The giant gamble in the desert – how Las Vegas bet big on commercial and residential real estate and lost big. Home prices in Las Vegas now down 60 percent from their peak and nearly 1 out of every 5 mortgages is in foreclosure.
Las Vegas is an economic enigma. A gambling and resort paradise planted in the middle of the barren Southwest desert like an electrical oasis. Very few areas witnessed such a large boom in both residential and commercial real estate rolled into one. In a city known for big wins and even bigger defeats the real estate debacle is exacting a painful toll on the desert region. An almost perfect storm of a crashing real estate bubble, high energy costs, and a forced austerity are forcing painful cuts in the city of splurge. It was hard to imagine the rate of growth in the area keeping pace with what experts were predicting but many rushed in buying homes sight unseen. Las Vegas home values are now down almost 60 percent from their peak reached in 2007. What came on so quickly may take decades to repair.
101 years of the most secretive central bank in history – Dollar has fallen over 90 percent since Fed was put into place. Fed running out of ammo with negative interest policy.
Few people realize how secretive the Federal Reserve operates even though it is the central bank to our financial system and wields a sword strong enough to be called Excalibur. The Federal Reserve came about from a secretive meeting on Jekyll Island by some of the world’s top financiers back in 1910 including the powerful J.P. Morgan. What very few know is that in November of 2010 Ben Bernanke made a trip to the island off of Georgia to commemorate the 100-year anniversary of the original meeting. This original meeting was held in the strictest of secrecy lest the public realize how the powerful bankers sought to aggregate power in a few hands. With the too big to fail becoming even bigger and the Fed blocking full out audits like a hockey goalie, it is nice to see few things change even after 100-years of destroying the U.S. dollar.
While D.C. and Wall Street burns the middle class flails – top 10 percent control 98 percent of all financial security wealth. For stocks and mutual funds bottom 90 percent controls only 19 percent of total assets.
Part of the unfortunate theatre being played out in the political arena is that little focus and energy is being placed on the issues plaguing the middle class. The interests of the big financial banks continue to dominate what politicians will discuss and the media seems content at rehashing the argument over and over like a well-trained parrot. In the meantime we have 46,000,000 Americans on food stamps simply trying to navigate their existence in a country where the middle class is faltering. The problem with our current political and financial system is that it has been solved like a Rubik’s Cube by the financial elite. It is now a jigsaw puzzle to be solved and politicians are seen merely as employees for whatever cause will increase the bottom line even if it means destroying the middle class. The Securities and Exchange Commission, the main enforcement arm against Wall Street graft has become basically an internship ground for those aspiring to big salaries at investment banks. Now more than ever wealth is concentrated in fewer hands and this era is making the irrational and spendthrift Roaring 20s look like a walk in the financially restrained park.
The tragedy of the too big to fail banking sector – over $1 trillion in deposits are over the $250,000 FDIC limit. $6.5 trillion in insured deposits backed by $3.9 billion.
It is amazing how much ill placed faith is thrown into the current banking system when there is plenty of evidence of insatiable malfeasance. The FDIC recently released its quarterly banking report and somehow dismal information was twisted as being positive. Take for example the reality that $6.5 trillion in insured deposits are backed by $3.9 billion. Does this give anyone any comfort? What is even more staggering is you have $1 trillion in deposits above the $250,000 FDIC protection limit riding it out with absolutely no protection. The banking sector is going to face dramatic problems ahead because the past issues of bad loans have yet to be realized. Sure, accounting trickery and fancy financial magic can buy you a few years but ultimately you have to come to terms with the deep issues in the balance sheet. The FDIC is overseeing an industry with $13 trillion in “assets†and only carries a $3.9 billion insurance fund. It appears the wizard behind the curtain is blowing more smoke than ever.