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RBNZ TAKES ACTION HOW NEW ZEALAND MANUFACTURING ECONOMIES PLUMMET 10 8 6 20 % 5 GDP % 30 TAIWAN KOREA 4 JAPAN 0 10 2 FINANCIAL ECONOMIES FALL us subprime HOUSING crisis 6 210 200 100 GDP % index 170 60 160 140 130 6 04 05 06 Year 07 08 09 lower INTEREST MARGINS 07 0 09 08 01 02 03 04 05 06 07 08 09 Asian and European manufacturers as their consumer The Reserve Bank cuts the OCR from 8.25% to markets shrink. 2.5%, widens the range of securities that banks can borrow on, expanding its balance sheet significantly. 10 Year CREDIT GROWTH IN AUSTRALASIA NEW ZEALAND ECONOMY CONTRACTS … BUT FORECAST TO RECOVER 4 3 20 20 Financial market stress hits housing, consumption and production in major financial economies in US and 2 15 15 Europe. 1 2 10 5 0 key 1. Bear Stearns announces major losses for two sub-prime backed hedge funds 2. BNP Paribas sub-prime funds frozen 3. Bear Stearns acquired by JP Morgan with US Fed assistance 4. Lehman Brothers files for bankruptcy 5. US Congress passes Troubled Asset Relief Program (TARP) 6. US sharemarket reaches low and starts subsequent rally SPREAD BETWEEN 3-MONTH INTERBANK RATES AND POLICY RATE EXPECTATIONS Major investors suffer losses, become more wary of -1 5 Sep 09 May 09 Jan 07 09 08 07 07 06 05 % UK NZ US 05 04 key 06 OCR (LHS) RBNZ TOTAL ASSETS (RHS) 10 03 sharemarkets crashing. banking strains, combined with worsening economic 05 Year % outlook, send property/commodity prices and liquid markets, LOWER INTEREST MARGINS sharemarkets. Large investment banks fail. Global 02 Subprime housing market collapse spills into 04 key 10 5 Jan 09 US financial shares down over 80% (LHS INDEX) US house prices down over 30% (RHS INDEX) HIGHER INTEREST MARGINS risk Illiquid markets, higher INTEREST MARGINS Sep 08 key 120 JAN 09 -6 May 08 JAN 08 Year MONEY MARKETS JAM Jan 08 0 JAN 07 03 03 The stress then spreads across the world into East -4 term LENDING markets close Sep 07 20 02 02 0 -2 150 May 07 40 01 2 180 80 01 -10 4 190 0 GDP % 120 -5 $NZ billions W E AT H E R e d T H E S T O R M 40 10 0 01 02 03 04 05 06 07 08 -1 -5 09 -2 key AUSTRALIA NEW ZEALAND risk, uncertain about which institutions to trust and in short-term money markets. 01 02 03 04 PRIVATE SECTOR CREDIT ANNUAL GROWTH The squeeze spreads to credit for more than one-year reduce their lending to business and household lending terms and market interest rates soar. sectors. Credit growth in NZ has to date not slowed 05 06 Year 07 08 09 Commodity economies like New Zealand’s are initially Tighter credit conditions means Australasian banks reluctant to lend, resulting in a cash (liquidity) squeeze 0 more sheltered, but a world event of this magnitude had to hit us too. as much as in some other countries. I nternational N ew Z ealand Pre-2007 2007 THE SEEDS THE CRISIS EMERGES NORTHERN ROCK COLLAPSES CONCERNS DEEPEN April – August September December House prices fall, interest rates rise, people cannot repay mortgages. Subprime lenders collapse. Losses make banks wary of lending to each other. Major central banks inject cash into the banking system and cut interest rates. Northern Rock fails because of its dependence on wholesale money market funding (80%), leading to a retail depositors’ run on the bank. UK Government guarantees Northern Rock deposits. Major central banks offer billions of dollars in loans to banks. Bond insurers’ credit ratings downgraded. US banks give high-risk loans to people with poor credit histories (subprime). Loans are bundled into portfolios and sold to investors globally. RBNZ accepts bank bills/bonds as security for lending to ensure banks have cash. 2008 2009 EYE OF THE STORM AUTHORITIES STEP UP RESPONSE FROM CRISIS TO RECESSION UNHAPPY NEW YEAR SPENDING PACKAGES MIXED OUTLOOK January – September September October November – December January February – April May – June Global stock markets’ biggest falls since 9/11. US Fed’s biggest interest rate cut in 25 years. UK, European banks try raising additional shareholder capital to cover losses. US unemployment 6.1%. Fannie Mae, Freddie Mac rescued by US Government. Lehman Brothers collapses – lack of government intervention shocks world markets. UK, US apply quantitative easing measures to stabilise financial systems and encourage lending. US passes $700bn rescue plan. UK Financial Services Authority increases deposit guarantee. European, UK bank bailouts. Countries around the world guarantee retail deposits, including Australia. Major central banks make emergency interest rate cuts. IMF loans to Ukraine, Iceland. China stimulus package. Eurozone, US in recession. Recovery measures in UK, US, Europe. US plans to help Big Three US car makers. US interest rates cut to 0-0.25%. US jobless rate 7.2%. Chinese exports suffer biggest fall in decade. German stimulus package. UK government loan guarantees for SMEs. UK in recession. US $787bn economic stimulus plan signed. G20 agree $1.1 trillion measures. Total financial sector writedowns forecast at $4 trillion. Chrysler files for bankruptcy protection. Ten big US banks fail stress tests, need capital. Carmaker GM bankrupt. UK unemployment 7.1%. Growth forecasts for some countries revised up as indicators stabilise. Ten of largest US banks say able to repay government (TARP) loans. Japanese economy experiences record decline in first quarter 2009 – minus 14.2% on annualised basis. Wide range of liquidity measures announced by RBNZ to ensure banking system has cash. OCR cut to 8%. OCR cut to 7.5%. Crown Deposit Guarantee Scheme established. RBNZ allows residential mortgage-backed securities as collateral to ensure banks have cash. Retail deposit guarantee scheme launched. OCR cut to 6.5%. Crown Wholesale Guarantee facility launched. RBNZ provides term auction lending facility and allows corporate and asset-backed securities to be eligible for lending to ensure banks have ongoing access to cash. OCR cut to 5%. Corporate and asset-backed securities Further cuts to OCR take it eligible to ensure banks have access to 2.5%. to cash. OCR cut to 3.5%. RBNZ releases prudential policy aimed at reducing dependence on short-term wholesale money market funding. NZ economy likely to sustain several quarters of economic contraction, but decline is relatively muted compared with other countries. Bank takeovers and nationalisation in the US, UK, France. US Fed’s $85bn rescue package for biggest insurance company, AIG. US House of Representatives rejection of $700bn Troubled Asset Relief Program (TARP) to buy bad debts from ailing banks sends further shockwaves around the world. Ireland guarantees bank deposits. RBNZ TAKES ACTION HOW NEW ZEALAND MANUFACTURING ECONOMIES PLUMMET 10 8 6 20 % 5 GDP % 30 TAIWAN KOREA 4 JAPAN 0 10 2 FINANCIAL ECONOMIES FALL us subprime HOUSING crisis 6 210 200 100 GDP % index 170 60 160 140 130 6 04 05 06 Year 07 08 09 lower INTEREST MARGINS 07 0 09 08 01 02 03 04 05 06 07 08 09 Asian and European manufacturers as their consumer The Reserve Bank cuts the OCR from 8.25% to markets shrink. 2.5%, widens the range of securities that banks can borrow on, expanding its balance sheet significantly. 10 Year CREDIT GROWTH IN AUSTRALASIA NEW ZEALAND ECONOMY CONTRACTS … BUT FORECAST TO RECOVER 4 3 20 20 Financial market stress hits housing, consumption and production in major financial economies in US and 2 15 15 Europe. 1 2 10 5 0 key 1. Bear Stearns announces major losses for two sub-prime backed hedge funds 2. BNP Paribas sub-prime funds frozen 3. Bear Stearns acquired by JP Morgan with US Fed assistance 4. Lehman Brothers files for bankruptcy 5. US Congress passes Troubled Asset Relief Program (TARP) 6. US sharemarket reaches low and starts subsequent rally SPREAD BETWEEN 3-MONTH INTERBANK RATES AND POLICY RATE EXPECTATIONS Major investors suffer losses, become more wary of -1 5 Sep 09 May 09 Jan 07 09 08 07 07 06 05 % UK NZ US 05 04 key 06 OCR (LHS) RBNZ TOTAL ASSETS (RHS) 10 03 sharemarkets crashing. banking strains, combined with worsening economic 05 Year % outlook, send property/commodity prices and liquid markets, LOWER INTEREST MARGINS sharemarkets. Large investment banks fail. Global 02 Subprime housing market collapse spills into 04 key 10 5 Jan 09 US financial shares down over 80% (LHS INDEX) US house prices down over 30% (RHS INDEX) HIGHER INTEREST MARGINS risk Illiquid markets, higher INTEREST MARGINS Sep 08 key 120 JAN 09 -6 May 08 JAN 08 Year MONEY MARKETS JAM Jan 08 0 JAN 07 03 03 The stress then spreads across the world into East -4 term LENDING markets close Sep 07 20 02 02 0 -2 150 May 07 40 01 2 180 80 01 -10 4 190 0 GDP % 120 -5 $NZ billions W E AT H E R e d T H E S T O R M 40 10 0 01 02 03 04 05 06 07 08 -1 -5 09 -2 key AUSTRALIA NEW ZEALAND risk, uncertain about which institutions to trust and in short-term money markets. 01 02 03 04 PRIVATE SECTOR CREDIT ANNUAL GROWTH The squeeze spreads to credit for more than one-year reduce their lending to business and household lending terms and market interest rates soar. sectors. Credit growth in NZ has to date not slowed 05 06 Year 07 08 09 Commodity economies like New Zealand’s are initially Tighter credit conditions means Australasian banks reluctant to lend, resulting in a cash (liquidity) squeeze 0 more sheltered, but a world event of this magnitude had to hit us too. as much as in some other countries. I nternational N ew Z ealand Pre-2007 2007 THE SEEDS THE CRISIS EMERGES NORTHERN ROCK COLLAPSES CONCERNS DEEPEN April – August September December House prices fall, interest rates rise, people cannot repay mortgages. Subprime lenders collapse. Losses make banks wary of lending to each other. Major central banks inject cash into the banking system and cut interest rates. Northern Rock fails because of its dependence on wholesale money market funding (80%), leading to a retail depositors’ run on the bank. UK Government guarantees Northern Rock deposits. Major central banks offer billions of dollars in loans to banks. Bond insurers’ credit ratings downgraded. US banks give high-risk loans to people with poor credit histories (subprime). Loans are bundled into portfolios and sold to investors globally. RBNZ accepts bank bills/bonds as security for lending to ensure banks have cash. 2008 2009 EYE OF THE STORM AUTHORITIES STEP UP RESPONSE FROM CRISIS TO RECESSION UNHAPPY NEW YEAR SPENDING PACKAGES MIXED OUTLOOK January – September September October November – December January February – April May – June Global stock markets’ biggest falls since 9/11. US Fed’s biggest interest rate cut in 25 years. UK, European banks try raising additional shareholder capital to cover losses. US unemployment 6.1%. Fannie Mae, Freddie Mac rescued by US Government. Lehman Brothers collapses – lack of government intervention shocks world markets. UK, US apply quantitative easing measures to stabilise financial systems and encourage lending. US passes $700bn rescue plan. UK Financial Services Authority increases deposit guarantee. European, UK bank bailouts. Countries around the world guarantee retail deposits, including Australia. Major central banks make emergency interest rate cuts. IMF loans to Ukraine, Iceland. China stimulus package. Eurozone, US in recession. Recovery measures in UK, US, Europe. US plans to help Big Three US car makers. US interest rates cut to 0-0.25%. US jobless rate 7.2%. Chinese exports suffer biggest fall in decade. German stimulus package. UK government loan guarantees for SMEs. UK in recession. US $787bn economic stimulus plan signed. G20 agree $1.1 trillion measures. Total financial sector writedowns forecast at $4 trillion. Chrysler files for bankruptcy protection. Ten big US banks fail stress tests, need capital. Carmaker GM bankrupt. UK unemployment 7.1%. Growth forecasts for some countries revised up as indicators stabilise. Ten of largest US banks say able to repay government (TARP) loans. Japanese economy experiences record decline in first quarter 2009 – minus 14.2% on annualised basis. Wide range of liquidity measures announced by RBNZ to ensure banking system has cash. OCR cut to 8%. OCR cut to 7.5%. Crown Deposit Guarantee Scheme established. RBNZ allows residential mortgage-backed securities as collateral to ensure banks have cash. Retail deposit guarantee scheme launched. OCR cut to 6.5%. Crown Wholesale Guarantee facility launched. RBNZ provides term auction lending facility and allows corporate and asset-backed securities to be eligible for lending to ensure banks have ongoing access to cash. OCR cut to 5%. Corporate and asset-backed securities Further cuts to OCR take it eligible to ensure banks have access to 2.5%. to cash. OCR cut to 3.5%. RBNZ releases prudential policy aimed at reducing dependence on short-term wholesale money market funding. NZ economy likely to sustain several quarters of economic contraction, but decline is relatively muted compared with other countries. Bank takeovers and nationalisation in the US, UK, France. US Fed’s $85bn rescue package for biggest insurance company, AIG. US House of Representatives rejection of $700bn Troubled Asset Relief Program (TARP) to buy bad debts from ailing banks sends further shockwaves around the world. Ireland guarantees bank deposits. RBNZ TAKES ACTION HOW NEW ZEALAND MANUFACTURING ECONOMIES PLUMMET 10 8 6 20 % 5 GDP % 30 TAIWAN KOREA 4 JAPAN 0 10 2 FINANCIAL ECONOMIES FALL us subprime HOUSING crisis 6 210 200 100 GDP % index 170 60 160 140 130 6 04 05 06 Year 07 08 09 lower INTEREST MARGINS 07 0 09 08 01 02 03 04 05 06 07 08 09 Asian and European manufacturers as their consumer The Reserve Bank cuts the OCR from 8.25% to markets shrink. 2.5%, widens the range of securities that banks can borrow on, expanding its balance sheet significantly. 10 Year CREDIT GROWTH IN AUSTRALASIA NEW ZEALAND ECONOMY CONTRACTS … BUT FORECAST TO RECOVER 4 3 20 20 Financial market stress hits housing, consumption and production in major financial economies in US and 2 15 15 Europe. 1 2 10 5 0 key 1. Bear Stearns announces major losses for two sub-prime backed hedge funds 2. BNP Paribas sub-prime funds frozen 3. Bear Stearns acquired by JP Morgan with US Fed assistance 4. Lehman Brothers files for bankruptcy 5. US Congress passes Troubled Asset Relief Program (TARP) 6. US sharemarket reaches low and starts subsequent rally SPREAD BETWEEN 3-MONTH INTERBANK RATES AND POLICY RATE EXPECTATIONS Major investors suffer losses, become more wary of -1 5 Sep 09 May 09 Jan 07 09 08 07 07 06 05 % UK NZ US 05 04 key 06 OCR (LHS) RBNZ TOTAL ASSETS (RHS) 10 03 sharemarkets crashing. banking strains, combined with worsening economic 05 Year % outlook, send property/commodity prices and liquid markets, LOWER INTEREST MARGINS sharemarkets. Large investment banks fail. Global 02 Subprime housing market collapse spills into 04 key 10 5 Jan 09 US financial shares down over 80% (LHS INDEX) US house prices down over 30% (RHS INDEX) HIGHER INTEREST MARGINS risk Illiquid markets, higher INTEREST MARGINS Sep 08 key 120 JAN 09 -6 May 08 JAN 08 Year MONEY MARKETS JAM Jan 08 0 JAN 07 03 03 The stress then spreads across the world into East -4 term LENDING markets close Sep 07 20 02 02 0 -2 150 May 07 40 01 2 180 80 01 -10 4 190 0 GDP % 120 -5 $NZ billions W E AT H E R e d T H E S T O R M 40 10 0 01 02 03 04 05 06 07 08 -1 -5 09 -2 key AUSTRALIA NEW ZEALAND risk, uncertain about which institutions to trust and in short-term money markets. 01 02 03 04 PRIVATE SECTOR CREDIT ANNUAL GROWTH The squeeze spreads to credit for more than one-year reduce their lending to business and household lending terms and market interest rates soar. sectors. Credit growth in NZ has to date not slowed 05 06 Year 07 08 09 Commodity economies like New Zealand’s are initially Tighter credit conditions means Australasian banks reluctant to lend, resulting in a cash (liquidity) squeeze 0 more sheltered, but a world event of this magnitude had to hit us too. as much as in some other countries. I nternational N ew Z ealand Pre-2007 2007 THE SEEDS THE CRISIS EMERGES NORTHERN ROCK COLLAPSES CONCERNS DEEPEN April – August September December House prices fall, interest rates rise, people cannot repay mortgages. Subprime lenders collapse. Losses make banks wary of lending to each other. Major central banks inject cash into the banking system and cut interest rates. Northern Rock fails because of its dependence on wholesale money market funding (80%), leading to a retail depositors’ run on the bank. UK Government guarantees Northern Rock deposits. Major central banks offer billions of dollars in loans to banks. Bond insurers’ credit ratings downgraded. US banks give high-risk loans to people with poor credit histories (subprime). Loans are bundled into portfolios and sold to investors globally. RBNZ accepts bank bills/bonds as security for lending to ensure banks have cash. 2008 2009 EYE OF THE STORM AUTHORITIES STEP UP RESPONSE FROM CRISIS TO RECESSION UNHAPPY NEW YEAR SPENDING PACKAGES MIXED OUTLOOK January – September September October November – December January February – April May – June Global stock markets’ biggest falls since 9/11. US Fed’s biggest interest rate cut in 25 years. UK, European banks try raising additional shareholder capital to cover losses. US unemployment 6.1%. Fannie Mae, Freddie Mac rescued by US Government. Lehman Brothers collapses – lack of government intervention shocks world markets. UK, US apply quantitative easing measures to stabilise financial systems and encourage lending. US passes $700bn rescue plan. UK Financial Services Authority increases deposit guarantee. European, UK bank bailouts. Countries around the world guarantee retail deposits, including Australia. Major central banks make emergency interest rate cuts. IMF loans to Ukraine, Iceland. China stimulus package. Eurozone, US in recession. Recovery measures in UK, US, Europe. US plans to help Big Three US car makers. US interest rates cut to 0-0.25%. US jobless rate 7.2%. Chinese exports suffer biggest fall in decade. German stimulus package. UK government loan guarantees for SMEs. UK in recession. US $787bn economic stimulus plan signed. G20 agree $1.1 trillion measures. Total financial sector writedowns forecast at $4 trillion. Chrysler files for bankruptcy protection. Ten big US banks fail stress tests, need capital. Carmaker GM bankrupt. UK unemployment 7.1%. Growth forecasts for some countries revised up as indicators stabilise. Ten of largest US banks say able to repay government (TARP) loans. Japanese economy experiences record decline in first quarter 2009 – minus 14.2% on annualised basis. Wide range of liquidity measures announced by RBNZ to ensure banking system has cash. OCR cut to 8%. OCR cut to 7.5%. Crown Deposit Guarantee Scheme established. RBNZ allows residential mortgage-backed securities as collateral to ensure banks have cash. Retail deposit guarantee scheme launched. OCR cut to 6.5%. Crown Wholesale Guarantee facility launched. RBNZ provides term auction lending facility and allows corporate and asset-backed securities to be eligible for lending to ensure banks have ongoing access to cash. OCR cut to 5%. Corporate and asset-backed securities Further cuts to OCR take it eligible to ensure banks have access to 2.5%. to cash. OCR cut to 3.5%. RBNZ releases prudential policy aimed at reducing dependence on short-term wholesale money market funding. NZ economy likely to sustain several quarters of economic contraction, but decline is relatively muted compared with other countries. Bank takeovers and nationalisation in the US, UK, France. US Fed’s $85bn rescue package for biggest insurance company, AIG. US House of Representatives rejection of $700bn Troubled Asset Relief Program (TARP) to buy bad debts from ailing banks sends further shockwaves around the world. Ireland guarantees bank deposits. RBNZ TAKES ACTION HOW NEW ZEALAND MANUFACTURING ECONOMIES PLUMMET 10 8 6 20 % 5 GDP % 30 TAIWAN KOREA 4 JAPAN 0 10 2 FINANCIAL ECONOMIES FALL us subprime HOUSING crisis 6 210 200 100 GDP % index 170 60 160 140 130 6 04 05 06 Year 07 08 09 lower INTEREST MARGINS 07 0 09 08 01 02 03 04 05 06 07 08 09 Asian and European manufacturers as their consumer The Reserve Bank cuts the OCR from 8.25% to markets shrink. 2.5%, widens the range of securities that banks can borrow on, expanding its balance sheet significantly. 10 Year CREDIT GROWTH IN AUSTRALASIA NEW ZEALAND ECONOMY CONTRACTS … BUT FORECAST TO RECOVER 4 3 20 20 Financial market stress hits housing, consumption and production in major financial economies in US and 2 15 15 Europe. 1 2 10 5 0 key 1. Bear Stearns announces major losses for two sub-prime backed hedge funds 2. BNP Paribas sub-prime funds frozen 3. Bear Stearns acquired by JP Morgan with US Fed assistance 4. Lehman Brothers files for bankruptcy 5. US Congress passes Troubled Asset Relief Program (TARP) 6. US sharemarket reaches low and starts subsequent rally SPREAD BETWEEN 3-MONTH INTERBANK RATES AND POLICY RATE EXPECTATIONS Major investors suffer losses, become more wary of -1 5 Sep 09 May 09 Jan 07 09 08 07 07 06 05 % UK NZ US 05 04 key 06 OCR (LHS) RBNZ TOTAL ASSETS (RHS) 10 03 sharemarkets crashing. banking strains, combined with worsening economic 05 Year % outlook, send property/commodity prices and liquid markets, LOWER INTEREST MARGINS sharemarkets. Large investment banks fail. Global 02 Subprime housing market collapse spills into 04 key 10 5 Jan 09 US financial shares down over 80% (LHS INDEX) US house prices down over 30% (RHS INDEX) HIGHER INTEREST MARGINS risk Illiquid markets, higher INTEREST MARGINS Sep 08 key 120 JAN 09 -6 May 08 JAN 08 Year MONEY MARKETS JAM Jan 08 0 JAN 07 03 03 The stress then spreads across the world into East -4 term LENDING markets close Sep 07 20 02 02 0 -2 150 May 07 40 01 2 180 80 01 -10 4 190 0 GDP % 120 -5 $NZ billions W E AT H E R e d T H E S T O R M 40 10 0 01 02 03 04 05 06 07 08 -1 -5 09 -2 key AUSTRALIA NEW ZEALAND risk, uncertain about which institutions to trust and in short-term money markets. 01 02 03 04 PRIVATE SECTOR CREDIT ANNUAL GROWTH The squeeze spreads to credit for more than one-year reduce their lending to business and household lending terms and market interest rates soar. sectors. Credit growth in NZ has to date not slowed 05 06 Year 07 08 09 Commodity economies like New Zealand’s are initially Tighter credit conditions means Australasian banks reluctant to lend, resulting in a cash (liquidity) squeeze 0 more sheltered, but a world event of this magnitude had to hit us too. as much as in some other countries. I nternational N ew Z ealand Pre-2007 2007 THE SEEDS THE CRISIS EMERGES NORTHERN ROCK COLLAPSES CONCERNS DEEPEN April – August September December House prices fall, interest rates rise, people cannot repay mortgages. Subprime lenders collapse. Losses make banks wary of lending to each other. Major central banks inject cash into the banking system and cut interest rates. Northern Rock fails because of its dependence on wholesale money market funding (80%), leading to a retail depositors’ run on the bank. UK Government guarantees Northern Rock deposits. Major central banks offer billions of dollars in loans to banks. Bond insurers’ credit ratings downgraded. US banks give high-risk loans to people with poor credit histories (subprime). Loans are bundled into portfolios and sold to investors globally. RBNZ accepts bank bills/bonds as security for lending to ensure banks have cash. 2008 2009 EYE OF THE STORM AUTHORITIES STEP UP RESPONSE FROM CRISIS TO RECESSION UNHAPPY NEW YEAR SPENDING PACKAGES MIXED OUTLOOK January – September September October November – December January February – April May – June Global stock markets’ biggest falls since 9/11. US Fed’s biggest interest rate cut in 25 years. UK, European banks try raising additional shareholder capital to cover losses. US unemployment 6.1%. Fannie Mae, Freddie Mac rescued by US Government. Lehman Brothers collapses – lack of government intervention shocks world markets. UK, US apply quantitative easing measures to stabilise financial systems and encourage lending. US passes $700bn rescue plan. UK Financial Services Authority increases deposit guarantee. European, UK bank bailouts. Countries around the world guarantee retail deposits, including Australia. Major central banks make emergency interest rate cuts. IMF loans to Ukraine, Iceland. China stimulus package. Eurozone, US in recession. Recovery measures in UK, US, Europe. US plans to help Big Three US car makers. US interest rates cut to 0-0.25%. US jobless rate 7.2%. Chinese exports suffer biggest fall in decade. German stimulus package. UK government loan guarantees for SMEs. UK in recession. US $787bn economic stimulus plan signed. G20 agree $1.1 trillion measures. Total financial sector writedowns forecast at $4 trillion. Chrysler files for bankruptcy protection. Ten big US banks fail stress tests, need capital. Carmaker GM bankrupt. UK unemployment 7.1%. Growth forecasts for some countries revised up as indicators stabilise. Ten of largest US banks say able to repay government (TARP) loans. Japanese economy experiences record decline in first quarter 2009 – minus 14.2% on annualised basis. Wide range of liquidity measures announced by RBNZ to ensure banking system has cash. OCR cut to 8%. OCR cut to 7.5%. Crown Deposit Guarantee Scheme established. RBNZ allows residential mortgage-backed securities as collateral to ensure banks have cash. Retail deposit guarantee scheme launched. OCR cut to 6.5%. Crown Wholesale Guarantee facility launched. RBNZ provides term auction lending facility and allows corporate and asset-backed securities to be eligible for lending to ensure banks have ongoing access to cash. OCR cut to 5%. Corporate and asset-backed securities Further cuts to OCR take it eligible to ensure banks have access to 2.5%. to cash. OCR cut to 3.5%. RBNZ releases prudential policy aimed at reducing dependence on short-term wholesale money market funding. NZ economy likely to sustain several quarters of economic contraction, but decline is relatively muted compared with other countries. Bank takeovers and nationalisation in the US, UK, France. US Fed’s $85bn rescue package for biggest insurance company, AIG. US House of Representatives rejection of $700bn Troubled Asset Relief Program (TARP) to buy bad debts from ailing banks sends further shockwaves around the world. Ireland guarantees bank deposits.