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History's greatest financial fall: How it began

September 23, 2008

August 9, 2007 is the official date when the crisis is said to have hit global finances. But the rot had started much earlier.

In 2006, the US housing market started to feel the pain of high interest rates -- which, between 2004 and 2006, had risen from one per cent to 5.35 per cent -- resulting in default rates on *sub-prime loans rising to record level.(*High risk loans to customers with poor or no credit histories).

February 22, 2007: HSBC fires head of its US mortgage lending business as losses reach $10.5 billion. On February 23, the Bombay Stock Exchange's sensitive index -- the Sensex -- ended down 356 points at 13,656. (Because of the time difference between India and the US, the market figures are of those a day later)

March 8, 2007: Biggest US house builder DR Horton warns of huge losses from sub-prime fall-out.

March 12, 2007: Shares in New Century Financial, one of the biggest sub-prime lenders in the US, were suspended amid fears it might be heading for bankruptcy.

Sensex gained 80 points to close at 12,983 on March 13.

March 13, 2007: Wall Street hit by sub-prime fears and on March 14, the sell-off on US and Asian markets saw the Sensex close with a loss of 453 points at 12,530. The NSE Nifty closed at 3,641, down 130 points.

Image: The headquarters of The New Century Financial Corporation in Irvine, California | Photograph: Jamie Rector/Getty Images

Also read: America's largest bankruptcies
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