Financial crisis of 2007â€“08

The financial crisis that began in 2007 is a global banking and financial crisis as part of the global economic crisis starting in 2007, as the U.S. housing crisis (including subprime ) began in the summer of 2007. The crisis was partly the consequence of a speculative bloated real estate market ( housing bubble ) in the USA. As the financial crisis began August 9, 2007 shall be made , because on this day the interest rates for interbank financial loans skyrocketed to. In other countries, for example in Spain, brought the bursting of a housing bubble banks in distress. The crisis expressed itself first in worldwide losses and insolvencies among companies in the financial sector. Its climax, the crisis was the collapse of U.S. bank Lehman Brothers in September 2008. The financial crisis prompted several states, large financial institutions (including American International Group, Fannie Mae, Freddie Mac, UBS and Commerzbank ) state through huge debt to obtain and equity injections alive. The discount rates were kept low or reduced them further to come up with " cheap money " to provide the banks and thereby maintain lending. Some banks were nationalized and later closed.

The crisis spilled over into the result in production cuts and business failures on the real economy. Many companies, such as automakers General Motors went bankrupt and laid off employees. The already high public debt in many countries due to the crisis rose sharply. As a result, the United States in 2011 threatened the temporary state bankruptcy.

In April 2009, the International Monetary Fund ( IMF) estimated the global securities losses as a result of the crisis on four trillion dollars.

After the financial markets had calmed down a bit, the sovereign debt crisis was visible in the euro area in October 2009, when Greece revealed his true financial and aid packages from the IMF and the European Union requested to avoid sovereign default. Scientific analyzes suggest that the bank bailout, which was financed in some states with large amounts of state funds, the national debt has so strong and erratic let rise that this is likely to have significantly contributed to the spread of the sovereign debt crisis of Greece to other euro zone states.

3.1 Coordination of Central Banks
3.2 stimulus programs
3.3 Measures to stabilize the banking system
3.4 Reform proposals of the G -20 countries 3.4.1 summit in November 2008
3.4.2 Subsequent summits

The onset and progression

Causes

The causes of the subprime crisis are controversial issues in science, which usually bundles of different causes of the crisis are named. The ordered by the Congress of the United States Financial Crisis Inquiry Commission created by an interrogation of parties and reviewing extensive evidence a report on the causes. According to the majority decision of this committee of experts in addition to the low interest rate policy and speculation in the property sector was also the lax regulation of the banking sector, a crucial factor for admission and extent of the crisis. Among macroeconomists will also, inter alia, the increasing inequality of income distribution and external imbalances as structural causes of the crisis discussed.

Rising income inequality

As a macro-economic cause is highlighted since the early 1980s by several economists, the increase in income inequality in the United States. The stagnation of the incomes of lower and middle income groups led them to finance their spending by an increasing debt. The indebtedness of the lower income groups was thereby promoted politically by the deregulation of credit markets and through direct government support for housing loans. The subprime crisis was according to this view, the result of an existing long been macroeconomic instability, caused by the increasing income inequality.

External imbalances

As another structural cause of the crisis, external imbalances are. The rising level of household debt in the United States had to be financed by borrowing from abroad. Outside the U.S., income inequality also rose strongly (eg China, Germany ), but here the credit system was less developed or more regulated so that the lower income groups spending could not finance the same extent on loans as the households in the United States. Thus the savings of upper income groups in these countries were created on the international capital market and financed so among other things, rising household debt in the United States.

Low interest rates after the dot-com bubble

The crisis went global requires a longer period of comparatively low real and nominal interest rates. The U.S. Federal Reserve operation after the bursting of the dotcom bubble of the new economy - the prices on the U.S. stock exchanges were low - a low interest rate policy to stimulate the U.S. economy (→ Economic Policy). This allowed for a re- price bubble, this time in the real estate market (→ real estate bubble ), the burst is regarded as the immediate cause for the 2007 open -emerging financial and banking crisis.

Worldwide high savings sought after return on the financial markets and led to a ( from today's perspective ) underestimation of the risks associated with loans ( "saving glut" or savings glut ). In June 2003, the federal funds rate was lowered to 1%. In addition, the trade deficit of the United States was financed by capital, which was created on the U.S. capital market, which kept interest rates low in the United States. For example, China put on its revenue from its export surplus in the U.S. in U.S. government securities, which reduced the effective interest rate of government securities. An investment crisis in the form of " relatively sparse becoming real investment " also drove the prices up and the effective interest rate down.

The Bank for International Settlements ( BIS) notes in its annual report in June 2008 that the central banks in the face of unusually low inflation long kept interest rates low in the advanced countries. This policy of low interest rates in the U.S. was also established so that deflation would weigh heavily on the now heavily indebted households and businesses. In light of the current financial crisis, writes the BIS: " It is not excluded that the reduction of the credit bubble flows after a temporarily higher inflation into deflation, which - could be hard to deal with - given the high nominal output level of debt in particular. Because of such considerations do not last in the USA for some particularly energetic use of monetary easing as ' insurance ' against such a low-probability but very costly development greatly. "

The low interest rates have not led to a devaluation of the currencies of advanced countries, because the " emerging economies " against their currencies to appreciate intervened ( Bretton Woods II regime ). China bought 2007 460 billion dollars. The currency reserves of China and the Industrial State Japan, who followed a similar strategy, thus increased to at least 1 trillion. U.S. dollar. In order to promote its exports, Japan holds the key interest rate for years very low, which keeps the price of the Japanese currency low. Investors use this to take cheap loans in Japan and use it to buy assets in other economic areas. Overall, this led together with financial market innovations to the high asset prices. High asset prices correspond to a low effective interest rate, the long- term interest rates remained low. As mid-2004 the U.S. economy was so well established that the U.S. central bank was about to go to raise the federal funds rate, this resulted from these reasons, as intended, also to an increase in long -term interest rates, so that continued the real estate bull market.

Expansion of credit to borrowers with moderate credit

Because of the low interest rates, lower income could afford a home. Encouraged by the low base rate of the U.S. Federal Reserve and by the policy (eg Community Reinvestment Act ) awarded U.S. banks floating rate loans to borrowers with excessive credit. Because of the low interest rates, the rates were initially low. The risk of a rate hike was the debtors, where this was often not aware of.

Because of the rising demand, prices of real estate and its value as collateral increased. The banks took advantage of this development to the debtors additional loans to sell. It also received customers with poor credit loans. With constantly rising real estate prices in the event of insolvency of the property may be sold at a higher market value. The banks were covered with rising prices and the debtor believed to be able to sell their house at a profit in an emergency. Some banks specialized in subprime loans ( about: sub-prime mortgages).

The real estate boom led to a revival of the construction industry and in consumer demand. 2005 witnessed the housing investments in the U.S. a maximum of six percent share of the gross domestic product and outbid so the first time the record year of 1960. 1991 this proportion had reached 3.5%, a low point. After 2005 this proportion went back again.

Securitization of U.S. mortgage loans

To raise the necessary capital for new loans, credit receivables were securitized in a big way. Here, sold the lending banks the payment claims under the mortgage loans together with their credit risk bonds to investors - other banks, insurance companies, hedge funds, asset managers - worldwide. This was done by the claims and risks from whole portfolios of mortgage loans in special purpose entities (including Special Purpose Vehicle, Conduit ) were introduced and were then used as Mortgage Backed Securities (MBS ), a form of forderungsbesichertem securities sold. To place the MBS investors, the seller could judge these papers by rating agencies with respect to their credit rating. The - almost always in charge of the securitization banks - agencies worked closely together with them with the aim of so structuring the securitization and thus to obtain the greatest possible well-rated tranches (see also credit enhancement ).

For the investment in securitized papers had to financial institutions that are subject to regulatory capital rules, hold less equity than in a direct lending. The Advisory Council on the Assessment of economic development describes this so that for the outsourcing of these transactions from bank balance sheets with the help of special purpose entities called " shadow banks " prudential rules could be circumvented for diversification and hedged by equity.

In a further step, the thus formed MBS tranches were again incorporated into special purpose vehicles and re- securitized ( collateralized debt obligation (CDO ) - securitization second stage) evaluated and the resulting tranches. A diversified portfolio, for example, from various MBS tranches with a rather poor rating ( " rating " ) of " BBB" was wiederverbrieft in the form of a collateralized debt obligation (CDO ), the most senior tranche of the CDO a prime rating of "AAA" obtained. Especially for European banks were securitizations second stage a means to participate in the commission pregnant securitization business. These banks did not have good access to prime mortgage loans. Therefore, they resorted to MBS to bundle these into packets and wiederzuverbriefen in the second stage. In addition, programs were set up in which the introduced into the SPE assets with a shorter period were refinanced on a rolling basis ( through the issuance of short-term asset-backed commercial paper ABCP ). About ABCP also means investors could be mobilized, which could provide it with capital only briefly available or wanted, such as money market funds. Since this term transformation had the potential to receive any connection refinancing at maturity of the issue ( liquidity risk), banks had guarantees in the form of liquidity facilities to provide that protected the ABCP investors at maturity of its securities from losses and for the guarantor initially a source of revenue constitute ( see IKB German industrial bank, Sachsen LB ). These guarantees were usually made on a rolling basis with a maturity of 364 days, as the prudential rules before the entry into force of Basel II demanded no equity for such off-balance sheet obligations with a maturity of less than one year. It could therefore be income generated without banking regulatory required capital was held liable therefor.

Defaults of subprime loans

The economic slowdown in the U.S. starting around 2005, declining growth rates in labor productivity in the U.S. and other countries, in the U.S., particularly in the construction industry, and the subsequent rise in the U.S. prime rate up to 5.25% in June 2006 sparked a chain reaction. Low-income borrowers could not pay the higher rates for their variable-rate loans, and had to sell their house. Because of the increasing real estate sales, home prices plummeted ( highlight was July 2006) and by the falling value of real estate, banks and investors have increasingly unsecured credit claims. The insolvency of debtors gave the banks and investors are now losses.

In the spring of 2007 reached in the United States defaults on subprime loans, the highest level in recent years. Some real estate funds that had invested in structured financial products, translated from the adoption of fund shares, because otherwise they would be in financial difficulty. In June 2007, Bear Stearns informed the customers of two of its hedge funds that deposits that had been the end of 2006 valued at 1.5 billion U.S. dollars, are worth almost nothing now. Dozens of mortgage lenders who had just specialize in these loans, creditor protection had to apply.

Overall, the International Monetary Fund estimated in October 2008, the decline in the value of subprime mortgages to 500 billion U.S. dollars and the Prime mortgages on another 80 billion dollars. The Scientific Advisory Board of the Federal Ministry of Economics and Technology considers this sum compared to the size of the global financial market is not very large. Also, the loss of value of mortgage-backed securities of 500 billion U.S. dollars is, the IMF estimate of October 2008, was significantly higher than actually expected to failures in the underlying mortgages. The high price decline in mortgage-backed securities had therefore come, that buyers of caution and at lower prices, no longer wanted to buy these securities. At this caution was the complexity and obscurity of these securities at as well as the fact that many papers were traded over the counter, so that a market price formation and thus an assessment of the papers was at all difficult.

The losses were then directly into the banks' balance sheets and reduced equity of the banks. In order to comply with regulatory requirements regarding capital reserves or to even to maintain the ratio of equity to receivables stable, the banks were forced to procure or other assets to sell what their prices lowered either new equity. This deleveraging - the banks had to repel a multiple of assets to receivables volume manufacture the old ratio of equity again in loss of value of claims - led to the " implosion of the financial system since August 2007."

Impact on the financial markets

Crisis of confidence in the interbank market

Among the investors are not only prepared to take risks hedge funds, but also more conservative investment funds were represented. However, since in particular had invested heavily in the more risky tranches of securities hedge fund, the incidence of these losses, which led to the closure and liquidation of the Hedge Funds. But investment banks were affected.

The closure of hedge funds and the losses in the investment banks led to a decrease in the risk appetite of investors. This eventually decided in a short time considerable amounts from the capital market or from talking with new investments back into risky assets. The declining risk appetite of investors brought the refinancing of banks founded by special purpose vehicles to a standstill.

The trigger for the crisis was that in July and August 2007, the owner of the commercial papers were no longer willing to purchase it again after the due date. The short-term loans were not renewed. Thus, the purpose entities came under pressure. However, they could no longer sell the structured securities, as it also found no buyers. Therefore, the purpose entities now had recourse to the loan commitments of the banks. In the temporal division of the SVR began the "Phase I" of the financial crisis.

This contributed to the crisis of confidence between the banks, which was reflected in the money market by a rise in money market rates. On August 9, 2007 - this day is now considered the beginning of the actual financial crisis - increased premiums on interbank loans compared to the central bank base rate worldwide, especially in the USA, by leaps and bounds. With the bankruptcy of Lehman Brothers on 15 September 2008, after a government rescue had failed, the interbank market came to a halt worldwide. Short-term excess liquidity was no longer applied at other banks, but under the deposit facility at the central banks.

In the temporal division of the SVR began the "Phase II" of the financial crisis.

Increase in risk premiums on government bonds

In the course of the crisis, public debt in many countries continued to rise, for example due to measures to stabilize the banks and stimulus packages ("Phase III "). The risk premiums of various European countries against German bunds rose. Several countries in the euro zone could their solvency through international assistance loans maintained ( Euro crisis). Within the framework of the European Stability Mechanism a common loan package from the EU, euro countries and the IMF, with the total sum of 750 billion euros was decided. The European Central Bank also announced that, in an emergency buy government bonds in the euro area countries.

Impact on the real economy

The IMF estimated in April 2009, the total losses to 4.1 trillion U.S. dollars (about 3 trillion euros ). Of these, the losses on " toxic " U.S. papers at about 2.7 trillion U.S. dollars, the losses from European papers are estimated at about 1.2 trillion U.S. dollars, Japanese papers with 150 billion U.S. dollars.

In August 2009, the IMF raised its cost estimates to 11.9 trillion U.S. dollars, representing nearly a threefold increase. A study by the German Bank Research estimated the crisis-induced reduction in global GDP over four trillion dollars.

During the year 2008, the financial crisis has increasingly had an impact on the real economy. Effects were seen around the world, first in the U.S., then in Western Europe and Japan, and since the autumn of 2008. As a result, stock prices recorded worldwide from October 2008 after an initial slump due to the financial crisis, a second sharp decline for fear of repercussions on the real economy. Also on the commodity markets were held, primarily from the beginning of the fourth quarter of 2008 strong price declines. Most automobile manufacturers in the industrialized countries have the end of October / early November announced significant production cuts in order to respond to a slump in sales in the tens of magnitude. According to the findings of the Federal Statistical Office Germany was after two quarters of negative growth rates compared to the corresponding prior-year quarters between October 2008 and the second quarter of 2009 in a recession. According to Eurostat statistics, industrial production went to the euro zone from its peak in the spring of 2008 to the spring of 2009 by more than 20 % back. The decline in industrial production is comparable with that in the first year of global economic crisis in 1930 in Germany and the USA.

The financial crisis had a significant impact on the forecasting ability of companies. Due to the unpredictability of the markets, many listed companies had difficulties to formulate the necessary for your annual management report in accordance with § 289 HGB forecasts for the coming fiscal year. The companies had to walk a tightrope accomplish here. On the one hand a forecast had to be made to inform the investors in accordance with the regulations, on the other hand, quantitative targets were difficult to quantify. The trend took it on forecasts, which were based on different scenarios and were mainly of a qualitative nature. Companies that continue communicated quantitative data in their forecasts, was granted by the capital market specifying larger spreads of up to 20 %.

Hunger crisis

It is believed by researchers that the food price crisis 2007-2008 is associated with the global financial crisis. Besides independent from the economic crisis factors, among others the increased in the wake of the financial crisis brought change to basic food speculation in connection with the hunger crisis. So the crisis of world hunger and help Oxfam 's view, as well as individual experts UNCTAD and the World Bank was mainly due to speculation in food. This view was, however, rejected in part.

According to the FAO holds 2009, since the outbreak of the crisis, the number of hungry people has increased by 100 million people ( total of 1 billion ). This is justified by the economic crisis in general and the high food prices in particular.

Assessment of the duration and extent of the crisis

Countries with an official recession (two stagnant quarters)
Countries with unofficial recession (one quarter)
Countries with an economic downturn of more than 1.0 %
Countries with an economic downturn of more than 0.5 %
Countries with an economic downturn of more than 0.1 %
Countries with positive economic development
N / A ( not available )
Assessment of the IMF (December 2008)

On 9 December 2008 the World Bank cut its forecast for global economic growth in 2009. Expected you only global growth of 0.9 percent, as opposed to 2.5 percent in 2008. On 11 June 2009 she lowered her forecast again, previously -1.75 % to -3 %. The most recent economic forecast falls thus more negative than those of the sister organization IMF: We expect the worst crisis since the Great Depression in the 1930s. In addition to a decline in global trade volume, especially the export opportunities for developing countries to richer countries were affected. The EU Commission is expected according to a published 3 November 2008 forecast for 2009 in the countries of the euro zone only with a very low economic growth of 0.1%. On 19 January 2009 she stepped up its forecast to -1.8 % for the countries of the EU. The IMF expects in its forecast from early November 2008 for 2009, the first global recession since the Second World War. On 23 April 2009 the project Gemeinschaftsdiagnose published its medium-term forecast up to 2013. Accordingly, these institutes expect for 2009 a decline in GDP of 6% and for 2010 by 0.5% and by 2013 is achieved GDP roughly the level of 2008 have.

On the national level, many governments have developed 2008/2009 economic stimulus programs over the years. General listed with early 2009, the triggering sector of the monetary system again positive indicators, since July, also show the " economic engines " of the real economy ( in particular the automotive industry and construction in Europe) signs of relaxation, it is - the worst is over the economic crisis - at least a first. But the problems in the industrialized nations shift to a in the tertiary (service) and Quartärsektor (about the tourism industry ), on the other hand, the slowdown affects delayed only since the spring on the number of employees and to the characteristics of consumption in general from ( around Christmas 2008, when the banking crisis was already effective in full extent, the consumption data still showed record levels, and the tourism - Winter season 2008/2009 is still considered a very positive ). The U.S. Federal Reserve expected by the financial crisis, with an unemployment rate up to 9.6% for the end of 2009 in the U.S., in the EU in July were 9.5% unemployment rate reached its highest level in ten years. Looked for the end of 2011, the Fed in their calculations from May 2009 unemployment rate of up to 8.5 % advance. Rising unemployment worsened in the U.S., the impact of the crisis. The savings rate of Americans increased, the propensity to fall. As of August 2009, the index of consumer climate at the University of Michigan, who had already risen in the spring of 2009 fell again. The end of August was the OECD - if only as a " progress report " to the better-informed semi-annual report - the negative economic growth for the G -7 with 3.7 % (instead of 4.1% in July ) for the euro area of 3.9 % ( instead of 4.8% - the ECB gave the same 4.1% instead of 4.6% last ) for the U.S. unchanged 2.8%. In the meantime (January 2010) seems to abate the financial crisis, but slower than predicted by many. On 21 January 2010, the chief economist of the World Bank forecast in a " Global Economic Forecast for 2010 " that in the industrialized countries ' gross national product will rise again in 2010 by 1.8 % (2011: 2.3 % to; was last year it declined to -3.3 %).

International Countermeasures

Coordination of central banks

Since December 2007, the European Central Bank ( ECB ), in consultation with the U.S. Federal Reserve banks U.S. dollars available and takes it on euro -denominated securities as collateral in order to ease the situation on the money market. The ECB therefore accepts exchange rate risks of private banks.

On 11 December 2007, the U.S. Federal Reserve cut for the third time since September 2007 the prime rate. In a concerted action announced on 12 December 2007, five central banks further measures to counteract the " increased pressure on the short-term funding markets." Among other things, the Federal Reserve lent in a barter (swap ) of the European Central Bank ( ECB) 20 billion U.S. dollar and the Swiss National Bank $ 4 billion to counter the dollar shortage in Europe. According to Frankfurter Allgemeine Zeitung has become known that the impetus for this Dollar Rent it from the Fed to the ECB by the Fed went out from the logs now published the meetings of the Federal Open Market Committee of the Fed.

On 18 September 2008, central banks around the world performs more than 180 billion U.S. dollars offered to ease tensions in the money market. With the European Central Bank, banks were able on Thursday, 18 October 2008, holds up to 40 billion U.S. dollars for a day, added a Euro - quick tender with a left open volume. The Bank of Japan for the first time offers U.S. dollars.

From October 2008, sank in a concerted action, seven of the leading central banks, including the Federal Reserve (Fed ), the European Central Bank ( ECB ), the Bank of England ( BoE) and the Swiss National Bank (SNB ), a global interest rates. Since then carried out further interest rate cuts which have been partially brought interest rates to one in decades attained low levels to historic lows.

On 6 April 2009, the ECB, the Fed swap line amounting to 80 billion U.S. dollars in Euros prepared the British central bank granted 60 billion pounds, the Swiss central bank provides 40 billion francs, and the Bank of Japan 10 trillion. Yen available. U.S. banks can rely on in the future as the Fed on loans in foreign currencies. The measure of the central banks complement the action of 18 September 2008 in the reverse direction. At that time, the Fed swap lines to foreign central banks had granted a total of 300 billion U.S. dollars.

On 30 November 2011, the European Central Bank, the U.S. central bank, the Federal Reserve, the central banks of Canada, Japan, Britain and the Swiss National Bank have the global financial markets made more money available to ward off the debt crisis and to support the real economy. The central banks agreed on the cost of existing dollar swaps from December 5, 2011 reduced by 50 basis points. They also agreed swaps in order to at any time to provide the required currency from banks can. The central banks as guarantee to commercial banks that they are liquid or in other currencies. At the same time, the Chinese central bank loosened its monetary policy. October 2013 announced the European Central Bank ( ECB), the U.S. Federal Reserve, the Bank of Japan, the Bank of England, the Bank of Canada and the Swiss National Bank, permanently maintain the Swap Agreement of December 2007.

Economic programs

In many countries, extensive economic stimulus and financial market stabilization laws have been launched as part of the financial crisis. There are in the U.S., the Economic Stimulus Act of 2008 ( ESA scope of 150 billion U.S. dollars), the Emergency Economic Stabilization Act of 2008 ( EESA circumference of 700 billion U.S. dollars ) and the American Recovery and Reinvestment Act of 2009 (circumference of the ARRA 787 billion U.S. dollars). In Germany, the Financial Market Stabilisation Act (circumference of FMStG: 400 billion euros ), the package of measures " job security by enhancing growth " (circumference of the economic stimulus package, I: 50 billion euros ) and the Economic Recovery Plan " Determined in crisis, strong for the next upturn " (circumference the economic stimulus package II: 14 billion euros ). In particular, the opportunities were extended to short-time working to stabilize the employment. In Austria, the stimulus packages I and II and the tax reform introduced in 2009 ( a total of nearly twelve billion euros ).

Worldwide is according to a study by German Bank Research the total, distributed over several years volume of the stimulus programs about 2000 billion U.S. dollars. Without the programs, according to DB Research, the decline in gross domestic product would have been considerably stronger. The crisis-induced reduction of GDP puts the study of " 4,000 billion " U.S. dollars. Finally, the banking sector can be restored only slowly.

Measures to stabilize the banking system

In the context of the crisis Notverstaatlichungen were in the U.S. and Europe (temporary ) performed and introduced so-called bad bank concepts ( settlement banks). In Germany, the possibility has been created with the financial market stabilization Fort Development Act in 2009, decentralized set up for individual credit institutions a bad bank. This is to accommodate troubled structured securities or also handle all loss-making businesses in need of redevelopment banks. Support measures in favor of financial institutions increased the government gross debt for 2008 and 2009 by a total of 98 billion euros. Since it is mainly the borrowing is to be compared with the corresponding receivables from the financial institutions.

Since October 2008 Bonds are guaranteed worldwide increasingly by the state. By October 2009, the volume of state-guaranteed bank debt has reached about 800 billion U.S. dollars. More than 450 billion U.S. dollars, accounting for Western Europe, the rest in large part to the United States.

In order to stabilize the banking system in the euro zone, the European Central Bank put a program of buying mortgage bonds on the " covered bond purchase program " CBPP, English abbreviated, and acquired so until June 2010 securities worth 60 billion euros.

After Joaquín Almunia, Vice- President of the European Commission, the banks were from October 2008 to March 2010 state aid in the context of about 4 trillion. Euro approved, three quarters in the form of state guarantees. The banks took from the state guarantees actually 994 billion euros to complete.

According to German Bundesbank took in Germany the government gross debt ( government and social security funds, including the attributable extra budgets ), according to preliminary calculations, the end of 2010 in delineation of the Maastricht Treaty to 83.2 % of GDP (almost 10 percentage points). It is comprehensive measures to stabilize financial market in the amount of € 241 billion would reflect that stood above all in connection with the Hypo Real Estate and WestLB. Since 2008, the government debt had increased by € 335 billion in the course of this financial market support measures, which would correspond to 13.4 % of gross domestic product. To the extent that the assets subject could utilize in the future, the debt would fall again.

After Joaquín Almunia European Union governments implemented between 2008 and 2010 1.6 trillion euros one ( 13% of GDP ) in order to save their banks. Three-quarters or almost 1.2 trillion euros of aids were used for guarantees or liquidity support, the remaining 400 billion euros for capital assistance and necessary depreciation.

A study by Beatrice Weder di Mauro and Kenichi Ueda is among other things to the conclusion that the value of unspoken state guarantees for banks has increased in the wake of the financial and banking crisis, which leads to financial facilities for the banks.

In the period from 2008 to 2011, the countries of the European Union supported the banking sector with 1.6 trillion euros. Also a number of new regulations was adopted at the national level, particularly in France, as well as at European level. The EU unified and intensified various aspects of banking law. In particular, this includes the obligation of financial institutions to develop in advance in the event of bankruptcy, liquidation plans as well as early intervention powers and the right to regulators, special administrator for banks to order. Critics, especially independent and Green MEPs, however, criticize the measures are insufficient, the behavior of the dominant conservative and socialist parties Europe as a financial industry - friendly as well as the lack of regulation in key areas such as the shadow banking system.

Reform proposals of the G -20 countries

Summit in November 2008

Under the acute impact of the financial crisis, a meeting at the level of Heads of State and Government of the G20 countries (plus the Netherlands and Spain) in Washington was held from 14th to November 16th, 2008 to discuss and implement the basics of a reform of the international financial markets. This high-level meeting was in the German press also called world financial summit. The goal was the agreement of international regulations to prevent the recurrence of financial crisis. A catalog with almost 50 individual measures was adopted. 28 of these individual proposals should be implemented by 31 March 2009, the other points in the medium term. Participants indicated tendencies toward protectionism clearly rejected, it expressly declared to the principles of free market and open trade. In addition, an effective regulation of the financial markets was demanded. Among other things, the following actions were agreed:

Greater monitoring of the rating agencies,
Stronger regulation of speculative hedge funds and other previously unregulated financial products,
Establishing evaluation criteria for complex financial products,
Increase the capital buffers of financial institutions,
Harmonization and revision of the accounting rules,
Orientation of the incentives of managers of medium-term objectives,
Protection against unfair competition by tax havens,
Strengthening of the International Monetary Fund,
Better protection of consumers through more transparent information.

Each participating country is committed to implementing the measures into national law.

Subsequent summits

A follow-up conference was held on 1 / 2 April 2009 in London. In addition to the specification of different points of the first meeting were complementary measures adopted to stimulate the economy:

The G20 countries agreed on a program of 1.1 billion U.S. dollars to revive the world economy, especially in world trade, as well as to improve the situation in the developing countries. In particular: The funds for the IMF should be increased to 750 billion U.S. dollars.
On new special drawing rights to be allocated 250 billion U.S. dollars. ** About Multilateral Development Banks at least 100 billion U.S. dollars will also be granted.

With the other G20 meeting on 24-25. September 2009 in Pittsburgh and 26-27. June 2010 in Toronto were the focus remains a reform and strengthen financial systems and the re- attainment of strong economic growth. Added to this was the requirement for sustainability and balance in achieving the growth targets.

Documentation

Inside Job, documentary film by Charles H. Ferguson, USA, 2010.
Inside the Meltdown - 4-part PBS documentary on the financial crisis, as well as additional background articles and in-depth expert interviews (English)
Money, Power & Wall Street - 4-part PBS documentary on the financial crisis, as well as additional background articles and in-depth expert interviews (English)

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