Blaming President Obama for all of the bad things in the economy is just absurd. If you want to blame someone, feast your eyes on the Republican Party. George W. Bush and the GOP Congress watched and congratulated themselves as the mortgage bubble grew and then burst, causing the Great Recession, the worst downturn in 80 years. Obama and the Democrats were able to stop the bleeding and restore some semblance of order to the economy, but a population that expects instant results wasn't satisfied.
The GOP was elected in 2010 to get things moving even faster, but they've largely stood by and done nothing for almost two years now. For example, a year ago September 8, President Obama submitted the American Jobs Act to Congress, and most of the bill still sits in the House. They won’t take it up, they won’t discuss it, and they won’t even offer up an alternative. It just sits there, because they can't bring themselves to do anything that President Obama may take credit for.
Even so, to claim we're not better off now than four years ago is absurd. Whether it’s willful ignorance or a faulty memory, let me take this opportunity to refresh it. Here are some key events that occurred four years ago. Compare them to what's happening now.
- The meltdown actually began in 2007, and for all of the vitriol aimed at them, the folks at Freddie Mac saw things coming early on. In February 2007, Freddie Mac announced they would no longer buy the subprime mortgages that ultimately became the main reason for the meltdown. (Source)
- A few weeks after Freddie Mac made their decision, a major subprime lender, New Century Financial Corporation, filed for bankruptcy, (Source) This was only the beginning,
- On June 1, 2007, Moody’s and Standard and Poor’s downgraded more 100 bonds that were based on second-lien subprime mortgages. (Source)
- Less than a week later, Bear Stearns stopped redeeming certain hedge funds based on subprime mortgages and mortgage-baced securities. (Source)
- By the end of July, 2007, one of the nation's largest mortgage lenders, Countrywide Financial had to file notice with the SEC of “difficult financial conditions."
- In August, 2007, American Home Mortgage Investment Corporation filed Chapter 11, France’s largest bank (BNP Paribas) stopped redeeming three of its mortgage-backed funds, and Countrywide had to borrow $11.5 billion just to stay solvent. Put simply, the entire financial system was in full meltdown mode long before we regular folks realized what was going on.
- In February 2008, President Bush signed the Economic Stimulus Act of 2008. (Source) Surely, you remember those $600 checks the government sent out, in the hope that perhaps you could buy a tank of gas or spend a bit at the local Wal-Mart.
- Later that same month, British Bank Northern Rock was taken over by the UK Treasury. (Source)
March 2008 is the month the economy really started to hit the fan, although Bush tried to keep things under wraps and our wonderful news apparatus apparently didn’t think it was important enough to discuss in detail.
- The Federal Reserve was doing its best to keep things afloat through the Term Auction Facility (TAF) and the Term Securities Lending Facility (TSLF) In March alone, $100 billion was lent through the TAF and $200 billion through the TSLF (Source) (Source)
- That same month, the Fed also approved the financial arrangement between Bank of America and Bear Stearns and issued a press release assuring everyone that they were “monitoring market developments closely and will continue to provide liquidity as necessary to promote the orderly functioning of the financial system.” That sure doesn’t sound like a vote of confidence in the economy.
- On July 11, 2008, the Office of Thrift Supervision shut down IndyMAC Bank and the FDIC worked to protect insured assets. (Source)
- Two days later, on July 13, 2008, the Fed authorized huge loans to Fannie Mae and Freddie Mac to protect their liquidity. (Source) The Treasury Department also increased the credit lines for the two companies. (Source) Two days after that, the SEC issued an order to protect short selling Fannie and Freddie stocks. (Source)
- On July 30, 2008 Bush signed into law the Housing and Economic Recovery Act of 2008, (Source), which allowed Treasury to buy Fannie and Freddie assets, and to re-regulate the mortgage market under the new Federal Housing Finance Agency.
- That same day, the Fed announced extensions of their “temporary” TAF, TSLF and PDCF programs through at least January 2009. (Source)
Now, we come to September and October 2008. When someone says they were better off four years ago, just laugh at them, and feel free to laugh hard. Almost no one is worse off now than 4 years ago, except the few crooks who went to jail over this garbage.
- On September 7, 2008, Fannie Mae and Freddie Mac were placed into receivership. (Source)
- On September 15, 2008, in an “arranged marriage” of sorts, Merrill Lynch essentially ceased to exist, with its assets purchased by Bank of America for $50 billion. (Source)
- That same day, Lehman Brothers filed for Chapter 11. (Source)
- The day after that, the Fed authorized an $85 billion loan to AIG. (Source)
- On September 17 the SEC placed a temporary ban on short selling of all financial companies stock. (Source) They don't do this unless they're looking at collapse.
- That same day, Treasury announced a Supplementary Financing Program, that consisted of a series of Treasury bill auctions, over and above the normal auction of bonds used to finance the federal government. (Source)
- On September 19, 2008, the Fed added two more programs to lend huge amounts of money to financial institutions, and to offer temporary financing for asset-backed commercial paper. (Source)
- The same day Treasury made $50 billion available from the Exchange Stabilization Fund to guarantee investments in certain types of money market accounts and mutual funds. (Source)
In plain English, that means four years ago, the banks were failing, and ALL of our money was at risk. Everyone with a mutual fund, money market account, or even an IRA or 401k were very close to losing everything, and quite possibly heading so low as to owe money to these people.
And keep something else in mind. All of this activity happened before the TARP program was introduced. The government was printing hundreds of billions of dollars and putting it into the financial system, just to keep the economy afloat before it actually publicly asked for bailout money.
- On September 20, 2008, Treasury submitted their plan for the Troubled Asset Relief Program, or TARP. (Source) You should remember this, because Hank Paulson wanted Congress to give him $700 billion to dole out to private financial companies with a three page bill, containing no provisions for payback.
- On September 25, 2008, The OTS shut down Washington Mutual Bank, with JP Morgan Chase buying up the assets, in a deal worked out by the Treasury Department. (Source)
- On September 29, 2008, the Fed announced an expansion of swap lines of credit a whopping $330 billion, to a total of $620 billion. Swap lines are short term loans designed to keep banks afloat. Most of this money was going to foreign banks, to keep them afloat during this US-manufactured crisis. (Source)
- Finally, on October 3, 2008. TARP becomes law, and the official bailouts begin. (Source)
If you do a little “arithmetic” with the above, you’ll note that more than $1 trillion was lent to financial services companies even before the $700 billion TARP was passed and signed. Let me reiterate; your money – ALL of your money -- was in serious danger of being lost forever.
But it’s not finished.
- On October 7, FDIC increased its deposit insurance limits to $250,000 to prevent bank runs.
- Between October 28, and December 12, 2008, the Treasury Department purchased $171.25 billion in preferred stock in 116 banks, just to keep them afloat.
- On December 19, 2008, Treasury authorized loans of $13.4 billion to General Motors and $4 billion to Chrysler.
Four years ago, this country suffered through one of the worst financial crises in our history, and we only survived because of policies and powers granted to government agencies during the New Deal era.
According to the Center for Retirement Research (Source);
“Between October 9, 2007 and October 9, 2008, the value of equities in retirement plans dropped by about $4 trillion, with the decline divided equally between defined benefit and 401(k)/Individual Retirement Accounts (IRAs). The decline in the defined benefit arena was in turn divided equally between private sector plans and those sponsored by state and local governments. This brief explores what a loss of roughly $1 trillion of private sector defined benefit equities means for the individual participants and for the firms that sponsor those plans."
If you had a retirement account in 2008. it lost a lot of money. Some lost everything, while some lucky souls managed to “only” lose 15-20%. That was NOT better than today.
The stock market saw its third worst crash in history in 2008. During the first ten days of October 2008 alone, the market lose nearly 24% of its value. (Source)
Household wealth lost $11.2 trillion in 2008 alone. (Source)
Back in 2008, there was virtually no financial regulation to protect us from the excesses of the mortgage meltdown. Now, there is the ‘Dodd-Frank Wall Street Reform and Consumer Protection Act’, which goes a long way toward re-regulating the financial services industry. It needs to go farther, but it won’t go farther until we get rid of the current incarnation of the Republican Party.
By nearly any measure, we are FAR better off now than we were four years ago, thanks to an Obama Administration that has approached the economy with a level head.
Here are a few more basic numbers for comparison's sake"
Unemployment rate, February 2009: 7.8%
Unemployment rate, June 2009 (end of recession): 9.4%
Unemployment rate, September 2012: 7.8%
Keep in mind, those numbers could be much lower, because the GOP Congress keeps cutting funding to states, which has resulted in a loss of nearly 700,000 public jobs, including teachers, police and firefighters. They also have been sitting on the American Jobs Act, which would have created an estimated 1-2 million jobs, and a federal highway bill that would have created at least one million new jobs. You know that 5.6% Obama promised, according to Crossroads GPS? Without the Republican Congress bocking him, he would have done that.
Jobs created January 2009: -820,000
Jobs created February 2009: -681,000
Jobs Created March 2009: -652,000
Avg Number of Jobs Created in 2012: +146,000
Dow record high, October 9, 2007: 14,164.43
Dow on March 5, 2009: 6,594.44
Dow at close of business, October 5, 2012: 13,610.15
GDP Growth 1st Quarter 2009: -6.7%
GDP Growth 2d Quarter 2009: -0.7%
GDP Growth 1st Quarter 2012: +3.0%
GDP Growth 2d Quarter 2012: +2.0%
Household Wealth, January 2008: $62.7 trillion
Household Wealth, January 2009: $51.5 trillion
Household Wealth, March 2012: $62.9 trillion
Home Prices rose in the second quarter 2012, for the first time since 2007. That's more than 4 year ago.
Numbers don't lie. We're doing way better now. So, the next time someone, like Willard Romney and Paul Ryan, for example, tries to tell you we're worse off than we were four years ago, just send them this and make them prove it.
And just as importantly, consider what Romney and Ryan plan to do. They essentially want to reproduce roughly the same policies as the Bush Administration. Look at the numbers above again. Do we really want to do that to ourselves again?