|
some disturbing ways, Las Vegas has become a model for the Federal
Reserve's handling of the entire U.S. economy.
Your humble editor's reading list is longer than his
arm -- and only gets longer as time goes by. (Books are added to the queue
faster than they get read.)
The latest is The Money and the Power: The Making of Las Vegas and
Its Hold on America. Here is an excerpt that
catches the flavor:
None of it was here only decades ago. The cities
whose classics it copies -- Cairo, Rome, Paris, Venice, New York -- measure
provenance in centuries. Not this place. Sixty years ago, Las Vegas was a
gritty, wind-whipped crossroads of faded whorehouses and honky-tonks with
stuttering neon. If it vanished tomorrow -- the millions of visitors and
residents, the huge structures, even the astronomically bright lights -- what
might posterity make of the traces? It would be a ruin of what had been at
once so artificial and so authentic, mimicking the other monuments while a
memorial to itself.
It is a city in the middle of nowhere that is the
world's most popular destination. It is a fount of enormous wealth that
produces nothing. Far from traditional centers of
commerce, it is a model for much of the nation's economy. It is a provincial outpost become an arbiter of national power.
Once thought the society's most aberrant city, it is not just newly
respectable but proves to have been an archetype all along.
Neon Ben Benanke
How appropriate might it be, one wonders, were the
Federal Reserve to move their official headquarters to Las Vegas?
It would be a move in keeping with the spirit of the
permanent gambling campaign -- a neon ode to "Quantitative Easing," which is
really just the continuation of Alan Greenspan's print-happy methods under a
more technical name.
Of course, some might consider it a gross insult to
insinuate the Federal Reserve with Vegas. Not to the
institution, mind you, but the city!
After all, at least in Vegas the gambling is
voluntary. In Las Vegas, no one "forces you out onto the risk
curve," or otherwise demands that you take a punt with your life savings
just to get by. In threatening to turn those savings to confetti, all but
demanding participation in a Ponzi scheme, the
Federal Reserve does exactly that.
The authors of The
Money and the Power are onto something when they say that Vegas
has become a model for "much of the nation's economy." The hidden
history of Glitter Gulch (an affectionate nickname for Vegas) is wrapped up
in sordid deals, heavy on the gray between legal and illegal, and well
tainted with organized crime. Meyer Lansky and Bugsy Siegel, two of the most
successful mobsters in history, are practically founding fathers of the town.
Benny Binion, a third pillar, left the bodies of
his enemies all over Texas before migrating to the West.
As far as America on the whole is concerned,
mobsters have been edged out by banksters... but
the net result feels the same.
(This isn't the first time I've written about the
Fed and their fantasy world. Sign up for Taipan
Daily to read more of my investment
commentary.)
Putting On a Good Show
For sheer spectacle, it is nearly impossible to beat
Las Vegas. This was apparent to all who
attended the Taipan Global Opportunities Summit
just a few weeks back. The restaurants, the glitter, the (literal) circus
acts, the physical beauty all decked out on full display... "over the top" is the best way to describe the place.
From your editor's perspective as a visitor, Vegas
looked every inch a boom town. The Palazzo (where we stayed) was packed. The
restaurants and casino floors were packed. All the poker rooms we frequented
-- Venetian, Bellagio, Wynn -- were packed, chip stacks high and animal
spirits strong. The very sidewalks of the strip spilled over with revelry.
And yet, for all the prosperity on display in that
"boots on the ground" report, Vegas is
hurting. Sin City is going through its worst soft patch in more than half a
century, as The
New York Times
reports:
The nation's gambling capital is staggering under a
confluence of economic forces that has sent Las Vegas into what officials
describe as its deepest economic rut since casinos first began rising in the
desert here in the 1940s.
Even as city leaders remain hopeful that gambling
revenues will rebound with the nation's economy, experts project that it will
not be enough to make up for an even deeper realignment that has taken place
in the course of this recession: the collapse of the construction industry,
which was the other economic pillar of the city and the state.
Unemployment in Nevada is now 14.4 percent, the
highest in the nation and a stark contrast to the 3.8 percent unemployment
rate here just 10 years ago; in Las Vegas, it is 14.7 percent.
August was the 44th consecutive month in which
Nevada led the nation in housing foreclosures...
So what is happening here? How can a city feel so
vibrant, and yet silently be in the midst of such suffering?
The answer resides in selective perception. One's
impressions of Vegas depend on where one goes and what one sees. In respect
to Taipan's recent trip, we spent nearly all our
time in the more vibrant parts of town.
The older, darker casinos, denied the vitality of
recent construction and multibillion-dollar upgrades, probably saw much less
foot traffic. And of course, the story of all the ghosted housing
developments and busted construction companies plays out shrouded in
darkness.
Blinded by the Lights
There is a parallel here to the sleight of hand
practiced by Washington and Wall Street.
We are told, urged even, to pay attention to the
Palazzos and Venetians and Bellagios -- the jewels
of the glittering strip -- in the hope of ignoring the darkness beyond.
Worse still, measures to "get the economy going
again" -- like measures to revive Sin City itself -- only wind up
benefiting the "haves" at the expense of the have-nots, and even
wind up hurting the have-nots.
Perhaps nowhere is this dynamic so
ferocious as in the divide between large blue chip corporations and small
businesses.
The Fed's commitment to keep interest rates near
zero has fueled the ability for blue chips to
borrow at ridiculously low sums, giving them cheap capital to either buy back
stock or invest in more promising operations overseas, while small business
-- the backbone of America's economy -- continues to wither on the vine. The
powers that be do not concern themselves with this reality, though, because
-- as with Vegas -- the have-nots are far from the neon lights.
Justice Litle
Taipan
Publishing Group
Justice Litle is the
Editorial Director of Taipan Publishing Group,
Editor of Justice Litle’s Macro Trader, and
Managing Editor to the free investing and trading e-letter Taipan Daily. His articles have been featured in Futures magazine, he has been quoted in The Wall Street Journal
and has even contributed regular market commentary to Reuters and Dow Jones.
Article brought to you by Taipan Publishing Group.
Additional valuable content can be syndicated via their News RSS feed. www.taipanpublishinggroup.com.
Don't forget to follow us on Facebook
and Twitter
for the latest in financial market news, investment commentary and exclusive special
promotions.
|
