5 years after Lehman

November 2008: Recession
 

At the end of 2008, Germany and several other countries are in recession. The GDP of a number of countries shrinks significantly over several quarters.
 

November 15, 2008: Financial market reforms are initiated
 

A meeting of the G20 countries in Washington takes the first step towards a reform of the global financial system.
 

November 25, 2008: US central bank buys mortgage-backed securities
 

The Fed announces an 800-billion-dollar program for buying loan-backed securities.
 

February 17, 2009: Economic stimulus package in the US
 

President Obama signs the act for an economic stimulus program of 787 billion dollars.
 

April 2009: The crisis spreads
 

The global economy slides ever deeper into the crisis. A global financial summit combats the crisis with collective decisions.
 

3rd Quarter of 2009: The US is out of recession
 

After a cumulative drop of 4.3 percent in macroeconomic output between the end of 2007 and the second quarter of 2009, a moderate economic recovery begins.
 

February 2010: The debt crisis reaches Europe
 

The revaluation of risks leads to international investors withdrawing from other risky investments: After the banks, the first state "victim" is Greece, which has suffered a significant loss of trust after covering up the extent of its debt. The European Commission takes action against the deficit violators by monitoring statistics and supervising savings plans. Anxiety is increasing with regard to other European countries, such as Ireland and Portugal.
 

May 2010: Aid for Greece, euro rescue fund set up
 

A rescue package for Greece is drawn up together with the IMF. In March, Europe and the IMF agreed on a contingency plan for Greece. EU countries and the IMF made a total of 110 billion euros available as bilateral assistance loans, in return for an economic adjustment program.
 

The temporary euro rescue fund, made up of the European Stability Mechanism (ESM) and the European Financial Stability Facility (EFSF), is set up to provide aid for member states which may face solvency difficulties in the future. 

November 2010: Ireland turns to the euro rescue fund

Irelandbecomes the second EU country to accept help from its partners and turns to the euro rescue fund. The EU, IMF and bilateral partners provide a rescue package of 67.5 billion euros, in return for an adjustment program.
 

December 2010: Optimism in Germany, anxiety in southern Europe
 

Once again, optimistic-sounding economic reports are coming from Germany. News from south-western Europe, on the other hand, is causing anxiety. Despite huge austerity efforts, Spain and Portugal cannot get out of the headlines. The debt crisis dogs Europe further during the whole of the following year and into 2012.
 

May 2011: Portugal turns to the euro rescue fund
 

Portugalreceives conditional financial assistance from the ESM, EFSF and IMF, of 78 billion euros in total.
 

December 13, 2011: Reform of the Stability and Growth Pact
 

The more stringent Stability and Growth Pact, extended to include economic policy monitoring, comes into force.
 

March 2012: Agreement on a second rescue package for Greece
 

In March, the finance ministers of the euro zone agree on the financing of a second Greek adjustment program for the period 2012 to 2014. Including funds from the first package which have not yet been paid out, the rescue package comprises 130 billion euros of conditional EFSF aid, as well as 28 billion euros of IMF aid, through 2016. Through a voluntary debt forgiveness, private creditors contribute around 100 billion euros to the financing of the rescue package. 
 

June 29, 2012: Collective bank supervision decided on for the euro zone
 

At their summit meeting, the heads of state and government of the euro area decide to implement a standardized bank supervision mechanism led by the ECB and, as soon as this mechanism is in place, to give the European Stability Mechanism (ESM) the possibility of recapitalizing banks directly.
 

July 2012: Bank rescue package adopted for Spain
 

Spaincan access ESM financial assistance for bank recapitalization via the Spanish rescue fund Fondo de Reestructuración Ordenada Bancaria, without becoming a full "program country". In return for aid totaling 100 billion euros, the country is obliged to undertake a sector-based adjustment program, under which ailing banks will be restructured or liquidated.
 

July 26, 2012: "Whatever it takes"
 

The announcement by the ECB president, Mario Draghi, that the European Central Bank will do everything in its power to save the euro, contributes significantly to calming things down on the financial markets.
 

October 8, 2012: Permanent ESM rescue fund comes into force
 

January 1, 2013: Fiscal Compact comes into force
 

The objective of the Fiscal Compact, signed by 25 EU countries, is to increase fiscal policy discipline in the euro area (including regulations for structurally balanced budgets, and the introduction of national "debt brakes").
 

April 2013: Cyprus turns to the ESM euro rescue fund
 

In April this year, a rescue package of 10 billion euros is agreed on with the Troika. The IMF contributes 1 billion euros to this, the ESM provides the remaining 9 billion euros. In return, the Cypriot government must undertake an adjustment program, as well as liquidating or restructuring the two major banks; in so doing, deposits of over 100,000 euros are not protected.

Dr. Lorenz Weimann
Allianz SE
Phone +49.89.3800-16891
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