Great Recession/Timelines: Difference between revisions
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imported>Nick Gardner |
imported>Nick Gardner |
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==2008-2009 The policy response== | ==2008-2009 The policy response== | ||
===Financial policy=== | |||
* The UK 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]. | |||
===Monetary policy=== | |||
* 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]. | * 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]. | ||
===Fiscal policy=== | |||
* November 15: The first [[G20 summit]] of leaders of the [[Group of Twenty]] countries agree to take expansionary fiscal action | * 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].) | ||
==2009 Global downturn and (patchy) recovery == | ==2009 Global downturn and (patchy) recovery == | ||
Revision as of 16:53, 20 March 2010
2002-2007 US housing boom and bust
- The average price of a US house increased by about 70% between 2000 and 2006 [1] and then fell to 6.5% below the 2006 peak by July 2007[2].
- The subprime mortgage crisis - including losses from mortgage defaults by the Bear Stearns bank's hedge funds [3] and the bankruptcy of the American Home Mortgage Corporation [4]..
2007-2009 International financial panic
- August 9 2007: The French bank BNP Paribas freezes its funds because it is unable to value their mortgage-backed assets. [5]
- September 12 2008 The Lehman Brothers investment bank becomes bankrupt[6] 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 policy response
Financial policy
- The UK offers unlimited support to all UK banks by capital support, equity purchase and lending guarantees [7] [8], and similar action is agreed by European Union leaders [9] and the US President[10]and there are rescues of individual banks in Europe [11][12] [13][14] and the United States [15].
Monetary policy
- A discount rate cut of half per cent by the central banks of the United States, Europe, China, Britain, Canada, Sweden and Switzerland [16].
Fiscal policy
- 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)[17].)
2009 Global downturn and (patchy) recovery