Some people believed President Bush did a good job with the
economy, at least until September 2008. He skated on the 2001 dot com bust but the 2008 housing bust was too much. As the situation collapsed around him the Democrats walked away with the election in 2008. Obama inherited a weak economy and a credit crisis. He also picked up a nation in need of reinventing itself after Bush oversaw the transfer of 1/3rd of all manufacturing jobs offshore.
Obama tried conventional stimulus to solve the problem and failed. Liquidity returned and corporate profits grew but unemployment inched over 10%. New jobs just weren't being created. The American consumer was scared and unable to take on more debt. The government didn't feel the same pressure and federal debt ballooned. In the meantime America continued its decades long love affair with foreign oil and cheap Asian manufactured goods while letting its domestic energy industry and its vital infrastructure stagnate.
At first as the new millenium began there were a large number of important positives that tended to obscure the problems
The stock market reached all time highs in 2001 and again in 2006.
Unemployment was low. Inflation had been kept in check for decades. Low
interest rates contributed to a real estate boom that triggered interest in ownership, house flipping and home improvement everywhere.
The federal government encourage ownership and encouraged loans even to marginally qualified individuals. Lenders bundled groups of loans and sold them in a secondary market. These became the "toxic assets" that became exposed and turned the economic downturn in 2008 into a world wide liquidity crisis.
Taxes cuts were memorialized until
2010 then extended to 2012 even with two wars and lack of economic activity creating fiscal deficits. The Gross Domestic Product (GDP), which is the economist's version of the
more familiar GNP, was growing at over 4% per year until it stopped briefly in 2008 before resuming its climb.
The world looked to
the US as the only superpower on the planet. The dollar was the
standard by which all currencies were measured. Generalized Peace with localized pain continued to be
the norm across the world. The threat of planet wide nuclear
annihilation is now only a vague memory for most people. Relatively small
areas are involved in
A great wave of technological innovation continued to knit the world together while tearing at its roots.
Other numbers revealed problems in the picture.
The US was engaged in at least three endless wars, namely
terrorism, drugs, and poverty (although we seem to
be in retreat on the last one). The motives and war fighting strategies for all three are murky at best with resulting waste, fraud and human suffering. Global warming may
or may not be a significant threat to our existence on this planet and
constantly evolving microbes
threaten our health with AIDS, influenza, ebola and other
nastiness. Poverty, crime, debt, health care problems and an increasingly intrusive government seemed inevitable.
"Bread and Circuses" and "Let them eat cake"
rings out daily in the
halls of Congress. They don't use those exact words of course. Partisan politics, pork barrel legislation,
influential lobbyists and seemingly widespread corruption distract
attention from the important issues. But when it comes time to vote the
American people continue to reelect the incumbents for whatever reasons and the
In 2008 we learned of a global financial crisis of unprecedented magnitude. Governments around the world bailed out banks and supported their currencies with infusions of liquidity as equity investments declined in value. What was behind it? Is it just a lack of confidence, a "bubble" bursting, or something different and deeper?
When President Obama took ownership of the problem he expanded the bailouts that Bush's team started and something seemed to be working. The financial institutions were first to begin reporting profitability but mortgage
defaults continued and unemployment officially reached 10%. Auto manufacturers were next and GM joined AIG as a subsidiary of Uncle Sam when it needed a bailout. The people are frustrated. Confidence in the institutions and the personalities in government is low.
The 2010 midterm elections were another referendum on the future. The people were frustrated and the leaders seem unable to craft a winning strategy. The Republicans got another chance in Congress, but unlike '97-99 they don't control both houses.
Republicans include the so called Tea Party candidates who vow to reduce the size of government through radical reform including the tax reform, balanced federal budget and limits on regulation and legislation. Not quite libertarians, these guys are far right wing of the Republican party.
Two years of gridlock led up to the 2012 elections. "Political common sense" became one of those self contradicting terms, an oxymoron like "Jumbo Shrimp." The major credit rating agencies saw the confusion and downgraded the credit of the United States of America. Americans reacted with disgust with their votes. Both sides blamed the other and Obama did the best job of selling his message. He was reelected and Republicans lost ground across the board.