March 2, 2007: Statistics Canada releases a report saying that the Canadian economy grew at an annualized rate of 1.4 per cent in the last quarter of 2006, the slowest growth rate in 3 years.
March 5, 2007: HSBC, Europe’s biggest bank, reveals losses linked to U.S. subprime mortgages, and says the U.S. subprime market is “unstable” and in a “downturn.”
April 2, 2007: New Century Financial Corporation files for bankruptcy protection and cuts half of its employees. The company, the largest subprime lender in the U.S. at the time, was inundated with customer defaults. Analysts are concerned about the impact of subprime mortgages on the financial industry.
April 12, 2007: Statistics Canada releases a year-end review saying that Canada’s economy will be put to the test as a result of a bigger than expected economic downturn south of the border.
May 17, 2007: U.S. Federal Reserve Chairman Ben Bernanke says that the increase in mortgage defaults will not have a great impact on the economy.
May 31, 2007: Statistics Canada says that Canadian economic growth hit a two-year high of 3.7 per cent in the first quarter of the year. The news sends the dollar up to 93.48 cents U.S. at closing.
In contrast, U.S. growth slumped to a four-year-low annual pace of just 0.6 per cent, less than half that of the previous quarter.
June 8, 2007: Statistics Canada releases a report saying the Canadian unemployment rate remained at 6.1 per cent in May, the lowest rate in 33 years, but the economy had generated a lower-than-expected 9,300 jobs in that month.
July 17, 2007: Bear Stearns reveals that two internal hedge funds, both with large holdings in subprime mortgages, have lost nearly all their value. Merrill Lynch, JPMorgan Chase, Citigroup and Goldman Sachs had all invested in the firms.
July 19, 2007: Bernanke tells the U.S. Senate Banking Committee that the subprime crisis could result in $100 billion in losses.
That day, the Dow Jones Industrial Average closes above 14,000 for the first time ever.
August 9, 2007: BNP Paribas, the largest bank in France, suspends withdrawals from three investment funds. The bank says it cannot “fairly” value the assets in the funds, of which one third are tied up in U.S. subprime securities.
The European Central Bank injects 95 billion Euros ($155 billion U.S.) into the banking market to improve liquidity, and adds another 108.7 billion Euros over the next few days. The U.S. Federal Reserve and the Banks of Japan and Australia also inject money into the market.
August 16, 2007: The Bank of Canada injects $370 million Canadian into the market to improve liquidity, after a $350-million infusion the day before.
August 17, 2007: The U.S. Federal Reserve cuts its lending rate to banks by half a percentage point, to 5.75 per cent, while acknowledging the need for a policy shift in dealing with the subprime mortgage crisis.
September 2, 2007: Statistics Canada reports a stronger-than-expected 3.4 per cent annualized growth rate in the second quarter based on strong consumer spending.
September 7, 2007: The “Libor rate”, or the rate at which banks lend to each other, rises to 6.7975 per cent, the highest rate since December 1998.
September 13, 2007: British bank Northern Rock asks the British central bank for emergency funds, sparking massive deposits from the bank. Long lines form outside of bank branches in what is the biggest run on a British bank in more than a century.
October 16, 2007: The Bank of Canada injects $591 million Canadian into the market to improve liquidity.
October 18, 2007: The Bank of Canada predicts that Canada’s economy will weaken in the second half of the year and in 2008 as a result of strict credit conditions and the high export-killing loonie. The Bank expects the value of the loonie to remain high.
October 30, 2007: Merrill Lynch ousts chairman and chief executive officer Stan O’Neal after reporting a $2.24 billion loss, six times the amount estimated by the company three weeks before.
November 4, 2007: Citigroup CEO Chuck Prince resigns after the bank increases its loss estimate with many investments in subprime mortgages.
November 7, 2007: The loonie closes at $1.0775 US, intensifying fears that a rapidly climbing currency could erode the competitiveness of Canadian products. The news prompts Prime Minister Stephen Harper to issue a cautionary comment about the dollar.
“The prime minister doesn’t typically comment on the Canadian dollar, other than to say it’s clear that it has some advantages and some real significant disadvantages for certain sectors and we are concerned, we share those concerns,” Harper said.
December 1, 2007: The Canadian dollar slides to close at parity with the US dollar for the first time since 1978.
December 19, 2007: The International Monetary Fund releases a report saying that the weakening U.S. economy, liquidity problems and a strong loonie will slow the growth of the Canadian economy in the next few quarters.
January 1, 2008: American stock prices begin a steady decline in January. Between the 1st and the 22nd, the Dow Jones Industrial Average loses over 1,000 points, or 8 per cent of its total value.
January 8, 2008: The World Bank predicts that global economic growth will slow in 2008.
January 11, 2008: The Bank of America makes a deal to buy mortgage lender Countrywide for about $4 billion.
January 22, 2008: The Bank of Canada cuts its key lending rate by a quarter of a percentage point to four per cent.
The U.S. Federal Reserve acts to avoid a recession by cutting rates by three quarters of a percentage point to 3.5 per cent. The cut was the biggest by the bank in 25 years, and the first emergency cut since 2001. Global stock markets rebound the next day.
February 10, 2008: Leaders from the G7 say global losses from the subprime mortgage crisis could reach $400 billion.
February 17, 2008: The British government nationalizes Northern Rock.
March 4, 2008: The Bank of Canada lowers its key overnight lending rate by half a percentage point to 3.5 per cent. The move is the first cut by the Bank of more than a quarter of a percentage point in six years.
March 14, 2008: The U.S. Federal Reserve and JPMorgan Chase give emergency funding to Bear Stearns after the investment bank announces major liquidity problems.
March 16, 2008: JPMorgan Chase agrees to buy Bear Stearns for two dollars a share, or seven per cent of its market value. Two months earlier, the bank had traded at $172 a share.
March 31, 2008: Treasury Secretary Henry Paulson proposes an overhaul of the U.S. financial system. The proposal contains a merger of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The plan is perceived as giving more power to The Fed.
April 1, 2008: U.S. Securities Firm Lehman Brothers Holdings Inc. earns $4 billion in a stock sale amid speculation the firm is short on capital.
April 22, 2008: The Bank of Canada cut its key interest rate by half a percentage point, to three per cent, and reduced its growth outlook for the year to 1.4 per cent, down from 1.8 per cent in January.
April 28, 2008: As part of a $168 billion economic stimulus plan, the U.S. Internal Revenue Service begins distributing tax rebates electronically.
April 30, 2008: Statistics Canada reports that the Canadian economy shrank unexpectedly by 0.2 per cent in February, and that weakness in manufacturing deepened and spread to the wholesale sector.
May 31, 2008: JPMorgan completes the acquisition of Bear Stearns.
July 11, 2008: Pasadena commercial bank IndyMac Bank, the second-largest independent American mortgage lender, fails. It is taken over by federal regulators.
September 2, 2008: The Organization for Economic Co-operation and Development says that the Canadian economy will expand by only 0.8 per cent for the year, down from the original prediction of 1.2 per cent. The new prediction would make Canada’s growth rate the second slowest in the industrialized world.
September 7, 2008: The U.S. government takes control of federal mortgage insurers Fannie Mae and Freddie Mac, which had been overwhelmed with mortgage defaults. The nationalizations are the largest in the U.S. in decades.
September 15, 2008: Investment bank Lehman Brothers files for bankruptcy protection, the biggest bankruptcy in history. The firm had been a Wall Street fixture for 150 years.
The Bank of America acquires Merrill Lynch for $50 billion.
Stephen Harper, in the midst of an election campaign, says that the finances of the average Canadian household are not at risk. "There are and will be difficulties in the world economy," he said. "At the same time, Canada is not in the same situation as the United States…. The Canadian economy’s fundamentals are solid."
September 16, 2008: American International Group (AIG) is given an $85 billion loan from the Federal Reserve to avert the collapse of the company.
September 25, 2008: Washington Mutual declares bankruptcy and is seized by the Federal Deposit Insurance Corporation (FDIC), marking the largest bank failure in American history. Washington Mutual’s assets are sold to JPMorgan Chase.
September 29, 2008: The House of Representatives rejects a $700 billion economic rescue plan. The Dow Jones loses 778 points and closes below 11,000.
October 1, 2008: The House approves a revised version of the plan and it is signed by George Bush two days later.
October 6, 2008: U.S. Federal Reserve makes $900 billion in lending available to banks.
October 8, 2008: The International Monetary Fund predicts a global economic downturn. The Bank of Canada cuts short-term interest rates by half a percentage point to 2.5 per cent as part of a coordinated action with central banks of the United States, European Union, Britain, China, Sweden, and Switzerland.
October 10, 2008: The Dow Jones Industrial Average closes off its worst week in history, losing 22.1 per cent.
October 11, 2008: Finance Minister Jim Flaherty attends a G7 meeting in Washington. The leaders come up with a plan to ease the credit crisis, including taking action to improve liquidity, ensuring lending continues and improving confidence of depositors with insurance and guarantee programs.
October 13, 2008: The Royal Bank of Scotland Group Plc, HBOS Plc, and Lloyds TSB Group Plc get a 37-billion pound bailout from the British government.
Germany announces it will provide 500 billion Euros in loan guarantees and capital.
October 14, 2008: The Conservative party wins the federal election in Canada after a campaign that focused mainly on the economy.
Harper campaigned on a package of tax cuts for Canadians, while criticizing the spending proposals of the Liberals and the NDP as dangerous and unrealistic.
Harper pledges to work with opposition parties to “weather the storm” facing the Canadian economy.
October 23, 2008: Statistics Canada reports that Canada’s economy remains in better shape than the U.S. economy in a variety of areas such as the housing, employment, financial and auto markets. It says recent indicators suggest the gap between Canada and the U.S. has been widening.
But the Bank of Canada warns that the Canadian economy will be on the verge of recession until the spring. It slashes the growth forecast to 0.6 per cent for the year.
October 31, 2008: Statistics Canada says the Canadian economy contracted by 0.3 per cent in August, compared to 0.7 per cent growth in July.
November 4, 2008: Americans go to the polls and elect Barack Obama president.
As in Canada, the American election campaigns focused primarily on the economy. Obama enjoyed significantly more support on this issue before the election than opponent John McCain.
McCain was criticized for suspending his campaign in September to go to Washington and focus on financial bailout legislation.
November 9, 2008: China unveils a two-year $586 billion stimulus package. Money will be spent on infrastructure and social welfare projects.
November 10, 2008: The Federal Reserve and the Treasury Department restructure the bailout of AIG, increasing the package to $150 billion.
November 15, 2008: Prime Minister Harper and Finance Minister Jim Flaherty meet leaders from the G20 in Washington. The leaders set out a roadmap for economic reform, including reforms of institutions put in place in Bretton Woods in 1944.
The leaders agree to collective action, and Harper announces after the meeting that the government is prepared to go into deficit in order to stimulate the economy.
November 19, 2008: The Bank of Canada says more interest rate cuts will be needed to stimulate growth in the country.
November 25, 2008: The Organization for Economic Cooperation and Development releases a report saying that Canada has entered a recession. The report says that the downturn is “not alarming,” since Canada’s strong banking sector and healthy government finances leave the country in a good position to weather the economic storm.
The Conference Board of Canada releases a report saying the auto sector could lose 15,000 jobs by the end of 2008.
November 28, 2008: The Canadian opposition parties criticize Stephen Harper’s handling of the economic crisis and say they might try to topple the government and form a ruling coalition.
December 1, 2008: The National Bureau of Economic Research confirms that the U.S. has entered recession.
December 4, 2008: French President Nicolas Sarkozy announces a 26 billion Euro stimulus plan to be spent on public sector investments and loans to carmakers.
December 5, 2008: The U.S. government announces that the economy lost 533,000 jobs in November, the most since 1974, and nearly 200,000 more than economists expected. The unemployment rate hit 6.7 per cent, the highest since 1993.
December 6, 2008: The German parliament passes a 31 billion Euro stimulus plan ($39.6 billion).
December 9, 2008: The Bank of Canada lowers its key interest rate by three-quarters of a point to 1.5 per cent, the lowest level in 50 years. It releases a statement acknowledging that the Canadian economy has entered a recession.
December 12, 2008: A $14-billion bailout of the American auto industry fails to get Senate support. Some analysts predict massive job cuts or even a collapse of the industry.
December 16, 2008: The U.S. Federal Reserve cuts its key interest rate from one per cent to a range of between zero per cent and 1.25 per cent.
December 19, 2008: President George Bush announces that $17. 4 billion of the $700-billion stimulus package meant for the financial industry will go to General Motors, Ford and Chrysler.
January 27, 2009: Finance Minister Jim Flaherty unveils the federal budget including a two-year $40 billion stimulus plan to be spent on infrastructure and construction, improve access to credit and relieve struggling industries.
The government had leaked elements of the budget before the announcement, including the fact that it would include a $30-billion deficit.
February 6, 2009: Statistics Canada reports that 129,000 jobs were lost in January, for a record single-month job loss total. The losses were almost all full-time positions. The American economy lost 598,000 jobs in January.
February 13, 2009: The U.S. Congress approves a $787 billion economic stimulus package that includes a “Buy American” clause, causing concern in Canada about the impact on trade between the two countries.
February 14, 2009: Bank of Canada Governor Mark Carney and Finance Minister Flaherty attend a G7 meeting of finance ministers in Rome, Italy. All leaders agree to avoid protectionist measures.
February 20, 2009: General Motors Corp. says it is seeking financial assistance from the Canadian and Ontario governments that could be worth $5-billion or more, and that it also needs changes to the wages and benefits of its unionized workers.
March 2, 2009: The Treasury Department commits to $30 billion in new equity for AIG if the company requires it, putting total U.S. government assistance to the company at around $186 billion.
March 4, 2009: Bank of Canada Governor Mark Carney reduced the Bank’s key interest rate by a half point to a record low of 0.5 per cent.
Following the announcement, the Royal Bank of Canada, Bank of Montreal, Toronto Dominion Bank, CIBC and the Bank of Nova Scotia cut their prime rates from three per cent to 2.5.
March 10, 2009: The Canadian Senate finance committee begins hearings on the federal budget. There is no indication it is prepared to delay passage past April 1, the beginning of the new fiscal year and the earliest the stimulus money can be rolled out.
March 11, 2009: The Parliamentary Budget Office releases a report saying that depending on the economic indicator, the Canadian economy may have performed worse than the American economy in the last three months of 2008.
Canada’s real gross domestic income, or GDI, fell by an annualized rate of 15.3 per cent in the fourth quarter from the quarter before, compared to a 1.5 per cent drop in the U.S. over the same time frame.
The report said GDI "is a key performance indicator, particularly during periods when commodity prices fluctuate significantly."
Chrysler Canada threatens to close its manufacturing plants unless it can get a US$2.3-billion loan from the federal government.
March 12, 2009: An IMF report says that things will likely get worse before they get better in Canada. It says that Canada is "better placed than many countries to weather the global financial turbulence and worldwide recession," but warned that it will likely cut its economic forecast for Canada.
The most recent forecast predicts a 1.2 per cent contraction for 2009, before recovering to grow 1.6 per cent in 2010.
March 19, 2009: The U.S. House of Representatives votes to impose a 90 per cent tax on bonuses at AIG and other companies that received $5 billion or more in federal bailout funds.
The move comes amidst public anger over news that AIG paid $165 million in bonuses to employees of the financial products unit, after the company received $173 billion in federal bailout funds.
April 9, 2009: Statistics Canada reports that Canada lost 61,300 jobs in March. Unemployment is at eight per cent.
April 21, 2009: The Bank of Canada cuts the benchmark interest rate to a record low 0.25 per cent, and said Canada’s economy would not begin to grow until the fourth quarter of this year.
April 30, 2009: The federal and Ontario governments agree to give $3.8 billion to help Chrysler restructure amid a bankruptcy deal that will see Chrysler join forces with Italian automaker Fiat. Together, the governments will get a two per cent stake in Chrysler.
May 4, 2009: In a bid to complete a restructuring plan, General Motors of Canada draws $500 million from an emergency fund created by the federal and Ontario governments.
May 6, 2009: Bank of Canada governor Mark Carney says the Canadian economy is expected to do well enough that the central bank will not have to boost growth by providing additional stimulus.
May 8, 2009: Statistics Canada reports that the Canadian economy unexpectedly gained 35,900 jobs in April. The unemployment rate remained at eight per cent through March and April. The U.S. government also releases data showing the American economy cut 539,000 jobs in April, fewer than expected.
In response to that news, the Canadian dollar rallies to 86.44 cents U.S.
May 14, 2009: Chrysler says in a bankruptcy court filing that it wants to eliminate 789 U.S. dealerships by June 9, accounting for about a quarter of its 3,200 U.S. dealerships.
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