Crash 1. click hereCrash 2. click hereCrash 3. click hereCrash 4. click hereCrash 5. click hereCashing in on bottoming out. click here1 year since the economic meltdown. 1 year of panic from headlines blaring bankruptcy, downsizing, pay cuts, job losses, unemployment, credit tailspin, crippling debt, housing woes, foreclosure, mortgages, inflation, recession, deficit, budget, bailout & stimulus. 1 year spent calculating the downturn offering explanations, assigning blame & proposing solutions. 1 year later as the world shows slow signs of recovery in financial foothold, we're still puzzled in asking how again exactly did this happen...
(with thanks and apologies to MSNBC)REWIND THE RIPPLE EFFECTApr. 2007 New Century Financial, which specializes in sub-prime mortgages, files for Chapter 11 bankruptcy protection and cuts half of its workforce
Aug.1, 2007 Two Bear Stearns hedge funds file for bankruptcy after sustaining heavy mortgage-related losses, kicking off a global credit crisis as funds fail around the world. CNBC anchor Jim Cramer warns of an economic “Armageddon” accusing the Fed of being asleep at the wheel.
Aug.6, 2007 American Home Mortgage, the 10th-largest mortgage lender, files for chapter 11 bankruptcy - another early sign of collapse.
Aug.9, 2007 French investment bank BNP Paribas suspends three investment funds that invested in subprime mortgage debt; they offer as an explanation the "complete evaporation of liquidity" in the market, a formulation that is viewd as the clearest sign yet that banks are refusing to do business with each other.
Aug.31, 2007 President Bush proposes a program to help some struggling homeowners renegotiate their loan terms; Fed Chairman Bernanke pledges to do everything necessary to protect the economy from marker turmoil. Ameriquest, once the largest subprime lender in the U.S., goes out of business, selling its loan servicing arm to Citigroup.
Sept.14, 2007 Britain’s Northern Rock bank gets emergency support from the Bank of England, sparking a run on the bank’s deposits.
Sept.17, 2007 Former Fed Chairman Alan Greenspan warns that current market turmoil is “identical” in many ways to that which occurred in 1987 and 1998. He also warns of “large double-digit declines” in home values.
Sept.18, 2007 The Fed cuts short-term interest rates by half a percentage point to 4.75 percent, marking the first rate cut in more than four years.
Oct.1, 2007 Swiss bank UBS is the world's first top-flight bank to announce losses of $3.4bn - from sub-prime related investments.
Oct.9, 2007 The Dow Jones industrial average closes at a record high of 14,164.53.
Oct.16, 2007 Treasury Secretary Hank Paulson says the housing collapse is “the most significant risk to our economy”.
Nov.1, 2007 The Fed injects $41 billion into the financial systems, the largest amount since the days following 9/11.
Jan.11, 2008 Bank of America announces plans to buy Countrywide Financial, a large mortgage lender, for $4.1 billion.
Jan.18, 2008 President Bush proposes a stimulus plan. “The plan must be built on broad-based tax relief that will directly affect economic growth and not the kind of spending projects that would have little immediate impact on our economy”, he decides.
Jan.25, 2008 The National Association of Realtors announces that the decline in existing-home sales is the worst in 25 years.
Feb.7, 2008 Senate passes $170 billion economic stimulus package.
May.30, 2008 JP Morgan Chase buys Bear Stearns, Wall Street’s 5th largest bank, for $10 a share (initially $2). The unprecedented deal is engineered by the Treasury Department and backed by $30 billion of loans from the Fed, marking the 1st time the central bank has extended credit outside the banking system.
June.19, 2008 The FBI arrests more than 400 people, including mortgage brokers, appraisers and home builders, as part of a crackdown on alleged mortgage schemes worth $1 billion.
July.9, 2008 Phil Gramm, at the time the chief economic adviser for GOP presidential candidate John McCain, says the economic meltdown is not as dire as it appears. “We have sort of become a nation of whiners”, he says.
July.11, 2008 IndyMac Bank is seized by federal regulators, succumbing to the pressures of tighter credit, tumbling home prices and rising foreclosures. It is the 2nd largest financial institution to close in U.S. history.
July.18, 2008 At a luncheon meeting, Bush makes informal remarks ”There’s no question about it. Wall Street got drunk. It got drunk and now it’s got a hangover. The question is how long will it sober up and not try to do all these fancy financial instruments.”.
Sept.7, 2008 The federal government announces it will take over Fannie Mae and Freddie Mac which until then had nominally been independent.
Sept.14, 2008 Merrill Lynch is acquired by BOA, pending approval of regulators and shareholders, in a deal that would become the focus of congressional hearings.
Sept.15, 2008 After a feverish weekend of negotiations fails to turn up a buyer, Lehman Bros. files for bankruptcy protection, the largest bankruptcy ever in U.S history. Paulson says he “never once considered helping Lehman Bros. by putting taxpayer money at risk.”
Sept.16, 2008 The Federal Reserve steps into rescue American International Group Inc. one of the world’s largest insurers, with an unprecedented injection of $85 billion in loans. The Fed takes a controlling 80 percent stake in the company and its investment ultimately grows over $130 billion.
Sept.17, 2008 The Dow drops sharply for the 2nd time in three days, sending the blue-chip index top a bear-market low of 10,609, down more than 33 percent from its 2007 peak.
Sept.18, 2008 The Fed, in conjunction with central banks around the world, injects another $180 billion in liquidity into the global financial system.
Sept.19, 2008 For the second consecutive day, the Dow industrials skyrocket, giving them a massive gain of more than 780 points in the two days.
Sept.23, 2008 Treasury Secretary Henry Paulson and Fed chief Ben Bernanke face congressional leaders. “I share the outrage that people have. I think it’s embarrassing to the United States of America”, says Paulson.
Sept.24, 2008 In a 12-minute prime-time address, President Bush warns Americans and lawmakers that failing to act fast on a bailout plan to rescue the US financial sector would mean “a long and painful recession.”
Sept.25, 2008 Washington Mutual collapses under the weight of its enormous bad bets on the mortgage marker. The Federal Deposit Insurance Corp. seizes WaMu, and then sells the thrift’s banking assets to JP Morgan Chase for $1.9 billion.
Sept.26, 2008 After earlier threatening to pull out of the Presidential debate in Oxford, Miss., because of the economic crisis, GOP candidate John McCain changes course and agrees to share the stage with Democrat Barack Obama.
Sept.28, 2008 The credit crunch hits Europe's banking sector as the European banking and insurance giant Fortis is partly nationalised to ensure its survival.
Sept.29, 2008 Fear spreads on Wall Street-sending the Dow down 777 points, the largest one-day point drop in history - after the House surprisingly rejected a compromise bailout package.
Sept.30, 2008 The Belgian-French bank Dexia becomes the latest European bank to be bailed out as the deepening credit crisis continues to shake the banking sector.
Oct.3, 2008 After a week of intense negotiations, the House voted 263-171 to approve a revised bailout package (with Bush quickly signing the bill) previously passed by the Senate on Oct.1.
Oct.7, 2008 The Icelandic government takes control of Landsbanki, the country's 2nd largest bank, which owns the UK internet bank Icesave.
Oct.8, 2008 In a rare coordinated move, the Federal Reserve and other major central banks slash interest rates by a half-percentage point in an effort to control the mushrooming financial crisis.
Oct.10, 2008 After watching Wall Street suffer its worst week in history, Treasury Secretary Henry Paulson announced that the government will buy stock in American banks for the first time since the Great Depression.
Oct.13, 2008 European governments put $2.3 trillion on the line in guarantees and other emergency measures to save the banking system in their most unified response yet to the global crisis. Dow soars 936 points for its best day in more than 75 years.
Oct.14, 2008 The U.S. government puts itself four-square into the country’s banking business, making what President Bush conceded was the unwelcome choice of massive government investments in the banking system to loosen paralyzed channels of credit.
Oct. 15, 2008 Just two days after an unprecedented 936-point gain, the Dow plummets 733 points, or 7.8 percent, to its 2nd largest point loss ever.
Oct.29, 2008 Fed cuts overnight lending rate a half-point to 1 percent, its lowest level in more than four years.
Nov.12, 2008 Paulson says the government will no longer buy distressed mortgage-related assets, formerly the centerpiece of the bailout, and instead will concentrate on injecting capital into banks.
Nov.23, 2008 The Treasury says it will invest another $20 billion in Citigroup Inc. to rescue the ailing banking giant. Federal authorities also pledge to backstop large losses Citigroup might absorb on $306 billion in real estate-related assets.
Dec.16, 2008 The Fed cuts it's overnight lending rate from one percent to virtually zero, establishing a record-low range of zero to0.25 percent as central bankers pledge to use "all available tools to promote the resumption of sustainable economic growth."
Jan.20, 2009 Barack Obama becomes the 44th US President and the 1st African-American to hold the post. "The state of our economy calls for action, bold and swift, and we will act - not only to create new jobs, but to lay a new foundation for growth" he says.
Feb 10, 2009 Treasury Secretary Timothy Geithner announces plans to expand the government's bank bailout program, but details are vague. Stock prices plunge.
Feb.13, 2009 With little Republican support, Congress passes a massive $787 billion stimulus bill aimed at battling the deep recession. Still savoring his 1st major victory in Congress, Obama says the bill marks a "major milestone on our road to recovery."
May.5, 2009 Has Karl Marx's vision have at long last come to fruition as workers of the world (ok ok, the United Auto Workers) seize control of the means of production? With Chrysler forced into bankruptcy the week before, the UAW is apparently poised to own a majority stake & more than a third of GM. Too bad the revolution might not save their jobs. Oh, how the lickspittle suffer.
Jun.30 2009 The 1st half of 2009 ends with GDP shrinking at a rate of about one percent, compared with 6.4 percent decline in the 1st quarter, suggesting that the worst of the recession is over.
Sept.4 2009 Unemployment rate rises to 9.7 percent, its highest level since 1983. although the pace of job losses is moderating.
A SHORT, QUICK HISTORY OF RECESSIONArduous money trouble in times of credit crisis ain't called 'hard times' for nothing:
1929 saw the Great Crash sending ticker tapes into a frenzy signalling the end of prosperity. The disbelief of bank failure was traumatic & although the dow jones slightly rebounded, it plummeted again & by the time life had sputtered back in
1933, the worst days of the
Depression had passed but it took decades for markets to regain their pre-cash value. The Christmas
1957 consumerism bottoming-out was due to a decline in international trade, car sales at a post-WWII low & rising unemployment. It took 3 times for the first 3 months of
1958 to see recovery. The
1973 oil n' energy crisis saw high inflation spinning its wheels. An early slip led to a rally only to run itself into a ditch from 1000 points on the index to a low of 577 by
1974. The dual falling of stocks in
1980 and
1982 with Reagan still in the early days of his Presidency involved a false start on the index with a jump by winter only for the gains to crumble again by spring. In
1987 the market crashed again. Restoration was relatively rapid & the recession that hit in
1990 caused the index to nosedive with nearly 20% of its value evaporating that summer. The overheated economy led to wildly unpopular wage freezes & unpaid leave for civil servants.