financial crisis 2008 timeline

Timeline of the

2008 Financial Crisis



means mortgage default (2)
repay reflect (2) regardless
loan record (3) things came to a heard
funds attempt real estate
effect major (2) file for bankruptcy
sub (2) issue (3) run into (2)
fear subprime face the music
fund trust (2) stock exchange
crisis lost trust lose/lost/lost
worry corporate seemingly
inter rate (2) chancellor
US Fed safe (2) Federal Reserve
federal exchange buy/bought/bought
rival drop (2) bankruptcy
cash sponsor step in (2)
bailout takeover choose/chose/chosen
saver crash (2) confidence
intra- blow (2) each other
avoid deposit investment
affect borrow run on banks
result contract dramatically


Video: The Financial Collapse of 2008



Mortgages, seemingly for anybody who wanted one.

Many US banks seemed willing to lend to anyone regardless of whether they had the means to repay those loans.

Things came to a head in the spring of 2007, when record numbers of people defaulted on those loans.

2 April 2007. At the beginning of April, New Century, a real estate investment trust, filed for bankruptcy. It had been a major issuer of subprime mortgages.

27 July 2007. Next to face the music was German corporate bank, IKB. On July 27th, after running into funding problems, it received a bailout from the German state development bank, KFW.

9 August 2007. Then on August 9th, the mortgage crisis hit financial markets.

As more people defaulted on their loans, banks and investors began losing money.

Banks lost trust in each other, worried that they wouldn’t get their money back. This fear was reflected in a rise in inter-bank lending rates.

21 January 2008. On the 21st of January, 2008, Germany’s stock exchange lost seven percent (7%) in value, the biggest drop since 9-11.

In the days afterwards, the US Fed lowered interest rates again.

16 March 2008, two months later on March 16th, Bayer Sterns was bought by rival JP Morgan, with cash borrowed from the Fed. It had been the fifth largest investment bank in the United States.

6 September 2008. On September 6th, the Federal takeover of US government-sponsored mortgage lenders, Fannie Mae and Freddie Mac.

15 September 2008. A little over a week later, another blow when US investment bank Lehman Brothers filed for bankruptcy.

The US Government chose not to step in.

Stocks all around the world crashed, as banks lost even more confidence in each other.

5 October 2008. The following month, German chancellor Angela Merkel and then finance minister, Peer Steinbrück, had this message for savers: “We’re telling savers that their deposits are safe,” an attempt to avoid a run on the banks.

What began as a US subprime mortgage crisis soon had an effect on the global economy.

Trade slowed down dramatically.

The result: in the year 2009, the US economy contracted by almost three percent (3%), and the German economy shrunk by five percent (5%).


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1. It has always been very difficult to get a loan from a bank. True or false?

2. Were 99% of borrowers able to repay their loans?

3. Only Lehman Brothers had financial difficulty. Is this right or wrong?

4. What happened when IKB Bank faced financial problems?

5. Were all bad loans refinanced so that they could be paid back later?

6. Did the loan defaults trigger a chain reaction? Were there bank takeovers?

7. The banking crisis only affected major banks. Is this correct or incorrect?


A. I remembered the Financial Crisis of 2008. Yes or no? Do your parents and grandparents remember it?

B. How did this affect your company, country and way of life?

C. There have been endless articles, debates, arguments, discussions and analysis and commentaries as to the cause and solution of the crisis.

D. What might happen in the future?

E. What should people, businesses and governments do?

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