Comments on: You Think They Were Setting Up a Monopoly, or Something…

By: Rick Bullotta

Rick Bullotta — Sun, 25 Nov 2007 13:25:47 +0000

Last thoughts on the topic from me – much like a casino, the current equity markets are less than a zero sum game. Beyond the buyers and sellers, the brokers extract a cut (directly and indirectly via market timing). When you factor in the “prescient knowledge” that brokerages often have, the similarities to a casino are substantial.

What did you think of the recent TomorrowNow announcements? Interesting, eh?

By: Jeff

Jeff — Wed, 21 Nov 2007 04:46:00 +0000

well yeah, but that’s the nature of a market. The fact that there is liquidity is what ensures the flow of capital and if you were to take away the private selling and buying of equities and bonds the result would be chaos.

I think you would agree that the buying and selling of equities and bonds is value creating insofar as your 401k, mutual funds, and possibly, pension fund are concerned.

It’s easy to talk about the transgressions of financial markets in academic terms, but the fact remains that so much of modern life depends on these markets that we now take them for granted. Insurance, mortgage financing, credit cards, municipal infrastructure, schools, retirement funds, business expansion, and bank security all depend on free flowing liquid financial marketplaces.

By: Rick Bullotta

Rick Bullotta — Tue, 20 Nov 2007 12:44:17 +0000

Of course I was taking the case against Wall Street to the extreme, but I still stick to the perspective that, as of today, it seems that the majority of activity is not associated with capital creation and growth, but rather, with the “churn” associated with trading existing issues. While “zero economic value” is an exaggeration vis-a-vis both Wall Street and casinos, I think you’d have to agree that a lot (most?) of the activity in the financial markets is non-value-added.

By: Jeff

Jeff — Fri, 16 Nov 2007 15:27:49 +0000

Rick,
I simply cannot endorse your statement about Wall St., which despite abuses is still a pure form of capitalism. Take Ducati motorcycles as an example, in 1996 this company was on death’s door when Texas Pacific acquired 49% of the company, later taking it public in 1999. In the 10+ years following that transaction, sourced by capital you describe as gambling loot, Ducati has quadrupled production, redefined state-of-the-art motorycycle technology (a title the Japanese were claiming for themselves), opened new facilities and, of course, created jobs. Ducati today is one of the most valued motorcycle brands not just because of their heritage but also because of their financial performance.

None of this would have been possible without Wall St.

By: Rick Bullotta

Rick Bullotta — Fri, 16 Nov 2007 11:49:15 +0000

In the interest of full disclosure, I’m something like 1/32 Native American, but since I do not (currently) have a casino at my house, I think I can be objective…

The dilemma here is that there was a MASSIVE injustice done to the Native Americans in the not-too-distant past, and this is what our brilliant government came up with to try to address the situation – tax people who are bad at math (the lottery is in the same camp).

But I’d have to extend your statement that “Casinos of all kinds are parasitic to society, there is zero economic value creation as a consequence of building or creating, just taking” to replace the word “Casinos” with “Wall Street”. Our major financial markets have become a giant casino, not a source of capital creation for economic growth and progress. They’re basically just a private casino where the house makes the rules, peeks at the cards, and charges $9.95 to play a hand.

By: Jeff

Jeff — Wed, 14 Nov 2007 23:29:47 +0000

I’ll join your tribe!

By: Steve

Steve — Wed, 14 Nov 2007 18:49:07 +0000

@Jeff… agree, its blows my mind that a “treaty” between an Indian “nation” and the US government can create such economic advantages for the tribes without concomitant social responsibility.

Gee, I’m a member of a tribe… I wonder if I can open up a casino and my own judicial system!

By: Jeff

Jeff — Wed, 14 Nov 2007 17:48:07 +0000

Steve,
The “sovereign nation” is exactly what I was referring to as the loophole. If they were truly sovereign, why do the Feds and the states have to license them?

The reality is that these tribes are incapable of operating without the consent of the Federal government. This trumps the states who then use a variety of labor, utility, environmental, and commerce regulations to force licensing at the state level.

All of the above is supported by the fact that these groups have pumped more $$ into state level political lobbying than any other group of businesses, sovereign or otherwise.

By: Martin Edic

Martin Edic — Wed, 14 Nov 2007 16:46:52 +0000

As for the ‘value’ these things add to our communities, I agree- there is none whatsoever beyond a few low paying jobs. Casinos make money by keeping people in the casino for as long as possible until they have no money left. So it is counter to their interests for any kind of related development (restaurants, retail, etc.) to take place around the casino.
I had the misfortune to stay at a Trump casino in Atlantic city last year. In the hotel rooms there were directions to the casinos in the hotel but no directions to the restaurants! And there were seven restaurants in the hotel…they won’t even support their own ancillary businesses if it takes away from gambling.

By: Steve

Steve — Wed, 14 Nov 2007 15:36:22 +0000

Good post Jeff. These casinos themselves aren’t just operating with “loopholes” as you say. Tribal lands are considered “sovereign nations” unto themselves. So if you get injured on tribal lands, and wish to sue, forget about it. The US court will refer the matter back to the tribal judicial system. Many of these tribes do not have any sort of robust, heck limited due process. And the folks that hear your case – have a vested interest in siding with the tribe, since most often these cases involve monetary damages. Its a judicial travesty.