Las Vegas Skeletons Tell Credit Bubble Tale
Stunning evidence of the commercial real estate bubble in Las Vegas
Staring across the abyss of skinless buildings of naked steel and concrete frames - all indicative of near identical timing for their groundbreaking and their abandonment.-- one sees the pictoral definition of a credit cycle bubble
In these YouTube videos, george4title of the National Inflation Association makes some powerful points about credit bubbles and the misallocation of capital that they cause. For this production, he has choosen the most illustrative back drop of Las Vegas.
While the continuous construction of newly themed properties has been a part of the Vegas landscape for decades, what is now shocking is the massive number and scale of abondonned skeletons -- unfinished projects, completely fenced off and not a crane in sight -- that all appear to have near the exact same genesis and sudden death.
But beyond the gaming bubble, george4title also finds poster children for the commercial property asset bubbles. Entire high end shopping malls, built and plans to the franchise restaurant theme on the Dairy Queen that's been "Coming Soon" for years. Storefront after storefront after storefront with new perfect exteriors but no interior wall treatments and never a tenant for complex after complex. They stand empty and unutilized because to allow market forces to take hold would reset fantasy asset values on the balance sheet. So artificial forces that created this uneconomic projects and preventing them from the creative redeployment marking to marked would enable.
George4title makes the interesting side point that the corporatization of Vegas was in many ways it is now worse than under Mob rule. The wages were better and the Mob does a better job of following the herd into bubbles like the banks have.
Considering the economic challenges of a tourism based economy in a recession as well as the secular challenge of Indian Gaming, Nevada has managed to maintain unemployment that's been no worse than California and Michigan. Yet Nevada's been hit even harder by the real estate downturn. These videos show how misallocations resulted from a credit bubble. The biggest failures on the most failed city were all packages and sold thousands of miles away on Wall Street.
George4title shares some hope for the future of Las Vegas, which many believe will recover and be the next success story in America because of the libertarian approach of low tax, small sized local and state governments. We'll see...
Tags: Bank Failure, Credit Crisis, Economic Planning, Federal Reserve, Rigged Markets, Wall Street Greed
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