Not Even Easing Will Be Easy

The media has been speculating that the Federal Reserve may soon undertake a third round of quantitative easing—or QE3, in economist-speak. The Fed would buy about $500 billion worth of 10-year treasury bonds—with freshly printed money—from banks and other financial businesses. The hope is that after selling off these bonds to the government, the banks will turn around and lend more money for business expansion and consumer credit purchases at historically low interest rates.

What would this mean for the Great Recession’s most famous punching bag, Las Vegas? Unfortunately, QE3 is unlikely to spur much lending or new economic activity here, says UNLV economist Stephen Brown. Regardless of how much money is pumped into the system and however low interest rates go, it’s still a bad lending environment. Brown’s surveys have found that banks and business owners lack confidence in the economy’s ability to support investments.

“That’s somewhat true on a national level,” he says. “But not nearly as true as it is here in Southern Nevada.”

It’s something of a psycho-economic vicious circle: Until we believe in the economy, all attempts to improve it will face steep odds. Las Vegas once had boundless faith in its ability to rebound from pretty much anything; after the last half-decade, even the Fed will have a hard time buying that confidence back.

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The first football bet I ever made was the 1958 NFL Championship Game between the Giants and the Colts—“The Greatest Game Ever Played.” I was 13 years old, and my brother made a $10 bet for me. We actually had a place in Pittsburgh called Louie’s Pool Room—Louie was a local bookmaker—and I laid 3½ points with the Colts, and they won by six. I immediately ran out looking for my brother to get my $10.