Gambling on a brighter US future

Al Jazeera’s Barnaby Phillips reports on the struggling US economy.

Phil McClary has put America’s economic troubles to music

Barnaby Phillips, Al Jazeera’s Europe correspondent, travelled across the US to find out what ordinary Americans feel about five key electoral issues.

In part one of American Challenge, he investigates the declining US economy and finds out how voters are struggling to cope.

On the Las Vegas Strip, there’s little sign that the US economy is in trouble. 

Glamorous, or merely garish, the Strip – a four mile stretch of huge casinos and outrageously themed hotels –  appears to be in rude health. 

In focus

In-depth coverage of the US election

Neon signs and fireworks light up the sky, the heavy traffic moves at a snail’s pace, and the pavements are crowded with jostling crowds.

At the southern end of the Strip, there is a forest of cranes, and a vast construction site.

They are building new, even bigger hotels and casinos, for more people to spend, spend, spend.

So, perhaps, as they used to say, Vegas really is recession-proof, oblivious to the economic pain now being felt elsewhere in the US. 

The truth is a little more complicated. Fewer visitors are coming, and those that do come are spending less money. Casino stocks have slumped. 

Across the US, the housing market is in crisis, but the state of Nevada, in which Las Vegas is the largest city, has been hit especially hard.

Developers who cashed in during the boom years have suddenly found they cannot sell their properties. 

Las Vegas remains an attractive option
for the super-rich

I met one developer, Frank Pankratz,  who is overseeing the construction of a lavish new estate to the west of Las Vegas.

Two towers have already gone up, and a vast residential-shopping village is scheduled to follow. 

The timing might not appear auspicious, but Frank has sold most of the luxury apartments in the towers, some for more than $20 million. 

He argues that confidence will soon return to Vegas, and he’ll be able to sell the remainder, although he concedes that his job is “less hard work when the economy is banging on all twelve cylinders”.

If it wasn’t for the economic downturn, Frank would have hoped to have sold all his properties by now. So it seems that even the super-rich are a little bit more cautious these days.

But elsewhere in Las Vegas there is real pain. 

Bob Massi is a lawyer who has lived here for 35 years. 

“You have real estate brokers and real estate agents who have gone out of business,  you have mortgage companies that have gone out of business, so it’s felt here like never before,” he says.

Foreign takeovers

I left Vegas, and its glitzy lights, and traveled 2,500km east, to the city of St Louis, on the banks of the Mississippi river.

One of the city’s most famous companies, the beer giant, Anheuser Busch, or AB, has just agreed to be sold off to a rival from Belgium.

AB makes more than half of all the beer sold in the United States, including Budweiser, a brand internationally synonymous with American beer, and its been brewing in St Louis for 150 years. 

US companies are being sold to
foreign firms

Although the Belgian company, InBev,  has promised it will not cut jobs, many local people have reacted with dismay to the takeover of such an iconic brand.

Almost under the shadow of the red-brick AB factory, I stopped to chat with a group of friends playing softball in a park. 

They told me the sale of AB has created some bitterness.  “It has hurt our pride a little,” said one man.

Another man said it was wrong for Budweiser to be owned by foreigners. “Its Americana. You might as well sell off apple pie.”

I drove a few kilometres up the road, to the Busch baseball stadium, home to the St Louis Cardinals, a team with a proud history, and a fruitful association with AB.

There I met local singer-songwriter Phil McClary. Phil is a friendly, down-to-earth guy in his early 40s, and he’s very patriotic.

US economic slowdown

US home foreclosures rose 55 per cent in July compared to the same period last year. 

Unemployment has risen to around 5.7 per cent or around 8.8 million people, up from 4.7 per cent in July 2007.
The offical US budget deficit in 2007 was about $162 billion but some economists estimate the real figure to be closer to $400 billion.

Inflation has also risen with prices of goods 5.6 per cent higher than they were in July of last year.

He’s written a passionate protest song against the takeover of AB. It’s called “Kiss My Glass”, and he sang it for me.

“We’ve got momma’s apple pie and baseball too, And lets not forget we were the first up on the moon.  

“Great accomplishments aside, America is not for Sale, and neither is her beer.”

But, with the dollar so weak, and in a more globalised economy,  there are signs that Phil might be wrong, and that America is in fact for sale these days. 

From iconic buildings on the Manhattan skyline to venerable breweries, wealthy foreigners are moving in. 

For many Americans these are uncomfortable, and new developments.

But the country has been here before; in the 1980s there were fears that the Japanese were buying up too many American companies and properties.

But those fears melted away in the 1990s, when the Japanese economy stalled, and America’s boomed. So perhaps reports of America’s economic demise are, once again, somewhat exaggerated.

Technology revolution

It certainly felt that way in my next destination, Silicon Valley, northern California.

The Valley is really a series of prosperous towns, clustered round the campus of Stanford University.

Eric Ries remains confident despite
the slowdown

In these towns you’ll find the headquarters of Apple, Google, Facebook, and many of the other companies that are leading the technology revolution, and changing all our lives.

I’d gone to meet Eric Ries, a 29 year old technology entrepreneur, to try and discover the secret of Silicon Valley’s success. 

Eric puts it down to the combination of investors who are willing to take risks and wait a long time to get their money back, and, as he puts it, “a whole corps of really motivated, passionate technologists, who are smart … and want to change the world”.

But they’re not only smart, they’re also resilient and entrepreneurial.

Eric had already seen two companies fail – “failure is almost a badge of pride here” – before his third took off.

There’s a dynamism and optimism in Silicon Valley that is almost infectious. 

People are not panicking during the current slowdown because they are confident of succeeding in the long-run.

And, crucially, this is still where the best and brightest from all over the world come to learn, to make money, and to share in the American dream.

My journey had shown me that America faces serious economic problems, and all the signs are that its share of global economic output may begin to decline, especially as China and India grow. 

But as long as America can preserve its culture of innovation and the “can-do” spirit, its bound to remain a formidable power. 

Source : Al Jazeera

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