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Economic Crisis Timeline: '00s Decade In Review

Decade

EILEEN AJ CONNELLY   12/18/09 12:59 PM ET   AP

It was a decade of living dangerously.

With interest rates low and lending standards lower, credit became the currency of the decade.

Exotic mortgage products helped housing prices more than double. Consumer spending shot up more than 48 percent – even while wages stagnated – as shoppers snapped up big-screen TVs, gadgets like iPhones and fashion labels like Gucci and Jimmy Choo.

The amount of debt consumers carried shot up 67 percent, peaking in June 2008 at $2.57 trillion. Likewise, businesses large and small borrowed money to finance a wave of mergers and expansion.

Then, the crash.

At the end of 2006, homeowners began defaulting on their mortgages at an alarming rate. The foreclosure rate broke record after record. Lenders failed by the dozen. In late 2009, more than 14 percent of homeowners with a mortgage were either behind on their payments or facing foreclosure.

For Bear Stearns and Lehman Brothers, which bet too heavily on securities backed by risky mortgages, the losses were fatal. The ripple effects across banking and other industries, sparked a recession that led to massive job losses and drastic cutbacks in consumer spending.

There are some signs of a recovery, but not of a quick rebound.

Stocks have recovered a portion of their losses, but it will appear on most investor's balance sheet as a lost decade – the first 10-year period investors saw a negative total return.

Nearly 27 million people are unemployed or underemployed. Consumers have cut back on spending and started saving, but it will take years to dig out of the debt hole. Home prices have receded to 2003 levels, and further in Arizona, California, Florida and Nevada.

The decade that began with the view that the sky was the limit is ending with both investors and consumers feeling grounded.

Here's a look at some of the key moments in personal finance in the 2000s.

2000

January

AOL and Time Warner announce a $162 billion deal. Then the largest-ever corporate merger, it set off an era of mega-mergers that helped fuel the market as investors chased outsized gains. It would prove to be a last hurrah for the dot-com era before the bubble burst.

February

JetBlue takes to the skies as the discount airline joins Southwest Airlines in pressuring the major carriers to cut prices. By the second quarter of 2009, the cost of average domestic itinerary fares will drop by 11 percent, down to $301 from $339.

March

The Nasdaq composite index reaches an all-time high of 5,048 on March 10, as the dot-com bubble peaks.

November

Just nine months after raising $82.5 million in an IPO, Pets.com silences its popular spokesdog sock puppet. Management announces the Web site will shut down and rights to the puppet sold. Pets.com joined a legion of other casualties. Remember Flooz.com, Kozmo.com, Webvan.com?

2001

January

President George W. Bush takes office. The passage of a $1.35 trillion tax cut program was an early success for the administration, but his domestic agenda would soon be eclipsed by 9/11.

September

The terrorist attacks of Sept. 11 darken the New York Stock Exchange for four days, its longest closure since 1933. When trading reopens Sept. 17, the Dow Jones industrial average plunges 684.81 points.

December

On Dec. 2, Enron files for Chapter 11 bankruptcy protection, to that point the largest bankruptcy in U.S. history. Many employees in Enron's 401(k) plan are heavily invested in company stock and see their retirement plans disappear.

2002

January

The first euro notes and coins are issued in 12 European countries. The notes are worth about 90 cents. By 2009, the exchange rate will value the euro around $1.45.

July

On the heels of a number of major corporate scandals, including Enron, Tyco and WorldCom, the Sarbanes-Oxley Act passes, setting new standards for corporate governance.

October

The dot-com bubble bear market reaches bottom, when the Dow Jones industrial average slips below 7,200.

2003

March

Research in Motion tops 500,000 Blackberry subscribers shortly after the handheld device adds voice service along with e-mail. The introduction of the iPhone in 2007 will further spark demand for smart phones. In the first nine months of 2009, worldwide sales of smart phones will top $53 billion according to IDC, a market research firm.

March

Operation Iraqi Freedom begins on March 20. The cost to taxpayers will be projected to exceed $1 trillion by the time the conflict ends.

September

NYSE Chairman and CEO Richard Grasso resigns following the revelation of his $140 million compensation package, sparking concerns about excessive executive pay.

2004

February

HBO airs the final episode of "Sex and the City," which epitomized the decade's swelling consumption of luxury fashion goods previously reserved for the wealthy, such as $600 Manolo Blahnik shoes.

August

Google goes public. Originally priced at $85, shares of the Internet search firm will trade near $600 by mid-December 2009.

October

The Boston Red Sox win their first World Series since 1918. As attendance rises 10 percent in the decade to 73.4 million, the average ticket price for a Major League Baseball game will rise more than 60 percent to $27 by 2009.

2005

March

"Mad Money" with Jim Cramer debuts on CNBC. With bobble-heads and "booyah" rants, Cramer becomes a mass-market personal finance guru. He will later suffer a public backlash for bad calls after the financial market meltdown.

April

Taxpayers move online as electronic filing of tax returns tops 50 percent for the first time. Some 68.5 million returns are submitted to the IRS via the Internet.

April

The first video is uploaded to the video sharing site YouTube.com. Just 18 months later Google will purchase the site for $1.76 billion. By decade's end viral videos and Susan Boyle will be a part of life. YouTube remains mum on whether it's profitable.

September

Quarterly direct-mail offers for credit cards peak at 2.22 million. Market researcher Mintel says nearly 8.2 million offers were sent out in the year.

September

The number of transactions made using debit cards overtakes those of credit cards. Debit card dollar volume will surpass credit in early 2009.

2006

January

After more than 18 years, Alan Greenspan's term on the Federal Reserve Board ends. Critics will later question whether his legacy of historic interest rate cuts led to the housing bubble.

April

Home values peak as the Standard & Poor's/Case-Shiller home price index reaches its highest point.

November

The Nintendo Wii video game console goes on sale. By the end of 2009, more than 23 million are sold. U.S. sales of video games will hit $20 billion in 2009 according to NPD Group.

2007

January

Countrywide Financial, the biggest U.S. mortgage lender, warns that homeowners are having trouble repaying loans. Within weeks, investment banks begin writing off millions in investments backed by risky mortgages-early signs of the global financial crisis to come.

September

In a sign the "green consumer" trend has taken hold, Wal-Mart launches a private label energy-saving compact fluorescent light bulb. One month later, former U.S. Vice President Al Gore wins the Nobel Peace Prize for raising awareness about global warming. By 2009, Wal-Mart will have sold 145 million of its light bulbs.

October

The Dow Jones industrial average records its highest ever close, 14,164.53 on Oct. 9. A week after the market peaks, Fox Business Network debuts to challenge CNBC.

October

On Oct. 15, Kathleen Casey-Kirschling files for early retirement, becoming the first of an estimated 80 million baby boomers to qualify for Social Security benefits.

December

Las Vegas gambling receipts peak at $10.9 billion. By decade's end, 37 states will have some kind of commercial or Indian-run casino.

December

The official start of a recession according to the National Bureau of Economic Research. It won't be declared such until full year later.

2008

March

Gold prices surge to more than $1,000 an ounce for the first time ever.

March

On March 16, Bear Stearns is sold to JPMorgan Chase for a fire-sale price of $2 a share, or $236 million, as the collapse of the subprime mortgage market brings down the fifth-largest Wall Street investment bank, foreshadowing the broader financial crisis.

March

Visa Inc. stock debuts on the New York Stock Exchange with the largest-ever IPO, raising $17.86 billion.

July

California lender IndyMac Bank fails at an estimated cost of $10.7 billion to the Federal Deposit Insurance Corp. A total of 25 banks will fail by the end of the year. Failures will skyrockets to more than 133 in 2009.

July

Oil reaches $150 a barrel; gasoline spikes to $4.11 a gallon. Gas prices become a topic of debate on the presidential campaign trail.

July

"Dark Knight," the second film in the reboot of the Batman series, premieres. Movie-goers will ultimately shell out more than $533 million, enabling the film to surpass "Star Wars" as No. 2 on the all-time list for domestic box office receipts.

September

On Sept. 15, the subprime mortgage crisis forces Lehman Brothers to file for Chapter 11 bankruptcy protection, setting forth a worldwide financial meltdown.

September

On Sept. 29, the House rejects the government's $700 billion financial bailout plan, triggering the largest-ever drop in the Dow Jones industrial average, 777.68 points.

October

As part of the federal bailout of the financial system, FDIC insurance on bank deposits is increased from $100,000 per account to $250,000, until 2014.

November

Riding a record-setting wave of $748 million in campaign donations, with more than 45 percent of the donations of $500 or less, and made by individuals, Barack Obama is elected the first African-American U.S. president.

December

Bernard Madoff is arrested by the FBI after confessing to his sons that his investment firm is a Ponzi scheme. Investigators later tally the real losses for his investors at more than $21 billion.

December

Revolving debt held by U.S. consumers, mostly on credit cards, tops out at $988.2 billion. The number of outstanding credit cards, once 425 million, will drop to 325 million by late 2009.

2009

January

President Barack Obama is sworn in. In his inaugural address he notes: "The state of the economy calls for action, bold and swift, and we will act-not only to create new jobs, but to lay a new foundation for growth."

February

The $757 billion economic stimulus package is signed into law.

March

On March 9, major stock market indicators hit 12-year lows, with the Dow Jones industrial average sinking to 6,547. Stocks then begin a months-long bull market that restores much, but far from all, of the wealth lost in the collapse.

May

Seeking to protect consumers, landmark credit card reform legislation is signed into law. According to consultant TowerGroup, banks use the nine months before the law takes effect to slash credit limits and raise interest rates on 65 percent of all outstanding cards.

July

In an effort to jump-start the economy and get gas-guzzlers off the road, the government initially approves $1 billion to provide rebates for new car purchases. Greater than anticipated demand leads Congress to approve an additional $2 billion.

July

With families skipping travel during the summer season due to the economy, "staycation" a slang term for staying home while on vacation, is among 100 new words added to the Merriam-Webster Collegiate Dictionary.

October

As investors left skittish by 2008's market collapse continue to seek relative security, bond fund Pimco Total Return, the world's largest mutual fund, tops $186 billion in assets.

November

After wavering back and forth for two weeks, on Nov. 5, the Dow settles into a two-month run above the 10,000 mark. The following morning, the Commerce Department says the unemployment rate hit 10.2 percent in October.

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Filed by Ryan McCarthy  |