A Look Back at the US Financial Crisis: 2008

They say that hindsight is 20-20, and never is that more true than in the financial markets.

Inspired by this great timeline from the St. Louis Federal Reserve we are looking back on my thoughts at various points throughout the US Financial Crisis  In a post last week we looked at 2007 which set the stage for the crisis with trouble in the MBS industry and four rate cuts by the Federal Reserve.

Now lets look at 2008...

On January 22nd the Fed had an unexpected rate cut of 75bp three days later in Short and Shallow or Long and Deep I say the Fed had slashed interest rates by 100 bp and now has cut another 75 bp with an additional 50 bp likely to be delivered on January 30. I was right because on January 30th this did happen. I discuss the impact on dollar two days later on February 1st in The Dollar: Takes a beating, Can it Keep on Ticking.

On February 13th Bush signed the Economic Stimulus Act of 2008 into law. The next week on February 17th Northern Rock is taken into state ownsership by the Treasury of the United Kingdom.

On March 7th in If to Err is Human, is Forgiveness Really Divine I state It is clear that the financial crisis that began in the US housing market and the derivatives tied to it has metastasized well beyond it. That same day the Fed announces $50 billion TAF auctions, extends the TAF for at least 6 months, and initiates a series of term repurchase transactions expected to cumulate $100 billion.

On March 11th The Federal Reserve Board announces the creation of the Term Securities Lending Facility (TSLF) to lend up to $200 billion of Treasury securities and extends increases swap lines with the ECB and SNB by $12 billion.

On March 13th in Why Intervention to Support the Dollar Remains Unlikely I point out The Bush Administration is the only Administration since before the end of the Bretton Woods regime not to intervene in the foreign exchange market.

On March 14th annouces the financing arrangement for JP Morgan Chase to purchase Bear Sterns.

On March 17th I appear on CNBC and maintain that the central banks will not intervene to support the dollar.

The next day on March 18th the Fed cut rates by an additional 75bp.

I state on April 4th in Lost in Translation: Dollar is a Good Buy, not Goodbye that the aggressive U.S. policy easing and the financial crisis, which none less than former Federal Reserve Chairman Alan Greenspan has said is the worst since the Great Depression, contributes to the lack of attractiveness of US assets. 

On April 30th the Fed cut rates by another 25bp.

On June 3rd Bernanke spoke at the International Monetary Conference in Spain which I discussed several days later on June 8th in Bernanke and Trichet: Comedy or Tragedy? 

On July 13th the NY Fed is authorized to lend to Fannie Mae and Freddie Mac. The same day the Treasury Department announces a temporary increase in the credit lines to Fannie Mae and Freddie Mac. On July 14th my webmaster begins her career on Wall Street.  The next day on July 15th the SEC prohibits naked short selling on securities of Fannie Mae, Freddie Mac, and primary dealers at commerical and investment banks. I explore all this several days later on July 18th in Fannie, Freddie, Hank, Ben, and the Dollar.

On July 30th Bush signs the Housing and Economic Recovery act of 2008.

On August 28th Barack Obama is offically nominated for president by the democratic party. He gives this speech.

The next day on August 29th John McCain anounced Alaskan govenor Sarah Palin as his running mate. This lead to a media frenzy, including this iconic SNL sketch:

And my personal favorite which declares the Oval Office a bummer free zone:

On September 7th Fannie Mae and Freddie Mac are offically taken over by the US government. 

On September 15th Lehman Brothers filed for Chapter 11 bankruptcy protection, the largest bankruptcy filling in U.S. History. The same day Bank of America announces its intent to purchase Merril Lynch & Co. for $50 billon.

The next day on September 16th the Federal Reserve agreed to lend up to $85 billion to AIG.

On September 17th the SEC announces a tempoary emergency ban on short selling in stocks of all companies in the financial sector.

On September 18th I discuss the impact of the financial crisis thus far and swap lines on the dollar in this CNBC interview:

On September 19th I discuss the role of government in the financial crisis thus far in Moral Hazard and the End Game.

On September 21st the Federal Reserve approces applications of investment banking companies Goldman Sachs and Morgan Stanley to become bank holding companies.

On September 24th Republican Presidential nomine John McCain announced he would suspend his campaign so he could work with Congress on the Emergency Economic Stablization Act of 2008. The same day I discuss the Global Economic Outlook in a Foreign Policy Association Panel to discuss the current state and outlook of the financial markets.

McCain resumed his campaign two days later on September 26th. The same day the FOMC increases existing swap lines with the ECB and SNB by $10 and $3 billion respectively. I discuss this the same day in Fire and Ice.

On September 29th the $700 billion Emergency Economic Stablization Act of 2008 failed a house vote, the Dow Jones fell nearly 778 points, the biggest single day loss ever. The same day the FOMC authorizes a $330 billion expansion of swap lines with nine central banks. On October 1st the Senate approved a revised version of the bill.

On October 3rd Wells Fargo announces a competing proposal to purchase Wachovia that does not require assistance from the FDIC. Congress passes and Bush signs into law the Emergency Economic Stabilization Act of 2008. The same day I discuss the death of capitalism and free markets in What Happened to Free Markets.

On Octber 8th the Fed reduces rates by 50bp.

On October 11th the DJIA caps its worst week ever with the highest volatility ever recorded in 112 years, having dropped 22% over the previous eight trading days. The same day leaders from the G7 meet in Washington. On October 12th the Federal Reseve approves the sale of Wachovia to Wells Fargo. The next day on October 13th they increase swap lines with four central banks. Three days later on October 16th I discuss potential additional steps policy makers could take in the financial crisis in What Next?

On October 29th the Fed reduces rates by another 50bp and establishes swap lines with several emerging market central banks. The same day the IMF announces the creation of a short term liquidity facility. Two days later on October 31st I examine who should be blamed for the financial crisis in It is All Your Fault.

On November 4th history was made as  Barack Obama became the first African American to be elected President of the United States and delivers this now iconic speech in my hometown of Chicago:

Later that week on November 7th I examined the worry of many that capitalism is being replaced by socialism in Socialism or National Socialism?

The next week on November 14th I discuss the strength of the dollar in this CNBC interview:

The next day on November 15th the group of the 20 largest economies meet in Washington D.C.

On November 18th executives of Ford, General Motors, and Chrysler testify before Congress requesting access to the TARP federal loans. The same day Mitt Romney publishes an opt ed in the NY Times entitled Let Detroit Go Bankrupt. Two days later I discuss the currency implications of the crisis in Why No Currency Crisis.

On November 25th the US Treasury announces they will provide $20 billion of TARP money for Citigroup.

On November 26th the Fed approves Bank of America acquiring Merrill Lynch.

On Friday December 5th the Department of Labor announces the US lost 533,000 jobs in November, the biggest monthly loss since 1974, sending the unemployment rate from 6.5% to 6.7%.

On December 10th the FDIC reiterates the guarentee of federal deposit insurance in the event of a bank failure.

On December 11th the FBI announced the arrest of Bernie Madoff with regards to a Ponzi scheme, which would later be reveled to be the largest financial fraud in U.S. history. Well if you don't count this one:

On December 19th the US Treasury authorizes loans up to $13.4 billion for General Motors and $4 billion for Chrysler.

On December 29th I appear on CNBC and discuss currencies to watch in 2009, including the Euro:

A Look Back at the US Financial Crisis: 2008 A Look Back at the US Financial Crisis: 2008 Reviewed by magonomics on March 19, 2012 Rating: 5
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