The Nevada Depression: A Look At The Harbinger Of The US Economy - FDL

[WillyT]

The Nevada Depression: A Look at the Harbinger of the US Economy
By: David Dayen Wednesday July 28, 2010 1:02 pm

<snip>

When I was leaving Las Vegas (don’t break into song), I encountered a guy on the elevator who was talking to his friend about his loss of home equity. “It’s like playing at the casino,” the man said. “You have a bunch of chips, and after a few hands, you look down, and they’re gone.”

This was a common theme at the Netroots Nation conference. Not specifically a guy relating home equity to a loss of blackjack chips, but attendees casually mentioning their interactions with people in Nevada who are struggling. Ryan Grim and Arthur Delaney, in a superior piece: http://www.huffingtonpost.com/2010/07/27/nevadas-economic-misery-m_n_661043.html basically extend out that anecdata by talking to numerous residents about the state of things in Nevada during the Great Recession. They muse that the reality of Nevada could equal the future of America.

On a cul-de-sac in the once-pleasant neighborhood of Silverado Ranch, Larry Wood is the last remaining resident. Two of the four homes are in foreclosure and a third is a “party rental” only occupied by rowdy tourists on weekends. One of his neighbors made a few bucks before abandoning the home, he says. “They sold all the palm trees and just walked away from it,” says Wood, sporting a “Freedom Isn’t Free” T-shirt. “It’s a great neighborhood. I guess that people weren’t financially set up to get through the crash.”

Wood takes little comfort in being the last resident. “Sometimes it’s scary. There’s a possibility someone would try to rob me and I wouldn’t have any neighbors to help me,” he says, recounting a previous attempted intrusion when his then-neighbor called to warn him not to answer the door because there was a group of thugs knocking. Armed and ready, he huddled near the door but the gang gave up and left.

You don’t have to go far to find these stories in Nevada, where the unemployment rate sits at 14.2%, and where nearly 6% of all homes received a foreclosure filing in the first half of the year.

This is a heartbreaking story, and I urge you to read all of it. But sadly enough, Grim and Delaney’s thesis about this being the future of America isn’t all that hard to predict. The White House’s Mid-Session Budget Review predicted 9% unemployment by the end of 2011, and won’t fall below 6% until 2015. But that last bit seems like a wishful scenario. Corporations have figured out how to make money while keeping labor costs down, raising the spectre of long-term structural unemployment. An entire generation of Americans, known as “Generation Y,” is experiencing a lack of jobs, ballooning loans, and a difficult future. The unemployment rate for those aged 20-24 was 15.3%, which significantly retards their career growth and earning potential.

This may not be able to last. I don’t know how you can have consumer confidence down and corporate profits up well into the future. Consumer spending makes up too much of the US economy. At some point, corporations have to give the people some money so they can buy their wares. And maybe the unemployed can organize and take out, one by one, those whose policies are threatening their hope.

Among the biggest sites in the unemployment netroots is LayoffList, managed by Michael Thornton, a native of Rochester, N.Y. Thornton stared LayoffList in 2008; five months ago, he began writing articles and posting legislators’ information. He now receives hundreds of emails and has logged more than a million hits. Thornton is finding that, rather than losing interest in politics since the end of the fight for extended benefits, the unemployed are “energized and motivated” and have started looking forward to the fall.

“Even Republicans say they aren’t voting Republican anymore,” the soft-spoken former technical writer says. “You have millions of unemployed people out there. If even half of them voted, they could swing a nationwide election.”

What I know is this: the middle class has been gutted from the inside, and without a mass movement created to stop those doing the deed, we could submit millions in the middle class to a horrible fate.

<snip>

Link: http://news.firedoglake.com/2010/07/28/the-nevada-depression-a-look-at-the-harbinger-of-the-us-economy/

:shrug:

[pitohui]

1. not the future of america, vegas was way overbuilt

did you say in 1985 that houston was the future of america? i doubt it

overbuilding/boom & bust is a regional, not a national trend

oil boom houston was overbuilt and, as a result, crashed hard, so that its prices never really soared again -- and now texas real estate prices are holding steady, because they weren't sky high unreal to begin with

vegas was simply way overbuilt for the size of the actual population, it HAD to crash, everybody can't make a living dealing blackjack and selling timeshares to each other, it was a boom & bust situation

the real estate bubble and the lack of jobs for young (or for that matter middle-aged) americans is two separate issues -- the real estate bubble had to burst, but it did not cause the lack of jobs and apparently we don't have the political will to do what's necessary to make sure all young (not to mention middle-aged) americans have jobs, as the unpopular necessities would be to 1) put a cold stop to hiring undocumented laborers or any other type scabs who undercut the job market and 2) LOWER not raise the retirement/social security age so that older people could give younger folks their chance

there are roads leading to las vegas where they check MY car for any undocumented mexican maid that i may be somehow smuggling in my hatchback, yet if there was a genuine political will to open up jobs for americans, INS could raid any and prob. EVERY vegas hotel housekeeping staff and remove plenty of undocumented workers

we COULD improve the situation if we wished but the howls that will follow my post will be proof that we DON'T wish to fix the problem, we'd rather "look good" than "do good"

[WillyT]

2. Maybe, But...

The decay in Vegas doesn't stay there: It reverberates throughout the state. "Coming Soon" signs have been pulled down across the city, because nothing is coming soon other than more foreclosures. The Nevada landscape is pockmarked by empty condos and casinos, some of them fully built and sitting there empty, others are shells frozen in time. When analysts talk abstractly about Wall Street sucking capital out of the real economy, these stalled construction projects are the on-the-ground reality. "60% Reduced Prices" promises one empty condo development.

The $3.1 billion Fontainebleau Las Vegas construction project sits nearly complete but the lender pulled out and everybody is suing everybody else. The first Ritz-Carlton in the company's history to shut down is in Las Vegas.

The city's dance clubs aren't empty, but there's less money circulating. "Saturn," an exotic dancer at Spearmint Rhino, says she and her fellow dancers are making roughly half what they were two years ago. The house she bought for more than $450,000 on an interest-only loan is now worth a third that. She's negotiating a short-sale with the bank.

The Dunkin Donuts that opened in Fabienne Chalaye's neighborhood five months ago is already empty. "Dunkin Donuts... It's all empty. Everything is empty," she marvels, while giving a HuffPost reporter a tour of the city.

Chalaye, a chauffeur, says her business is down roughly 60 percent over the last two years. It slowed down almost imperceptibly after 2006, then fell off a cliff in 2008. She hasn't made a mortgage payment in 15 months and expects to be booted from her home, along with her husband, her adult daughter and her daughter's boyfriend any day now. She bought the house in 2008 on an interest-only loan for $313,000; it's now worth $117,000 and her interest rate shot up to 12 percent. Both she and Garcia, however, say they're leaning toward voting for Harry Reid to return to the Senate, because they have no faith in his opponent, Sharron Angle. "'I wanna get rid of Social Security,'" Garcia quotes Angle saying. "How stupid is that?"

Garcia says a friend of his in the crane business told him he was offloading the hulking useless tools to builders in China because it isn't worth the cost of storing them. "Office Space Available" blares a sign next to a stalled office project.

A five-bedroom home with Spanish tile and a game room sits vacant on half an acre of land. "This property is Bank-owned. We reserve the right to prosecute any and all trespassers illegally accessing the property. Thank you for your cooperation."

The Nugget Casino in tiny Searchlight (population: 576), about an hour from Vegas, laid off a third of its 85 employees in the past two years to cope with reduced demand for the Nugget's slot machines and chicken fried steaks, says owner Verlie Doing, 86.

"We had a great banker when we built this place," says Doing, who opened the Nugget with her husband in 1979. Now, Doing says, she doesn't think Wells Fargo will give her a loan to fix the three air conditioners that recently failed. "I'm not gonna talk to the bank. I'm not even gonna bother to waste my time with 'em."

Link: http://www.huffingtonpost.com/2010/07/27/nevadas-economic-misery-m_n_661043.html

:shrug:

[marmar]

3. Wow, the Happytalk un-rec'ers are running wild tonight.

nt

[WillyT]

4. Yep... And If Unreccing Were An Organic, Individual Thing...

I wouldn't have that much of a problem with it.

But in it's current state... it's just 5th Grade schoolyard sad.

:shrug:

[depakid]

9. Not so much "happy talk" but bushbot types who hate FDL irrespective of the message

in the articles. Similar to the knee jerk "fuck Nader" types.

[Demeter]

5. If You Want a Glimpse of the Future, Look At Detroit

[WillyT]

6. Great Point !!!

America becoming a Third-World Country was not on my radar... ever.

The Karma applies, however.

:shrug:

[bvar22]

15. Detroit....or New Orleans.

Though there are "investors and developers" who are trying to turn New Orleans into a Theme Park that may draw in some tourists.....if there are any tourists in the near future.

[Fumesucker]

7. There are several nearly finished strip centers in my area that have been abandoned for years now..

And I'm nowhere near Nevada.

[depakid]

8. What does Nevada produce in terms of tangible value to support its population base?

Tawdry (and now expensive) entertainment and gambling (which is now legal and available elsewhere through Native American Casinos).

With respect to Vegas- it was a classic bubble, with elements of overshoot and collapse.

[WillyT]

10. I Hear Ya... But The Question Remains... The Third Major American City To Go Down ???

Or the 4th, 5th, 6th...

Only been to Vegas once in 1976. Not my favorite stop, yet...

I don't like setting a trend that allows major population centers to fail, while also having no solutions to the suffering and displacement.

:shrug:

:hi:

[depakid]

12. This one was bound to happen from the outset- Vegas' growth was irrational and unsustainable

Its wealth and property values were illusory.

Not so much part of a trend as another failed attempt to defy natural and economic laws.

[WillyT]

13. And Detroit ??? - New Orleans ???

I don't disagree with you about Vegas, but real human beings live there, and their lives and fortunes are of concern to all of us, for no other reason that any of us could be next.

I heard the same thing about New Orleans after Katrina, "Well, they never should have built there in the first place."

I don't like any Americans writing-off any other Americans.

I know you're not saying that, but I just don't like this trend.

:shrug:

:hi:

[depakid]

14. Completely different situations

That would be like comparing Greece's problems with the US's.

With respect to New Orleans, engineers knew back in the 1990's that the levies wouldn't withstand a category 3+ hurricane and appropriations were requested from the Republican Congress to upgrade them.

Which of course were denied- and nothing was done, despite a near miss the year prior to Katrina.

[MadMaddie]

11. This is an interesting piece

<snip>
“Even Republicans say they aren’t voting Republican anymore,” the soft-spoken former technical writer says. “You have millions of unemployed people out there. If even half of them voted, they could swing a nationwide election.”
<snip>

So the question is will the Republicans try to disenfranchise those unemployed workers? They have done it to minorities many times over.....are they bold enough to do it to a larger population?

[FirstLight]

16. you know what's really scary?

Is that I live in CA near the stateline and I have been looking for jobs in carson vally because there's nothing here. and rents and housing looks nicer too...lots of new houses up for cheap rent.

but to move for a job and then NOT have the job in a year...that would really suck too... so what's the answer?
:scared: