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Friday March 6th
Depart Las Vegas today for Miami via Dallas Texas.
I’ve never been to Dallas before and I recall watching the hit TV show from the 80s called Dallas about the oil rich families of Texas.
I squeeze in a conference call before I depart the hotel at 12pm with a US Company I market in Australia.
I was meant to meet them in Texas for a meeting however due to my tight schedule this was not going to be possible so we settle for a conference call which ends up being productive.
I started this company 2 years ago promoting a US product and turned over almost $10million in its first year and has been a very successful company.
I had been considering selling it and had been meeting with several Public Companies who were interested in acquiring the company from me.
Before the Global Financial Crisis it was valued at $12million, however, due to the downturn, $5 to $6million Australian was the best I could expect to get for it so I’ve been in two minds whether to sell. It has a lot of potential and if supplier relations can be improved then its worth more to me to keep for now, until the market rebounds.
Many people ask do I gamble especially when I’m in Las Vegas.
I’ve got to admit I’m a far better investor then a gambler.
My partner tends to do well whenever she goes into a casino and made $2,000 US last night at the roulette table.
To me gambling is a bit of fun and I’m quite conservative when it comes to gambling.
I’d bet no more than a few hundred dollars and be happy to make $300.
I find it a hard way to make money gambling, when I can do trades in the share market with a far greater degree of certainty of make money. So gambling makes little sense to me other then occasional fun.
At least in Vegas you get free drinks while at the tables, unlike Australian casinos.
A good friend of mine joined us in Vegas from LA who is a big roulette fan so him and my partner hit the tables at every chance to boost their winnings
My partner has a general rule, that any money she wins she has to donate to the dress or shoe stores within 24hours. So at least she helped out the American economy.
My dad was always very anti gambling. Thus growing up I’ve always been reluctant to ever spend much at the gambling tables, however if I do play it will generally be blackjack.
We fortunately get to meet Steve Wynn for a short chat and photo on our way to dinner.
For those who don’t know who Steve Wynn is he virtually built Las Vegas including casinos, such as Bellagio and Mirage, which he then sold and now has Wynn’s Casino in Vegas which just opened Encore next door where we are staying.
We stayed also in Macau last year in his replica Wynn casino there.
He recognises our Australian accent and asks if we know Solomon Lew from Australia who must be well known at his casinos.
Kerry Packer is still well known in Las Vegas with most taxi drivers still able to share legendary stories about Kerry’s huge gambling days.
Apparently the night Kerry passed away he had his Lear jet on standby for one last trip to Vegas to go out with a bang.
I’m not sure how Kerry would feel about his son James Packers huge gambles with buying US casinos, which has cost the Packer Empire a large fortune with the Stock Market Crash reportedly reducing Packers wealth from over $7 billion to $2billion. Many in Vegas don’t understand why he has bought such casinos which tend to be low profile smaller operations and at such high prices.
I’m sure his dad would have had more fun betting $5billion at the casinos and probably would have come out better.
Steve Wynn mentions he is very good friends with Tony Robbins and Sage his wife and they were staying as guests of Steve only last week.
I recall when I was in Las Vegas several years ago Tony mentioned him and Steve were good friends.
After dinner we headed off to Tryst nightclub at the Wynn which is one of the best clubs in Vegas overlooking a huge waterfall.
In the 15 years I’ve been going to Vegas it’s the quietest I’ve ever seen it and its clear the recession is taking its toll on Vegas.
The Trump Tower which is now complete across the street from Wynn’s casino is apparently offering rooms from only $69 US a night.
They believe soon the casinos from Mondays to Wednesdays will start giving rooms away for free to simply get people to them as they make their money on food drinks and gambling.
The huge Venetian casino next door is apparently about to file for bankruptcy.
So if you’re looking for an inexpensive holiday then Vegas should soon be that.
WHEN Wall Street erupted six months ago, American voters swung behind Barack Obama as the best candidate for the crisis.
But with the US losing more than a half million jobs each month, Wall Street down a further 20 per cent since inauguration and American banks deep in trouble, he is making the crisis worse.
In a typically sweeping analysis last week, Paul Keating doubted whether Obama’s $US787 billion ($1.2 trillion) budget stimulus would restore confidence in the US or world economy. And he sheeted home blame for the crisis not to Kevin Rudd’s extreme capitalism, not to Alan Greenspan and not to greedy sub-prime bankers on Wall Street.
These were simply accessories to the original culprits: the Clinton administration, the International Monetary Fund and Timothy Geithner, a 1990s mid-ranking US econocrat who has ended up as Obama’s tax-avoiding Treasury Secretary.
The implication is that fixing the fundamental global imbalance behind the crisis requires American belt-tightening as part of what some call a “grand bargain” between the world’s biggest debtor, the US, and its biggest creditor, China. Under the bargain, Beijing would tap its $US2 trillion of foreign reserves to stoke domestic demand, build infrastructure and construct a social safety net underneath 1.3billion Chinese.
Instead of drawing on Chinese savings to finance US consumption, Washington would rein in its budget deficits. China would let the yuan strengthen against the greenback, boosting Chinese purchasing power and helping American industry narrow the US trade deficit. Global recovery would be driven by Chinese consumers and American net exports, so correcting the fundamental imbalance. The US would consume less but would save American jobs.
The Chinese would export less but live better. But, rather than balance Beijing’s $US586 billion budget stimulus with US belt-tightening, Obama has embarked on massive New Deal-style spending.
Disguised as a recession cure, this will widen this year’s US budget deficit to $US1.2 trillion or 12per cent of gross domestic product and lift net public debt to 60 per cent of GDP or $US13 trillion in a decade. Even this requires rosy economic forecasts and a big run-down in defence spending. No wonder the confidence effects from Obama’s fiscal stimulus “have not been great”, Keating said. “Is American default on the cards? If not, who is going to buy the bonds?” The Chinese, of course, says Obama’s Secretary of State Hillary Clinton, who last month told Beijing it was in China’s interest to keep the US economy afloat. That’s Bill Clinton’s line, too.
Yet, while the Clintons want the Chinese to stockpile more US bonds, Geithner wants Beijing to stop “manipulating” a weak currency that threatens American jobs. That is, the US wants it both ways. That’s too much for Keating, who blames the crisis on Bill Clinton’s failure to exploit the end of the Cold War by reshaping the global economy’s post-World War II institutional architecture. Instead, Clinton “declared victory and walked off the field”. The US spent the ’90s in self-celebration, happy to “vacuum up the savings of the world” as its spoils. Washington’s only use for Beijing was “to turn up to bond tenders”.
Keating told a Lowy Institute forum last week that Gordon Brown and Obama must use next month’s Group of 20 London summit to pave the way politically for the grand bargain. Obama must defy his own advisers to entrench the G20, the child of the 1997 East Asian financial crisis, as the successor to the Group of Seven big industrialised nations that formed during ’70s stagflation but that excludes China.
And the G20 must replace the Washington-run and trans-Atlantic-dominated IMF as the official funder of emerging economies hit by external crises. Stuck in the 1947 Bretton Woods world, the Benelux countries have more IMF voting rights than China. Calls by Brown, Rudd and others to pump more capital into the IMF “would be a huge mistake”, Keating said. The IMF had been “making a mess of things for 20 years and the greatest mess was East Asia”.
When the hot money sucked into booming East Asia during ’90s globalisation was sucked back out, the IMF should have diagnosed a fitful exodus of capital that called for bridge financing. Instead the IMF prescribed the tough medicine usually reserved for structural balance of payments crises.
Geithner was the “Treasury line officer” who wrote the punishing IMF program for Keating’s valued Southeast Asian partner, Suharto, and the country in which Obama lived as a boy. “It takes a gigantic fool to mess that up,” Keating said. Geithner’s then superior and now Obama’s chief White House economic counsel, Larry Summers, had a shouting match with Peter Costello over Australia’s push to redraw the IMF’s Indonesia program.
Brown was IMF committee chairman. After that, no East Asian country, particularly China, would put its “head in the noose” of the IMF or the US Treasury, said Keating. To protect its sovereignty, Beijing built its huge defensive war chest of foreign reserves, financed by exports that otherwise would have lifted Chinese living standards. But, as Chinese demand bid up the price of US government debt, interest rates fell and risk became cheap.
Searching for higher yield, the American investment banks that built the 20th century’s great industrial economy ended up lending to the lowest-value borrowers, tarting up sub-prime mortgages as investment grade bonds, inflating the US housing bubble and poisoning the global banking system.
That’s what money pushers do when money is so abundantly cheap, whether they’re “greedy Dick Fuld” of Lehman Brothers or Citibank’s “hopeless Charles Prince”. Keating didn’t draw this out but Obama’s yes-we-can platform was built around ongoing Chinese credit.
The crisis simply became a too-good-to-waste opportunity for the Obama Democrats to ratchet up government spending. Now they want the universal health insurance that Bill and Hillary couldn’t deliver, but with no money to pay for it. Obama last week compared Wall Street’s rout with the statistical noise of daily political polling. It’s more serious than that.
What Keating described as Wall Street’s “profound” wealth destruction may be forcing on the US a version of the belt-tightening that Geithner and Summers imposed on Indonesia a decade ago.
That could add General Motors and Citibank to the scalps of Lehman and Merrill Lynch. As the richest and most productive nation on earth, the US should be generating savings to invest in emerging economies, not being bankrolled by the savings of poor Chinese. The irony is that, rather than change, Obamanomics is resisting adjustment to China’s ascent. SOURCE: The Australian – Economics editor Michael Stutchbury | March 10, 2009 <
