Precedent · Credit
2008 Global Financial Crisis
2007–2009
A credit shock that became a global recession. Subprime losses froze interbank funding, Lehman failed in September 2008, and a deleveraging cascade ran through credit, equities, housing, and the labor market over roughly twenty months.
The signature
Each variable's peak deviation from the pre-event baseline, with the curve shape, the lag before it moved, and how long the recovery ran.
| Variable | Peak deviation | Shape | Lag / Recovery | Confidence |
|---|---|---|---|---|
| High Yield OAS HY OAS ~3.4% → ~21% peak Dec 2008 | +500% | Spike | 60d lag · 365d | high |
| VIX VIX ~21 → ~80 Nov 2008 | +280% | Spike | 60d lag · 180d | high |
| S&P 500 Peak-to-trough Oct 2007 → Mar 2009 | −57% | U | 0d lag · 540d | high |
| Case-Shiller Home Prices National index peak-to-trough | −27% | L | 0d lag · 900d | high |
| Brent Crude Brent ~$144 Jul → ~$34 Dec 2008 (post-spike crash) | −75% | V | 30d lag · 300d | high |
| Unemployment Rate 5.0% → 10.0% (doubled), slow recovery | +100% | Ramp | 120d lag · 1000d | high |
| Real GDP Real GDP peak-to-trough | −4% | U | 90d lag · 540d | high |
Methodology
Encoded as peak deviations from the pre-shock baseline. The signature is a credit-first shock: high-yield spreads blew out before the real economy turned, equities fell ~57% peak-to-trough, real GDP fell ~4.3%, unemployment doubled, and oil crashed ~75% from its mid-2008 spike. Shapes are mostly U (slow recovery), with spikes in spreads and volatility.
What's different now
The post-2008 regime carries far more central-bank willingness to backstop credit fast (see 2020), and bank balance sheets are better capitalized — a repeat credit freeze would likely be met with quicker liquidity, compressing the spread spike sooner. Housing leverage is also lower. Read 2008 as the severe tail, not the base case.