Snap Fact #228
Are We Better Off Today Than 4 Years Ago, Before President Obama Took Office?
The simple answer is Yes, we are better off, much better off.
Officially the Great Recession started in December 2007, long before most Americans on Main Street realized what was about to happen. After all, our portfolios were solid, our homes were worth a lot more than we owed, credit was easy, the deficits were low ($400B - $500B per year) and we were even being encouraged by Dick Cheney to go shopping! How could we know that there was a large bubble growing?
Three months before the recession was officially declared, Treasury Secretary Paulson and Federal Reserve Board Chairman Bernanke embarked on the largest bailout program ever conceived with the blessing of a lame-duck president and a complicit Congress - a program which so far will cost taxpayers $8.5 trillion. This staggering sum encompasses: loans backed by worthless assets ($2.3 trillion), equity investments in bankrupt companies with negative net worth ($3.0 trillion), and guarantees on crumbling derivatives and other hollow collateral ($3.2 trillion).
Looking back to 2008, the world and U.S. economies were tanking. Wall Street firms Bear Stearns and Lehman Brothers would collapse, as the subprime mortgage crisis was raging. The private-sector economy would plunge, losing 700,000 jobs per month. The Dow was in a downward spiral that would see it fall to below 7,000 and with it, our hard-earned wealth. Record foreclosures and massive losses in home equity would be felt throughout the country. Car companies would threaten to go belly-up. Banks, financial institutions and insurance companies considered "too big to fail" would face catastrophic losses threatening to undermine the entire economy, wiping out credit, savings and retirement plans. We were at the precipice of the second Great Depression.