Tuesday, November 24, 2009

The Big Fat Bloated Economic Engine that Couldn't

A newly paved road winds its way to the plastic-shrouded shell of the Mohegans' new tribal office and community center. Construction equipment is scattered about, but work on the facility stopped months ago.

It's a stark and unmistakable symbol of the financial crisis within Connecticut's multibillion-dollar Indian gaming empire.

After making and spending billions over the last decade, the Mohegans and their nearby neighbors, the Mashantucket Pequot Indians, are teetering on the brink of a financial meltdown.

Expansion plans have been canceled, employees have been laid off, credit ratings are in free fall, and bankers and bond holders are knocking on the door. In a sign of just how bad it has become, the Pequots last week defaulted on a Wall Street bond, signaling to creditors the tribe cannot meet its obligations.

All of this adds up to a toxic mix of problems that only a few years ago would have been unthinkable for two tribes with economic engines that once seemed geared for never-ending growth.

--Tribes teeter on financial brink,
Changing economics tarnish success story of Pequot, Mohegan casinos
November 23, 2009

Well, there you go. Supposedly billions of Massachusetts dollars are crossing the border into tax-free Connecticut casinos every year - and the casinos still can't make a buck. Which may explain why the Mashpee Wampanoag have wisely ratcheted down their own big fat bloated plans for a similar edifice to greed in Middleboro.

Except... that's not the shiny, five-star Shangri-la they used to buy the host community's vote of approval in 2007. Which means they'd certainly have to go through that process again. If the Supreme Court's decision in Carcieri v. Salazar were overturned. Which is highly unlikely.

Casinos rely on rigged, predatory slot machines and a whole lot of people who, back in a booming economy, didn't mind burning money. That's all changed. In the heady casino boomtown years, people didn't understand that the spendthrift economy was a house of cards, a pyramid scheme, a bursting bubble, building like an enormous jackpot that was only going to pay off for the guys on Wall Street. Now, people spend wisely, look for bargains, downsize, reconsider, save and grow embittered over bailouts. Especially here in frugal, Yankee New England.

But bankruptcy and lack of credit and abandoned construction equipment doesn't stop Mohegan Sun from squatting in Palmer, or keep the Mashpee from publishing construction bids in trade journals, and it won't slow the silent creep of lobbyists and unions on Beacon Hill.

It is as it ever was. The inevitability smokescreen of hope. The relentless push for unsustainable growth.

Because reality has no business in the middle of a poppy field - and the reality is that, sometimes, even the house can't win.

Which begs the question - when the money-factory files for bankruptcy, where exactly does that leave the rest of us?


Carl said...

Holding the bag, no doubt. When things are "good" for them, the rest of us pay the costs. When things are bad for them, our bag gets bigger. The costs don't go away.
Thank you always Gladys.

Gladys Kravitz said...

Holding the bag, indeed. Unless we close the book on this grim fairy tale now.