Top 12 Events of the 21st Century

The Most Important Financial News Stories

The events surrounding the Great Recession eclipsed most of the other financial news stories in the past decade. In 2020, the coronavirus pandemic could surpass even that in terms of economic damage. Take a walk back in time. Who would have thought in 2000 that so much would change in just 20 years?

2001: 9/11 Attack Leads to War on Terror

U.S. Soldiers Continue Patrols Outside FOB Shank In Afghanistan
Scott Olson / Getty Images

The 9/11 attacks killed 2,973 people, including 343 firefighters. The physical damage was between $82.8 billion and $94.8 billion.

The attacks caused the stock exchange to close. When it reopened, the Dow dropped almost 700 points. The attacks deepened the 2001 recession. They also led to the War on Terror. The costs of the wars in Afghanistan and Iraq were $5.9 trillion.

2005: Hurricane Katrina Cost $180 Billion

woman with dog after Hurricane Katrina
Lana Seymour and her dog Fifi peer out from their house to survey the damage in the French Quarter after Hurricane Katrina blew through the area early on August 29, 2005 in New Orleans, Louisiana. Photo by Chris Graythen/Getty Images

Hurricane Katrina was a Category 5 storm that hit Louisiana on August 29, 2005. It was the most destructive natural disaster in U.S. history, causing $160 billion in damage.

The second-most destructive hurricane occurred in 2017. Hurricane Harvey cost $125 million. Hurricane Sandy cost $70.2 million in 2012, and Hurricane Irma cost $50 million in 2017.

2007: Housing Crisis

Tracy Munch watches as an eviction team removes furniture from her foreclosed house
Tracy Munch watches as an eviction team removes furniture from her foreclosed house February 2, 2009 in Adams County, Colorado. She and her husband had been renting from an owner, who collected the monthly payments but had stopped paying his mortgage. Photo by John Moore/Getty Images

The subprime mortgage crisis occurred when banks lowered their requirements for home lending. Banks weren't concerned because they resold the mortgages on the secondary market. In 2007, housing prices started to fall. New home prices fell 22% from their peak of $262,600 in March 2007 to $204,200 in October 2010.

At the same time, the Federal Reserve raised interest rates. Many homeowners had adjustable-rate mortgages that followed the fed funds rate and reset after the first few years. Homeowners were surprised when they were hit with suddenly higher payments. They couldn't sell their houses because prices had dropped below the mortgage value. When banks foreclosed, many lost their homes.

2008: Global Banking System Stopped Working

Geithner, Bernanke, And Fuld Testify At House Hearing On Lehman Bankruptcy
Chip Somodevilla / Getty Images

On Monday, September 15, 2008, Lehman Brothers announced bankruptcy. It was the largest bankruptcy in U.S. history. The 164-year old firm was the fourth-largest U.S. investment bank. Its bankruptcy kicked off the global financial crisis. 

On Wednesday, September 17, banks withdrew $172 billion from ultra-safe money market accounts. Banks were hoarding cash for write-downs on bad mortgages. The credit freeze led to a cash shortage for most businesses. In response, the Federal Reserve lowered interest rates to zero.

Lehman’s bankruptcy sent financial markets reeling.

On September 29, 2008, the Dow Jones Industrial Average fell 777.68 points, the largest point drop in any single day (as of that time). Between October 9, 2007, and March 6, 2009, the Dow dropped 50%. It was the worst decline since the Great Depression when the Dow fell 80%. It occurred in only 17 months, while the Great Depression drop took three years.

2008: Billions in Bailouts

Geithner, Bernanke, And Fuld Testify At House Hearing On Lehman Bankruptcy
Chip Somodevilla / Getty Images

On Oct. 3, 2008, Congress passed the $700 billion bailout bill, now known as the Troubled Assets Relief Program. The program was initially designed to purchase toxic mortgages from banks, freeing up cash for more loans. But, it was taking too long to implement. On Oct. 14, the Treasury used $350 billion for the Capital Repurchase Program, which purchased preferred stock in major banks.

On Sept. 16, the American International Group, the world's largest insurance company, announced it was going bankrupt.

Like a hedge fund, AIG took risks with unregulated products, such as credit default swaps. It wrongly used cash from people's insurance policies. The Fed stepped in to avoid the collapse of the $3.45 trillion money-market fund industry, which invested in AIG debt and securities. Most mutual funds also owned AIG stock.

The 2009 economic stimulus package sought to reassure investors and end the recession. It spend over $179 billion in tax relief, health services, and unemployment compensation. The recession ended in the third quarter.

2011: Japan's Tsunami and Nuclear Disaster

woman sitting on ground after fukushima earthquake
A local resident rests as she evacuates an area after a 9.0 magnitude strong earthquake struck on March 11 off the coast of north-eastern Japan, on March 14, 2011 in Sendai, Japan. (Photo by Kiyoshi Ota/Getty Images)

On March 11, 2011, Japan suffered a 9.0 magnitude earthquake. It caused a 133-foot high tsunami to crash over Japan's northeastern shoreline. Almost 16,000 people died and around 2,500 went missing.

The waves damaged the Fukushima nuclear power plant, creating radioactive leaks. The "Triple Disaster" devastated Japan's economy. It crippled the country's nuclear industry and convinced Europe to cut back its reliance on nuclear power.

2014: Obamacare Adds Coverage for 20 Million

health worker exam
A nurse weighs a patient. Obamacare pays 100% for preventive care, including free wellness checks. Photo: Thinkstock/Getty Images

The Affordable Care Act expanded health coverage to 20 million people. They could receive low-cost preventive care for chronic illnesses. That kept them out of expensive emergency rooms.

As a result, the rise in U.S. health care costs has slowed. Between 2010 and 2016, health care costs rose by 4.3% a year. That's slower than the 6% annual increase during the prior 20 years.

2015: Greek Debt Crisis Threatens European Union

Greek debt crisis
Greece's financial pressures almost forced it to abandon the Greek euro. Photo: Eduard Andras/Getty Images

The Greek debt crisis warned of the danger facing other heavily indebted countries. In 2015, Greece almost defaulted on its debt and exited the eurozone. To avoid default, the EU loaned Greece enough to continue making payments. It was the biggest financial rescue of a bankrupt country in history. 

It also triggered the eurozone debt crisis. Greece's debt crisis warned of the potential fate of other heavily indebted EU members. Although Greece's sovereign debt crisis was resolved, it threw into question the viability of the European Union itself. 

2015: China Emerges as the World's Largest Economy

china-stock-market.jpg
An investor looks at the stock market in Wuhan of Hubei Province, China. Photo by China Photos/Getty Images

In 2015, China became the world's largest economy. That's according to the International Monetary Fund, which uses so-called international dollars to make better comparisons among countries.

That has shifted the economic balance of power. The European Union is the second-largest economy, leaving the United States at third place.

China is also the second-largest holder of U.S. debt. This gives it leverage. For example, China's holdings of U.S. debt allows low interest rates and cheap consumer goods. If China called in its debt, U.S. interest rates and prices would rise, slowing America's economic growth. 

2016: Brexit Vote

Brexit is the nickname for "British exit" from the European Union. The U.K. left the EU on Jan. 31, 2020. Brexit restricts immigration and could disrupt trade. The U.K. government estimated that Brexit would lower the country's growth by 6.7% over 15 years. The biggest impact has been due to ongoing uncertainty over the final outcome.

COVID-19 Pandemic and 2020 Recession

Mother and son wearing masks

 Photo by Halfpoint Images/Getty Images

On March 11, 2020, the World Health Organization declared the new COVID-19 coronavirus a pandemic. It could cost the global economy as much as $2 trillion in 2020. It could reduce global growth rates to 0.5%.

COVID-19's estimated mortality rate of 3%-7% is worse than the flu's 0.1% rate.  Although it is less deadly than SARS’s rate of 10%, it spreads more quickly. One reason is that the incubation period is longer, and many people don't show symptoms. As a result, they spread the disease before they even realize they are sick.

To stop the spread of the virus, many countries around the world called for people to shelter-in-place.

Most governments closed non-essential businesses. In just a few months, the pandemic decimated the U.S. economy. In the first quarter of 2020, growth declined by 5%. In April, retail sales plummeted 16.4% as governors closed nonessential businesses. Furloughed workers sent the number of unemployed to 23 million.

The Congressional Budget Office predicts a modified U-shaped recovery.

These early indications reveal that the second quarter will be worse. The Congressional Budget Office predicts the economy will decline by 38%. The number of unemployed will rise to 26 million. The third quarter will improve, but not enough to make up for earlier losses. Effects will linger until the fourth quarter 2021, with slightly lower economic output and higher unemployment.

The Federal Reserve estimated that the second-quarter U.S. unemployment rate could be 32%.

2020: Stock Market Crash and Recession

crash
Traders work on the floor of the New York Stock Exchange before the closing bell May 6, 2010 in New York City. The Dow plunged almost 1000 points before closing down about 350 on Greek debt fears. Photo by Mario Tama/Getty Images

The stock market crash of 2020 began on Monday, March 9, with history’s largest point plunge for the Dow Jones Industrial Average (DJIA) up to that date. It was followed by two more record-setting point drops on March 12 and March 16. The stock market crash included the three worst point drops in U.S. history.

The drop was caused by unbridled global fears about the spread of the coronavirus, oil price drops, and a looming recession.

Article Sources

  1. The 9/11 Commission. "The 9/11 Commission Report," Page 311. Accessed April 20, 2020.

  2. The Office of the New York City Comptroller. "One Year Later: The Fiscal Impact of 9/11 on New York City," Page 1. Accessed April 20, 2020.

  3. Brown University. "$5.9 Trillion Spent and Obligated on Post-9/11 Wars," Accessed April 20, 2020.

  4. NOAA. "Table 3b. Costliest Mainland United States Tropical Cyclones, 1900-2017, after Accounting for Inflation to 2017 Dollars," Accessed April 20, 2020.

  5. National Oceanic and Atmospheric Administration. "Tropical Cyclone Report Hurricane Katrina 23-30 August 2005," Page 1. Accessed April 20, 2020.

  6. National Bureau of Economic Research. "Has Financial Development Made the World Riskier?" Page 4. Accessed April 20, 2020.

  7. U.S Census. "Median and Average Sales Prices of New Homes Sold in United States," Accessed April 20, 2020.

  8. Federal Reserve Bank of St. Louis. "Targeted Fed Funds Rate," Accessed April 20, 2020.

  9. National Bureau of Economic Research. "The Fed and Lehman Brothers," Page 1. Accessed April 20, 2020.

  10. Rosalind Z. Wiggins, Thomas Piontek, Andre Metrick. Yale Program on Financial Stability Case Study. "The Lehman Brothers Bankruptcy A: Overview," Page 1. Accessed April 20, 2020.

  11. Journal of Economic Perspectives. "When Safe Proved Risky: Commercial Paper During the Financial Crisis of 2007–2009," Page 30. Accessed April 20, 2020.

  12. Federal Reserve Bank of St. Louis. “Federal Funds Target Range - Upper Limit,” Accessed April 20, 2020.

  13. S&P Dow Jones Indices. “DJIA Daily Performance History, “ Download DJIA Daily Performance History. Accessed April 20, 2020.

  14. Congressional Budget Office. "Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output in 2014," Accessed April 20, 2020..

  15. GROWTH: Bureau of Economic Analysis. “National Income and Product Accounts Tables: Table 1.1.1. Percent Change From Preceding Period in Real Gross Domestic Product,” Select “Modify,” Select “First Year 2008,” Select “Refresh Table.” Accessed April 20, 2020.

  16. National Aeronautics and Space Administration. "The Great Wave of Reform," Accessed April 20, 2020.

  17. OECD. "Impacts of the Fukushima Daiichi Accident on Nuclear Development Policies," Pages 10 and 12. Accessed April 20, 2020.

  18. Center on Budget and Policy Priorities. "Chart Book: Accomplishments of Affordable Care Act," Accessed April 20, 2020.

  19. HealthAffairs. "National Health Care Spending in 2016: Spending and Enrollment Growth Slow After Initial Coverage Expansions." Accessed April 20, 2020.

  20. Centers for Medicare and Medicaid Services. "History of Health Spending in the United States, 1960-2013," Page 18-22. Accessed April 20, 2020.

  21. Council on Foreign Relations. "Greece's Debt Crisis Timeline," Accessed April 20, 2020.

  22. International Monetary Fund. “GDP Based on PPP, Share of the World.” Accessed April 20, 2020.

  23. U.S. Department of the Treasury. "Major Foreign Holders of Treasury Securities," Accessed April 20, 2020.

  24. U.K. House of Commons Library. “Brexit Deal: Potential Economic Impact,” Accessed April 20, 2020.

  25. World Health Organization. "WHO Director-General's Opening Remarks at the Media Briefing on COVID-19 - 11 March 2020," Accessed April 20, 2020.

  26. United Nations. "Coronavirus Update: COVID-19 Likely to Cost Economy $1 Trillion During 2020, Says UN Trade Agency." Accessed April 20, 2020.

  27. World Health Organization. “Q&A: Similarities and Differences – COVID-19 and Influenza,” Accessed April 20, 2020.

  28. Johns Hopkins University. "Coronavirus Disease 2019 Versus the Flu," Accessed April 20, 2020.

  29. Centers for Disease Control and Prevention. "SARS Basics Fact Sheet," Accessed April 20, 2020.

  30. Bureau of Economic Analysis. “National Income and Product Accounts Tables: Table 1.1.1. Percent Change From Preceding Period in Real Gross Domestic Product,” Accessed June 2, 2020.

  31. U.S. Census Bureau. "Advance Monthly Sales for Retail and Food Services." Accessed June 2, 2020.

  32. Bureau of Labor Statistics. "Employment Situation Summary," Table A. Accessed June 2, 2020.

  33. Congressional Budget Office. "Interim Economic Projections for 2020 and 2021." Accessed June 3, 2020.

  34. Federal Reserve Bank of St. Louis. "Back-of-the-Envelope Estimates of Next Quarter’s Unemployment Rate," Accessed April 20, 2020.

  35. S&P Dow Jones Indices. “DJIA Daily Performance History, “ Download DJIA Daily Performance History. Accessed April 20, 2020.