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From Citizendium, the Citizens' Compendium
Prelude (trends: January 2000 to June 2007)
- 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).
US housing boom and bust
- The average house price rises by 80%  between 2001 and 2006 and then falls by 8% from its 2006 peak to mid-2007 .
Financial crisis (June 2007 to November 2008)
- 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 .
- The French BNP Paribas bank announces that it is unable to value bonds backed by US house mortgages
- The interbank market is near collapse .
- The US government-sponsored house mortgage lenders Fannie Mae and Freddie Mac are rescued from bankruptcy .
- The US Lehman Brothers investment bank is bankrupt  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 .
- 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.
- There are nationwide bank rescues, recapitalisations, depositor guarantees by United States and European govermments'
- The first G20 summit of leaders of the Group of Twenty countries agree to adopt expansionary fiscal policies.
Recession (December 2008 to December 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*.
- Recessions develop in early 2009 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.
- Economic growth resumes in most countries by the 4th quarter of 2009. The main exceptions are the Baltic States, Greece, Iceland, Ireland Portugal and Spain. There is a return to pre-recession growth rates in most developing countries, but growth rates in the developed countries are generally below-trend, and unemployment rates continue to rise.
Recovery (from January 2010 to August 2011)
- April 2010
- The eurozone launches the €600bn European Financial Stability Facility
- January 2011
- The first bond issue by the European Financial Stability Facility
- March 2011
- A Japanese earthquake and tsunami kills over 9000 people and causes damage estimated to be over $300bn.
- July 2011
- The European Central Bank raises its discount rate from 1.25 per cent to 1.5 per centhttp://www.ecb.int/press/pr/date/2011/html/pr110707.en.html].
- The European Financial Stability Facility's powers are amended to enable it to help countries not officially in receipt of a bailout and to recapitalise Eurozone banks.
- August 2011
- After prolonged inter-party negotiations, the US Congress agrees to raise the Federal debt ceiling and reduce government spending .
- The Standard and Poor credit rating agency downgrades US bonds from AAA to AA+.
- The European Central Bank buys Spanish and Italian government bonds
- A sharp rise in the 3 month LIBOR-OIS spread  raises fears of new banking crisis and leads to falls on world stock markets.
Slowdown (from August 2011)
- September 2011
- Economic recovery appeared to have come close to a halt in the major industrialised economies, with falling household and business confidence affecting both world trade and employment, according to new analysis from the OECD. Growth remains strong in most emerging economies, albeit at a more moderate pace.
- The Federal Reserve launches Operation Twist, its third programme of quantitative easing; programme consists of $400bn in long-date treasury bonds, and reinvestments of early repayments of mortgage bonds
- October 2011
- November 2011
- The Congressional Joint Select Committee on Deficit Reduction fails to reach agreement as a result of which there are to be $1.2 trillion of spending cuts in 2013, as guaranteed under the Budget Control Act. The yield on 10-year American debt nevertheless remains below 2 percent.
- December 2011
|Links to reports of events in 2011 and beyond are available on the Global stagnation timelines subpage.|