Monday, July 7, 2008

OK. Now it's serious.

If the housing crash wasn't proof enough. If GM's stock at a 50 year low wasn't proof enough. This should finally be enough proof to the perma-bulls that the economy is in the shitter;

No tourist resort can afford to lose its buzz. Yet the slump now runs so deep it's starting to hurt even the town's Elvis impersonators, wedding chapels, and sex industry. When money's tight, the prospect of stuffing another $20 bill into a lap-dancer's gyrating stocking-top somehow doesn't seem quite so enticing. "This year already we've seen the Minx closing, the Mensa club closing, and the Crazy Horse closing," says Dolores Eliades, owner of the OG, the second biggest "adult cabaret" venue in the world. "By another 12 months from now, I expect another two or three major venues will have gone.

The demise of the Las Vegas "sex-industry" (which entails topless dancers only and despite what most people think still does not have legalized prostitution) is a perfect nation-wide representation of the boom and bust of the 2000s. While I lived in Las Vegas for 5 years, it was a bit of a fantasy world. And not because of the Strip and the silly hotels on it.

No, it was the fact that in a town where the median income is $45K a year, every 2nd car on the road was either a BMW, Hummer or Escalade. And I'm not exaggerating. You'd go to $600 a month apartment complexes and see multiple $50K care in the parking lot. You'd go to a middle class subdivision and see boats, tricked out Harleys, customized pick-ups in the driveways. You'd go to a Best Buy on a Saturday and there would be a line of people coming out with $4,000 TVs which of course would be loaded into the $50K SUV. And strip clubs as well as nightclubs were wall to wall people week in and week out. Not that I ever went to one myself, it's just what I heard from a friend of a friend who new a guy whose brother went to a strip club once. Uhm yeah, that's it.

And of course all this consumption was fuelled by easy credit. Easy credit for homes which turned into HELOCs which turned into cars. Easy credit for credit cards with 0% intro rates. Even easy credit for payday loans which allowed even the poorest of the poor to get in on the fun. On top of that Californians were swimming in housing bubble money drove the 4hrs up I-15 every weekend and plunked down a lot of $20 (or more) down those g-strings, further adding fuel to the consumption fire.

Well now the party's over. It has been over for quite some time. It's only now really starting to settle in. Las Vegas has been down before and it pulled itself back up. Which is something I really dug about the city. There is no real history there. As soon as a building becomes too old to make money, the building gets blown up and a newer, bigger and shinier one takes its place. And this cycle will repeat itself and the town will be great once again. But for now, things will probably get a lot worse before getting better.

It was a pretty cool ride though and I'm glad I was part of it.

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