Professor Elam

Wed Feb 24 2010

Wall Street lore has it that no one rings a bell at the bottom. Well Warren Buffet's investing buddy, Charlie Munger, has rung one at DOW 10,300. Writing in Slate, Munger titles his article, It's Over. 

He compares America to a giant gambling casino in which 'investment firms' have assumed the role that gambling casinos once did. In the end everyone is betting on stocks and derivatives, who is working?

I wrote a column rather like this several years back, really I did. There are over thirty states with lotteries, including Arizona.  But State Parks are closing anyway, Mish today reports that spending is out of control in Phoenix. Only a few years back, Las Vegas was the fastest growing city in the US. It was also the city that produced little or nothing in terms of tangible output, a true 'swap dollar' economy. Now the thirty story condo developments are empty, and the Mayor of Las Vegas is angry at the President for remarks disparaging the city. Gee how times have changed. The values of the publicly owned casinos have collapsed, big time. 

In a way, the public unions were gambling that the governments could pay astronomic salaries and retirements. That bet is not paying off either. But the Administration continues to reward his union base with items like purchasing a Illinois State Prison for over $200M to house GITMO detainees. California no doubt looks to Washington DC as its final salvation. 

A PEW Study backs me up on this but I do not agree with the Director that this can be solved now with some small steps. The real world use of the word NO is never easy.