Global financial crisis in December 2008

This article only provides a detailed description of the financial market events of December 2008. For the background information, causes, effects and policy responses see Financial crisis of 2007-08. For a timeline see Subprime crisis impact timeline.

Reports of economic activity

On December 1, the National Bureau of Economic Research officially declared that the U.S. economy had entered recession in December 2007, a full year earlier.[1] (See late 2000s recession)

The Labor Department said that the US lost 533,000 jobs in November 2008, the biggest monthly loss since 1974. This raised the unemployment rate from 6.5% to 6.7%.

On December 9, the Bank of Canada lowered its key interest rate by 0.75% to 1.5%, the lowest it had been since 1958; at the same time the Bank officially announced that Canada's economy was in recession.[2] This move came after the news that Canada lost 70,600 jobs in the month of November, the most since 1982.[3] The official Bank of Canada press release stated that "[the] outlook for the world economy has deteriorated significantly and the global recession will be broader and deeper than previously anticipated."[4]

On December 11, the FBI announced the arrest of Bernard Madoff in a Ponzi scheme which totaled $50 billion by Madoff's own estimate, and which was soon found to affect banks, individuals, and charities in the U.S. and Europe. [5]

Events

After 5 positive days, on December 1 the S&P 500 fell 80 points to 816, down 9%. Financial stocks in the S&P 500 fell 17%. The Dow Jones Industrial Average closed at 8149 with a drop of 679 points 7.7% down. Oil fell below $50 a barrel in New York Trading.[6] The General Accounting Office released a report that claims that the Oversight of the Troubled Assets Relief Program requires additional actions to ensure "integrity, accountability, and transparency". (Washington Post) (bloomberg.com) (Wall Street Journal) (CNN Money)

On December 22, US industry leaders asked the Federal Reserve for assistance un-freezing the commercial real estate market, which has not securitized any loans in the last six months of 2008.[7]

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See also

References
  1. Grynbaum, Michael M.; David Jolly (2008-12-01). "It's Official: Recession Started One Year Ago". The New York Times. Retrieved 2008-12-01.
  2. Archived December 17, 2008, at the Wayback Machine
  3. Grant, Tavia (2008-12-09). "Canadian job cuts looming". Globe and Mail. Retrieved 2009-01-12.
  4. "Bank of Canada lowers overnight rate 2008" (Press release). OTTAWA: Bank of Canada. 2008-12-09. Retrieved 2009-01-12.
  5. Continually updated list of banks, individuals, and charities which claim losses due to Madoff at The New York Times Retrieved January 24, 2009 Archived April 3, 2009, at the Wayback Machine
  6. Grynbaum, Michael M. (2008-12-01). "Cheer Fades as Stocks Plunge 9%". The New York Times. Retrieved 2008-12-01.
  7. Commercial Properties Seek Federal Bailout
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