The 2007 U.S. housing bust hit everyone from would-be sellers of suburban split-levels to German bankers, as mounting home foreclosures led to billion-dollar bank write-downs, frozen credit markets and recession fears.

The contagion was voted the top business story of the year by U.S. newspaper and broadcast editors surveyed by The Associated Press.

Inventories of unsold homes hit the highest level since World War II and some economists predicted the largest drop in home prices since the Great Depression. The mounting defaults triggered sudden downgrades of mortgage-backed securities, which spooked credit markets, causing lenders to snap their wallets shut as banks grew too nervous to lend, even to each other. Federal Reserve moves from its emergency playbook did little to thaw lending.

This was the second year the housing crisis was voted the top story, with editors placing record crude oil prices a distant second. Toy recalls, the Federal Reserve's actions and the incredibly shrinking dollar all garnered much fewer votes.

1. HOUSING CONTAGION

Mortgage defaults and foreclosures rose, shocking debt markets worldwide. European and U.S. financial institutions wrote down more than $100 billion in debt-backed securities after high-grade debt was downgraded to junk.

The market froze for commercial paper, the short-term debt businesses from auto lenders to clothing manufacturers to insurers depend on. Defaults on student and auto loans crept higher.

While the Bush administration prodded the mortgage industry to freeze increases on adjustable-rate mortgages for some borrowers, observers were split over whether the move would keep people in their homes, or merely postpone foreclosures.

2. RECORD OIL PRICES

The weak dollar, fears about dwindling supplies and powerful economic growth from China and India sent oil prices soaring to nearly $100 a barrel, pushing up gasoline prices, as well as the cost of everything from airfares to milk. With oil prices up roughly 270 percent over the last six years, many analysts predict it will take a severe recession to push them down dramatically.

3. TOY RECALLS

Chinese-made items pulled off American store shelves included children's jewelry tainted with lead, ginger treated with an illegal pesticide and car booster cables that posed the risk of electric shock. As consumers grew distrustful of the "Made in China" label, the company most identified with the recalls was toy maker Mattel Inc., which recalled more than 21 million Chinese-made toys because of problems with either lead paint or tiny magnets children could accidentally swallow. Mattel's own tests on some toys found that they had lead levels up to 200 times the accepted limit.

Congress is wrestling with reform legislation for the Consumer Product Safety Commission, whose 400 employees monitor 15,000 types of products. While Senate Democrats are backing a bill to ban lead in children's products and expand state authority to enforce Federal product safety laws, business groups are backing a less stringent House measure.

4. FED MOVES

The worst credit crisis in nearly a decade spurred three Federal Reserve rate cuts, taking the Fed's target short-term interest rate down 1 percentage point for the year, to 4.25 percent. At year's end, it was unclear whether the cuts and other more creative Fed moves aimed at unlocking credit markets could keep the economy on track.

5. DOW 14,000

The 30 large stocks in the Dow Jones Industrial Average soared past 14,000 in July and October. But both times, the benchmark index tumbled soon after, as the credit crisis intensified. Volatility returned to the index early in the year, when a steady runup was replaced with the dizzying swings that marked the market for the year.

6. DOLLAR FALLS

The euro, the yen, even the Canadian loonie climbed against the dollar, which fell on concerns about the U.S. economy, eroding confidence further as it dropped. The dollar's slide helped drive up prices for energy and food, but official U.S. response was nonchalant and the public was equally blase. Reports, which proved false, that supermodel Gisele Bundchen was demanding payment in euros sparked some of the most serious national discussion of the currency's decline.

7. CHINA AND INDIA ROAR

Years of double-digit growth have led to inflation as high as 6.5 percent in China. Meanwhile, the Indian economy was on track to grow 9 percent for the fourth-year in a row; inflation spiked higher there, too. The rate of growth had even outsourcers complaining that Bangalore is too crowded, Shanghai too expensive and the U.S. companies that have offshored there may move again. Central bankers in both nations grappled with the pace of growth, with reports that Chinese policy was shifting from "prudent" to "tight" in 2008 and central bankers in India tightening the money supply, too.

8. ETHANOL BOOM

Ethanol production was on track to jump from 5 billion gallons in 2006 to 7 billion in 2007, as the nation searched for renewable fuel alternatives.

The biggest winners so far: Farmers who converted soybean fields to corn and were rewarded with big yields and high prices. But high construction costs and corn prices plus difficulties getting ethanol from factories to pumps tempered investors' enthusiasm late in the year.

9. BANK CEO EXITS

The CEOs of Merrill Lynch & Co. and Citigroup Inc. retired suddenly, within days of each other, as declining mortgage holdings shrunk their banks' assets by billions of dollars. Merrill's Stan O'Neal left in late October after the bank reported a third-quarter loss of $2.24 billion, the largest in its 93-year history. Charles Prince left Citi following the bank's announcement that it would take $8 billion to $11 billion in asset writedowns, on top of $6.5 billion it had already taken.

Citi named Morgan Stanley alum Vikram Pandit CEO after Merrill snapped up John Thain from his spot as CEO of NYSE Euronext. Both men quickly began appointing people they'd worked with in the past.

10: UAW HEALTH DEAL

The United Auto Workers and General Motors Corp. agreed to a contract that shifts $46.7 billion worth of retiree healthcare costs from the company to the union. Similar deals with Ford Motor Co. and Chrysler LLC followed, meaning that by 2010, the union will be responsible for the health insurance of 540,000 retirees and their spouses, a number equal to the population of Portland, Ore.

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