Avbout a year ago I opined that the next grfeat disaster after housing would be casinos, gee I wish I had acted on that speculation by buying some puts Check out LVS or MGM. Las Vegas Sands LVS owns casions both in Las Vegas and in are you ready, Macao, People's Republic of China. The stock has fallen from 150 to $3.23, no that is not a misprint. How could it fall so far? My answer is that the market realizes and is discounting that all these facilities are or will soon be operating at below their fixed cost levels, smoethign we study in cost accounting. If one falls below that level, only cash stand between the company and the end of opeartions as GM is coming to understand.
LVS ratios tell teh story. Debt is 4.5 tiomes equity. They owe $10 B dollars. Does anyone thing they can make their debt service agreements? Las Vegas had been cited as the hottest economy in the US. Half a million dollar condos were going up all over town last summer, some in thirty story tall buildings.
trust me, Las Vegas will be tomorrow's monument to foolishness. America excahnged manufacturing for a 'service' economy. What could be more service oriented than a gambling casino? What asset does a shareholder own-a big empty building in the desert. And a lot of debt. We will continue to follow this story.
Professor Elam 
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