President Barack H. Obama was elected in November of 2008. He assumed the Presidency on January 20, 2009, inheriting a country on the verge of a massive depression whose economic downfall could also have brought down the rest of the Industrial nations of the world.
Most of the banking houses within the United States were close to if not at the point of bankruptcy. They had been involved for the last 30 to 40 years in a process of increasing the amount of available currency in the overall economy by financing and continually refinancing a large percentage of American homes, and in doing this raising property values virtually to the clouds. Their philosophy at that time was for homeowners to use their properties as bank accounts by continually refinancing them. During the year 2008 this Real Estate Bubble burst with property values crashing in some cases 60 to 80 percent. Initially in 2008 former President George W. Bush had partially bailed out some of the banks before he left office; but the bulk of this problem was left to the new incoming President, Barack Obama.
Among other things the country faced, with the sudden fall of values and the fact that the banks suddenly stopped refinancing homes, was a sudden massive level of unemployment. On the one hand many people owed more on their homes than they were worth and on the other hand, because of the sudden massive unemployment, many people were no longer able to afford to make their monthly mortgage payments, even if the value of their homes was above their mortgage debt.
It should be noted that if a large percentage of the banks were allowed to fail then the movement of money within and across the country would slow to a trickle destroying the economy for a number of years until a new banking system could be set up, however long that took. In 1929 with the Great Depression the disintegration lasted until the 1940s, the outbreak of World War II. This one with its added complications could last 20 to 30 years, if not longer.
Another immediate problem was the fact that the numerous Hedge Funds that had bought the original mortgages, each of which had been divided up into a hundred or more pieces and sold piece by piece to different Hedge Funds, had very sloppy records of these transactions. The banks sold the mortgages and/or set up their own Hedge Funds. Then they continued to administer them but no longer owned the mortgages. At this point mortgage money was no longer coming in. The banks stopped receiving their fees and the Hedge Funds no longer received their incomes. What emerged was an impossible situation.
The problem here was that no one owned enough of a mortgage to foreclose legally on a property for nonpayment of the mortgage. Ownership, however, did not bother the banks, many began foreclosing on properties they did not own but did service. Initially the courts felt that the banks would do nothing illegal. When it was proven that the banks were acting illegally the practice was stopped by the courts and those banks were heavily fined. People who had been foreclosed illegally in some cases received some financial compensation from the banks. Other than that no one from the banks was charged with criminal activity.
President Barack Obama made hugh government loans to the banks. He also bailed out the American auto industry. These were all interest bearing loans. Former President George W. Bush had signed the 2009 Budget the prior year into law. President Obama needed an additional amount over 300 billion dollars to fund all the loans. A Democratic Congress authorized the amount needed and the Federal Government was eventually mostly paid back with interest. The companies that did not pay their loans back went bankrupt.
President Obama made a point that the near-bankrupt banks could no longer compensate their executive with million dollar salaries. Their leaders had, after all, brought these financial institutions practically into bankruptcy. The CEO of the Bank of America complained vigorously that his company would pay back their loans as soon as possible so they could get back to paying their executives proper compensations.
Immediately upon assuming the presidency the Obama Administration faced two massive problems: one was a high rise in unemployment; and the other was the fact that most of those homes whose value had collapsed had mortgages that each had hundreds of owners. Actually no one held enough of a mortgage to do anything with it. In reality this meant that no one really owned the houses. Functionally if nothing was done to alter the situation then it would take at the very least one or two decades for the problem to be resolved.
No one owned enough of a mortgage to do anything with it. The people in these homes could go one living there without making payments, which in many cases was happening because of the unemployment, and no one could foreclose on them. Of course no one knew which homes came under this and which did not. But in time many homeowners figured it out. They had made no mortgage payments and no one bothered them. Many of these people were employed or became eventually employed and still made no mortgage payments. Instead they ended up with more money than they ordinarily had when they were employed and so they spent this money in restaurants or other places essentially enjoying themselves and also helping economic growth.
What the Obama Administration had been able to do was to turn a potential depression that would have been larger than the Great Depression of 1929 into what has been called the Great Recession. By the use of money they made a potentially massive depression into a recession from which the country recovered while Obama was still President of the United States.
The mortgage dilemma which ordinarily should have taken a decade or more to resolve was solved by President Obama and the Chairman of the Federal Reserve, Ben Bernanke. For a term of a little over two years, during President Obama’s second term in office, the Federal Reserve bought $50 billion worth of mortgage paper a month and then destroyed or discarded the mortgage pieces. Fifty billion a month for a period of two years is one trillion, 200 million dollars’ worth of mortgage pieces. In addition the government also added this same amount of money to the National Cash Flow.
In essence the Obama Administration bought the country out of a potential depression and recession. Adding all this money to the economy did not cause any real inflation. Instead it reduced unemployment to under 4% toward the end of President Obama second term in office and essentially brought about a return to a positive and healthy functional economy. Interestingly neither Obama nor Bernanke flaunted this fact and not only did they get no credit for it, most people didn’t even know it happened.
In 1933 Franklin D. Roosevelt doubled the money supply in the U.S. but the Great Depression did not really end until World War II. In 2015 Barack Obama more than quadrupled the money supply and ended the Great Recession. The country learned a lot economically over the years. Money was accepted by the Federal Government as a tool to end National economic disasters. It was no longer an object of value.
Shortly after Barack Obama assumed the Presidency the Republicans from both Houses of Congress met in caucus and concluded that they would make Obama a one term President. Was this because he was Black or because he was a Democrat? For whichever reason they would support nothing for which he could gain credit.
At this time, 2009, the Republicans were in a minority position in both Houses of Congress. After the midterm election of 2010 the Republicans would gain the majority in the House of Representatives and keep it for the rest of President Obama’s term of office. In 2014, for his last two years in office, the Republicans would also gain the majority in the Senate. As a consequence after his first two years as President it would be impossible for President Obama to achieve any new legislation. He would essentially run the country by executive orders.
As a footnote included in the text of this essay we should consider what might have happened if the Republican candidate, John McCain had won the 2008 Election. How would he have run the United States as President? The probability is that he would have had the same problems that President Herbert Hoover had from 1929 to 1933. The country would have fallen into and continued with a Grand Depression. There is no way that McCain would have had the imagination to do what President Barack Obama did.
During his first two years in office President Barack Obama not only modified what might had been a massive depression he also got through Congress a great deal of positive legislation. Obama signed the Patient Protection and Affordable Care Act, which was later known as the Affordable Care Act or Obamacare. In order to avoid a repeat of the 2008 Property Bubble Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act that the President signed. There was the American Recovery and Reinvestment Act of 2009. In addition he signed Tax Relief, Unemployment Insurance Reauthorization, and the Job Creation Act of 2010. For the military there was the Don’t Ask, Don’t Tell Repeal Act of 2010. Sexual orientation was no longer to be considered in the military.
By 2011 the Republicans or GOP gained control of the House of Representatives. After a lengthy debate the President signed the Budget Control and American Taxpayer Relief Act. As the President and the House of Representatives could not come to any agreement of funding the government this bill was signed as a compromise. The House wanted to cut entitlement programs and increase military spending while the Administration refused to support cutting entitlement programs. What occurred was sequestration. If the President and Congress could not work out any way to reduce government spending then beginning in 2013 the Sequester would come into being. This would automatically reduce an equal percentage of all aspects of Federal spending. It officially began on March 1, 2013. Exceptions could be made but each required a separate bill from Congress signed by the President. Sequestration is still with the Federal Government.
During his second term in office the President In addition to Sequestration increased U.S. troop levels in Afghanistan, reduced nuclear weapons with the United States-Russia New START Treaty, largely ended military involvement in the Iraq War and ordered military operations that brought about the death of Osama bin Laden.
In 2012 President Barack Obama ran for a second term against the Republican, Mitt Romney. What was fascinating in the election was the shortness of the Republican memory. One of the things Romney promised was to do away with all the legislation that was passed to do away with the abuses that had caused the 2008 Real Estate Bubble. All of that would wait another four years for when Donald Trump became President.
In this four year period President Obama promoted the LGBT Americans with his Administration filing briefs that urged the Supreme Court to strike down same-sex marriage bans as unconstitutional. Obama also urged gun control after shootings. He strongly supported climate change and immigration. Militarily he ordered intervention in Iraq and continued operations in Afghanistan. He supported the Paris Agreement on global climate change and initiated sanctions against Russia after the invasion in Ukraine and interference in the 2016 Presidential Election. He also, after over one half a century, normalized U.S. relations with Cuba. President Obama left office in January with a 60% approval rating.
When President Barack Obama assumed the office of President of the United States the population of the country, according to the Census Bureau was 306.77 million people. At the end of his eight year term it had grown to 325.34 million people. An increase of 18.57 million persons. People or whose antecedents’ had come from all over the planet changing the population so that Caucasians were no longer the majority of the population. They continued as a large minority within the population.
It should also be noted that in 2009, at the end of the George W. Bush Administration, the National Debt was 10.6 trillion dollars, doubled from the end of the Clinton Era. By January of 2017 it was 18 trillion dollars. It had been extremely expensive keeping a Grand Depression from happening. The alternative for the American people would have been total disaster.