Now that the financial year 08-09 is over — and the world hopes that it won’t see one of its like for a long time, particularly not 09-10 — a little reflection on how it all unfolded (exploded, crashed, broke, boomed, etc).
11: The US Federal Deposit Insurance Corporation takes over IndyMac in the fourth-largest bank failure in US history
19: US Federal Reserve chief Ben Bernanke says losses in the “fast-unravelling subprime lending market could top $100 billion”.
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30: US President George W Bush (doesn’t that all feel like a long time ago) signs into law the Housing and Economic Recovery Act of 2008, which authorises the Federal Housing Administration to guarantee up to $300 billion in new 30-year fixed rate mortgages for subprime borrowers if lenders write-down principal loan balances to 90% of current appraisal value.
3: Dow Jones index finishes down 2.1%, following a fall a week earlier of over 4%. Fears spread about how many financial firms are exposed to the emerging turmoil in the US domestic mortgage market.
3: Finance Minister Lindsay Tanner plays down the prospect of a local recession to the ABC. Nevertheless, Young Liberals who’d purchased “Kevin 07, Recession 08” t-shirts begin to feel vindicated.
16: Value in RAMS shares halves as the Aussie lender’s exposure to the US sub-prime crisis begins to emerge.
7: The US Government takes over Fannie Mae and Freddy Mac, which sends Wall Street into a panic because so many banks and mortgage lenders relied on them to facilitate the mortgage market. Bankers across the country assume foetal position.
10: Lehman Brothers report US$3.9 billion loss in third quarter; the company files for bankruptcy five days later.
18: US Treasury secretary Henry Paulson and Ben Bernanke meet with key legislators to propose a $US700 billion emergency bailout through the purchase of toxic assets. Paulson’s extensive 3-page plea for the money includes a provision that will exempt his spending from court challenges. Congress axes the legal cloak, prompting Representative Barney Frank to quip, “We have disexempted him.”
7-8: The Icelandic government takes control of its three largest banks as the British government invokes anti-terrorism legislation to freeze the bank’s UK-based assets. Iceland’s almost complete economic collapse will lead to the resignation of the government in three months’ time. World is shocked at how quickly an entire country can disintegrate until it is established that Iceland has only six or seven inhabitants.
15: A reporter asks Kevin Rudd to describe the sorts of discussions he’s been having with Treasurer Wayne Swan and Finance Minister Lindsay Tanner. Rudd claims to have uttered the phrase “dash it, Lindsay,” and goes on to say that “extreme capitalism” is to blame for the GFC. Rudd’s minders are later seen drinking heavily.
20: “This thaw — took a while to thaw, it’s going to take a while to unthaw”: wise words from George W Bush on the lack of liquidity in the markets.
15: The G20 meet in Washington DC to discuss a coordinated plan to deal with the GFC. A fortnight earlier, The Australian had claimed that President W Bush didn’t actually know what the G20 was.
17: K-Rudd is accused of leaking a false conversation between himself and Dubya in a bid to prove he’s in with the cool kids; Australian public’s reaction is largely “whatever”.
18: Big Auto’s top three CEOs travel to Washington to cry poor, and to request $US25 billion in bailout money – and take their private jets along. One congressman later tells CNN it’s like “seeing a guy show up at the soup kitchen in high hat and tuxedo”.
8: The Rudd Government’s $10.4 billion fiscal stimulus package begins appearing in bank accounts across the country. (And, as it happens, outside the country – it later emerges that $40 million in stimulus handouts have been wasted on expats and the deceased.)
13: German Chancellor Angela Merkel announces a 50 billion euro stimulus package designed to combat the effects of the GFC on Europe’s largest economy.
16: The Irish Government announces its plan to nationalise the beleaguered Anglo Irish Bank.
27: The Icelandic Government becomes the second in Europe, after Belgium, to succumb to the GFC. Iceland’s coalition leadership disintegrates amid widespread anger among the Icelandic public at the collapse of their banking system and currency. Says The Australian:
Protests in front of the parliament that began last fall drew crowds of thousands that quickly turned raucous – pelting the parliament building with eggs and rolls of toilet paper, and displaying effigies of Mr Haarde.
27: More stimulus as Canada’s conservative government unveils a modest $32 million package to aid its ailing economy.
10: US Treasury Secretary Timothy Geithner announces a $2.5 trillion plan to flood the financial markets.
13: Australia gets its stimulus too after the Senate passes the Rudd Government’s $42 billion package.
17: Stimulus abounds amid criticism as President Obama signs a $787 million package. Liberal Democrats had hoped for a bigger package from the President.
10: The US Justice Department files 11 charges against Bernard L. Madoff, including money laundering, theft and perjury, for his role in a Ponzi scheme that robbed investors of $US65 billion.
30: The Obama Administration gives General Motors 60 days to create a survival plan to weather its financial woes.
2: G20 leaders, meeting in London, come up with a $1 trillion deal in response to the GFC. The main focus of their ire is tax havens and protectionism.
9: Unemployment in Australia reaches 5.7% in March.
24: First quarter figures show the British economy shrank at the fastest rate in 30 years with GDP falling 1.9%, the sharpest since the Thatcher years.
30: Chrysler, founded in 1925, becomes the first ever major US car company to file for bankruptcy.
21: California, the world’s eighth largest economy and in crisis, is denied a lifeline by uncooperative voters.
1: General Motors – symbol of American entrepreneurial innovation — files for bankruptcy, “forcing the 100-year-old automaker once seen as a symbol of American economic might and dynamism into a new and uncertain era of government ownership.” On a more positive note, the Chrysler sale to Italian group Fiat SpA is approved, after the American company filed for bankruptcy in April.
10: Australian consumers are duly stimulated, reporting the biggest jump in consumer confidence in 22 years.
11: The Japanese economy slides further into recession as first quarter figures report a 14.2% drop in GDP.
29: Bernie Madoff, condemned as “extraordinarily evil” by District Judge Denny Chin, is sentenced to 150 years in jail for his crimes, on the penultimate day of the financial year.