Belfast Telegraph

Global crisis goes full circle

It is almost four years since the first credit crunch, and again the world's economy is staring into the abyss. Nikhil Kumar charts the chain of events that has led us right back to square one

2007

August 9

France's BNP Paribas suspends three funds because it cannot place a value on their packages of sub-prime mortgage debts from the US. Cracks begin to appear in the global financial system amid concern about complex products, based on questionable mortgages in the US.

September

News emerges that Northern Rock has asked for emergency support from the Bank of England, triggering the biggest UK bank run in a century.

2008

January 21

World stock markets record their biggest fall since 9/11.

February

Northern Rock nationalised.

March

JPMorgan, backed by loans from the New York Fed, buys crisis-hit Bear Stearns, Wall Street's fifth biggest investment bank.

April

Sense of crisis escalates as IMF warns potential losses from global credit crunch could reach $1tn.

September 7

The US Treasury takes over Fannie Mae and Freddie Mac, the government-backed mortgage giants that played a leading role in expanding sub-prime loans.

September 15

Lehman Brothers, Wall Street's fourth largest investment bank, files for bankruptcy, triggering panic in the markets. Bank of America says it will buy troubled stockbroker Merrill Lynch in a $50bn deal.

September 16

US government seizes control of AIG. The $85bn intervention comes after the Lehman collapse sends markets into an indiscriminate selling frenzy.

September 17

The events in the US spark a sell-off in UK banking stocks as investors flee. HBOS agrees to be bought by Lloyds TSB.

October 3

President Bush signs the Emergency Economic Stabilisation Act into law.

October 8

Prime Minister Gordon Brown unveils a £500bn plan to prop up Britain's ailing banks.

December 16

US cuts interest rates to near zero - the lowest in the history of the Federal Reserve.

2009

April

G20 leaders gather in London; Gordon Brown hails $1tn recovery package for the world economy. Measures include a tripling of the IMF's resources to $750bn.

November

Dubai is at the centre of a storm after state-backed Dubai World shocks investors by asking for a debt standstill.

November 30

Greece feels the heat after markets focus on its debts. The country's Finance Minister George Papaconstantinou says: "We are concerned the international markets are looking at us in a worried way."

December

Fitch cuts Greece's credit rating to BBB+. Standard & Poor's (S&P) and Moody's follow suit.

2010

January

Greece announces plans to cut its deficit, sparking protests. Spain plans to save €50bn.

April

Eurozone finance ministers approve €30bn aid for Greece. S&P cuts Portugal's ratings by two notches.

May

€750bn financial safety net set up to protect the eurozone.

July

European banks are "stress tested" to see how they would deal with an escalation in the crisis. Of the 91 tested, seven fail and 17 pass by narrow margins.

August

S&P cuts Ireland's credit rating.

September

Spain steps up austerity drive with a tough 2011 budget.

November

The EU and IMF begin working on a rescue package as Ireland announces €15bn austerity plan. The EU approves €85bn rescue for Ireland. Republicans take control of the US House of Representatives with a promise to scale back spending.

2011

April

Portugal follows Greece and Ireland in asking for EU help. The €78bn bailout is approved in the middle of May.

May

US reaches its $14.3tn debt limit.

June

IMF says US must strike a deal so that the world can avoid a "severe shock".

July

EU leaders prepare another rescue package for Greece.

August

In the US, Republicans and Democrats finally reach a compromise, but stock markets tumble again as fears grow that Italy and Spain may need a bailout.

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