Twenty-two trillion dollars. I thought I’d write it out. That’s not some random number I came up with off the top of my head–That’s the number from a study by the Government Accountability Office, and it’s their best guess of the money lost when the economy went off a cliff in the summer of 2008. I’ve read somewhere that as of 2008, the total accumulated worth of the US was some $60 trillion, so that little hiccup took away a third of all the wealth the US has accumulated since White folks first arrived at Jamestown some 400 years ago.
That study (released early this month) was part of a cost-benefit analysis of Dodd Frank, the financial services reform law Republican Senator Mike Crapo blames for blocking the recovery. We lost $22 trillion in large part because we had stopped regulating the banks in the days after the repeal of Glass Steagall. In the opinion of people like Times columnist Paul Krugman, what’s blocking the recovery (at least in large part) is the Republicans refusing for five years on to acknowledge what a deep hole we were in as a result of the 2008 meltdown, a meltdown W was warned about in August 2006 by Treasury secretary Paulson.
I’ve blogged here before that IMHO the 2008 crash was not simply about the housing bubble burst hitting the banks at the same time that the price of a barrel of oil went to an unprecedented $147 dollars a barrel. Whether Americans like to admit it or not, our economic well-being is completely tied to oil. Obama happens to be unfortunate enough to be in the Oval office when energy news is nothing but bad–the last Democrat so affected was Jimmy Carter.
Two thoughts to close with:
- We are not going to fix a $22 T hole with $400 b in stimulus (which is what was left of Obama’s 2009 package after nearly half of it went to tax breaks for businesses).
- We are not going to get out of this hole unless gasoline (and oil in general) gets way cheaper. If you believe the Peak Oil guys, we are not getting out of this hole. The oil we’re finding (shale oil, tar sands, deep water stuff, and oil in places where there’s no infrastructure to get it out) is increasingly expensive to extract, process and ship. Some deep-water wells don’t break even with oil at prices under $60 a barrel. Somebody needs to circulate a plan B.