Nicolae Sfetcu

The Financial Collapse of 2007–2008, generally referred to in Britain as "the credit crunch" and in the United States as "the credit crisis," first became apparent on August 9, 2007 when a loss of confidence by investors in the value of securitized mortgages resulted in a liquidity crisis which prompted the massive injection of capital into financial markets by the Federal Reserve and the European Central Bank. The TED spread over the period from August, 2007 to the present clearly shows increases dating from that time with a spike in September, 2008. The TED spread is an indicator of perceived credit risk in the general economy.

Predictions

A number of commentators have suggested that if the liquidity crisis continues, there could be an extended recession or worse.

Timeline of events

Events of 2007

• Liquidity crisis emerges August 9, 2007

Events of 2008

January 2008 stock market volatility
Bear Stearns
Federal takeover of Fannie Mae and Freddie Mac
Liquidity crisis of September 2008
American International Group
Merrill Lynch
Lehman Brothers
Economic crisis of 2008
Washington Mutual, sold by FDIC to JPMorgan Chase
Wachovia's banking assests (of $700B) sold to Citigroup for $2.2B
U.S. legislative proposals are made to provide economic rescue
Hypo Real Estate

Links and further reading

• "Congress decides it is worth risking depression Commentary by Martin Wolf in The Financial Times Published: September 30 2008 19:22 | Last updated: September 30 2008 19:22
• "Bailout Plan Is Only One Step on a Long Road" news analysis by Steve Lohr in The New York Times September 28, 2008
• Text and summary of the Emergency Economic Stabilization Act of 2008
• "Wall Street, R.I.P.: The End of an Era, Even at Goldman" article by Julie Creswell and Ben White in The New York Times September 27, 2008
• "Five Days That Transformed Wall Street". The Washington Post.
• Ben S. Bernanke (September 23, 2008). "Text of the testimony prepared for delivery before the Senate Committee on Banking, Housing, and Urban Affairs". The New York Times.
• Henry M. Paulson, Jr. (September 23, 2008). "Text of the testimony prepared for delivery before the Senate Committee on Banking, Housing, and Urban Affairs". The New York Times.
• Nocera, Joe; Andrew Ross Sorkin, Diana B. Henriques, Edmund L. Andrews (2008-10-01). "36 Hours of Alarm and Action as Crisis Spiraled", New York Times. Retrieved on 2008-10-02.  (Background on development of the Treasury proposal to Congress)
• "The Day the S.E.C. Changed the Game" Report by Stephen Labaton Produced by Amy O'Leary in The New York Times: September 28 2008

This guide is licensed under the GNU Free Documentation License. It uses material from the Wikipedia.

Video: Inside Story - Financial crisis and Europe

Technorati Tags: 2007 2008 European Central Bank events Federal Reserve Finance Financial Collapse financial markets injection of capital investors Issues links liquidity crisis mortgages predictions reading the credit crisis the credit crunch timeline video Financial Collapse 2007 2008 the credit crunch the credit crisis investors mortgages liquidity crisis injection

• Printer-friendly version
• Add new comment
• Send to friend
• PDF version