2008 Financial Crisis

2008 Financial Crisis

Full Name
2008 Financial Crisis
Event Type
Primary Date
9/2008

The 2008 Financial Crisis, also known as the Global Financial Crisis, was the worst economic disaster that led to the Great Recession, where housing prices dropped more than the price plunge during the Great Depression of 1929. Considered as the greatest jolt to the global financial system in almost a century, the crisis started in August 2007 with a series of significant financial landslides, pushing the world’s banking system towards the edge of collapse. The immediate trigger was a combination of financial speculations in the financial market, caused by deregulation in the financial industry that permitted banks to engage in hedge fund trading with derivatives. Within a few weeks in September 2008, Lehman Brothers, one of the world’s biggest financial institutions, went bankrupt. As a response to the financial crisis, to prevent further collapse, lending has been encouraged, restoring faith in the integral commercial paper markets, providing banks with enough funds to allow customers to make withdrawals. Two years after the recession ended, unemployment was still above 9%.

Entities

Bear Stearns
Lehman Brothers

Entity Types

Bank
Hedge Fund

Event Types

Bankruptcy
Crisis
Recession

Industries

Banking

Terms

Collateralized Loan Obligation
Derivative
Lending
Mortgage

Mentioned by the Following

Entities

Legg Mason Value Trust

Events

1980s Decade
Lehman Bankruptcy
Subprime Mortgage Crisis

Event Types

Crisis
International Monetary Crisis

People

Adam Posen
Alan Gula
Andrew Sorkin
Charles Mizrahi
Dan Ferris
David Einhorn
Harry Dent
Hugh Hendry
Jake Bernstein
John Hempton
Keith Fitz-Gerald
Larry McDonald
Mark Galasiewski
Michael Lewitt
Mike Markowski
Mohnish Pabrai
Nouriel Roubini
Paul Hodges
Peter Schiff
Simon Mikhailovich
Simon Ogus
Steve Sjuggerud
Tom Hoenig
Warren Buffett

Positions

A Brief History of Doom
A History of the United States in Five Crashes
After Normal
Asset Allocation
Automatic Profits Alert
Big Debt Crises
Bonds
Bull by the Horns
Crashed
Currency Wars
Early Look
Finance and the Good Society
Financial Advice and Investment Decisions
Financial Stability
Financial Terms Dictionary
First Responders
Getting Back to Even
Good Strategy Bad Strategy
Infiltrated
Insights into the Global Financial Crisis
Invested
Investment Management after the Global Financial Crisis
Investment Management: A Science to Teach or an Art to Learn?
Lost Decades
Making the Future
Money and Power
Quantitative Credit Portfolio Management
Risk-Return Analysis: Volume 1
Saving Capitalism From Short Termism
Ten Years After
The Age of Oversupply
The Ascent of Money
The Bullies of Wall Street
The Committee to Destroy the World
The Death of Capital
The Future of Finance
The Greatest Trade Ever
The Honest Guide to Candlestick Patterns
The Next Economic Disaster
The Return of Depression Economics and the Crisis of 2008
The Second Great Contraction
The World in Depression, 1929–1939
Too Big to Fail
Value Investing Tools and Techniques
Volatility at World's End
Volatility: The Market Price of Uncertainty
Volcker
Warren Buffett's Interview With the Financial Crisis Inquiry Commission

Strategies

Collateralized Loan Obligation


  • The Federal reserve and FDIC extended FDIC insurance to 100% of bank deposits (previously was limited to a maxim of 250,000 per account)
Federal Reserve Response
  • Bought long-term assets to push long-term interest rates lower during and after (Quantitiate Easing)
  • Set its overnight lending rate to 0%.
  • After the 2008 Meltdown, the balance sheet grew by 1.4 Trillion in just 94 days (under Ben Bernanke)
    • Cause a reflation and recovery of financial markets
    • Reshaped how the US financial system looks since

Key Sub Events

  • 9/29/2008 : US House of Representatives rejected a bank bailout (Monday)
  • 10/3/2008 : US House passes $700 billion bailout bill (Friday)
    • Some representatives say they were told that the stock market would crater without this bailout


Also Commonly Referred to As:
  • The 2008 Meltdown
  • The Panic of 2008
  • 2008 Financial Panic
  • Global Financial Crisis of 2008-09
  • Great Financial Crisis (GFC)