BUSINESS & FINANCE buying the loans were sucking the opportunities up at record pace .
Fast-forward to July of 2007 and the second major institution falls victim . Investment bank Bear Sterns notifies its investors they won ’ t be getting any of their money they invested . Surely it wasn ’ t put in those exact words but any investor with savvy would have been thinking it . The investments in trouble were hedge funds and Bear Sterns , despite considerable efforts , was not able to convince rival banks to help bail them out . To put it bluntly the system was beginning to collapse .
The S ** t Hits the Fan :
9TH AUGUST 2007
BNP Paribas won ’ t allow investors to take their money out due to , “ complete evaporation of liquidity ”. The European Central Bank decides to pump 96 billion Euros into the market to improve liquidity and adds an additional 108.7 billion over the next few days , that should do ….. right ? Wrong ! Even the US Federal Reserve interfered followed by Bank of Canada and Japan . Mmmmm , something ’ s brewing ? All this led to the Federal Reserve cutting interest rates in the US by a half percent on the 17th of August , 2007 which results in Banks beginning to lend to each other at a staggering rate .
On the 13th of September reports began to circulate that Northern Rock had asked for and been granted emergency financial help from the Bank of England . The US Federal Reserve then cut its interest rates by an additional half percent on the 18th of September . While top notch banks around the world began to report major losses due to sub-prime investments . USB report a 3.4 billion loss , Citigroup reveals 3.1 billion in losses , Merrill Lynch reports 7.9 billion in losses and the list goes on .
Many people at the time didn ’ t fully understand that the list of countries in trouble was increasing as a result of the situation , but their leaders did . On December 6th George W . Bush revealed a plan to help more than a million people facing troubles with their homes in the US while the Bank of England began conservatively cutting interest rates by a quarter of a percent . December 13th saw the US Federal Reserve make plans with 5 major central banks around the world to offer billions in loans to banks in an effort to shore up the situation . Many banks began offering auctions , the US for 20 billion followed by the European Central Bank to the tune of 500 billion which was designed to help commercial banks over the Christmas Period .
Then credit ratings of monoline insurers began to be downgraded , while a huge slowdown in economic growth globally began to take hold . Stock markets started falling around the world , the US Federal Reserve cut their interest rates to 3.5 %, the G7 estimated that the global loss due to the collapse of the US subprime market reached 400 billion , followed by the International Monetary Fund announcing that losses could reach one trillion or higher . Housing prices began to fall rapidly , banks continued to collapse or be purchased by larger conglomerates at unbelievable prices . Reports of record bail-outs began to emerge into the media . While huge job cuts were being reported by major companies around the globe . The world was on the brink of financial collapse .
Ok stop ! Stop ! STOP ! You may think this seems pretty doom and gloom , however from the ashes a Phoenix would rise and these events set the stage for a man with great vision who would inspire people beyond his borders . On the 28th of June 2009 Sheikh Mohammed Bin Rashid Al Maktoum ( the Vice President and Prime Minister of the United Arab Emirates , and ruler of Dubai ) announced the launch of Dubai 2020 . It was an effort whose main responsibility was to examine the possibility of Dubai hosting either the World Expo or the Olympics and the Para Olympics in 2020 . At the time this may have seemed like a very small step to fixing the financial downturn situation affecting Dubai , but while the rest of the world was in panic Sheikh Mohamed pointed to a direction forward .
Dubai ’ s economy had come to a screeching halt during the crises with many construction projects in progress in 2008 . During this time contractors attempted to focus on completing projects faster , which used up available funds , as payments from investors began to slow down . In the end construction companies began to close leaving large projects on hold in different
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1961 Magazine Fall 2016