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Anatomy of a downturn A closer look at the global ‘credit crunch’

Anatomy of a downturn A closer look at the global ‘credit crunch’. Governments in Great Britain, Belgium, the Netherlands and even Iceland have been forced to bail out some of their biggest banks. The Rudd Government has moved to protect bank deposits for the next 3 years.

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Anatomy of a downturn A closer look at the global ‘credit crunch’

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  1. Anatomy of a downturn A closer look at the global ‘credit crunch’

  2. Governments in Great Britain, Belgium, the Netherlands and even Iceland have been forced to bail out some of their biggest banks The Rudd Government has moved to protect bank deposits for the next 3 years The ‘credit crunch’ may have its roots in the US, but it’s now a global problem Importantly, the Australian banking system, which is more regulated than that in the US, has held up very well

  3. Anatomy of a downturna closer look at the global ‘credit crunch’ January 2008 March 2007 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 US Federal Reserve cuts interest rates by 0.75% amid fears the US economy could fall into recession

  4. Anatomy of a downturna closer look at the global ‘credit crunch’ April 2008 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 International Monetary Fund warns losses related to the ‘credit crunch’ could top US$1 trillion

  5. 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%

  6. Anatomy of a downturna closer look at the global ‘credit crunch’ October 2008 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%

  7. The list of casualties keeps growing …

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