Fallout: The Financial Crisis

How Las Vegas went bust

Marketplace Staff Aug 20, 2009
HTML EMBED:
COPY
Fallout: The Financial Crisis

How Las Vegas went bust

Marketplace Staff Aug 20, 2009
HTML EMBED:
COPY

TEXT OF INTERVIEW

Tess Vigeland: The city of Las Vegas, Sin City, was for years one of the fastest-growing metropolitan areas in the country. People flocked to good jobs at casinos. Anyone could get a house. The odds of a decent lifestyle were in your favor. At least that was the story.

The growth of Vegas largely matched the trajectory of the housing bubble, a seemingly endless explosion of building and buying and big payouts. But when the bubble burst, so did Sin City’s economy.

Joel Stein writes about it in this week’s Time Magazine. Welcome to the program.

JOEL STEIN: Oh, thanks for having me. This is very exciting.

VIGELAND: Give us a bit of an economic snap shot of what Vegas is like right now. I was actually there a few months ago, and it was awfully slow.

STEIN: What were you doing in Vegas?

VIGELAND: Oh, I can’t tell.

STEIN: Wow, see that’s the good thing. The place is full of people like you. So when you walk around the casinos and the pools, it’s pretty full because the prices have dropped so much, particularly the hotel rooms. But you don’t have to go very far to see a bunch of unfinished hotels that are just going to sit there forever, cranes that are going nowhere. And if you drive outside the strip, the foreclosure rate is unbelievable.

VIGELAND: One of the things you realize as you read the article is how much of a microcosm Vegas was for the entire bust across the country. Talk to us a little bit about how pre-recession Vegas really was symbolic of pre-recession America and its mindset.

STEIN: Well, the great thing is you can go to Vegas and you can see the moment when the boom stopped. Because you can see the last house in the housing project, or you can see the level of the hotel where they stopped. So it almost feels like there was just a day when all the credit left, really. And everyone just had to stop. And that’s when the unemployment rate goes from, like, three-point-something percent to 12 percent really quickly.

VIGELAND: Does the new Vegas, the post-bust Vegas at all represent the rest of the bust?

STEIN: Yeah, it’s interesting to go around Vegas because I thought after hearing all this stuff about the new economy and thrift that the hotels would kinda be changing, and the rooms would look different, or they’d go back to the cheap buffets. But they’re holding ground. They assume that this is another small cycle, America will go back to just how it was. People get used to bad times, and they don’t really want to change their lives.

VIGELAND: But how can you not change a gambling habit when you have no money?

STEIN: Well, you’ve obviously never been to Vegas.

VIGELAND: Come with no money, leave with even less.

STEIN: Exactly. It’s the only city I know of where they make a lot of money and produce absolutely nothing.

VIGELAND: In the article you also talk about folks who are capitalizing on the wasteland. Can you give us a couple of examples of that.

STEIN: Yeah, there’s a lot of people who have already figured out how to make money on the bust in Vegas. I think a lot of real-estate agents have figured out how to short homes, basically move people from a home where they’re underwater and let the banks deal with that problem, and buy a new home. So I think there’s already real-estate agents out there who are making a decent profit off of this. There are already casino operators who are back in business. Phil Ruffin bought Treasure Island really cheap off of MGM, who was pouring all their money into CityCenter and was just desperate for cash.

VIGELAND: You know, the excess, the greed, the expansion, it really brings to mind visions of Rome.

STEIN: Yeah.

VIGELAND: Have we seen an empire truly fall here? Can Vegas bounce back?

STEIN: It looks like it has been sacked. Because you walk into these foreclosed homes and all the copper wiring has been stripped, and all the appliances are taken out, and people angrily kind of destroy things or throw paint on the walls. I don’t know what happened when Rome fell, but people are going to party until the thing burns. I think there’s at least once cycle left in this country, and certainly in Vegas.

VIGELAND: And did you contribute to that when you were there?

STEIN: I didn’t have time to gamble because I was actually reporting. But I couldn’t let that pass. And so I made one sports bet on hockey. And sadly for Vegas, I won. So I think Vegas was down about $300, $400 bucks on my visit.

VIGELAND: Joel Stein is a Time magazine contributor. And his article “Less Vegas” is the cover story this week. It’s been fun, Joel, thanks.

STEIN: Thank you.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.