Thursday, October 30, 2008

New Open Forum

Feel free to post up interesting links, discuss issues, etc in this forum

Economic Collapse: 2009 Will Be Worse Then The Great Depression


William Engdahl: Europe furious that AAA US bonds turned out to be toxic waste. American financial system will no longer be trusted - the end of an era.

Thursday Economic News Roundup

Fed Buys $145.7 Billion of Commercial Paper

Government to Be Discussing Plan to Aid Homeowners

White House Wants Limit on Loan-Guarantee Plan (Update1)

Fed Adds $21 Billion to Loans for A.I.G

Fed's rate at zero? It's no longer a far-fetched idea

States Urge Immediate Fed, Treasury Aid to Automakers

American Express to cut 7,000 jobs

Hartford gets halved

GM-Chrysler Merger May Cost 74,000 Jobs)

Note: Tomorrow is a big day for economic data releases - data that may potentially wipe out some of our recent market gains.

Oct 31 08:30 Employment Cost Index
Oct 31 08:30 Personal Income Sep
Oct 31 08:30 Personal Spending Sep
Oct 31 09:45 Chicago PMI Oct
Oct 31 10:00 Mich Sentiment-Rev.

Sequoia's Economic Meeting

Hat tip Ellen

More details on Sequoia’s economic “inconvenient truth” meeting

Sequoia Capital, a premier Silicon Valley venture firm, held a meeting on Tuesday during which it told its portfolio companies to cut costs and prepare for an economic downturn that could last many years.

The presentation, one attendee tells me, was like the global warming wake-up call movie “An Inconvenient Truth.” But instead of Al Gore running through a bunch of slides about the environment, it was billionaire investors running through a bunch of slides about a “very cataclysmic” economic future.

Here are presentation excerpts and comments drawn from a leak posted on GigaOm and left in comments on Silicon Alley Insider. Our sources have confirmed their accuracy.

Mike Moritz, General Partner, Sequoia Capital:

“We’re talking survival. Get this point into your heads.”

Companies need to be cash-flow positive, if nothing else in order to justify additional funding

Eric Upin, Partner, Sequoia Capital, formerly ran Stanford University’s $26 billion endowment fund:

This could be at least a 15-year downward cycle, judging by historical trends; the credit market will take a long time to recover

Startups need to deeply cut expenses, and throw out existing projections
Michael Beckwith, Partner, Sequoia Capital:

A dramatic recovery is unlikely

The final point: Get real or go home

Briefing Below:

Sequoia Capital on startups and the economic downturn

Tuesday, October 28, 2008

Gold Bottom?

Looking at the chart below, note the seriously oversold condition of the paper Gold market. I believe we are currently at or very near the bottom and a nice upturn is quite likely in the not too distant future.

Keep an eye on the black MACD line towards bottom right of the chart - note its recent flattening out. Now watch the very likely upturn (positive divergence) in the days ahead.

Consumer Confidence Plummets to ALL - TIME LOW

October 28, 2008 - Consumer Confidence Index Plummets to an All-Time Low

The Conference Board Consumer Confidence Index™, which had improved moderately in September, fell to an all-time low in October. The Index now stands at 38.0 (1985=100), down from 61.4 in September. The Present Situation Index decreased to 41.9 from 61.1 last month. The Expectations Index declined to 35.5 from 61.5 in September.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: "The impact of the financial crisis over the last several weeks has clearly taken a toll on consumers' confidence. The decline in the Index (-23.4 points) is the third largest in the history of the series, and the lowest reading on record. In assessing current conditions, consumers rated the labor market and business conditions much less favorably, suggesting that the fourth quarter is off to a weaker start than the third quarter. Looking ahead, consumers are extremely pessimistic, and a significantly larger proportion than last month foresees business and labor market conditions worsening. Their earnings outlook, as well as inflation outlook, is also more pessimistic, and this news does not bode well for retailers who are already bracing for what is shaping up to be a very challenging holiday season."

Consumers' appraisal of current conditions deteriorated sharply in October. Those saying business conditions are "bad" increased to 38.3 percent from 33.4 percent, while those claiming business conditions are "good" declined to 9.2 percent from 12.8 percent. Consumers' assessment of the labor market was also much more negative. The percentage of consumers saying jobs are "hard to get" rose to 37.2 percent from 32.2 percent in September, while those claiming jobs are "plentiful" decreased to 8.9 percent from 12.6 percent.

Consumers' short-term outlook turned significantly more pessimistic. Those expecting business conditions to worsen over the next six months surged to 36.6 percent from 21.0 percent, while those anticipating conditions to improve fell to 9.9 percent from 13.4 percent. The outlook for the job market was also less favorable. The percent of consumers expecting fewer jobs in the months ahead surged to 41.5 percent from 26.9 percent, while those anticipating more jobs decreased to 7.4 percent from 11.9 percent. The proportion of consumers expecting their incomes to increase fell to 10.8 percent from 15.1 percent.

Three Very Good Articles

For your reading pleasure:


Deflationary Pullback Precedes Hyperinflationary Tsunami - Kunstler

Easthampton Burning - Kunstler

Obama's birth certificate sealed by Hawaii governor

Not that I'm biased or could give a rat's a@@ one way or the other as to who gets elected (neither candidate will be able to solve our massive economic/geopolitical woes). This issue merely illustrates how far we, as a corrupt/controlled nation, have fallen. One would think, if there was nothing to hide, that there would be... well, nothing to hide. Is this the "Change in America we want to believe in?"

By Jerome R. Corsi
© 2008 WorldNetDaily

HONOLULU, Hawaii – Although the legitimacy of Sen. Barack Obama's has become a focus of intense speculation – and even several lawsuits – WND has learned that Hawaii's Gov. Linda Lingle has placed the candidate's birth certificate under seal and instructed the state's Department of Health to make sure no one in the press obtains access to the original document under any circumstances.

The governor's office officially declined a request made in writing by WND in Hawaii to obtain a copy of the hospital-generated original birth certificate of Barack Obama.

Gov. Linda Lingle, R-Hawaii

"It does not appear that Dr. Corsi is within any of these categories of persons with a direct and tangible interest in the birth certificate he seeks," wrote Roz Makuala, manager of constituent services in the governor's office, in an e-mailed response to a WND request seeking the information.

Those listed as entitled to obtain a copy of an original birth certificate include the person born, or "registrant" according to the legal description from the office, the spouse or parent of the registrant, a descendant of the registrant, a person having a with the registrant, a legal guardian of the registrant, or a person or agency acting on behalf of the registrant.

(Story continues below)

Obama's birth certificate sealed by Hawaii governor

Las Vegas Economic Roundup

Tourism is down and gaming revenue continues to fall - driving unemployment rates significantly higher across the valley - leading to more foreclosures and driving state legislators to substantial budget cuts. Yes, the dominos are falling!

Las Vegas Airline Woes:

Traffic at Las Vegas's McCarran International Airport falls again

The number of people flying to and from Las Vegas fell 13.2 percent in September to 3.37 million, the largest year-over-year decline since the months following Sept. 11, 2001, and the 11th consecutive monthly dip.

It’s another major indicator that the woes of the airline industry, dire economic news and an emerging recession are battering the Southern Nevada economy that blossomed with cheap oil, easy consumer credit and the mistaken notion home and property values were on a non-stop upward trajectory.

Airlines deliver about half of the nearly 40 million people who visit Las Vegas annually. And last month their results were dismal compared to September 2007, which appears now to be near the end of the boom that began when the local economy roared back from the post-Sept. 11 recession.

“As the economy weakens it creates more uncertainty,” Scott Kirby, president of US Airways, said recently during a discussion of the airline’s quarterly earnings.

The uncertainty translated to fewer Las Vegas passengers for nearly all the major carriers at McCarran International Airport.

Non Gaming tourists:

Las Vegas casinos go empty as risk-averse patrons play safe

LAS VEGAS: With just days to go until the US presidential election, financial gloom hangs like a pall over visitors to Las Vegas. Wayland Ferguson, a New Mexico resident in town for a conference, said he had no interest in gambling or splashing out during his trip. “People need to get back to the idea of living on less than they make, not more than they make,” he said, as he stood with friends outside one of Las Vegas’ attractions, a mall modelled after the forum in ancient Rome. “We’ve become a society that lives on credit. We need to increase our savings.”

During the good times, the gaudy neon lights of the famed Las Vegas strip fuel dreams of hitting the jackpot, and even breaking the bank at the casinos. For Justin Pagliarulo, from Georgia, the biggest worry was his retirement fund, which is invested in financial markets through a 401(k) plan. “I’m losing lots of money on my 401(k) right now, so that’s a big concern,” said Pagliarulo, who still found some money for a flutter in the casinos, and visit an upscale show by Cirque du Soleil.

Visitor numbers and gaming revenues on the strip are off by 1.5% and 6.7% respectively in the year to August, and hotels and resorts are having to entice visitors with discounted rooms to keep the roulette wheels spinning.

While visitors are clearly feeling the pinch from the downturn, they are divided over whether Democrat Barack Obama or Republican John McCain is the best pick to get the economy back on track.

“I think whoever gets elected is going to have a real problem,” said McConnell. “And it’s going to take more than four years to get us out of it.”

How bad will it get for many of these very leveraged casino operations?

Are the Las Vegas Strip casinos facing bankruptcy?

Some of the biggest losers on Wall Street are based right here in Las Vegas.

The stock prices of casino companies are tumbling and the company that owns the Venetian is seeing the most dramatic decline of them all.

Last Thursday, the Las Vegas Sands Corporation hit an all-time low - a low of about $8 dollars per share, compared to $148 per share last year.

Experts News 3 has spoken with say Las Vegas in general is a financial house of cards showing some ominous signs of collapse. (Funny, that was the point and name of one of my first Las Vegas posts back in 2006: Las Vegas—A House of Cards Bound to fall

The casino sector has been squeezed harder than other industries as consumers cut back their spending.

The downturn has also hit the Chinese gambling enclave of Macau, where Las Vegas companies like the Sands, Wynn, and MGM-Mirage have spent billions of dollars to remake Macau as Asia's Las Vegas.

But back in the real Las Vegas, the financial risk remains high as tens of thousands of new hotel rooms become ready to open within the next year or two. Unfortunately, the projected level of customer spending may not come along as planned.

"You have Wall Street really turning its back on the Las Vegas Strip," says News 3 financial analyst Steve Budin.

"I think it's definitely possible they (some of the gaming companies) might consider bankruptcy," says Budin.

Anyone want to buy a Mall or three?

High-end Las Vegas Strip malls on the market

What do you get for the person who has everything? How about a shopping mall?

Three of the largest Strip shopping malls in Las Vegas are now up for sale: the Fashion Show Mall, the Grand Canal Shoppes at the Venetian, and the retail shops at the Palazzo

News 3's Jesse Corona says they're not being sold because of low sales numbers, but because of how poorly their parent company is doing.

General Growth Properties (GGP) says of the 20 malls they operate, the Fashion Show, Venetian Grand Canal Shoppes, and the Palazzo are three of their flagship properties. So why are they selling them off?

General Growth Properties has seen their stock plummet 96 percent in the last year, down to about $2 per share. They're also looking at a combined $900 million loan payment on both the Palazzo and Fashion Show Mall, due at the end of November.

But just how well are these malls doing?

Steve Barry sells timeshares at a booth in front of the Fashion Show Mall. He says that foot traffic at the mall is down at least 20 percent.

Barry says his company has had to lay off almost half of their workforce in the last two months and that he personally has a hard time believing that the sales numbers at any mall are higher right now when compared to last year.

The Gaming loss spillover effect?

Closing time coming a lot earlier these days

Businesses forced to reduce hours to cope with economic slowdown

The lights are out already and the door is locked at the LaCabana Mexican Restaurant on Martin Luther King Boulevard.

Only the fading sun provides a peek into the deserted interior. It is well before 6 p.m. on a weeknight, but the once-popular neighborhood spot is among the growing number of businesses opting to cut their losses by cutting their hours.

Limiting business hours is being seen as a Band-Aid to stop the financial bleeding in an economic setting that has already proven to be worse than the previous downturn. The last recession included the aftermath of the Sept. 11, 2001, terrorist attacks and the dot-com collapse. LaCabana owner William Jacobs recently reduced the 17-year-old restaurant's hours of operation by more than 25 percent.

Jacobs was hit especially hard by the economic skid because he also owns the Paradise Lounge next door. The bar's revenue helped to cushion the drop in business at LaCabana for a while, but it is also seeing fewer patrons.

The high-spending construction workers and laborers have vanished, he lamented, leaving the restaurant near Alta Drive to try to survive on new budget-conscious lunch specials.

"We cut off about five hours a day during the week," he said. "We cut the equivalent of three workdays off our schedule." That also meant letting four of his 11 employees go.

Not far from Jacobs' restaurant is a another valley staple, El Sombrero on Main Street. The Las Vegas favorite of three decades once benefited from a resurgent downtown. Nestled on an old industrial stretch, an auto repair shop serves as one of El Sombrero's neighbors. Customers liked the old Vegas feel, however, and would come in until 10 or 11 p.m. Owner Jose Aragon shuts his doors at about 4 p.m. now.

"Oh yes, we barely made it through the year so far," he said.

The El Sombrero owner has cut about a third of his business hours, from being open 64 hours a week two years ago to about 44 today. Aragon kept on just a small staff, now made up of family members. The ghost-town atmosphere after lunch, and his advancing years, made it impractical to keep the doors open late anymore.

Restaurants aren't the only businesses that are turning out the lights earlier or more often these days. The Curves gym at the Las Vegas Beltway and Decatur Boulevard has opted to cut hours in the middle of the day. Owner Bob Ansara said membership was "stagnant" for the past 18 months, except for about six people dropping memberships for undisclosed reasons. One trainer said the sagging economy was a factor.

"We've heard a lot of women, with the economy, were calling up to say they had to drop their memberships," the employee said.

Trainers, also, were asked to accept reduced hours.

The change in Curves' hours -- closing roughly three hours in the middle of each weekday and opening four fewer hours on weekends -- is consistent with the Curves corporate model, Ansara said. He had gone outside the normal hours to see if they would prove profitable. They weren't.

It doesn't surprise economist Keith Schwer that businesses are resorting to reducing hours.

"We know that furniture, autos and home repairs are the first to go, then restaurants," he said. "Gyms also fall into the discretionary category."

Tourism has stumbled, hurting the local economy even more, he said.

"We know in the Las Vegas economy, that people's incomes were less and prices were going up." Schwer said. "Visitor volume is down."

Reduced hours are showing up in more than the "closed" signs on shops' doors. The state of Nevada Department of Employment Training and Rehabilitation is seeing a trend in the rising numbers of unemployment claims. More and more Nevadans are putting in claims for "partial unemployment," said Jered McDonald, a department economist.

Rising Las Vegas Unemployment Rate:

Nevada jobless rate climbs in September (Las Vegas up to 7.4%)

Nevada's unemployment rate rose to 7.3 percent in September, its highest level in 23 years, as more than 102,000 Nevadans were out of work, according to a report released Monday.
The state Department of Employment, Training and Rehabilitation report shows the seasonally adjusted rate was up from 7.1 percent in August—and also shows Nevada above the national jobless rate of 6.1 percent in September.

Bill Anderson, chief economist for the agency, said rates in the state's population centers also increased, led by the Las Vegas area at 7.4 percent, up from 7.1 percent. In the Reno area, the rate hit 6.9 percent in September, up from 6.6 percent in August.

Anderson expects Nevada's statewide rate to get worse, averaging about 8.6 percent for 2009. That means about 120,000 people out of work. He also noted the number of Nevadans filing for unemployment is the highest since shortly after the Sept. 11, 2001, terrorist attacks.

Nevada's economy depends heavily on industries that have been hit hardest by the economic downturn, including housing, construction and tourism. Two massive casino construction projects on the Las Vegas Strip have stalled. The state continues to lead the nation in rates of foreclosure.

The downturn has forced state and local governments to make massive cuts in services, and has some looking for new sources of tax revenue.

Budget cuts and foreclosure rates

Deep budget cuts in Nevada

CARSON CITY, Nev.—Nevada may cut deeper into its budget, on a percentage basis, than any other state in the nation, budget chief Andrew Clinger says.
Clinger attended a National Association of State Budget Officers meeting in Washington, D.C. last week and learned that many of his counterparts around the country were reporting cuts of 5 percent and 6 percent. That's well below the 14 percent to as much as 20 percent that Nevada may have to cut in the coming two-year budget cycle, which starts next July.

The biggest reason for Nevada's budget problem, Clinger said, is a slumping housing market along with a drop in auto sales and high fuel prices, which either kept some tourists from coming to the state or reduced the amount of money they were able to spend once here.

Clinger also said that in the second quarter of 2008, one in 43 households in Nevada got a foreclosure notice. Nevada's rate is now four times the national average and is the highest in the nation. California is in second with a rate of one home in 65 and Arizona third with one in 70.

Nevada saw a total of 24,657 foreclosure filings in the second quarter of 2008. That's up 26 percent from the first quarter of the year and up 147 percent from 2007.

Monday, October 27, 2008

Mints struggle to meet metals demand

GATA: Mints struggle to meet metals demand

Snippets below:

Safe-haven investors are on a shopping spree for precious metals, snapping up gold and silver as an antidote to topsy-turvy markets -- if they can find any, that is.

Demand for physical gold and silver is gobbling up product at nearly every mint around the globe and in Canada has the Royal Canadian Mint allocating its supply among its distributors, who in turn are limiting the number of coins they sell to dealers, who sell to consumers.

"Virtually every mint in the world is sold out of product and as fast as we can produce it, all of us, there is more demand," said David Madge, director of bullion services at the Royal Canadian Mint.

The situation is causing major headaches for bullion dealers like Donald Carlson.

"It's a nightmare trying to keep enough stock in," said Carlson, general manager of Calgary's Albern Coins & Foreign Exchange Ltd.

Back in March, when gold blew through the roof at $1,033.90 per ounce -- its highest ever price -- business was 70 per cent buyers and 30 per cent sellers, Carlson said.

Now it's 99 per cent buyers and one per cent sellers, and people are buying whatever's available.

Much more at link: Mints struggle to meet metals demand

Sunday, October 26, 2008

60 Minutes: Credit Default Swaps

Steve Kroft examines the complicated financial instruments known as credit default swaps and the central role they are playing in the unfolding economic crisis.

Shooting w/FOFOA, Saturday Oct 25th

EU Calls For 'New World Governance'

Excellent video showing Sarkozy and Barroso calling for a "New World Order", "New World Governance", "New Global Order".

The EU and globalists are determined to use crisis' to setup the final stages of what they call the "New World Order".

News/video links of Interest

Europe on the brink of currency crisis meltdown 26 Oct:

The financial crisis spreading like wildfire across the former Soviet bloc threatens to set off a second and more dangerous banking crisis in Western Europe, tipping the whole Continent into a fully-fledged economic slump.

Currency pegs are being tested to destruction on the fringes of Europe’s monetary union in a traumatic upheaval that recalls the collapse of the Exchange Rate Mechanism in 1992.

“This is the biggest currency crisis the world has ever seen,” said Neil Mellor, a strategist at Bank of New York Mellon.

Experts fear the mayhem may soon trigger a chain reaction within the eurozone itself. The risk is a surge in capital flight from Austria – the country, as it happens, that set off the global banking collapse of May 1931 when Credit-Anstalt went down – and from a string of Club Med countries that rely on foreign funding to cover huge current account deficits.

The latest data from the Bank for International Settlements shows that Western European banks hold almost all the exposure to the emerging market bubble, now busting with spectacular effect.

Thousands of Hedge Funds on Brink of Collapse

Emmanuel Roman, the co-chief executive of Europe’s biggest hedge fund GLG, has warned that thousands of hedge funds are on the brink of failure as the global economy contracts with unexpected severity.

Emmanuel Roman, of GLG Partners, said 25pc-30pc of the world’s 8,000 hedge funds would disappear "in a Darwinian process", either going bust or deciding meagre profits are not worth their efforts.

"This will go down in the history books as one of the greatest fiascos of banking in 100 years," said Mr Roman, who with Noam Gottesman.

His views were echoed by Professor Nouriel Roubini, a former US Treasury and presidential adviser known for his accurate prediction of financial crises, who estimated that up to 500 hedge funds would fail within months.

Both men were speaking at the same hedge fund conference in London yesterday, and Prof Roubini said he would not be surprised if the US and other countries soon had to close their stock markets for more than a week to halt descent into "sheer panic".

The economist warned that the world is heading for a protracted recession that will end the US’s financial dominance.

"It’s the beginning of the decline of the US financial empire. The Great Depression ended in a massive war. I hope that’s not going to happen

but it’s pretty ugly now," Prof Roubini said.

He added that turmoil over world trade, currency markets and debt is likely to cause geopolitical tensions between the Western world and emerging superpowers such as Russia, China and "a bunch of unstable oil states".

House Democrats Contemplate Abolishing 401(k) Tax Breaks

Powerful House Democrats are eyeing proposals to overhaul the nation’s $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive and redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.

Ron Paul on CNN American Morning 24 Oct - 'Monetary system is fraudulent'

Huckabee and Chuck Norris FOX economic conspiracy exchange

Saturday, October 25, 2008

Peter Shiff of Glenn Beck Radio Show - 24 Oct

Excellent discussion

Part 2

Tick, tick, tick

Reuters: China: U.S. has plundered world wealth with dollar

BEIJING (Reuters) - The United States has plundered global wealth by exploiting the dollar's dominance, and the world urgently needs other currencies to take its place, a leading Chinese state newspaper said on Friday.

The front-page commentary in the overseas edition of the People's Daily said that Asian and European countries should banish the U.S. dollar from their direct trade relations for a start, relying only on their own currencies.

A meeting between Asian and European leaders, starting on Friday in Beijing, presented the perfect opportunity to begin building a new international financial order, the newspaper said.

The People's Daily is the official newspaper of China's ruling Communist Party. The Chinese-language overseas edition is a small circulation offshoot of the main paper.

Its pronouncements do not necessarily directly voice leadership views. But the commentary, as well as recent comments, amount to a growing chorus of Chinese disdain for Washington's economic policies and global financial dominance in the wake of the credit crisis.

"The grim reality has led people, amidst the panic, to realize that the United States has used the U.S. dollar's hegemony to plunder the world's wealth," said the commentator, Shi Jianxun, a professor at Shanghai's Tongji University.

Shi, who has before been strident in his criticism of the U.S., said other countries had lost vast amounts of wealth because of the financial crisis, while Washington's sole concern had been protecting its own interests.

"The U.S. dollar is losing people's confidence. The world, acting democratically and lawfully through a global financial organization, urgently needs to change the international monetary system based on U.S. global economic leadership and U.S. dollar dominance," he wrote.

Shi suggested that all trade between Europe and Asia should be settled in euros, pounds, yen and yuan, though he did not explain how the Chinese currency could play such a role since it is not convertible on the capital account.

A two-day Asia-Europe Meeting (ASEM) of 27 EU member states and 16 Asian countries was set to open on Friday. Though few analysts expect much in the way of concrete agreements, Shi said it could prove momentous.

"How can Europe and Asia grasp each other's hands and together confront the once-in-a-century global financial crisis sparked by the U.S.; how can they construct a new equitable and safe international financial order?" he said.

"The world is waiting for this Asian-European meeting to achieve big results in financial cooperation."

Really Scary Charts

How bad is this credit crisis?

From the Financial Ninja - Really Scary Fed Charts: OCT, Now Crazy Scary

Weekend Funnies

Thursday, October 23, 2008

Open Forum

Feel free to discuss issues, post comments, links, etc, here

Black Swan - Not worse than the Great Depression, but worse than the American Revolution

Not worse than the Great Depression, but possibly worse than the American Revolution


Shattered Dreams

Excellent PBS special discussing the foreclosure crisis in California. Though Riverside County's "Foreclosure Alley" was the primary target for this segment, I believe much of the nation is experiencing a similar, albeit smaller-scale foreclosure problem - for the moment... As the nation's economic condition continues to deterioriate, millions more jobs will be lost, credit will remain tight, interest rates will rise, underwriting standards will stiffen and this wide-scale foreclosure contagion will likely spiral out of control - across the nation.

I really think you'll enjoy this clip.

Wednesday, October 22, 2008

Lindsey Williams on The Alex Jones show"End of Arab Oil"

Posted TODAY:

Previous Lindsey Williams Post from Back in July 08: Oil expectations 2008-09 - A MUST READ!!!!!


Asian Markets Cratering ATT

Not looking good in Asia at the moment: Asian Markets

- Hang Seng down 5.5%
- Nikkei 225 down 6.25%
- Seoul Composite down >9%

Gold opinions: what's happening & were it's going

Jim Sinclair's unshakable belief in holding physical gold is currently stronger than ever - 'I know without any shadow of doubt that I am right so let the margin traders and constant whiners go to hell.'

He's telling readers that between the election and inauguration day the world's economies are going to spiral out of control. He's maintained for years that those behind the curtain whose minions suppress the price of gold are ultimately the biggest long players.

Jim Sinclair's site

Dear Friends,

Gold is a currency that you will see perform as the currency of choice. There is no doubt we are headed into a planetary Weimar experience to some degree.

Dollars are being created faster now than in any other period in history. The Fed and treasury are guaranteeing everything from money market funds to large corporate entities in one way or another.

The first valuation of worthless OTC derivatives via a public sale of these at .0875 to .02 cents shocked anyone with a brain. Now the downturn in business is hitting financial entities and shortly litigation will smoke whatever is left.

The FDIC is already yelling for additional and significant funding from congress as their capital contracts on every Friday’s bailout.

People expect things to return to normal in 2010. That is a fairy tale.

The Fed has only started creating money for bailouts. You saw what happened when they stepped away from Lehman. If you say you didn't look out the window.

All these bailouts and Federal guarantees on credit items constitute a white wash on a falling economic structure going out of control and soon.

The out of control point of major planetary dislocation is between 14 and 89 days from now.

Moving On:

As you may have already seen from Chetlv's link, Sprott Asset Management's chief investment strategist, John Embry, went on Business News Network in Canada Tuesday morning to discuss, among other things, the suppression of the gold price on the New York Commodities Exchange. Embry believe that long contract holders may call for delivery of enough December contracts as to prompt a claim of force majeure when the exchange cannot delivery enough real metal. Embry's interview begins at the 11 minute mark - get's real good ~ 14 min mark:

BNN Commodities Report, October 21, 2008

More still from the Midas Letter:

Aftershock and Gold Rocket

Some article excerpts below:

Welcome to the opening ceremony of a modern depression.

The effects of the financial shock are starting to make themselves felt in my neck of the woods. Neighbors on three sides not involved even peripherally in the financial markets are unemployed now. Vacations for the year have been cancelled.

Even Paramount Pictures announced this week that they would only be “green lighting” 20 films for production instead of their originally budgeted 25.

General Motors (NYSE:GM), Ford (NYSE:F) and Chrysler (DCX) are laying off thousands upon thousands.

Copper and nickel mines are closing, and feasibility studies are being postponed. Yahoo is laying off 10% of its workforce.

There is barely a single industry outside of anything related to home foreclosure that is not in the process or about to enter the process of hunkering down and trimming the workforce to survive what is now universally perceived to be lean times ahead.

The joke of the week I heard was this: I went into Starbucks (NYSE:SBUX) to buy a coffee and they offered me a free bank with it.

Starbucks is closing 600 stores this year. Bah humbug.

If for some reason you’re still wearing rose colored glasses through all of this, now is the time to prepare for the biggest social upheaval these generations will ever see.

Crime is about to become rampant. As police forces start laying off due to reduced tax revenue at the municipal, state, provincial, county and federal level, desperate times will force good people to do bad things. Bad people won’t even wait for times to toughen up.

There is nothing but trouble as far as the eye can see. Major threatened industries include airlines, tourism, automotive and of course, the financial industry.

For many, a Merry Christmas is as likely as gold falling from the sky. At least Fed Chairman Benranke has promised to dump dollar bills from helicopters… by the time that happens, they’ll probably be more useful as litter box liner.

The most common question being asked is, “If gold is in such strong demand and short supply, why is the price so weak?”

The bottom line is this: the massive repatriation of US Dollars as a result of de-leveraging globally and the unwinding of so many credit contingent deals is making the US Dollar look strong, while the gold manipulation cartel is exerting its utmost effort to keep the spot price of gold low through concentrated short positions on COMEX. The price of gold will emerge from this negative influence on the next leg down and the economy goes into a broader paralysis instead of being limited as it is now to real estate and financials. Most credible analysts are recommending a minimum 30% exposure to gold for institutional portfolios.

Though its hard to imagine in the current price environment, both gold and silver are on the verge of a tremendous breakout to the upside.

Tuesday, October 21, 2008

US Gvt to default on debt on/before summer 2009

GEAB N°28, 16 Oct: Global systemic crisis Alert - Summer 2009: The US government defaults on its debt.

Our researchers anticipate that, before next summer 2009, the US government will default and be prevented to pay back its creditors (holders of US Treasury Bonds, of Fanny Mae and Freddy Mac shares, etc.). Of course such a bankruptcy will provoke some very negative outcome for all USD-denominated asset holders. According to our team, the period that will then begin should be conducive to the setting up of a « new Dollar » to remedy the problem of default and of induced massive capital drain from the US.

Summer 2009: The US government defaults on its debt

Hard times have some flirting with survivalism

Hard times have some flirting with survivalism

Economic angst has Americans stockpiling 'beans, bullets and Band-Aids’

Atash Hagmahani is not waiting for the stock market to recover. The former high-tech professional turned urban survivalist has already moved his money into safer investments: Rice and beans, for starters.

“I hoard food,” says Hagmahani, 44, estimating that he has enough to last his family a year or two. “I’m not ashamed to admit it.”

“People keep asking when this (economic crisis) is going to clear up,”

The answer, he predicts, is that the country is entering what he calls a “Greater Depression.” “Maybe they jolly well better get used to the change in lifestyle.”

Hagmahani is not alone in concluding that desperate times call for serious preparations.

With foreclosure rates running rampant, financial institutions teetering and falling, prices for many goods and services climbing, and jobs being slashed, many Americans are making preparations for worse times ahead. For some, that means cutting spending and saving more. For others, it means taking a step into survivalism, once regarded solely as the province of religious End-of-Timers, sci-fi fans and extremists.

That often manifests itself as a desire to secure basic emergency resources — what survival guru Jim Wesley Rawles describes as “beans, bullets and Band-Aids.”

Getting ready for ‘TEOTWAWKI’

“There are a lot more people — a lot more eager people — who are trying to get themselves squared away logistically,” said Rawles, who lectures and writes books on preparing for and surviving “TEOTWAWKI” — The End Of The World As We Know It.

A less surprising indication of the public nervousness about the recent financial turmoil can be found in gold brokerages and coin shops around the country. Many say that demand for gold and silver has been off the charts in recent months — a clear measure of concerns about the U.S. dollar and the soundness of the economy as a whole.

“We’re seeing absolutely unprecedented demand,” said Peter Grant, gold broker and analyst at USA Gold in Denver. “We’re seeing the full gamut … from high net worth (clients) to people looking at just a couple of ounces at a time.”

Physical Gold and Silver Rush and looming COMEX Default

GATA: Metal keeps drying up as Comex pretends otherwise

"There's no rational explanation for the incredible disconnection between gold's physical demand and the paper trading of it on the Comex."

Ted Butler & Israel Friedman: The Silver Rush Is On

Sales of newly-issued silver coins by the world’s public and private mints have exceeded 30 million ounces. These mints can’t keep up with investment demand, for the first time in history, resulting in unprecedented premiums and rationing. Throw in newly manufactured bars of all sizes, and some 150 million ounces of silver can easily be documented to have been bought by investors. Undocumented purchases would add tens of millions more ounces. Investment demand for silver this year is running at a full 25% of world mine production and over 20% of total production (including recycling). This is a remarkable historical turnabout. For decades, up until a few years ago, there was no net investment demand for silver. It was always reported that investors were dishoarding silver. unprecedented investment rush is underway in silver. The amount of investment money flowing into silver, compared to gold, is staggering. Let me make this clear - it’s not bearish for gold in any way. It’s just bullish beyond belief for silver.

Silver Manipulation by Wallstreet!

COMEX Default on Gold or Silver

Physical Gold versus Paper Gold -- USAGOLD Video Brief (October 18, 2008)

Monday, October 20, 2008

Drama - and conflict - behind the $250 billion banking deal

If you weren't already aware of Paulson's shady backroom antics, you're likely to find this next article unbelievable.

Dictator Paulson gave these nine major bank chief executives absolutely no choice but to accept his plan - a plan that may ultimately cost the American Taxpayer $2.25 trillion - triple the size of the original $700 billion rescue package:

International Herald Tribune: Drama - and conflict - behind the $250 billion banking deal

The chief executives of the nine largest banks in the United States trooped into a gilded conference room at the Treasury Department at 3 p.m. Monday. To their astonishment, each was handed a one-page document that said they agreed to sell shares to the government. Then Treasury Secretary Henry Paulson Jr. said they had to sign it before leaving.

The chairman of JPMorgan Chase, James Dimon, was receptive, saying he thought the deal looked good, once he had run the numbers through his head. The chairman of Wells Fargo, Richard Kovacevich, protested strongly that, unlike his New York rivals, his bank was not in trouble because of investments in exotic mortgages and did not need a bailout, according to people briefed on the meeting.

But by 6:30, all nine chief executives had signed, setting in motion the largest government intervention in the American banking system since the Great Depression of the 1930s and retreating from the rescue plan that Paulson had fought so hard to get through the U.S. Congress only two weeks earlier.

What happened during those three and a half hours is a story of high drama and brief conflict, followed by acquiescence by the bankers, who felt they had little choice but to go along with the Treasury plan to inject $250 billion of capital into thousands of banks, starting with theirs.

Paulson announced the plan Tuesday, saying "we regret having to take these actions." Pouring billions in public money into the banks, he said, was "objectionable," but unavoidable to restore confidence in the markets and persuade the banks to start lending again.

In addition to the capital infusions, which will be made this week, the government said it would temporarily guarantee $1.5 trillion worth of new senior debt issued by banks, as well as insuring $500 billion in deposits in non-interest-bearing accounts, mainly used by businesses.

All told, the potential cost to the government of the latest bailout package comes to $2.25 trillion, triple the size of the original $700 billion rescue package, which centered on buying distressed assets from banks. The latest massive show of government firepower is an abrupt about-face for Paulson, who just days earlier was discouraging the idea of capital injections for banks. Analysts say the United States was forced to shift policy in part because Britain and other European countries had announced plans to recapitalize their banks and backstop bank lending. But unlike the British authorities, the Treasury secretary presented his plan as an offer the banks could not refuse.

"It was a take it or take it offer," said a person who was briefed on the meeting, speaking on condition of anonymity because the discussions had been private. "Everyone knew there was only one answer."

Getting to that point, however, necessitated sometimes tense exchanges between Paulson, a former chairman of Goldman Sachs, and his former colleagues and competitors, who sat across a dark-wood table from him, sipping coffee and cola under a soaring rose and sage-colored ceiling. This account is based on interviews with government officials and bank executives who attended the meeting or were briefed on it.

Paulson began calling the bankers personally on Sunday afternoon.

Some were already in Washington for a meeting of the International Monetary Fund. The executives did not have an inkling of Paulson's plans. Some speculated he would brief them about the government's latest bailout program, or perhaps sound them out about a voluntary initiative. No one expected him to present his plan as an ultimatum.

Paulson, according to his own account, presented his case in blunt terms. The largest U.S. banks needed to begin lending to each other for the good of the financial system, he said during an interview by telephone, recalling his remarks. To do that, they needed to be better capitalized.

"I don't think there was any banker in that room who was going to look us in the eye and say they had too much capital," Paulson said. "In a relatively short period of time, people came on board."

Indeed, several of the banks represented in the room are in need of capital. And analysts said the terms of the government's investment were attractive for the banks, certainly compared with the terms that Warren Buffett extracted from Goldman Sachs for his $5 billion investment.

The Treasury will receive preferred shares that pay a 5 percent dividend, rising to 9 percent after five years. It will get warrants to purchase common shares, equivalent to 15 percent of its initial investment. But the Treasury said it would not exercise its right to vote those common shares.

The terms, officials said, were designed not to be punitive. The rising dividend and the warrants are meant to give banks an incentive to raise private capital and buy out the government after a few years.

Still, it took some cajoling. Kovacevich of Wells Fargo objected that his bank, based in San Francisco, had avoided the mortgage-related woes of its Wall Street rivals. He said the investment could come at the expense of his other shareholders.

Kovacevich is also said to have expressed concern about restrictions on executive compensation at banks that receive capital injections. If he steps down from Wells Fargo after completing the Wachovia takeover, he will be entitled to retirement benefits worth about $43 million and $140 million in accumulated stock and options, according to James Reda & Associates, a firm that consults on executive pay. Pay experts say the new Treasury limits would probably not affect Kovacevich's exit package. Kovacevich declined to be interviewed about the meeting.

Kenneth Lewis, the chairman of Bank of America, also pushed back, saying that his bank had just raised $10 billion on its own. Later, Lewis urged his colleagues not to quibble with the plan's restrictions on executive compensation for the top executives. These include a ban on the payment of golden parachutes, repayment of any bonus based on earnings that prove to be inaccurate, and a limit of $500,000 on the tax deductibility of salaries.

If the bankers let executive compensation block this, "we are out of our minds," he said, according to a person briefed on the meeting.

In an interview Monday, before the meeting, John Mack said that his bank, Morgan Stanley, did not need capital from the Treasury. It had just sealed a $9 billion deal with a large Japanese bank. During the meeting, however, Mack said little, according to participants.

Paulson, however, was peppered with questions about the terms of the investment by other chief executives with experience in deal-making: Lloyd Blankfein of Goldman Sachs, Vikram Pandit of Citigroup, John Thain of Merrill Lynch and Dimon. Among their concerns: How would the government's stake affect other preferred shareholders? Would the Treasury demand control over management in return for the capital? How would the warrants work?

With the discussion becoming heated, the chairman of the Federal Reserve, Ben Bernanke, who was seated next to Paulson, interceded.

He told the bankers that the session need not be combative, because both the banks and the broader economy stood to benefit from the program.

Without such measures, he added, even the situation of healthy banks could deteriorate.

The president of the Federal Reserve Bank of New York, Timothy Geithner, then proceeded to outline the details of the investment program. When the bankers heard the amount of money the government planned to invest, they were stunned by the size, according to several people.

As they heard more of the details, some of the bankers began to realize how attractive it was for them.

Even as they insisted they did not need the money, bankers recognized the extra capital could be helpful if the economy got shakier. Many of these banks' biggest businesses are tied to the stock and credit markets; the quicker they improve, the better their results.

Later, Pandit told colleagues that the investment would give Citigroup more flexibility to borrow and lend. Dimon told colleagues he believed the relatively cheap capital was a fair deal for his bank. Lewis said he recognized the prospects of his bank are closely aligned with the American economy.

Thain was intrigued by the terms of the guarantee by the Federal Deposit Insurance Corp. on new senior debt issued by banks, participants said. He mentally calculated the maturities on debt issued by Merrill Lynch, to determine how the program could benefit his bank.

For Paulson, selling the bankers on capital injections may not have been as difficult as overhauling a rescue program that had originally focused on asset purchases from banks. Paulson said the worsening conditions made a change in focus imperative.

"I've always said to everyone that ever worked for me, if you get too dug in on a position, the facts change, and you don't change to adapt to the facts, you will never be successful," he said.

Paulson insisted that purchases of distressed assets would remain a big part of the program. But having allocated $250 billion to direct investments, the Treasury has only $100 billion left from its initial allotment of $350 billion from Congress to spend on those purchases.

Eric Dash, Louise Story and Ben White reported from New York.

Jim Rogers: "An Inflationary Holocaust"

"Legendary investor Jim Rogers warned during a CNBC interview this morning that global central banks are creating the environment for an inflationary holocaust by their ceaseless overprinting of currency, a measure that isn't even successful in stabilizing the stock market."

PETER SCHIFF - Recession will turn into Hyperinflationary Depression

PETER SCHIFF on Glenn Beck 16 Oct


Gold's New Records

Chart above came from James Turk's most excellent read: Gold's New Records

Sunday, October 19, 2008

Get ready for much higher oil prices!

In this Bizarro world we live in, Goldman and Merrill pronouncements usually turn out to be the inverse of reality. Well today they both stated oil will likely fall another 44%. See below from Bloomberg (1 hr ago):

"Goldman Sachs Group Inc. and Merrill Lynch & Co. analysts say crude, which fell more than 50 percent from a record $147.27 a barrel in July to a 14-month low last week, may drop another 44 percent should the world economy slip into a recession."

If you recall, when oil prices were peaking (~ $140) earlier this year, Goldman Sachs started predicting that we'd see $200-a-barrel oil soon. Ha! They used this announcement to lure many players into the market - to then crush them all with their massive manipulation efforts.

Don't trust anything these folks say! Oil will now RISE!

The Currency War

Excellent read over at FoFoa's Blog: The Currency War

Weakening Pulse of Las Vegas's Economy

It's certainly no secret to many that I've been calling for a severe economic downturn in Las Vegas since the boom of late 2005/early 2006 - and until just recently, many considered my bleak outlook ludicrous, as past history has shown Vegas to be quite resilient and recession proof.

Well, thus far anyway, it's looking like (ok, this is a big stretch here) maybe I'm not quite as dumb as I look.

Latest LV Economic roundup:

Las Vegas Strip Casino Revenue Falls for Eighth Straight Month

Las Vegas Strip casino gambling revenue declined for the eighth straight month in August as cash-strapped U.S. consumers curbed entertainment and travel spending because of an economic slowdown.

Gambling proceeds from the Strip fell 7.4 percent to $494 million in August, Nevada's Gaming Control Board said today.

Casino revenue at the largest U.S. gambling center slid 6.7 percent to $4.21 billion this year through August as U.S. consumers struggled with higher gasoline and food prices, declining home values, job losses and the worst financial crisis since the Great Depression.

``Third-quarter results could prove to be challenging statewide, as September weakness could be greater than August revenue figures,'' Dennis Farrell, a debt analyst with Wachovia Capital Markets LLC in Charlotte, North Carolina, said today in a note to clients."

One of the big differences between this downturn and during years previous: Many of the MAJOR players today leveraged themselves to the hilt during the cheap-money driven boom years.

Even major players feel serious squeeze as revenue drops, debts rise

Casino companies’ earnings are plummeting by double digits. Debt costs are rising for many companies. And their customers are spending less.

In the financial world, in this economy, those are the trend lines of doom.

Indeed, a few smaller operators are already close to bankruptcy. But could giants like MGM Mirage and Harrah’s Entertainment be next?

The breathtaking series of Wall Street failures and Washington bailouts of recent months suggests anything is possible — even spectacular failures in Las Vegas.

Some companies have halted construction projects, and analysts expect more plans to be put on hold in the coming months. (The exceptions are big projects too far along to mothball, such as MGM Mirage’s CityCenter and the Octavius hotel tower at Harrah’s-owned Caesars Palace.)

Some experts believe there might be a cultural shift at play with longer-term implications for businesses, especially the Las Vegas resort industry, which encourages escapist, spendthrift behavior.

“Post the era of using homes as ‘piggy banks’ and overspending as a nation at every level, we believe a new era of national thrift is before us,” Andrew Zarnett, a bond analyst with Deutsche Bank, said in a research report last week. “We believe last week’s activities in the stock market have caused too much psychological damage and the general public has been traumatized by these events ... We believe Americans will be forced, if not at their own volition, to reduce household debt.”

The result, Zarnett says, will be reduced consumer spending and an unprecedented gaming industry recession.

For several casino companies, the economy began its slump soon after they took on massive debts. At the tail end of the credit boom, Station Casinos and Harrah’s went private with the help of private equity firms that borrowed extensively to make the deals happen.

It’s hard to blame these companies for taking on debt when they did because few business models would have assumed a decline this deep, according to one Las Vegas casino executive, who requested anonymity.

“Nobody considered a situation where your cash flow goes down by 25 percent because that would have been a ridiculous assumption to make a year ago,” the executive said. “You would have been laughed out of the room.”

Before the economic decline, major casino companies used cheap capital to build expensive properties and acquire others. Lenders gave them money at attractive interest rates on the assumption they would generate enough cash to pay off their ballooning debts, or at least refinance them at lower rates.

So, how is all this turmoil affecting Gaming Stocks?

That thud? It's casino stocks crashing

Like a mistress who has lost her allure, the gaming industry is getting the cold shoulder from Wall Street.

Stock prices of the major casino operators have plummeted in 2008. In the past week, shares of publicly traded casino operators and slot-machine manufacturers sank to historic lows.

MGM Mirage, Las Vegas Sands Corp. and International Game Technology, once the sector's most expensive shares, are trading in the teens. Ameristar Casinos Inc., Pinnacle Entertainment Inc. and Boyd Gaming Corp. stock can be bought for pocket change.

JPMorgan gaming analyst Joe Greff often ends his investor notes by telling clients to remain on the sidelines when it comes to the gaming industry. Like they need any encouragement?

Other research analysts are advising folks to pass on the gaming sector.

"The stocks of casino operators have been taken to the woodshed in 2008 after a multiyear bull run in the sector driven by cheap debt, mergers and acquisitions, and consolidation," Macquarie Capital analyst Joel Simkins said. "Year to date, the eight casino operators in our coverage universe have declined 61 percent on average."

Nationwide, gaming revenues have disintegrated. Through August, Nevada casinos have won almost 7 percent less than they did a year ago. Atlantic City's casino win is down 5 percent. Gaming revenues have declined 18 percent in Illinois, 10 percent in Colorado, 3 percent in Mississippi and 1 percent in Indiana.

Macau gaming revenues fell 3 percent in September, the first time in more than three years the Chinese gambling market recorded a monthly decline. That news was not well received.

Deutsche Bank gaming analyst Bill Lerner said the Nevada companies operating in Macau -- MGM Mirage, Wynn Resorts Ltd. and Las Vegas Sands -- could take a double slap to the face. Strip casino managers he spoke with said September revenues declined in the last two weeks of the month when the national economy worsened. Visitation levels fell as rising unemployment and financial fears kept customers home.

Simkins added that September's numbers look worse than August for MGM Mirage and Las Vegas Sands.

OK, I think I'm getting this: tourism and spending are down, gaming revenue is tanking, casinos are highly leveraged and gaming stocks have cratered. What about the local Las Vegas housing market - Is it holding up?

Prices, new-home sales continue slide

The housing outlook continues to be bleak for Las Vegas, with lagging new-home sales and falling prices, but existing-home sales topped 3,000 for the third straight month, Home Builders Research reported Thursday.

The median existing-home price in September was $189,000, a decrease of $73,377, or 28 percent, from a year ago.

New-home building permits remain at their lowest levels in decades. There were 461 permits pulled in September. The year-to-date total is down 53 percent at 5,452.

"My best bet is that a lot of buyers rushed to take advantage of down-payment assistance before it was no longer available. "The bump in September sales will probably take away from October sales, so I expect sales to be down quite a bit month to month."

What's missing from the Emergency Economic Stabilization Act is a "stay of execution" for the death of down-payment assistance, housing analyst Lisa Jackson of John Burns Real Estate Consulting said.

Despite some initial traction from a last-ditch, grass-roots effort to preserve seller-funded down payment assistance, the financial crisis engulfed the momentum, she said.

Elimination of down-payment assistance is going to hurt demand for housing as almost all buyers will need a 3.5 percent down payment. While some builders may have seen a recent uptick in sales, long-term demand will certainly fall, Jackson said.

"In other words, R.I.P. You'll be missed by many," Jackson said.

The housing slump has taken its toll on home builders, the latest being Concordia Homes of Nevada. The Henderson-based builder closed its sales offices at subdivisions in Southern Nevada and Arizona.

Well, you probably already knew Las Vegas had one of the worst residential housing markets in the nation, but what about the high-end condo market?

HOUSING: Credit squeeze hits high-rises

Buyers of high-end condos struggle to secure mortgages. Only 21 percent of the 1,284 condos at Trump International Hotel & Tower had closed sales by Sept. 29, while the number at Palms Place is just more than half, a report by Deutsche Bank shows.

"I've never seen anything like it," New York billionaire developer Donald Trump said. "Historically, the banks will call me and beg for end loans. But they don't do that any more because the banks are really out of business."

At Palms Place, 342 of the 599 units, or 57 percent, have closed sales.

Both properties began closings in February, during the beginning of the mortgage meltdown.

Brock Davis, founder of U.S. Express Mortgages, said prospective condo-hotel buyers are now facing lenders who want as much as 50 percent down and require borrowers to have exceptional credit.

The buyer must be willing to take adjustable-rate mortgages to obtain lower rates.

"The rules have changed on qualifying," said Davis, who has been involved in the area's mortgage industry for 30 years. "The still have to qualify better than normal on income, on credit and showing where your down payment is coming from."

Rates on 30-year fixed-rate mortgages for banks willing to loan on condo-hotel purchases are as high as 8 percent to 9 percent, according to the latest data Davis had seen.

"There's just not the financing available at the interest rate or small down payments there was two years ago," Davis said. "That's the problem."

A few potential buyers have had to walk away from their nonrefundable 20 percent deposits, Trump said.

No one seems to know how the struggles of current buyers will carry over to a new series of condo-hotels coming on line in the next few years.

Approximately 2,700 condo units at MGM Mirage's CityCenter are scheduled to begin closing in September. The company opened its Las Vegas sales pavilion, behind New York-New York, in January 2007, and recently opened a pavilion in Dubai.

"A year from now, I don't think there is anybody in this country who isn't hoping the economy is recovering by then," MGM Mirage Vice President of Public Affairs Gordon Absher said. "People are cautiously optimistic in that hope."

Officials at the Cosmopolitan, which has deposits on 1,825 of 2,184 condo units available, said market conditions should improve by the time their buyers begin applying for mortgages in the second quarter of 2010

Two other projects under construction, Fontainebleau, with 1,018 condo-hotel units, and the 398-unit St. Regis Residence at The Venetian Palazzo, have not begun selling their units.

Ouch! The Condo Market certainly looks bad. So how is Commercial Real Estate holding up?

Slumping economy hurts Las Vegas commercial real estate markets

Las Vegas commercial real estate markets have not escaped the turmoil of the national credit and housing crises, a third-quarter retail market report from CB Richard Ellis showed.

The retail market shows the strain of the economic downturn with steadily increasing vacancies and the first quarter of negative absorption, or the amount of new space taken by tenants, in a decade.

The vacancy rate ran 6.32 percent in the third quarter for nearly 59 million square feet of retail space in Las Vegas, up from 5.82 percent in the previous quarter and up 1.75 percentage points from a year ago, CB reported.

How about locals - are they managing to keep their heads above water?

Losing Las Vegas Shows How Americans Crap Out in Housing Casino

Leigh Sogoloff, who spends her evenings lap-dancing at Rick's Cabaret Vegas on Procyon Street, says she's making half her income of a year ago.

``You don't shop, you don't buy stuff you can't afford,'' the 36-year-old Sogoloff said between dances at the Las Vegas club. She has postponed buying a house and is reading Deepak Chopra. ``I know how to save money. I'm not a dumb stripper.''

Dimi Doronis, a banquet server for Aramark Corp stated: ``I've been 18 years in this town, and I've never seen what's gone on like it has this last month. ``I don't know how I'm still alive. I'm digging into my savings right now, but soon it's going to be done.''

Mark Stubbins, a cab driver in Las Vegas for two and a half years, watched his tips drop to as low as $30 a day from as much as $80 a day before business started slowing down in May. The 53- year-old said he's struggling to meet his company's daily fare goals, which were set a year ago, when more tourists and businesspeople were still coming to town.

The city that sold Americans on the dream they could lay down a small wager and walk away millionaires is reeling from speculation in the housing market that helped bring down Wall Street. The quick profits that so easily spread from Nevada to Florida, just as casino gambling migrated to 37 states, are now proving what happens in Vegas rarely stays in Vegas.

Other snippets from the above link:

- Las Vegas leads the nation in falling home prices, foreclosures and stalled construction projects. Rick's Cabaret International Inc., with 20 clubs in seven states and two in Buenos Aires, has lost 74 percent of its market value this year.

- More than $10 billion of hotel and casino projects with 10,000 rooms have been delayed on Las Vegas Boulevard.

- Las Vegas had the biggest home-price decline in the country in July and Nevada had the highest foreclosure rate in August. One in 91 homes in Nevada were in some stage of default, compared with one in 416 for the U.S. overall.

- At Las Vegas's McCarran International Airport, the total number of arriving and departing passengers in August dropped 9.9 percent from a year earlier

- The unemployment rate for the Las Vegas metropolitan area rose to 7.1 percent in August - one of the highest in the nation.

- Las Vegas's housing market is the worst in the U.S. Home values in the area at the end of the second quarter had fallen to March 2004 levels, according to the S&P/Case-Shiller Home-Price Index. Las Vegas prices fell 30 percent in July from a year earlier, the biggest drop among 20 U.S. metropolitan areas.

- Nevada's foreclosure rate was the highest of any state for the 20th straight month in August, according to RealtyTrac Inc.

Bottom Line:

As I've pointed out before, this downturn will be much larger than any that have come before it. Gaming revenues have fallen ONLY ONCE before since 1970 -- in the aftermath of the Sept. 11 terror attacks (they dropped a mere 1 percent from 2001 to 2002).

Thus far, compounded by the housing crisis, higher debt loads, job insecurities, reduced credit availability, reduced wealth effect, etc, gaming losses have been far worse than that experienced in 01/02 and the longer-term spillover effects will be crushing to the state and its residents. Heck, we're just now warming up - wait to see what happens when the real recession party kicks in. As you know, many "Experts" still deny that we're even in a recession today.

In closing:

I would like to leave you with my first Las Vegas post Las Vegas—A House of Cards Bound to fall

Regards from "possibly" a not quite as dumb as I look