Great Recession/Timelines

Prelude (trends: January 2000 to June 2007)

Capital flows:

Flows of capital into the advanced countries, rising from about 8 per cent of world GDP in 2002 to about 16 per cent in 2007

US Monetary policy

Progressive discount rate reductions by the Federal Reserve reducing the federal funds rate from 6 per cent in 2000 to 1 per cent in 2003, followed by increases to 5.25 per cent in 2006)[1].

US housing boom and bust

The average house price rises by 80% [2] between 2001 and 2006 and then falls by 8% from its 2006 peak to mid-2007 .

Financial crisis (June 2007 to November 2008)

June 2007

US Credit rating agencies downgrade over 100 bonds backed by subprime mortgages.

Two of the Bear Stearns'' investment bank's hedge funds are threatened by losses from mortgage defaults [3].

August 2007

The French BNP Paribas bank announces that it is unable to value bonds backed by US house mortgages[4]

The interbank market is near collapse [5].

September 2007

The UK Northern Rock bank suffers a bank run [6]

March 2008

The US Bear Stearns investment bank is rescued [7].

August 2008

The US government-sponsored house mortgage lenders Fannie Mae and Freddie Mac are rescued from bankruptcy [8].

September 2008

The US Lehman Brothers investment bank is bankrupt [9][10][11] with losses of $365 billion to insurers of its bonds. $785m worth of its funds are written off and money market investors suffer a massive loss [12].

There is panic in the money market and a halt in trading in the interbank market.

There are multiple bank failures and rescues in the United States and Europe.

(See The Crash stage 3/September timeline of the Crash of 2008 article).

October 2008

There are nationwide bank rescues, recapitalisations, depositor guarantees by United States and European govermments'

(See The Crash stage 3/October timeline of the Crash of 2008 article).

November 2008

The first G20 summit of leaders of the Group of Twenty countries agree to adopt expansionary fiscal policies.

Recession (December 2008 to October 2009)

(Wikilinks marked thus * are to statistical tabulations))

The governments of the G7 countries announce major fiscal stimulus packages* and their central banks announce monetary and banking measures*, but recessions develop in most advanced economies, with negative growth rates* of 3 to 5 per cent among the G7 countries (and of over 14 per cent in the the Baltic countries) and unemployment rates* of 10 per cent in the United States and France. There are falls in world trade* of over 12 percent.

Recession-induced budget deficits raise public debt* to an average of 100 per cent of GDP in the G20 countries.