Great Recession/Timelines

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]

• The crash of 2008

• 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.

• The recession of 2009

2008-2009 The policy response

Financial policy

• October 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

• The recession of 2009
• The patchy recovery