European crisis 2007-2011

The credit crisis marks the crisis on the financial markets that arose in the summer of 2007, peaked in the autumn of 2008 and only ended in the course of 2011.  The crisis was triggered to a large extent by a stagnating housing market in the United States and because the bundled mortgages packaged in bonds in the lowest segment (subprime) became less valuable at a high rate. As a result, financial institutions ran into problems and hundreds of billions were finally written off on purchased bonds. Because it was unclear which institutions would get into trouble because of this, the interbank money market dried up, banks no longer borrowed money. Several banks have been nationalized, bankrupted or taken over. Negative developments in various market segments have strengthened each other.   Developments soon threatened the smooth functioning of the international financial system, and intervention by virtually all central banks proved necessary. From October 2008, various governments participated directly in the risk-bearing capital of banks on a large scale.   Due to the mutual influence of market segments it is not possible to indicate exactly which events influenced each other in which way. In general it can be said that problems related to US mortgages were the immediate cause of the crisis, which spilled over into the market for related complex financial products. This was reinforced because the assumptions used in the valuation of such complex financial products in mathematical formulas were based on quicksand. The underlying causes of the crisis are so complex that it is virtually impossible to get a clear and complete picture of the situation. Analyzes of the problems and the fundamental solutions are often focused on only a limited part of the crisis.   The term "credit crisis" does not cover the entire load of the crisis. There was not only a credit crisis in the sense of a limited availability of liquidity and (longer-term) capital, but also at times of an overall mutual confidence crisis in the financial sector.   From the beginning of 2010 the crisis changed object: people were increasingly worried about the financial position of a number of governments. This led to a crisis surrounding Greek public finances in April 2010. Other countries (in particular Portugal, Spain, Italy and Ireland) were also threatened with a financial crisis. EU Ministers of Finance presented a € 500 billion rescue plan on 10 May 2010, while the IMF pledged € 250 billion.   Timeline of the credit crisis   The credit crisis that raged on the financial markets from the summer of 2007 until around mid-2011 had a major impact on the economy.   In the timeline below of the credit crisis, an overview is given of the main events, an overview of events related to the European sovereign debt crisis (The European sovereign debt crisis or euro crisis is the financial crisis that erupted within the euro zone at the end of 2009, after Greece, a member of the European Union and the euro area, no longer threatened to finance its debts independently. This happened as a spur of the credit crisis that broke out two years earlier)  Above is Dow Jones stock index from January 2006-November 2008 In the week of August 13, 2007 stock prices fell sharply. The prices of government bonds issued by governments with a high rating rose. Various hedge funds and other funds had to report (sometimes substantial) losses. In the week of 20 August, several investors, subsidiaries of large financial institutions, in asset backed commercial paper (short-term loans with collateral) who had financed these investments with short-term loans, found problems in obtaining refinancing while their investments could not be sold in the short term. The IMF called for tax incentives to prevent a recession. In the week of February 18, the British government decided to nationalize Northern Rock, after a bid from the Virgin Group had been found insufficient [183]. Credit Suisse wrote off $ 2.85 billion [184]. SWF Qatar Investment Authority announced that it is taking an (unknown) interest in Credit Suisse [185]. A number of Credit Suisse traders were suspended because they reported the value of investments too high. ING (national bank in the Netherlands) reported a relatively modest amount of depreciation on subprime of € 194 million in 2007. BNP Paribas reported depreciation of € 589 million. The British bank HBOS paid £ 227 million on subprime loans and reduced the valuation of other investments by £ 509 million. ABN AMRO Bank (national bank in the Netherlands) announced that € 1.56 billion would be written off on subprime loans for 2007.  worldwide cooperation to curb the consequences of the credit crisis. If bank balance sheets with private capital could not be sufficiently strengthened, public money would have to be used. In the Global Financial Stability Report, the IMF estimated the total damage of the credit crisis to $ 945 billion. In the weekend of 12 and 13 April, the G7 called on the banking sector to provide full figures on their risks and the size of the expected depreciation by mid-2008. Complex financial products had to be valued at market value.   In November 2008 several German banks reported state aid: after Hypo Real Estate also BayernLB, HSH Nordbank and WestLB. Reduction of interest rates by the Bank of England: from 5.0 to 0.5% in a few months  The customers of Northern Rock by withdrawing money on a large scale, even after the British government has considerably expanded the existing deposit guarantee scheme.  Regarding the crisis, it was noted that it could take some time before the damage was repaired. A number of banks have sounded the alarm about the damage that had occurred as a result of the crisis. Several other major banks and securities companies in the US announce poor figures for the third quarter of 2007 (without mentioning exact figures), including Citibank and Merrill Lynch. The Swiss bank UBS in the third quarter a loss of CHF 830 million due to write-offs on loans. The Swiss bank Credit Suisse reported a write-down of CHF 1.1 billion on mortgage-related loans and CHF 1.1 billion on leveraged loans.  Elsewhere in the US is also very chaotic on the financial market. The American securities bank Merrill Lynch, which involved a write-down of mortgages and related investments in the portfolio for the third quarter, amounted to $ 7.9 billion, and announced layoffs. US securities bank Merrill Lynch, which reported $ 7.9 billion in write-downs of mortgages and related investments in the portfolio, and announced redundancies. As a result of the credit crisis, the CEO of Citigroup / Citibank, Charles "Chuck" Prince III, was forced to abandon. Citibank announced that it would have to write off between $ 8 billion and $ 11 billion on loans, in addition to earlier write-offs. US securities bank Morgan Stanley announced a write-off of $ 3.7 billion on subprime loans. In 2007 Bank of America, Citigroup and JP Morgan Chase announced that the intended Master Liquidity Enhancement Conduit (aka "Superfund") would be canceled. In 2008, Citigroup reported $ 18 billion in depreciation in the fourth quarter of 2007, resulting in a net loss of $ 9.83 billion for the fourth quarter Prime Minister Zapatero announced the 'Plan E', which provides for a total investment of € 55 billion in the country that was hit hard by the crisis, in an attempt to get the economy back on track. In the week of 5 January 2009, the Federal Reserve Bank of New York announced the purchase of a total of $ 500 billion in MBS at the expense of Freddie Mac, Fannie Mae and Ginnie Mae; the project would run until mid-2009. The Bank of England reduced the base rate from 2.00% to 1.50%; the lowest level in the history of the Bank of England. The German government took part in the capital of Commerzbank for around € 20 billion.  In January 2010, Belgian companies, institutions and individuals demanded a total of 1.39 billion euros from Lehman Brothers and a series of subsidiaries from this bankrupt US investment bank. Bernanke stated that the problems in the US housing market were caused by a shortage of regulations, not by too low interest rates. In the week of 18 January 2010, IMF director Strauss-Kahn warned of a new recession, although he hinted that the IMF would increase the growth estimates. However, Citigroup reported a loss of $ 7.8 billion in the fourth quarter due to the repayment of $ 20 billion in state support. Bank of America reported a loss of $ 5.4 billion in the fourth quarter, also (partly) as a result of repaying government support, here $ 45 billion. In March 2010, the IMF said it expected the members of the G7, with the exception of Canada and Germany, to have a government debt of more than 100% of the GDP in 2014. The crisis lasted until 2016. Slowly it seems to be better. The housing market is picking up again and more is being invested. However, many houses are still under water. The US itself has increased interest rates.   My conclusion to this: The credit crisis started in the summer of 2007. It often speaks of 7 meager and 7 fat years. This took a little longer, from 2016 onwards a cautious economic growth was visible and the european economy was slowly emerging from the crisis. In total, the crisis lasted nine years and the times before 2007 will most likely not return. How did this crisis start and how is it possible that it continued for so long. For me personally it was very difficult to get through financially. I work for an international bank, Citigroup. Given the fact that this company was also very negatively touched by the crisis, the company was forced to reduce the workforce. I saw many people without work and with high debts. Some have to leave the house. Many companies were bankrupt. Especially the mentalities in people went down very drastically. It was a terrible time of headache.     🌍🌎🌏🌍🌎🌏🌍🌎🌍🌎🌏🌍🌎🌏