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


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.


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


January 21

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


Northern Rock nationalised.


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


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.



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.


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."


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



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


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


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


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.


S&P cuts Ireland's credit rating.


Spain steps up austerity drive with a tough 2011 budget.


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.



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


US reaches its $14.3tn debt limit.


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


EU leaders prepare another rescue package for Greece.


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.