I call heaven and earth to record this day against you, that I have set before you life and death, blessing and cursing: therefore choose life, that both thou and thy seed may live. ~Deuteronomy 30:19
By Catherine Austin Fitts
The announcements of casino closings in Atlantic City continue. (See Trump Plaza Casino to Close) It is worth pondering what this means.
There were two economic drivers of the growth of the casino industry along the New Jersey shore. The first was money laundering. Why leave all of the market to Las Vegas? The second, of course, was entertainment – serving a consumer that wanted to sit in air conditioning in front of slot machines while they gambled their discretionary income and – in some cases – life savings away. Why waste the money on learning new skills or growing fresh food or starting a business?
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Competition for the money laundering market share skyrocketed. Drive down the highway throughout the United States and state after state has authorized casinos; big places with lots of lights and not much real market. As China grew, Asian casinos mushroomed. Then on line gambling took off. That means places like Atlantic City are getting squeezed.
So, in the end, the consumer mattered if the casinos where going to meet their overhead.
The American consumer is tapped out and more increases in federal subsidies cannot fill the gap. Long-term currency debasement and taxation are a slow burn squeezing those not protected by new innovation or rigged deals and government money reserved for insiders. For families who still had $100-1,000 a month in discretionary income, Obamacare was the last straw. Of the hundreds of businesses from Sears to Trump Plaza Casino that fed on that sliver of discretionary income, the questions is which, if any, will make it.
This is why it is important to ask the question as to what the fundamental impact of a business is. Does it make the consumer healthier, smarter, and wealthier? Because if its impact is to make the people and markets it serves stupider, sicker and poorer, the investor needs to be able to price the difference between equity creation and liquidation.
A lesson learned from the financial coup d’état appears to be that institutional investors have a hard time pricing the differential between prosperity and liquidation.
Related Reading:
The Solari Model – Total Economic Return
On the Solari Investment Model
Building a New Investment Strategy Model, Comment #1
Catherine Austin Fitts : Economy and Culture, Imagining the Reinvention of Everything
