2009 Financial Crisis

The US & Global Financial Crisis – A Timeline of What Happened

Here are some of the most important milestones in the unraveling of the world’s financial systems:

A Timeline of Events: 2007 | 2008 | 2009 | 2010 

January 8: UK interest rates are cut to 1.5%, the lowest level ever.

January 9: The unemployment rate in the U.S. continues to increase. It reaches 7.2% in December 2008, after registering 6.8% in November. 

January 13: China records its largest export decline in a decade.

January 13: Germany announces a EUR 50bn stimulus package.

January 14: December retail sales fall by a larger than expected 2.7% in the U.S. Stock markets drop around the world. 

January 15: The ECB cuts interest rates from 2.5% to 2%.

January 15: The Irish government decides to take over the Anglo Irish Bank rather than inject funds.

January 16: Bank of America is granted a $20bn bail-out from the $700bn bank rescue fund known as TARP (Troubled Asset Relief Program).

January 21: The ECB cuts rates by 50 basis points to 2%.

January 23: Recession is declared in the UK as GDP is revealed to have shrunk by 1.5% in the fourth quarter and 0.6% in the third quarter 2008.

January 28: The IMF says the global economy will grow by only 0.5% in 2009, the lowest rate since the Second World War. The International Labor Organization predicts that the economic crisis will cause 51 million jobs to be lost worldwide this year.

February 5: UK interest rates hit another record low after being cut from 1.5% to 1%.

February 17: President Obama signs the $787bn stimulus package into law. The plan is intended to save or create a total of 3.5 million jobs, improve the nation’s infrastructure and encourage consumer spending.

March 2: AIG reports a first-quarter 2008 loss of $61.7bn, the largest in American history. The group also gets a further $30bn in government rescue funds.

March 5: The Bank of England cuts rates by 50 basis points to 0.5%.

March 11: The ECB cuts its key interest rate from 2% to 1.5%.

March 14: G20 finance ministers declare they will make a “sustained effort” to restore growth in the global economy.  

March 18: The Federal Reserve announces plans to purchase close to $1.2 trillion worth of mortgage-related and government debt in an effort to prop up the economy.

April 2: The G20 summit in London concludes with an agreement to implement measures worth $1.1 trillion to stem the global economic decline.

April 3: U.S. unemployment jumps to 8.5% in March, from 8.1% in the previous month.

April 8: A further ECB interest rate cut takes it to 1.25%.

April 22: The IMF revises up its projection for financial industry writedowns to $4 trillion. Just a quarter of that sum has been written down to date, and nearly half the toxic assets exposure is outside the U.S.

April 22: UK Finance Minister Alistair Darling predicts that the domestic economy will contract by 3.5% in 2009.

May 1: Chrysler declares bankruptcy.

May 4: The Eurozone economy will shrink by 4% in 2009 and umemployment will average 10.9% in the region, according to European Commission forecasts.

May 4: The Treasury announces that ten major U.S. banks need a total of $74.6bn in fresh capital, with Bank of America in the worst condition.

May 7: Eurozone interest rates are cut by 25 basis points to 1%.

June 1: GM, the largest autos manufacturer in the world, files for Chapter 11 bankruptcy protection. The company receives a $30bn loan from the U.S. government to top up the $20.5bn it has already been given.

June 1: Unemployment in the UK increases to 7.1% in the first quarter, from 6.7% in the fourth quarter 2008.

June 10: 2008 was the first year since 1993 that worldwide oil consumption fell, oil producer BP announces. This is a further indication of the severity of the recession.

June 10: Ten of the large banks that received TARP rescue funds in October declare that they will repay the money soon. This will free them from restrictions on executive compensation.

June 11: The Japanese economy shrinks by an annualized rate of 14.2% in the first quarter 2009. This is the biggest GDP contraction in the country’s history, but less severe than previously forecast.

June 24: Fed chairman Ben Bernanke says interest rates will remain unchanged for the moment.

June 25: The U.S. economy recorded negative growth of 5.5% in the first three months of 2009, according to the Bureau of Economic Analysis.

July 2: June unemployment rises marginally to 9.5%. Since the recession began in December 2007, a net 7.2 million jobs have been lost, and the unemployment rate has increased by 4.6 percentage points.

July 20: Neil Barofsky, who runs the TARP bank bailout program, causes an outcry when he testifies that in an absolute worst-case scenario, the government could be forced to bail out the economy to the tune of $23.7 trillion. This astounding figure assumes that every single financial institution in the country fails, and that all their assets are found worthless.

July 24: Lawmakers in California approve a package of spending cuts intended to close the gap on the state’s ballooning budget deficit that presently stands at $26bn. The state has stopped paying some contractors and begun issuing IOUs to others.