‘What happens in Vegas, stays in Vegas.” So says the official advertising slogan for America’s den of iniquity. Knowing this “knowing” slogan, I was expecting something slightly more risqué than the overwhelming smell of waffles and pancakes, which greeted me at Las Vegas Airport.
Granted, there are those stick insects that hang out in the Ice Bar who might regard scoffing down sticky chocolate smeared pancakes as the most lewd and depraved thing known to humanity. But for most of us, something more hardcore might be expected here in America’s centre of sin.
Whatever your weakness, it is clear that self-restraint is not high on the agenda in Vegas. In fact, if one word can describe this place it is gratification, instant gratification.
This town is a microcosm of much that has gone wrong economically with the US (which is why I am here making a documentary). Vegas is loud, brash, overdrawn and in recession. The economy here is crashing.
Nevada has the third-highest rate of unemployment in the Union and house prices are plummeting. Up to 8,000 casino workers have been laid off since January and business is down everywhere.
Like Ireland, Vegas boomed in the past 10 years, construction sucked in workers from all over the US and Mexico and it heralded low taxes and the spirit of the individual. Like Ireland, Vegas engaged in Casino Capitalism based on short-term gains gambling with other people’s money. It bet the house on construction and lost.
Today, the place is full of the same ghost estates that blight our land, built miles away from the city with no transport links. These are houses built for the new service workers of Vegas — workers who are now unemployed. This is now the foreclosure capital of the South West, a state that has gone from boom to bust in a matter of a year. This morning, the third Nevada-based bank this year has gone bust.
Things are grim in the vice capital of the US, but it differs from Ireland in one crucial aspect. This difference will cushion the blow of the recession, allowing Nevada to recover more quickly. If it were an independent country, faced with a recession, Nevada would devalue its currency and trade its way out of this crisis, allowing hotel room prices in Vegas to plummet relative to California and attract in more Californian tourists in process.
But it can’t. It is a state of the United States of America. The downside is that Nevada can’t devalue; the upside is that it gets huge transfers from the federal government to pay for its unemployed in the same way that Wexford gets transfers from the Dublin government to pay for the rise in unemployment in Enniscorthy.
As a result, the impact of the recession in Nevada will be more cushioned than it otherwise would be if Nevada were an independent state within the dollar zone.
Now look at Ireland. Ireland is an independent state within the Eurozone. Because there is no central European budget where we might get federal transfers, we have to suffer this recession with a hard currency, without any offsetting budgetary help. How dumb is that?
Ireland has abandoned macroeconomics and is now being run by mantras, which allow our leaders to avoid honestly assessing our situation.
Ideally, we would devalue our currency and print money to get us out of this mess. We should also increase government investment, not reduce it. This is after all the core of macroeconomic theory as I learnt it.
When you have a liquidity problem where the people are hoarding, not spending, the state takes up the reins and spends. This is what every country did in the 1930s and goes to the heart of the response to the crisis which President Obama unveiled last week. But the Irish government is trapped, we have got ourselves into a stupid situation whereby we can neither devalue nor spend excessively. Therefore, our present European arrangement is the worst of all worlds.
But we are going to vote on Europe again this year with Lisbon II, so what should we do?
Less Europe and an ability to devalue our currency would help enormously but so too would more Europe and fiscal federalism where real political and budgetary integration accompanies monetary union and free trade.
This implies that the best policy for Ireland is either to dilute our commitment to Europe or enhance it greatly! Both outcomes are better than keeping the present status quo of being full members of the euro in a half-constructed political union. This is a disaster. So something has to give.
The financial markets have twigged this Irish dilemma and are betting that Germany will not tolerate more European integration, which the Germans could rightly see as yet another attempt to extort from the German taxpayer money to pay for Ireland’s sins. This is why the market which measures the risk of an Irish default, known as the credit default swap market, is suggesting that a default in Ireland is likely.
However, as against that, the political class in Europe and in Germany in particular, by proposing a European bond, is moving gradually towards more muscular political integration backed up by these monetary measures.
At the moment Germany, while admittedly footing the EU bill, gains tremendously from the EU because it can export its goods freely in the union, without having to worry too much about the budgetary implication of an EU-wide recession. So German trade benefits are amplified in a Euro boom but its fiscal downsides are capped in a recession. So it is win, win for Germany.
Granted it is the largest contributor to the Euro budget but this budget is modest when compared to a national budget and the national responsibility of proper EU governance.
Thus this crisis is not just a challenge to Ireland but it is also a challenge to Europe. We can improve our lot by taking either radical option.
We would be better off being the most ardent pro-Europeans or by being the first to leave the currency union! Equally, we know that if we stay as we are, we will have a much longer recession than is warranted, which is political and social suicide.
In short, we have to make big adult choices. In contrast, here in the land of the Elvis impersonators, Casino Capitalism is a grown-ups Disneyland, which will be paid for by the croupier in the form of Uncle Sam. Unfortunately, in our Irish version of Casino Capitalism, the punter always pays.
We are in a situation where we have to make a move. We can’t stay as we are.
In biblical terms, Ireland needs the Wisdom of Solomon; lamentably all we are faced with is the Life of Brian.
This article reminds me of Dun Aengus where the outer half of the ring fort was lost into the sea – when that happened it was not erosion – it was something far greater more like another Age of Mismanagement – we are only left with dull gray lifeless limestone when they in another age beamed with the blue of royalty and strobbing gyrating disco/ laser lights displaying positive energy .
Now we must ask ourselves what landmark will be left to show to remind a future mankind that we had once a celtic tiger and where might that be?
Hi David, Vegas has gone through several booms and busts over the years and will continue to do so. Gambling will continue so it wont go away. > Because there is no central European budget where we might get federal transfers, we have to suffer this recession with a hard currency, without any offsetting budgetary help. Ideally, we would devalue our currency and print money to get us out of this mess. But we do get ‘federal’ European transfers, on an equity basis and when we deserve it. Remember all those roads the EU funded 85% for, the cohesion funds,… Read more »
The problem I see is that Irish economy is not European. Basically Europeans pay high taxes and make the companies pay high taxes to create a social state where everybody has access to a wide range of public services mainly free and paid from that bag where all those taxes go. That’s where that money that Europe would use to bail Ireland would come from. So basically you’ll get European taxpayers money to pay for Irish sins. For example, Irish people prefer to receive a children allowance as money in the pocket rather than let the state (or a number… Read more »
Hi David.
There is only one solution to the economic peril we are all faced with and it’s not borrowing more and its
not taxing more to fix up our deficit to be able to borrow more and what any fancy terms one wants
to dress it up with this is what is underway. In re-organising our economy we
must start with fixing what brought the mess we’re in about. This leads us
too one thing, CREDIT PRODUCTION. We must use CREDIT PRODUCTION
as a utility if we are serious about fixing our economy.
Hi David.
Using CREDIT PRODUCTION AS A UTILITY ensures excess is minimized.
It protects the community against it’s on vice when it comes to greed
and reckless spending.
Hi David.
A real economy, an economy in equity and continuous growth will
never happen on the basis of using CREDIT PRODUCTION
outside of it’s utility function/status.
Hi David.
THE SOLUTION TO OUR PRESENT ECONOMIC MALAISE IS BELOW.
Good to see a new angle on this… A while ago, i asked about comparing Detroit and Portland… 2 regions in the US with very different outcomes… and theres vegas… In all cases its not just the structure that counts its how the local economy and politicians works within the structure that is equally as important. Just one comment on this quote from the article “This implies that the best policy for Ireland is either to dilute our commitment to Europe or enhance it greatly! Both outcomes are better than keeping the present status quo of being full members of… Read more »
Ireland is as financially bankrupt as Peru or Brazil.With unemployment increasing by 1,000 per day we will have 700,000 out of work within a year.We are finished.
“Ireland has abandoned macroeconomics and is now being run by mantras”
That is an astute observation.
Perhaps our media could adopt this mantra wholeheartedly to try and counteract the phenomenon.
Then, maybe we can all move on to high quality analysis. Media commentators included.
Credit Unions is our next casino to shut doors as we know it to be
Is it just me or is Cowen now trying to actually wind down Ireland Inc? While every other economy in the developed world is trying to stimulate business and activity and spending, Cowen seems intent on shutting it all down? How many hundreds of 1000s have to lose their jobs before it becomes clear that Ireland cannot afford to pay 3 times the rate of social welfare than what is paid in the UK, many cases exceeding the minimum wage?
YES…… IRELAND IS BEEN
MANIPULATED BY BANKING SYSTM VIZ A IIZ
DYSFUNCTIONAL CREDIT PRODUCTION TO COERCE
US INTO VOTING YES ON LISBON
This country is a basket case, any public servant is a millionaire if you consider their index linked pension, they are the new rich, the only people who can borrow, will they move to Howth or Dalkey next?
You should be here today David, to see the capitulation of the government to the necessity of another budget adjustment of tax rises on everybody and spending slashes on public expenditure. Eventually the government will cut public pay and social welfare payments. Please desist from your macroeconomic training in inflation, devaluation, etc. because there is no way out of the eurozone, although Krugman has already lumped us in with Iceland and Estonia. Cowen is the personification of misery, and get more miserable but not contrite by the day, although Lenihan invited the opposition to have a look at the Finance… Read more »
Hi David I was in Vegas for a week (too long) in 2004, I saw the issues you highlighted in your article above. The wasteful expenditure, the opulent but soulless hotels, elderly cocktail waitresses busting it for a dollar tip, the ready supply of prostitutes, the porn littering the streets during the day and night etc etc. Indeed the whole concept of Las Vegas seemed insane, arrogant not to mind environmentally idiotic – a fitting metaphor for capitalism as a whole. I flew out and saw the ‘service houses’ but thought that gambling would keep the show on the road,… Read more »
This nonsense about pensions is proof that we, as a nation, are completely daft. Pat Kenny has once again shown his bias by providing air-time for a so-called expert to explain what it would cost now, to earn a garda pension, now on a finishing salary of 52000 after 30 years service.This does not compare the pension investment in the private sector necessary for the previous 30 years with tax relief to earn a similar pension, now. If you had invested 6.5% of your salary from 1975, to 2005 in an endowment policy,with a salary starting at 12000, and finishing… Read more »
Hi David.
The economy collapsing is the ponzi/bubble economy.
How did it burst,,,,,,,,,…?
The banks stopped lending. The banks suckered the running of
the economy onto their CREDIT OUT OF THIN AIR PRODUCTION.
They then pull the plug. Collapse the economy. Consolidate. Buy
up real assets for pennies on the euro. Re-open credit lines and
start over.
YOu mean these place were built on people losing, or people believing they were lucky,
HI DAVID
CASINO CAPITALISM = MILKING THE DYSFUNCTIONAL CREDIT PRODUCTION WITH NEW FINANCIAL INSTRUMENTS
Hi David.
Gordon brown today sky news lunchtime
“this whole thing started with a banking failure………”
The Las Vegas Mindset is a what has been wrong with this country for the last twenty years. Even before we got money in this country we were yearning for the gambler lifestyle. Is that not why CJH got 40% of the vote despite him being a crook (though useless candidates in other parties also helped the scoundrel). We have behaved like a bunch of aristocratic, status obsessed high-rolling buffoons in a Casino.We were proud. What exactly we were proud of, I have still not resolved. Therefore, I assume, proud of nothing. Which brings us to where we are now… Read more »
Basil Fawlty would do better than Brown..
should clarify – apologies –
He said: ‘kid, you and your girl seem like nice people, why don’t you take your money and buy her dinner because these places weren’t built on people winning’ – that summed up Casino Capitalism for me right there and then.
They may as well get out a referendum tomorrow and get Lisbon II voted in asap. May as well try and get inside the tent and work the system. The option of leaving the EU and the Euro is not on. As MK1 says, we are not retiring at our peak and it would back water us big time. Another option might be mandatory conscription into the army. May as well start getting people off the streets and getting them doing something useful. Ship them to the blue berets, act as the fallback should CIE/ Dublin Bus strike. Any more… Read more »
@ Deco – ‘pride before the fall – put a beggar on horseback and he will ride to the devil etc……….’
Now that would be ironic…. conscription but into the Irish army to keep people occupied not some EU imperialist warmongering Lisbon blah blah
what to do next…. its obvious…. maximum wage for everyone who gets paid by the government…… keep overall employment as high as possible, put people doing useful work…. e.g. we can have 166 TD’s taking an average of 200k or we can have 166TDs plus another 860 people not drawing the dole and earning 30k each. And repeat
There should be no first class seats in the lifeboats
Paddy is smarter though than them lads in Vegas! Ocean’s required eleven people to rob the bank in Vegas, Paddy could do it with his Golden Circle of ten!
I wish to God some what you say seeps through into not only the governments consciousness but also that of the general public. I’m so sick of hearing how lucky we are that we’re not Iceland and how the euro is so great. Balls it is! The euro contributed to his mess when we coudln’t set our own interest rates and is now compounding the misery because we can’t devalue. It is lunacy! And we’ve got our politicians and sheep-like electorate to thank. Wake up people! If Europe doens’t help us then we need to help ourselves and leave the… Read more »
“In biblical terms, Ireland needs the Wisdom of Solomon; lamentably all we are faced with is the Life of Brian.” As a member of the Popular Front of Judea, all one of our membership takes extreme offence at this sideswipe at our political goals and visions ;-{ !! On a calmer note, this piece of prose lyrically points to the junction that David presents us with and the ‘opportunity’ it actually presents for our ‘leadership?’ to give Ireland a good old shakeout and reconstruct it. Or further turn the clientelist screw, as the case may be. Quoted from http://www.Lorian.org SOUL… Read more »
What on Earth is McWilliams doing in Las Vegas? David! thou shouldst be with us at this hour: Ireland hath need of thee: she is a fen Of stagnant waters: altar, sword, and pen, Fireside, the heroic wealth of hall and bower, Have forfeited their ancient Irish dower Of inward happiness. We are selfish men; O raise us up, return to us again, And give us manners, virtue, freedom, power! Thy soul was like a Star, and dwelt apart; Thou hadst a voice whose sound was like the sea: Pure as the naked heavens, majestic, free, So didst thou travel… Read more »
National Bankruptcies :
Britain owes $15,000 per capita
USA owes $36,000 per capita
Japan owes $157,000 per capita
What does Ireland Inc owe ?
Now we must ask ourselves what landmark will be left to show to remind a future mankind that we had once a celtic tiger and where might that be?
johnA,
How about the dozens of wind turbines lying idle because the lack of demand made them uneconomical to bring on line? Some of them with the blades fallen off due to lack of maintenence?
An Irish Ozymandias, so to speak.
Let’s be quite clear,the Euro is not the problem,it never was.The problem is the structures that were put in place when we joined the Euro.By that I mean the structures in the Regulators Office,Central Bank and Financial Ombudsman.The light touch,nod and wink,blind eye,self promoting,hush hush,lack of necessary expertese,inside information,no accountability and the rest of this fatally flawed regime that allowed Bankers/developers and all sort of Financial Traders to exploit the Euro,its interest rates,economic strength etc.for pure greed and power and self advancement.Remember Ireland when it joined the Euro did not have to put the type of prudent policies in place… Read more »
I agree Jim but everything the gov do will be arseways. I think this country really is Godforsaken.
I am fed up reading an unfolding story which gets played out for real about 1 month later. Given the wonderful prescient abilities of this blog (and I say this without sarcasm), can we figure out a solution that does not reference the EU, Government, Banks etc. These institutions seem to be headed south. If I were Brian, I would fire up mandatory conscription to soak up our bright talent. A few years smartening up, doing a few gigs for the UN and overriding PS strikes ;). End Neutrality would be something else I’d do and realise we depend on… Read more »
Test…
Arragh!! This Blog reads latest first….Sorry for repeats.
It’s hard work, but if you print it out first then you have a real job on your hands trying
to read it! Maybe like the Athlone one way system it might be quietly dropped after a
decent interval! hint hint
well said jim. Without the Euro things would have probably been even worse 1: when economy was booming, they would havev pointed to low interest rate in euro zone and said that to be competetive ireland needs to have the same interest rate 2: they would have claimed that Ireland was a special case, as noted the boom was going to get boomier 3: when euro zone started to increase interest rate. some vested interests would probably have pointed out that interest rates should go even lower to encourage the most important industry in the country and to bring the… Read more »
There is an alternative to currency devaluation, which is selective – i.e. discerning – deflation. It involves thinking about what things are worth to us, and how much we are willing to pay – or not to pay. It`s happening guys, haven`t you noticed? Devaluation is just a temporary hoodwinking of the population. Actually it`s stroke politics. Deflation needs real thought & hard work. **************************************************************************************************** Sometimes those long plane-rides don`t help clear thought. Schizophrenia is the most serious of all mental illnesses and let`s hope the country doesn`t go that way (again) on Lisbon II. We should try to learn… Read more »
The Celtic Tiger debate is over , it was a credit pumped charade. The economic vacuum as a result of its inevitable demise is now clear. The only counter argument, that the people in government who significantly responsible for its creation, can now state, is that the current economic malaise is a global one. It is certainly true that the global economic contraction , expedited the eradication of the Irish wealth facade, but create the facade it did not. And put Ireland in an economic deterioration far worse than any other western country, it did not either. I don’t believe… Read more »
Hi phillip.
I’ve been postig a solution for weeks…..
Return credit production to it’s rightful place as a PUBLIC UTILITY. thank you
Hi bloggers..
Credit in use as a PUBLIC UTILITY does not mean providing
credit to unsustainable enterprises etc etc….,,,,
It’s not a difficult concept.. bizarre to how it’s so misunderstood.
I beginning to think the pop of Ireland are programmed leprechauns
who see credit as an intrinsically valuable resource.
@businees.ie
with you on the shift into human capital as motor to a prosperous economy,
I reckon we should grab with both hands the new knowledge based economy
and leave the industrial to the chinese and indians. I see Ireland brilliantly
positioned to gear up and seize the day on a knowledge based economy
to which CREDIT AS A PUBLIC UTILITY FITS LIKE a hand in a glove.
gadfly55, completely correct; the spin in the media is ridiculous and has been so for quite some time. You are correct, of course, about the 40 years of contribution required for “full pension”, which is calculated as 40/80ths of finishing salary. If you retire at 60, you only get 35/80ths, and so on (unless you pay extra to “top-up”). There is also the 1.5% “Widows and orphans” contribution on top of that 6.5% in order for spouses and children to receive half your pension, 20/80ths of salary after you die – and that, only for ten years. Most of the… Read more »
Furrylugs – you asked a very important question “Now we must ask ourselves what landmark will be left to show to remind a future mankind that we had once a celtic tiger and where might that be?”
How about THE BINGE SYRINGE ??
The Spire to symbolize the Quagmire.
A monument to pointless waste.
Actually Deco, that was johnAllens poser I was replying to. I’m sadly lacking that level of intellectual assessment. Mea Culpa
Wills – how can a society which regards the obliteration of it’s brain cells in as an act of national identification, on a repeated basis expect to have a long term future in the knowledge economy.
Just look inside the A&E of your local hospital. We have too many bad habits to expect to hold it together as a knowledge based economy.
Unless we clean up our act. Which is impossible considering all the alcoholics in the Dail !!!
I know this might sound heretical in some quarters, but I think serious consideration should be give to scrqapping the minimum wage. Replace it with a new set of workers rights concerning the treatment of workers, and the right of a worker to request their employer to review their boss’ position with respect to any infringement of Labour Law.. That way workers would be protected, but any remaining disincentive to hiring people in this economy would be removed. In any case it should be considered. We are losing thousands of jobs every week. And it has to stop soon. It… Read more »