Nikos,
This isn’t government money that was lost, this is individual household wealth - you take up all of the money held by all American citizens in their primary residence, cars, stocks, bonds, retirement accounts, savings accounts, checking accounts, etc.
The thing is, we didn’t so much “lose” $12 trillion as it was an illusion to begin with because we were in a leverage-induced asset bubble. Was a 2,000 square foot, unremarkable house in California *really* worth $800,000 or was it just that money was so easy and people could lie on the applications they borrowed money to drive up the price, hoping to profit from selling it at a still higher price?
I still think we as a nation got off lucky given how massive the speculation and stupidity was.
The estimates I’ve seen look like it will take us until roughly 2015-2016 to regain all of that money as people using savings and / or pay down debt to strengthen their personal balance sheets. We’ve gotten through it before and we will again. The government just needs to stay out of the way of the private sector.
Thanks for your common-sense posts.
You will find that absolutely nobody is interested in such common sense. People seem to want to believe the falsely inflated values of the stock market and housing boom were actually real in some way.
“Real” values are probably slightly understated at the present, but we have “lost” a great deal less than is commonly supposed.