Saturday, December 13, 2008

Things in Vegas

are getting pretty bad. The economy here is built on tourism(down 10% year over year), commercial construction(2-3 major projects still underway), and residential construction(D.O.A.). Many residential construction companies, several who were customers of ours, have gone belly up. Many of our customers that were running 2 or three productions lines 24/7 are now down to 1 line on one shift. We currently still have the highest foreclosure rate in the U.S.

The good news is that they are rebuilding the I-15 expressway so there will be many new overpasses to live under!!!

Still there is little doubt that we are in better shape than Michigan.
Now that the auto bailout is dead, at least until W releases some T.A.R.P. money for the big three, things in Michigan are looking even bleaker.

I'm not real sure where this is leading. I remember being in PoliSci class and discussing the economy back then with the other students and with Ricardo Solomon (the professor), roughly about 2005 or 2006. Back then Fords was in its second or third iteration of its "turn around". Many of the die hard UAW members in the class blamed W and the Republicans. No surprise there. Personally I felt it was a combination of UAW/Management issues.

At the end of the class on one day I remember saying that this whole mess is from the fact that the U.S was built on the back of poor people around the world, and now that the economy is becoming increasingly globalized, those countries are getting their payback and that it would continue to drag our standard of living down until we were equal with most of the rest of the world. Professor Solomon was taken aback by my statement. There was no doubt that I was anything but a die hard conservative in the class, and my statement seemed to surprise him. I am beginning to fear that I was more correct that I thought.

In the world of business, the U.S. has two things that work to its advantage:
1. Innovation
2. Productivity

These two traits are also closely tied to each other. With innovation we increase productivity which in turn raises our standard of living. They are the only things we still have going for us in the long term. In the short term, it is going to get very ugly.

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