The worst economic crisis in decades played out like a soap opera of epic proportions - the bad guys were vilified, speculation ran wild and drama unfolded on an almost daily basis.
We've tracked the credit crunch in the UK and beyond, from the very first rumblings of trouble to the official end point, and present it here in what may be the most detailed timeline of the recession online. By using the links alongside each headline, you can find more detail about that particular event - however, rather than use traditional news sources, we've linked to quality blogs that reported on the news as it broke in an effort to accurately reflect the sentiments at ground level.
Needless to say, money.co.uk is not responsible for the quality of outside content, nor are we affiliated with any of the opinions expressed therein. That said, it is interesting to note how accurate many of the predictions made by the bloggers below came to be.
Date
Headline
Comments
8-Feb-2007
HSBC saves for losses as mortgage business deteriorates.
2-Apr-2007
Top US lender New Century Financial file for bankruptcy.
30-May-2007
Kensington bought out for £283m.
18-Jul-2007
Bear Stearns tells investors that they should expect to receive little money after rival banks refuse to buy them out.
9-Aug-2007
French Investment bank BNP Paribas, hit by mortgage credit problems.
13-Sep-2007
Northern Rock asks for and is granted emergency financial support from the Bank of England.
18-Sep-2007
US Federal Reserve cuts the main interest rates by half a percentage point to 4.75%.
19-Sep-2007
Bank of England auctions £10 billion.
1-Oct-2007
Huge financial institutions such as Swiss Bank UBS, Citigroup and Credit Suisse report loss in earnings.
17-Oct-2007
Moneyfacts found that 40% of the mortgage products have been withdrawn from the UK market.
30-Oct-2007
Merrill Lynch's Chief resigns after huge losses.
6-Dec-2007
Bank of England reduces Bank Rate by 0.25 percentage points to 5.5%.
13-Dec-2007
US Federal reserve pushes action asking 5 leading banks around the world to offer billions of dollars in loans to banks.
9-Jan-2008
The World Bank's prediction is that the global economic growth will slow down by 2008. Developing countries are set to play a crucial role in rebuilding the economy.
21-Jan-2008
Global stock markets suffer one of their biggest falls since 2001, including London's FTSE 100 index.
17-Feb-2008
16-Mar-2008
JP Morgan Chase pay $2 for a share in the dwindling Bear Stearns, less than on tenth of the firm's market price.
28-Mar-2008
Nationwide begin toughening lending rates. They predict house prices will fall by the end of the year.
8-Apr-2008
International Monetary Fund (IMF) warns possible losses which equate to $1 trillion due to the credit crunch.
10-Apr-2008
Bank of England cuts interest rates to 5%, a historic low.
21-Apr-2008
Bank of England gives £50 billion of the Taxpayers' money to struggling banks.
22-Apr-2008
Bank of Scotland aim to raise £10 billion from shareholders through a rights issue.
30-Apr-2008
Nationwide report first 1% house price fall in 12 years.
25-Jun-2008
Barclays plan on raising £4.5 billion in a share issue.
8-Jul-2008
Figures suggest UK could hit recession within months, suggests British Chamber of Commerce.
29-Aug-2008
Bradford and Bingley announces reported losses for the last 6 months.
30-Aug-2008
Alistair Darling declares a warning that the economy is facing its worst crisis for 60 years.
2-Sep-2008
The treasury announce a one year extension in stamp duty exemption.
7-Sep-2008
Lenders Fannie Mae and Freddie Mac receive a bail out from the US Government in one of the biggest rescues in US history.
15-Sep-2008
Lehman Brothers file for Charter 11 bankruptcy protection. Merrill Lynch also gets taken over by the Bank of America.
17-Sep-2008
Lloyds TSB announces that they will take over the biggest mortgage lender in the UK, HBOS.
28-Sep-2008
European banking and lending giant, Fortis is partly nationalised.
29-Sep-2008
Bradford and Bingley is nationalised.
30-Sep-2008
Europe's third largest bank, Dexia is bailed out.
3-Oct-2008
UK's Financial Services Authority raise the limit on deposit guarantees.
8-Oct-2008
UK Government release details regarding a £50 billion rescue package for the banking system.
11-Oct-2008
G7 nations issue a five point plan to rescue credit markets.
13-Oct-2008
Announcement that the UK Government will pump billions of pounds into three UK banks in the nationalisation process.
14-Nov-2008
The Eurozone slips into recession.
8-Jan-2009
The Bank of England cuts rates to 1.5%, the lowest in its 315 year history.
14-Jan-2009
Plans for the UK government to plough £20 billion loans to small and middle sized businesses revealed.
23-Jan-2009
UK officially enters recession. Office for National Statistics reported that the Economy had shrunk through the last two quarters of 2008.
28-Jan-2009
World economic growth set to fall by 0.5%.
5-Feb-2009
Bank of England cuts interest rates to just 1%.
10-Feb-2009
Banks apologise for their failures with RBS and HBOS.
2-Mar-2009
HSBC seeks to raise £12.5 billion from shareholders, shares fall.
14-Mar-2009
The G20 pledge to do whatever is necessary to fix the global economy at a London Summit.
22-Apr-2009
Alistair Darling predicts that the British Economy will shrink by 3.5% in 2009.
10-Jun-2009
Global oil consumption shrinks for the first time since 1993, the largest drop for 27 years.
24-Jun-2009
The UK economy's rate of decline hits 5.6%, the biggest fall since records began in 1955.
11-Sep-2009
FTSE 100 soars through the 5000 mark for the first time in 2009, but quickly falls.
15-Sep-2009
Bank of England's Mervyn King claims the British economy is growing again.
13-Oct-2009
The rate of UK inflation falls to the lowest level in five years, against expectations.
24-Oct-2009
Britain remains in recession as economic figures unexpectedly shrink for the sixth consecutive quarter.
26-Oct-2009
Criticism is aimed at the Bank of England for its failed scheme to kick-start lending to medium-sized businesses.
1-Nov-2009
Bank of England donate another £25 billion to the £200 billion already in its easing programme.
11-Nov-2009
Bank of England Governor Mervyn King states that the UK economy has only just started recovering.
27-Dec-2009
The Government breaks tradition and declines to knight Ian Luder, Lord Mayor of London, who defended bankers' bonuses.
10-Jan-2010
British finance directors express optimism in a new FTSE-100 survey.
26-Jan-2010
Britain comes out of the recession with a GDP growth of 0.1%.
"There will come a day unlike any other day, an event unlike any other event and a crisis unlike any other crisis. It will emerge out of nowhere at a time no one expects."
Jim Puplava, Financialsense.com, back in 2000.
Jim Puplava, Financialsense.com, back in 2000.
"Ultimately, New Century Financial is to blame for its own bankruptcy. The company rode a wave in the mortgage business without adequate fraud prevention controls and credit underwriting standards in place."
G. Barry Nielsen, Investopedia
G. Barry Nielsen, Investopedia
"In our opinion, Bear Stearns will not be the last firm to experience problems with hedge funds, and investors are in for a further rude awakening as the hedge fund industry continues along its under-regulated path of seeking maximum investment performance. Many hedge funds are overextending, and frankly have no idea as to their actual open positions in the financial world."
William Piracci, Trading Options Lab
William Piracci, Trading Options Lab
"This led to a cataclysmic series of bank collapses all across the increasingly interconnected financial world, leaving policymakers utterly befuddled about what was taking place and how best to deal with it. A downturn enabled by the ideologies of Thatcher and Regan and implemented by large, too-big-to-fail financial institutions, took hold and wreaked havoc."
Sean Kippin, The Beaver Online
Sean Kippin, The Beaver Online
"There is considerable stigma attached to using these facilities, and rightly so. Any bank that had better funding options would use them. When the Fed lowered the discount rate, only a few banks stepped forward after some exhortation by the Fed, and for the most part it was a symbolic gesture by banks who did not need the money."
Yves Smith, Naked Capitalism
Yves Smith, Naked Capitalism
"Given the bubble that started to grow in housing and the corresponding flood of mortgage availability that arose to inflate it, a real need for regulation did start to emerge. But the FSA fluffed it."
Richard Dyson, Thisismoney.co.uk
Richard Dyson, Thisismoney.co.uk
"[Stan] O’Neal now joins a long list of former Masters of the Universe trying to burnish their badly tarnished reputations… The essence of O’Neal’s argument: ‘Hey, I might have run the company into the ground, but it was that damn Cribiore who prevented me from getting a better price for my shareholders.’"
The Big Picture
The Big Picture
"When it comes to our economic crisis, which was triggered by the cratering of the subprime market, both parties share much blame. The policies and actions of both parties, along with their deep coziness with the financial sector, created a bubble that was destined to explode."
Bob Morris, Politics in the Zeros
Bob Morris, Politics in the Zeros
"…All the biggest banking entities that are dying were all celebrated as ‘The Best Bankers on Earth’ and the CEOs were the most highly paid executives on earth. Now, each one falls just one or two years after being crowned… The idea that all of them are fools and knaves is slowly dawning."
Elaine Meinel Supkis, Money Matters
Elaine Meinel Supkis, Money Matters
"JP Morgan agrees to acquire Bear Stearns via a share exchange for the equivalent of $2 per share. The money for this is provided by the Federal Reserve Bank, which agreed to cover any potential losses if the loan defaults. Huh? How come I don’t get no-lose deals like this?"
Jonathan, My Money Blog
Jonathan, My Money Blog
"Prior to the crisis, detractors claimed the fund's role both as a lender and observer was becoming irrelevant, and it took the credit crisis to bring it back to the fore."
Chris Marshall, Citywire
Chris Marshall, Citywire
"A banking system burdened by bad debt and liabilities, with a funding cliff looming; a system that is a borrowing machine, not a lending machine − is one based on the economics of the insane."
Ann, Debtonation
Ann, Debtonation
"Already dark clouds had starting forming over the UK housing market during the summer of 2007. To derivatives market participants… the housing market could not rise any further under these conditions, which is what actually transpired on release of subsequent house price data."
Nadeem Walayat, Marketoracle.co.uk
Nadeem Walayat, Marketoracle.co.uk
"While Barclays seems to have come out of the financial crisis on top, we remain uncomfortable about the risk it has taken on. Investment banking accounts for at least half of its profits."
Erin Davis, Hemstock
Erin Davis, Hemstock
"The Labour Government’s over spending and breaking their own golden rules was the key early policy mistake. Failing to implement suitable capital adequacy requirements for banks and derivatives such as Commercial Mortgage Backed Securities was another."
Martin, Inspired Assets
Martin, Inspired Assets
"Labour’s past role in the economic situation will be forgotten as quickly as George Bush and the Republicans similarly escaped censure in the US − instead we’ll have Gordon Brown and Alistair Darling lauded as economic sages whose wise words the Coalition and the voters should never have spurned."
Andrew Lewin
Andrew Lewin
"The ‘too big to fail banks’ have benefitted from this economic calamity by solidifying their financial prowess by co-opting the government and providing generous handouts to their lot."
My Budget 360
My Budget 360
"Letting Lehman go bust was really the point at which things went most horribly wrong for the financial system, starting a steady process of de-leveraging into a tailspin. The fear factor in the wake of Lehman was the worst thing for the average citizen because neither they nor their political or business leaders could at that point say whether the global financial system would collapse, and it very nearly did."
Martin, Inspired Assets
Martin, Inspired Assets
"The question that occurs to me is how the European banks could have been so monumentally dumb as to amass the amounts of sovereign debt which they purportedly carry."
Tom Lindmark, Wallstreetpit.com
Tom Lindmark, Wallstreetpit.com
"It is thus misleading to argue… that banks ‘exploited a loophole’ by buying assets with low risk weights. Banks that did this were doing exactly what regulators wanted them to do: they were leveraging into securities that the regulators judged safe. Unfortunately, in both cases, the regulators' judgments were wrong."
Jeffrey Friedman, Causes of the Crisis
Jeffrey Friedman, Causes of the Crisis
"Senior bank creditors have done well out of the credit crisis. Tax payers have ridden to the rescue almost every time a bank has wobbled. Each time politicians and regulators have considered hair-cutting senior creditors, they have ended up keeping their scissors in their pocket, alarmed by the predictions of widespread panic if the integrity of senior debt is not respected."
Creditflux
Creditflux
"Whilst taxpayers have had to sit back and watch their hard earned money being ploughed into the banking industry… it seems that the banking industry is not prepared to repay the favour for taxpayers."
The Money Stop
The Money Stop
"The Euro might survive in the long run, but it'll suffer some touch and go moments along the way."
John Stepek, MoneyWeek
John Stepek, MoneyWeek
"over 50% of GDP is generated by SMEs (small and medium enterprises), over 50% of employment is provided by SMEs and more than 60% of innovation comes out of the SME sector."
Stefan Topfer, The Small Business Blog
Stefan Topfer, The Small Business Blog
"While FDIC chairwoman Sheila Bair said the current crisis would be "nothing compared with previous cycles, such as the savings-and-loan days," it’s actually much bigger, because the financial sector had grown to be nearly half the economy by 2006 − as measured by the earnings of the S&P 500."
Douglas French, Dailyreckoning.com
Douglas French, Dailyreckoning.com
"I think the key event for the future is when TARP was changed on-the-fly from purchasing toxic assets to the government being allowed to do what it wants even if that means car companies. That really goes to the heart of what consensual government is all about."
Eddy Elfenbein, Crossingwallstreet.com
Eddy Elfenbein, Crossingwallstreet.com
"The World Bank and regional development banks (such as the African Development Bank) were encouraged to boost lending, backed by commitments of the G20 to raise the capital base of these multilateral banks."
Prof. Jeffrey Sachs, VOX
Prof. Jeffrey Sachs, VOX
"The issue is not one of ‘running out’ so much as it is not having enough to keep our economy running… a shortfall between demand and supply as little as 10 to 15 percent is enough to wholly shatter an oil-dependent economy and reduce its citizenry to poverty."
Matt Savinar, Life After the Oil Crash
Matt Savinar, Life After the Oil Crash
"Having survived the 2007/2008 financial crisis by the skin of their teeth, UK banks, along with many of their counterparts around the world, will be facing significant challenges in the next few years."
Dan Jardine, city.GENT
Dan Jardine, city.GENT
"The Governor claimed to understand the reasons for the panic but never seems to have asked himself what would have happened had he done things differently. Or if he did, he has emerged from the exercise with a remarkable sense of self-satisfaction."
Adrian Hamilton, The Independent
Adrian Hamilton, The Independent
"The countries that had been muddling through divided into two groups: those where government credit was unimpaired continued to muddle through, while countries like Greece and Ireland, where government credit was impaired, had no choice but to pursue austerity and try to restore fiscal confidence."
J. Bradford DeLong, Project Syndicate
J. Bradford DeLong, Project Syndicate
"If they do keep going like this, then there really will be no tomorrow, certainly for the paper pound, which could eventually reach its intrinsic value, which is that of poor quality firelighters."
Andy Duncan, The Cobden Centre
Andy Duncan, The Cobden Centre
"Which approach will be more successful: the British one that will sharply reduce government spending and fiscal deficits, or the American one that believes these deficits are necessary, and perhaps even too small, to get this country out of the recession?"
The Becker-Posner Blog
The Becker-Posner Blog
"All economists and reports have suggested that the recovery will be fragile…"
Tom Lindmark, UK Recession.com
Tom Lindmark, UK Recession.com
"For many including myself it will take years to get back to where we were though hopefully we will then be much wiser for having experienced it."
Martin, Inspired Assets
Martin, Inspired Assets
We'd like to thank all of the above bloggers whose work was indispensable in creating the money.co.uk Credit Crunch Timeline, as well as the following news sources: The Guardian, The Telegraph, New York Times, Wall Street Journal, BBC, Sky News, Reuters and Bloomberg.
