[State of the Valley]
Oil’s not well
Our woeful economy has started a blame game of epic proportions
Thu, Jun 12, 2008 (midnight)
Photo: Aaron Thompson
Ask a waiter, a cabbie, a store clerk, and you will likely receive a similar answer, most anywhere you go in the Las Vegas Valley. “How’s business?” The worker’s face contorts. The tone of voice is subdued. Things aren’t good, just happy to have a job.
Sales are down. Tips are off. Work is disappearing. The national unemployment rate climbed to 5.5 percent from 5 percent in May, the largest jump in 22 years, with the loss of 49,000 jobs. Longtime Nevadans/immigrants; men/women; young/old—it doesn’t matter. Many sense something is wrong.
In Nevada, the unemployment rate sits at 5.7 percent, according to the most recent numbers released in April, with more than 10,000 construction jobs lost over the past year. Storefronts sit empty. Restaurants are slow. The highways seem emptier. State political and business leaders continue to struggle with an expected billion-dollar state budget shortfall.
MGM Mirage recently lopped off more than 400 mid-managers. In Business Las Vegas reported that Station Casinos Chief Executive Officer Frank Fertitta III earned $125.9 million in total compensation last year, and most readers shrugged with indifference.
Dave Berns is the host and senior producer of KNPR’s State of Nevada. It airs Monday through Friday from 9 to 11 a.m., with a replay from 7 to 9 p.m., on News 88.9, KNPR-FM.
Last year, MGM Mirage Chief Executive Officer Terry Lanni led the In Business list. This year he fell to 11th, earning $22.2 million. A sixth construction worker recently died at MGM Mirage’s CityCenter project, and Lanni wasn’t talking publicly about the tragedy.
The home-foreclosure crisis continues. Once-booming suburban neighborhoods have developed checkerboard patterns of occupancy. Many homes remain lived in. Others show the telltale signs of vacancy—shabby lawns, for-sale signs that have been standing for months, reports of break-ins, homes vandalized for spare parts. It’s shaken the confidence of people living in the poorest and most expensive neighborhoods. They talk of moving if they could sell.
Others who recently bought homes in some of the newest subdivisions worry that they’re upside down, living in houses that are worth much less than the mortgages they carry. Many can’t get hold of a banker to help renegotiate those mortgages, which were bundled and sold off to overseas investors, part of an alphabet soup of high-finance derivatives that are difficult to grasp for a Wharton MBA, let alone understaffed federal and state financial regulators who were supposedly protecting those of us who were too lazy, too greedy or simply unable to grasp what we were signing.
The odds we’d be paying $4 a gallon for gasoline were “uncertain.” That’s what President Bush told us in February. This past weekend that uncertainty became reality when the average price of gas topped that mark nationwide.
Apparently, Rep. Nancy Boyda, a Kansas Democrat, is a major cause of rising gas prices, according to House Republicans. What has the freshman House member from Topeka done to bolster the price at the pump in the Las Vegas Valley?
“When Nancy Boyda took office, consumers in Kansas were paying $2.15 for a gallon of gasoline. Since taking control of Congress, Boyda and her fellow Democrats have ignored the 57 percent of Americans who support expanding domestic energy exploration to help achieve our energy independence,” read a news release issued Sunday by the National Republican Congressional Committee, the cash-strapped campaign arm of House Republicans. “Voters are growing increasingly frustrated that Nancy Boyda and her Democrat colleagues have refused to consider practical solutions to bring down skyrocketing gas prices.”
So it’s Nancy Boyda, the 52-year-old Methodist schoolteacher from Bush country who defeated conservative Republican Jim Ryun two years ago. She helped push up your gas prices in Henderson. The childish political games continue.
Exxon Mobil, the Saudi sheiks, Bush-Cheney/Clinton-Gore/Reagan-Bush and our decades-long love-fest with powerful gas guzzlers aren’t responsible for this bind. It has nothing to do with urban sprawl, a lack of mass transit or the one-person, one-car ethos that drives our daily commute, my daily commute.
Explore. Drill. Pump. To heck with all of that talk of global warming, carbon footprints, peak oil and the declining world oil supply. Boyda! Why do you hate America?
And what about the Democrats’ love affair with Wall Street? The high-finance crowd with their complex alphabet soup of CDOs and SIVs in partnership with the low-interest boys—Bernanke and Greenspan—contributed to the double bubbles of the dot-com and housing-market crashes of the past decade.
That’s according to author and one-time Republican political strategist Kevin Phillips, who argues in his latest book, Bad Money, that our adoration of low interest rates and easy credit freed money for questionable investments that are destroying America’s economic power while bolstering the long-term financial prospects of Asia and Europe.
If Republicans are the party of Big Oil, Phillips writes, Democrats have become the beneficiaries of political contributions that have flowed from Wall Street, prompting the party of Obama, the Clintons and Reid to oppose a push to raise taxes on wealthy hedge-fund managers whose earnings are taxed at a 15 percent rate.
“We’re told that the tax rate on hedge-fund managers has to be kept low to encourage risk-taking,” writes New York Times columnist Paul Krugman. “But the managers aren’t risking their own money. The only risk they face is the uncertainty of their fees—and as any waitress who depends on tips or salesman who depends on commissions can tell you most people with uncertain incomes don’t get any special tax breaks.”
No new taxes, especially on the wealthiest Americans.
And the Bush-Clinton-Bush-Clinton political parade has contributed to a calcification of the nation’s political process, further narrowing the options for debate, Phillips argues.
Southern Nevadans, Americans want to hear some words of hope, some sense of sincere optimism from our political leaders. But President Bush seems worn out—and besides, is anyone listening to him? And our governor is tied up in an ugly divorce dispute that might or might not have serious public policy implications.
Of course, mayors, city council members and county commissioners like to make public appearances when times are good, when the Vegas miracle is going strong, but somehow the Goodmans, the Reids, the Ensigns, the Porters aren’t so public when things aren’t that good, when people are just happy to have a job.