [8] and the US President[9]and there are rescues of individual banks in Europe [10][11] [12][13] and the United States [14].
The coordinated monetary stimulus.
- A discount rate cut of half per cent by the central banks of the United States, Europe, China, Britain, Canada, Sweden and Switzerland [15].
Agreement on a collective fiscal stimulus
- November 15: The first G20 summit of leaders of the Group of Twenty countries agree to take expansionary fiscal action
- The money market panic persists (LIBOR-OIS spreads reach over 350 basis points (compared with August 2007 rates of around 10 points)[16].)
Domestic measures