On August 9, 2007, the world changed.

At around midday, news broke that the European Central Bank (ECB) would pump €94.8 billion into the money market to ease liquidity, while the US Federal Reserve released $24 billion.

Since that day, banks around the world have written down a staggering $400 billion on assets - more than Poland's entire GDP and enough to buy David Beckham out of his $250 million LA Galaxy contract 1,600 times over.

A year later, banks are still writing down the value of their assets as the once prolific sub-prime mortgage market continues to infect global lenders and institutions, costing six banking chiefs their jobs.

Crunch calendar: where it all went wrong

Timeline of the key dates, from the first fears over sub-prime lending last spring to the latest banking losses

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Ironically, it was Adam Applegarth, former chief executive at Northern Rock, who described August 9, 2007 in biblical terms as "the day the world changed".

Just over a month later, Northern Rock was forced to borrow £27 billion from the Bank of England, sparking the first run on a British bank in over 100 years.

Fears of US sub-prime contagion and the Northern Rock effect brought the shutters down on cheap funding in the UK’s wholesale money market.

As a consequence, 12 months later, first-time buyers are paying 150 per cent more on a deposit to secure a mortgage, 1.7 million homeowners are facing negative equity and an estimated 45,000 people could find themselves the victim of repossession.

America is also awash with casualties. In total, seven banks have collapsed, most notably Bear Stearns which was rescued earlier this year by rival, JP Morgan Chase, for just $2 a share. A year earlier, Bear Stearns shares traded at $158.

The US Fed has pumped billions into its money markets, and given its citizens tax breaks. But foreclosures on houses have risen to one in every 171 homes in the US where prices have tumbled by 16 per cent.

According to the International Monetary Fund, Britain will avoid a "technical recession", defined as two quarters of shrinking GDP.

Nevertheless, the slowdown will be acute and households and companies are set to suffer even more pain over the next two years.

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