Ricardo Banaga can finally breathe a little easier as he guns his taxi around the eerily quiet nighttime streets of Las Vegas. Just a little, he says, just a little. But business is finally inching back toward normal, after a nine-month period that saw his earnings slashed by more than half, courtesy of the global recession.
In past business slumps, this carefree capital of kitsch and casinos was an oasis that blustered its way onward without missing a beat. This time, the travel budgets of companies and individual revelers shrank so dramatically that Banaga saw his twice-a-month paycheck for 12-hour days slip to around $600 from $1,200. And that's before gas expenses.
His wife's hours at a hotel fell by more than half as well, leaving the Philippine immigrants scrambling each month to pay the mortgage on their small home, and forced to explain week after week to their 10-year-old son why they couldn't go out for their usual Saturday afternoon trips to the bowling alley or movies. "My son kept asking why we don't have enough money," Banaga said. "It's hard to explain, you know?"
Yet time does not stand still even out here in the wide open spaces of Nevada, and suddenly life is lightening up a bit. The desert may be a strange place to look for "green shoots" of economic growth, but they are there nonetheless. Banaga's paychecks are sometimes hitting $900 again as companies discover they don't have to cut out convention travel entirely and as families decide that if they haven't been laid off yet, maybe they can afford a spring trip to Vegas.
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Highly stimulated, and not just in Vegas
This is how it starts, in small gestures and tiny steps. And no doubt any recovery that gets under way might well be tenuous and subject to fast reversal. But there really do appear to be stirrings of life in brutalized landscapes across the world as depression-fighting money from governments and central banks wends its ways from the capitols to the streets. As a result, here in Vegas, crushed casino stocks like Las Vegas Sands (LVS, news, msgs) and MGM Mirage (MGM, news, msgs), which not long ago traded over $100 a share, still look cheap under $15 even after they've risen a touch off the littered floor -- particularly if they endure a setback over the next few weeks to remove some froth. So does device maker Multimedia Games (MGAM, news, msgs) at around $2.75.And why not? It's easy to just look at a single-data time series like U.S. unemployment and worry about the dwindling number of Americans earning paychecks and their ability to buy. But it's not so easy to tote up all the efforts worldwide that have been leveled at filling in the gaps until job growth returns. Analysts at ISI Group in New York now count 613 separate government and central policy initiatives in the past 21 months, with most in the past four months, all aimed at preventing the sort of discredited, self-centered parsimony that led to catastrophe in the 1930s.
Just a few efforts in the past week include the Obama administration's decision to provide substantial support to GMAC, General Motors' (GM, news, msgs) financing arm, and a Senate bill that expands federal efforts at preventing foreclosures. In addition: The Bank of England increased its asset purchase program by $75 billion; the European Central Bank extended a bank credit program by six months; Germany decided to provide an extra $13 billion to troubled giant Commerzbank; interest rates were cut in Iceland, the Czech Republic, the European Union, Chile, Peru and Denmark; the Bank of Japan opted to provide an additional $60 billion to Asian nations via swap agreements; and other Asian nations agreed to set up a $120 billion emergency fund for their peers.
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Hyperventilation vs. hyperinflation The specter of inflation that was supposed to scare investors back into commodities has so far stayed in the shadows.
Meanwhile, here at home, the Obama administration and key legislators have agreed on a "cash for clunkers" bill to stimulate auto sales, more banks and buyers are agreeing to participate in the Public-Private Investment Program to remove bad loans from banks' balance sheets at above-market rates, and mortgage rates have plunged to the mid-4% range.
ISI analysts, quite appropriately, ask, "Is anyone keeping score? Is it possible to keep score? Never in history has so much stimulus been applied on a global scale in such a short amount of time."
Back in the darkest days of last winter, I feared that governments would try to go their own ways, raise tariffs to protect home industries and fail to coordinate on the monetary attack. Their initial steps and pronouncements hinted in that direction. But the financial collapse of Iceland and the near collapse of major money-center banks in Ireland, the United Kingdom and the United States in February appear to have slapped lawmakers across the face and made them realize we are all in this together. A grudging recognition of yoked fates -- and a set of decisions to save national banking systems at virtually any cost to taxpayers -- appears to have taken hold.
Continued: Normal, even if not fully
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