8/14/2019 Recession in USA - FFW

1/19

2008 Recession Global &

US

8/14/2019 Recession in USA - FFW

2/19

US Subprime Crisis-Timeline

1990 - 2003

Progressive discount rate cuts by Federal Reserve Bank (from 7% in1990 t0 0.75% in 2003 . Housing boom begins (8% increase2002 to 2003) 1999

Fannie Mae eases credit terms for subprime loans

2002 President sets target for expanding minority home-owning .2003 - 2006

Progressive discount rate increases (from 0.75% to 6.25% in 2006).Housing boom continues (Average 2006 house price about 70%above 2000 level)

2007June

25 Two Bear Stearns hedge funds threatenedby losses frommortgage defaults

August

6 American Home Mortgage bankrupt 9 French bank BNP Paribas freezes funds because it is .unable to

8/14/2019 Recession in USA - FFW

3/19

US Subprime Crisis -Timeline

2008

January

US mortgage lender Countrywide soldto Bank of America after its share pricedrops by 48%

March

Bear Stearns bank rescued following losses relating to mortgage-related

assets by its hedge funds. [April

Global subprime crisis costs could reach $1 trillion (IMF estimate)

IMF forecasts US recession and world growth slowdownJune

US house prices 20% below 2006 peakAugust

Fannie Mae and Freddie Mac rescuedSeptember

7Fannie Mae and Freddie Mac nationalized

12 Lehman Brothers bankrupt with losses of up to $160 billion to holders ofits unsecured bonds.

8/14/2019 Recession in USA - FFW

4/19

UK Housing Prices

8/14/2019 Recession in USA - FFW

5/19

World Recession Time Line

YEAR 2008January

US mortgage lender Countrywide sold to Bank of America afterits share price drops by 48%

February

Northern Rockbank nationalised

March

Bear Stearns rescuedApril

Global subprime crisis costs could reach $1 trillion (IMF estimate)

IMF forecasts US recession and world growth slowdown Bank of England announces Special Liquidity SchemeJune

US house prices 20% below 2006 peakAugust

Fannie Mae and Freddie Mac rescued

8/14/2019 Recession in USA - FFW

6/19

World Recession Time Line

September

7Fannie Mae and Freddie Mac nationalized12Lehman Brothers bankruptwith losses of $365 billion toinsurers of its bonds.

No government rescue.$785m Lehman funds written off-money market investors suffer massive loss

16Money market panic17 American Insurance Group nationalised

UK's Halifax/Bank of Scotland (HBOS) accepts rescue bid fromLloyds TSB

18Paulson Rescue plan proposed (US Treasury scheme to take"toxic assets" out of the US banking system)

UK temporary ban on short selling 19 Fed supports money markets Federal Reserve Bank ready to

finance loans from the money market

23Federal Reserve Bank protectsGoldman Sachs and MorganStanley banks

26 Washington Mutual closed by regulator. Assets sold to JPMorgan

Chase Coordinated support by US, UK, European and Swiss central banks .

8/14/2019 Recession in USA - FFW

7/19

World Recession Time LineOctober 3 Modified $700 billion Paulson Plan (to purchase toxic assets)

approved by Congress

Dutch Fortis and ABN Amro banks nationalized .German HypoReal Estate bank rescuedIcelandic economic crisis".

6 US Wachovia Corp to be rescued by Wells Fargo takeover

7 More European bank rescues

UKcredit insurer withdraws cover . 8 500 billion UK rescueplan (the "Brown plan" to inject capital, take equity in banks andguarantee interbank lending)

Coordinated interest rate cut of half per cent by the central banks ofthe United States, Europe, China, Britain, Canada, Sweden and

Switzerland . 10 G7 Action Plan agreed by finance ministers (in a broadly worded

statement, lacking in specifics)

12EU leaders adopt UK rescue plan (to inject capital, take equityin banks and guarantee interbank lending)

14President Bush announces new plans (to inject capital, takeequity in banks and guarantee interbank lending)

19 German bank rescue package agreed

8/14/2019 Recession in USA - FFW

8/19

November 12 US government plan to purchase "toxic assets" abandoned

23Citigroup Rescue - US government makes $20 billion cashinjection and guarantees against loss on $306 billion of illiquidassets

US Federal Reserve Bank promises to buy up to $500 billion worth of

mortgage-backed securities guarantee by Fannie Mae and FreddieMac and up to $100billion worth of their direct debt

2008, 4th quarter

World

The oil price falls. (November US light $60/barrel, down fron July $147

peak). United States Federal Reserve Bank promises to buy up to $500 billion worth of

mortgage-backed securities guarantee by Fannie Mae and FreddieMac and up to $100billion worth of their direct debt. FederalReserve Bank cuts its discount rate to 0 to 1/4 per cent Europe

European Central Bank cuts MRO rate from 3.75% to 2.5" Bank of

England cuts bank rate from 4.5% to 2% Asia China announces a $586 billion fiscal stimulus

World Recession Time Line

8/14/2019 Recession in USA - FFW

9/19

Recession continues in 2009

2009, 1st quarter

US Congress approves stimulus package - American Recovery and

Reinvestment Act(H.R. 1) - a $839 billion stimulus package

European Central Bank cuts MRO rate to 2% Bank of England

cuts discount rate cut- from 2% to 1.5% . banks lent 185 bn

under the Special Liquidity Scheme

2009, 2nd quarter Bank of England cuts discount rate to 0.5% and announces 75

billion asset purchase under its Asset Purchase Scheme . The

beginning of its programme ofquantitative easing

8/14/2019 Recession in USA - FFW

10/19

Domino Effect

8/14/2019 Recession in USA - FFW

11/19

Here you go!

8/14/2019 Recession in USA - FFW

12/19

Global Recession

C o u n trie s in re ce ssio n a s o f M a rch

2 0 0 9

S e v e re ly a ffe cte d co u n trie s

8/14/2019 Recession in USA - FFW

13/19

Banks Failure

8/14/2019 Recession in USA - FFW

14/19

Bank Failures By Month

8/14/2019 Recession in USA - FFW

15/19

Auto Industry Collapses

8/14/2019 Recession in USA - FFW

16/19

Auto Majors Stumble

8/14/2019 Recession in USA - FFW

17/19

Auto Shutdown Effect onJobs

8/14/2019 Recession in USA - FFW

18/19

Job Trend Major Industries

8/14/2019 Recession in USA - FFW

19/19

Bankruptcy Filing Rate