anatomy of a downturn a closer look at the global ‘credit crunch’
TRANSCRIPT
Anatomy of a downturnA closer look at the global ‘credit crunch’
The ‘credit crunch’ may have its roots in the US, but it’s
now a global problem
The Rudd Government has moved to protect bank deposits for the next 3 years
Governments in Great Britain, Belgium, the Netherlands and even Iceland have been forced to bail out some of their biggest banks
Importantly, the Australian banking system, which is more regulated than that in the US, has held up very well
January 2008
US Federal Reserve cutsinterest rates by 0.75% amidfears the US economy could fall into recession
JP Morgan buys US investment bank Bear Stearns in an ‘emergency’ rescue deal US Federal Reserve provides US$200 billion to commercial banks in another bid to free up market liquidity
March 2007
Anatomy of a downturna closer look at the global ‘credit crunch’
Anatomy of a downturna closer look at the global ‘credit crunch’
April 2008
International Monetary Fund warns losses related to the ‘credit crunch’ could top US$1 trillion
September 2008
7 September 2008
US government seizes control of mortgage lenders Fannie Mae and Freddie Mac
15 September 2008
Lehman Brothers files for bankruptcy. Merrill Lynch is bought by Bank of America for US$50 billion
16 September 2008
American International Group (AIG), the US’s biggest insurer, receives an US$85 billion loan from the US Federal Reserve to stave off bankruptcy
28 September 2008
US bank, Washington Mutual, is seized by US regulators in the biggest US bank failure in history
Anatomy of a downturna closer look at the global ‘credit crunch’
September 2008
28 September 2008
Britain, Belgium and the Netherlands are forced to bail out several major banks. US government announces US$700 billion plan to rescue Wall Street
29 September 2008
Citigroup bids for US bank Wachovia in a deal backed by US authorities
US House of Representatives narrowly rejects the US$700 billion bailout plan by a vote of 228-205, sending global share markets tumbling
30 September 2008
$55 billion dollars is wiped off the Australian share market in a single day
One day later, the market recovers by more than 4%
Anatomy of a downturna closer look at the global ‘credit crunch’
3 October 2008
After a second vote, the US House of Representatives passes the US$700 billion bailout plan
6 - 10 October 2008
Concerns that bailout plan won’t prevent a global recession sends global shares sliding:
Japan -24.3%Europe -22.2%UK - 21.0%US -18.2%
Australia -15.6%
October 2008
The list of casualties keeps growing …