Dow Jones Industrial Average

2007-2009 Global Financial Crisis

During the 2007-2009 period markets witnessed the Lehman Bros collapse and the unofficial bankruptcy of a large number of banks and building societies, some significant. Many problems were caused by subprime mortgage loans in the US and similar irresponsible lending practices in other countries like those in Europe and the UK. The problem was widespread, the solution unknown. Not only did Western governments reduce interest rates to zero in an attempt to make holding cash unattractive (and thus spend it, or loan it, stimulating growth) but they also began a program of "Quantitative Easing" (the modern day, computerized equivalent of the printing press, and akin to that used in Japan during the Lost Decade). After March 2009, markets began to recover, but the remainder of this movement is yet to unravel. The Dow Jones Industrial Average fell from an all-time high of 14279 on October 11th, 2007 to a low of 6440 on 9th March, 2009, a nominal drop of 54.9%, and 56.9% when adjusted for inflation.