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

European Central Bank cuts MRO rate to 2% [46]

UK Fiscal stimulus announced - 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.

Bank of England starts quantitative easing [47] and Asset protection [48][49]

Bank of England cuts discount rate cut- from 2% to 1.5% [50].

UK banks lent £185 bn under the Special Liquidity Scheme [51]

UK household saving ratio rises to 3.9% (compared to 1.7% for the year 2008)[52][53]

Germany introduces major fiscal stimulus package [54]

2009, 2nd quarter

World

Oil price rises - to over $70 per barrel

United States

Federal Reserve balance sheet total reaches $2045 billion [55]

Industrial capacity utilisation stable at about 69%[56]

Banks fail stress tests - of the 19 banks tested, it was found that ten of them need to raise a total of $74.6bn. Any who fail to raise their quota will come under increased government control.

10 banks repay Treasury loans' - received under the Troubled Asset Relief Program.

Mark to market rule eased for inactive markets to what an asset could fetch in an "orderly" transaction (not including distressed transactions or fire-sales)[57]

Europe

ECB discount rate 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[58].

ECB quantitative easing starts - with plans to buy €60bn worth of bonds. [59]

ECB balance sheet total reaches €2,000 billion [60].

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 [61].

Bank of England cuts discount rate to 0.5% and announces £75 billion asset purchase under its Asset Purchase Scheme [62] .

Bank of England's balance sheet total reaches £227 billion [63]

UK household saving rate rises to 5.6% (compared with 1.7% for the year 2008)[64][65]

Asia

Bank of Japan's balance sheet total reaches Y110,000 billion [66].

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)[67].

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 [68]

Europe

Germany plans further fiscal stimulus - by tax cuts of about 1% of GDP#[69]

Bank of England increases asset purchase programme by £25 billion to £200 billion[70]