Alas, those days aren't returning anytime soon. That economy collapsed because it was erected on a rickety foundation of debt, leverage, speculation and interest rates held unreasonably low by the Federal Reserve.
Which brings us to our representatives in Washington, D.C., who are intent on trying to pump air into deflating bubbles that comprised far too large a portion of the U.S. and the world economy.
On Tuesday, House Speaker Nancy Pelosi raised the possibility of a second stimulus bill - even though the first one hasn't had a chance to work.
Meanwhile, both the Obama and Bush administrations seem to believe that no large bank or automaker may be permitted to file for bankruptcy protection. All have become too big to fail, even if it means ato keep them in business.
American International Group has already put more than $173 billion in taxpayer funds at risk, with zero disclosure about the ultimate beneficiaries, and with no end in sight. General Motors $13.4 billion from the Feds so far, and plans to ask for another $16.6 billion.
An article in the Washington Post Tuesday described a confidential presentation that AIG representatives showed to the Feds when asking for bailout dollars. It used phrases like "potentially catastrophic unforeseen consequences," "retirement savings significantly at risk" and "a loss of confidence in the private pension system in the U.S." The high-pressure tactics worked. Or perhaps the good folks at the U.S. Treasury have forgotten how to say "no."
(By the way, given the revolving door between government agencies and Wall Street, shouldn't regulators involved in bailout decisions be barred from taking jobs at bailed-out firms? Otherwise you have the unsavory possibility of the treasury being looted by someone who - coincidentally - takes a seven-figure job at that same firm.)
Housing prices are being propped up through the program that President Obama announced last month. It uses taxpayer dollars to bail out a subset of homeowners - including many who signed up for a risky mortgage they couldn't afford unless home prices continued to rise and future refinancing was possible.
Even if market conditions suggest higher risks of defaults and thus higher interest rates, cheap loans are being propped up, thanks to the new Term Asset-Backed Securities Loan Facility program.
Perhaps some of these steps were necessary. But taken as a whole, these extraordinary measures point to a bipartisan Washington culture that's unwilling to let go of the past.
Peter Schiff of Euro Pacific Capital put it well last Friday: "Jobs must be lost in the service sector so that labor can be reallocated towards goods production. Asset prices, for both stocks and real estate, must decline to levels appropriate for current circumstances ... By postponing these adjustments we merely assure an even more painful transition in the future."
Now that the housing bubble, stock market bubble and commodities bubble have popped, the market is trying to adjust to non-bubbly conditions. Laws and regulations that interfere with that process can delay that adjustment and prolong the recession. (If a failing business is artificially propped up, valuable resources are being wasted rather than being used for productive purposes.)
Plus, the money for these bailouts has to come from somewhere. Last month Bloomberg News put the tab so far at $9.7 trillion, enough to hand each U.S. household a check for around $92,000, or pay off 90 percent of home mortgages in the country.
That money, of course, will come from taxes. We'll borrow some from China, the largest foreign holder of Treasury debt, with the promise of paying it back with interest. Some will come from the Federal Reserve printing it, a move that devalues the greenback and leads to taxation through inflation.
At some point, though, the bailout costs will simply become too immense. George Mason University economics professor Russ Roberts wrote this week: "We can't keep GM and AIG and Fannie and Freddie and every insolvent bank and every mortgage afloat. It can't be done. It's not a strategy. It's just desperation to avoid pain. We're going to have to start letting them fail. Sooner is better than later. Otherwise, we continue to throw good money after bad."
We can't bring back the bubble economy. But until our esteemed elected representatives in Washington figure that out, don't expect an end to this downturn anytime soon.
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Declan McCullagh is the chief political correspondent for CNET. Previously, he was Wired's Washington bureau chief and a reporter for Time.com and Time magazine in Washington, D.C. He has taught journalism, public policy, and First Amendment law. He is an occasional programmer, avid analog and digital photographer, and lives in the San Francisco Bay area. His e-mail address is email@example.com