Steve Wynn's Plan to Fix America

Posted by: Chris Palmeri on September 30, 2008

Steve Wynn, the billionaire casino mogul had steam coming out of his ears when I spoke to him on the day the big bailout failed. And he wasn’t even a fan of it. Here’s what he said:

“I am totally disgusted as an American by the leadership shown by both parties. We have a deficit, $350 billion. This bailout would cost $700 billion. We’re going to go to a trillion. I watched the debate. Lehrer should have asked them: What do you plan to do? If either one had real leadership he would have looked over to the other and said my fellow Americans, 70% of the budget are entitlements, Congress can’t touch that. Another 30% of the budget is discretionary, but it’s things like national defense. We have as much ability to afford $700 billion as we do being Mary Poppins! America can’t afford another trillion dollars in debt. Our GDP can’t afford it. All Americans are going to pay the price. We’ll have a cheaper dollar and higher oil. We are going to save our institutions, but not by buying assets and bringing them to Washington. If a bureaucracy buys those credits its tantamount to Hari Kari.”

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“Those assets should stay where they were created. Warren Buffet showed us the way. The government stiffens the balance sheets of the troubled companies with preferred stock. All you institutions, we’re going to save you, but you have to cut your operating expenses, pay bare minimum salaries, no bonuses, until the government gets its money back. What will happen is the bankers will say tomorrow okay, let people stay in those homes. Instead of the Ditech commercial where you had people saying forget about paperwork. They’ll ask them to show how much they afford. Loans will get renegotiated. Homes will go back to $250,000. The people that live in them will pay what they can afford. The banks will have huge tax losses. The stocks will drop, just like they’re supposed to. This phony inflation in the economy will end. Shame on both the political parties. No more, enough is enough. Shame on both of those guys. Do they both have such a low opinion of us? Obama with his tax cuts and unpaid expenditures. McCain talking about earmarks. Earmarks run for one day. We can’t pay people social security at 65, we have to pay them at 70. What is this constant procrastination of the truth. I don’t give a damn about being polite.”

Reader Comments

ballbuster

September 30, 2008 2:31 PM

These thoughtful solutions to our current economic woes show that Steve Wynn deserves the Nobel prize for his stroke of genious. Steve Wynn, the world-renowned purveyor of gambling sins, has now reintroduced himself as the master of world banking, complex financing, and macro economics. His impeccable intellectual credentials includes his uncanny abilities to sucker into his casinos the desperados, wishful-thinking-get-rich-quick dreamers and the impulsive-compulsives. His exploits in catering to the lowest denominators of human behaviors are legendary as measured from Las Vegas to Macao. Even though Wynn and those who harbor the dark-alley and crevices of inner cities share similar business models, Wynn's casino with its grandeur and opulence masquerades the same ruthless goal: the fantasy of becoming rich without working. It is ironic that Wynn would criticize those people who speculate in real estate and its risky investment papers while encouraging the same people into his gambling halls. In the aftermath of the real estate bust and its subsequent financial turmoil,
Wynn freely dispenses his scorn to those trying to rehabilitate the economy. Yet, where is Steve Wynn's generous advice when gambling, aided and abetted by his casinos, destroys families? The troubling question before the American people is why did BW give Steve Wynn a selected audience when his qualification is so undeserving other than the fact that he has amassed money from the vulnerable.

Jamie

September 30, 2008 6:20 PM

A fool and his money are easily parted.

Bob Dodson

October 1, 2008 2:52 AM

Mr. Wynn;
I trust your knowledge and expertise on this Economical Crisis. Why is our Congress, both houses, ignoring all the less costly solutions ($700 Billion), when it could be solved with less than $50
billion. Seems like the greedy fingers are still in the pot. All that caused this should be fired or relieved of their positions.

Thomas

October 1, 2008 4:20 AM

Sometimes the truth hurts. Let's not dismiss the truth just because we differ with its source. Is the country in trouble? You bet! And our government officials (some better than others) realize how we got to this point far better than the general public. So, is anyone being held accountable? NO! Let's recap: Banks offer variable rates to the public and we bite. Variable rates are then inflated to the point the public suffers to make the payment. Banks to the rescue, with ties to real estate brokers working on percentages and hand picked appraisers, inflate the housing market to an excess of approx. 35% greater than true market value. Then they offer a refinance fixed rate that is high but looks better than that inflated variable rate loan they suckered you to accept. And do it all under the guise of helping the customer. (First rule, if the bank offers to help you look carefully to see how much extra it will cost and how much they profit from the venture!) Sure, you can say they are in the business of making money, but at what cost. Do unto others, oh never mind, it obvious no-one understands the value of that. There was a time that banks would truthfully advise their customers not to exceed their financial limits. Some of us remember those times and many foolishly want to trust them now. We see where that’s got us. Now it's all about how long they could milk you before they would end up with your property. And it worked for a long time. But guess what? Since the property isn't worth what they said it was they either don't want it back or they want to "help you" make your payment on that over inflated property by extending your payments a few years. Sadly the poor dumb public buys a $2 calculator and figures how many years it will take them to pay off that 35% excess and decide to move on. Now the banks bottom line has so many properties they lose their cash flow. As the financial hammer falls or at least is definitely put in motion, it's the taxpayer that catches the brunt. All while CEOs of failing financial institutions walk away from any accountability parading their golden parachutes. But the money's been made for the wealthy players. And the so-called bailout that will restore our financial institutions will not restore the public's trust. Again we're looking for accountability. And the consumer though coaxed, is blamed for exceeding their abilities to repay loans on houses that were "over appraised" when the banks refinanced the loan. How would you feel if you purchased your $200,000 home within the last few years and you learn that its actual value was really $130K to $140K? Plus you had made your purchase based on lies and deceit of the greedy. In lower courts it might be construed as "theft by deception". And to make matters worse the cities and counties have set their property taxes based on erroneous property appraisals. Does anyone see a budget problem with this picture or why more problems are on the horizon? “Oh the tangled web we weave.”

George Dorunda

October 1, 2008 9:06 AM

Socialist Bailout Plan Attacks United States Constitution
The preamble of the United States Constitution: "We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America."
Section I of the bailout bill: "Emergency Economic Stabilization Act of 2008, Section 2, Purposes: Provides authority to the Treasury Secretary to restore liquidity and stability to the US financial system and to ensure the economic well-being of Americans."
The Constitution promotes the general welfare of Americans. The bailout bill ensures economic well-being of Americans. There is an enormous difference. Our founding fathers never intended for government to guarantee or "ensure" anything. There is nothing in the Constitution about ensuring general welfare, only promoting it. The crisis is this bill bestows ultimate power to the Treasury Secretary to do whatever he wants to do to "ensure economic well-being." That is limitless power in the hands of one individual. That's socialism.
Keep in mind that anytime the government guarantees something, hold onto your wallets.
The political hacks created this "Crisis." Creating a "crisis" is the easiest way to manage the behavior of a frightened citizenry.
The buzzword during this election has been "change." This is terrorizing "change" like we've never seen.

Dorunda.com

Jihad Jay

October 1, 2008 11:26 AM

Ballbuster...what does Wynn's exploits as selling the sin of gambling and your ethical judgment therein have to do with the nuts and bolts of Wynn's suggestion for an improved financial plan and the need to restore liquidity in the markets?

Answer: Nothing.

You're a moron.

And probably an Obama supporter.

Which only maintains the truth of Wynn's comments.

Dane Ronnow

October 1, 2008 11:37 AM

Say what you want about Wynn's morals, but you can't argue with his business sense. When it comes to this bailout, the man knows what he's talking about. Donald Trump -- like him or not -- would give the same advice.

Loan these corporations enough to get them running, with the stipulation that they pay interest back to the government off the top of their profits, and principal as they can, then let the free market and capitalism do what it does best -- level the playing field.

Like Wynn says, some businesses will fail. But that's what happens when they're run into the ground by incompetence, negligence, greed (you name it).

Rick

October 1, 2008 1:17 PM

Ballbuster wrote: "The troubling question ... is why did BW give Steve Wynn a selected audience when his qualification is so undeserving ..."

So you don't agree with Steve Wynn's choice of businesses, because some folks lack self-control? How many other businesses could you make the same observation about? Maybe we should never allow an auto executive to have any say when it comes to fiscal problems, because after all 40,000+ are killed every year in cars here in the U.S. Never-mind those who can go to Vegas casinos, have a good time and do it responsibly. Give me a break!

Maybe BW gave him an audience because what he says makes some sense. He appeared on Fox News last night and presented a convincing argument and has probably appeared elsewhere.

Who better to turn to for resolution to a serious problem than an enormously successful businessman?

Rather that than our Congressional leaders and the government bureacrats who created the problem in the first place.

If Wynn's idea makes sense and is an alternative solution then it should be given serious consideration.

Chip Ramsey

October 1, 2008 1:18 PM

@Ballbuster
Steve Wynn may not be the best spokesman for this plan, but that doesn't make it a bad idea. If better credentials is what you're looking for, check out the link. http://www.voxeu.org/index.php?q=node/1683

Christian Lunoe

October 1, 2008 7:08 PM

Finally, a breath of fresh air. At the Wharton School in Philadelphia where we are keeping a keen eye on the financial crisis, it seems that everyone is focused on the current bailout legislation and how is needs to be passed.

The buyout of these mortgage backed securities is rediculous for several reasons. We don't know the value to give them, so we could potentially create golden parachutes for these pampered Wall Street Execs. Furthermore, we create a moral hazard that says if you take enough risks and get too involved with American society, then you will always be okay. So then people take more and more risks. If we bailout now, it is the start to a slippery slope.

We need accountability. These firms must take a big hit. Consumers must find confidence in the system. Go out and spend money! The GDP needs cosumers to spend money. Then investors will invest. Then GDP will rise and the snowball effect will work to benefit us by restoring the economy. Bring back consumer confidence and you will bring back the economy.

Great job Steve. See you in 2 years back home when I graduate the ol' red n blue! ha

Jim

October 1, 2008 8:36 PM

Ballbuster misses the point. If a gambler loses, he has to live with the consequences. Yes, bankruptcy may be a predictable outcome for betting the house and losing. The government should not cover losing bets. Let the market adjust. Don't use taxpayer money for a bailout. Steve Wynn has an idea that Congress should seriously consider.

bill

October 2, 2008 1:00 PM

Steve,s comment are right on the money (pun)

Toyaholic

October 2, 2008 9:00 PM

Hey Ballbuster, I don't see steve asking to get bailed out. Casino gambling is entertainment not an investment. Both gambling and the credit nightmare are supported by greed. At least with gambiling I can choose if I have to pay for it.

SoCalGal

October 9, 2008 11:06 PM

Uh, so where's the "plan?" Is there a plan somewhere in Wynn's rant? He's just mad that a recession will mean lower revenues for his casinos. Steve, leave the deep thinking to those who know how.

Ashford

October 23, 2009 11:34 AM

Here is a plan...... H.R. 25, before the congress now, the FairTax Act.

It removes the anchor on production by replacing all income and payroll taxes with a single retail sales tax on new goods and services. Used items, investments,and education exempt. Do the math when you remove those embedded costs from prices.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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