Intersecting Minds: Education, Business and Technology at the North Carolina State Jenkins Graduate School of Management

Having a discussion with a friend a few minutes ago, I realized that a lot has happened to the economy in the last 6 months. From Bear Stearns and Lehman collapsing to the fear of stagnation, to all the different plans and actions taken by the Bush and Obama administrations, there’s been a lot. Here’s a refresher for those interested:

September 12, 2008: All quiet on the Western front. Dow = 11,421

September 13, 2008, Lehman Brothers Declares Bankruptcy: The first semi-climatic event of what would turn into a series of crises. Lehman Brothers declares bankruptcy that morning citing over a $100B more debt than assets. At the time, Lehman was the largest bankruptcy in American history. The stock market closed down more than 500 points that day. Dow = 10,917

September 16, 2008, AIG Collapses: AIG’s stock price falls over 95% after their credit rating is downgraded. Analysts had compared the assets on their balance sheet to those on Lehman Brothers’ balance sheet. There they found the same mortgage-backed securities, but they were leveraged two times as much as Lehman’s. This led to a massive liquidity crisis which in turn led to the first of what would become tens of billions of dollars in bailouts from the federal government. Dow = 11,059

October 3, 2008, TARP becomes law: The Troubled Assets Relief Program (TARP) was the Bush administrations first response to the ballooning crisis. As mortgage-backed securities began to deline in value, major investment and commercial banks began reporting huge losses. The bill set aside $700B for the Treasury Secretary, Hank Paulson, to ensure these lending and investing institutions became insolvent. Unfortunately, almost no oversight was created for a bill that had been hastily created. The money that had been designated to relieve the frozen credit markets instead sat inside the banks. Dow = 10,325

November 4th, 2008, Barack Obama is elected President: Taking over from a lame-duck Bush administration, Obama promises swift and bold action on the economy. Dow = 9,625

December 12, 2008, GM runs out of cash and the Auto Bailout: GM and the other large, American automakers had been in trouble for years, after facing stiff foreign competition. The combined punch of soaring commodity prices in mid-2008 with the credit crisis of late-2008 brought GM, long the world’s #1 automaker, to the brink of bankruptcy. They requested $12B in aid from the federal government. Dow = 8,629

January 20th, 2009, Obama Inauguration: Obama begins outlining his first actions in office, including a general economic stimulus package, a foreclosure prevention plan and a recipe to cleanse the banks of the toxic mortgage-backed securities that were plaguing their balance sheets. Dow = 7,949

February 17th, 2009, American Recovery and Reinvestment Act passes Congress: The stimulus package. Leveraging his high approval ratings and a desire for action, Obama pushes this $787B bill through in less than a month. The bill allocates $288B in tax cuts, $80.9B for infrastructure, $147B for health care, and the rest for education, energy and environment investments. Dow = 7,552

March 4th, 2009, Foreclosure Prevention Plan details are released: The Obama administration releases details on their $75B plan to alleviate a burgeoning foreclosure crisis. Millions of Americans are losing their homes, driven by crashing home prices, increasing job losses, and oversized loans they can’t afford. The plan offers assistance to banks to renegotiate mortgages around the securities. Dow = 6,875

March 9th, 2009, Dow hits bottom?: Dow = 6,574

March 23rd, 2009, Tim Geithner unveils $1T Bad Debt Relief Plan: Secretary Treasury Tim Geithner proposes a nuanced private-public partnership to leverage private hedge fund equity with $820B of government debt to buy up toxic assets from banks balance sheets. Dow = 7,775

I know there have been many other events, as well. If you’d like to see more on this list, let me know in comments and I’ll throw them up.