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  and then fell to 6.5% below the 2006 peak by July 2007.
 * The subprime mortgage crisis - including losses from mortgage defaults by the Bear Stearns bank's  hedge funds    and the bankruptcy of  the  American Home Mortgage Corporation ..

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.


 * The crash of 2008


 * September 12 2008 The Lehman Brothers investment bank becomes bankrupt 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

Financial policy

 * October The UK offers unlimited support to all UK banks by capital support, equity purchase and lending guarantees , and similar action is agreed by European Union leaders  and the US Presidentand there are rescues of individual banks in Europe     and the United States.

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.

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).)

2009 Global downturn and (patchy) recovery

 * The recession of 2009
 * The patchy recovery

2009-2012 The fiscal stability issue
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Europe

 * The European Central Bank cuts its main rate to 2%
 * The UK announces a fiscal stimulus (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). The Bank of England starts quantitative easing  and asset protection . The Bank of England cuts discount  rate from 2% to 1.5% .  UK banks  arelent £185 bn under the Special Liquidity Scheme
 * Germany introduces a major fiscal stimulus package

World

 * Oil price rises - to over $70 per barrel

United States

 * 10 banks repay Treasury loans' - received under the Troubled Asset Relief Program. The mark to market accounting rule is eased for inactive markets (to what an asset could fetch in an "orderly" transaction

Europe

 * The The European Central Bank discount rate is cut to 1 percent - the interest rate on the main refinancing operations of the Euro system be decreased by 25 basis points to 1.00%, from 13/05/09.   ECB quantitative easing starts - with plans to buy €60bn worth of bonds.   ECB balance sheet total reaches €2,000 billion.
 * 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.
 * The Bank of England's discount rate is to reduced to0.5% and announces £75 billion asset purchase under its Asset Purchase Scheme  The Bank of England's balance sheet total reaches £227 billion

Asia

 * The Bank of Japan's balance sheet total reaches Y110,000 billion.