She is one of the few bank analysts, which had sell ratings on all of the banks before they declined significantly in 2008.  Her argument is that banks are ill prepared for an unemployment rate of 10%. 

“No bank underwrote a loan with 10 percent unemployment on the horizon,” Whitney said. “I think there is no doubt that home prices will go down dramatically from here, it’s just a question of when.”

Whitney also said that local governments and states are chronically under-funded and that most states are under water, adding to the problem of low private consumption, she said.

Comment:  As the records for bank failures continue to fall it will become increasingly difficult for the U.S. economy to grow.

Casino and lottery revenue for states falling for the first time according to a New York Times article.

Comment:       The casino and gambling industry was one of the few industries that emerged as a secular growth industry during the secular bear market, which began in 1966 and ended in 1982.  The industry emerged from a cyclical industry, which had been Nevada grounded, during the last recession after the State of New Jersey passed a referendum on casino gambling in Atlantic City during the deep recession which hit the east coast during the 1970s.  Simply stated this industry went from a cyclical to a secular growth story only because of the severe recession because New Jersey’s landmark decision opened the floodgates for all of the other states for casino gambling and the lotteries. 

The casino gambling industry grew for the last 30 consecutive years and like the home retail furnishings industry it has become a casualty of the current recession.  Two of the industry’s three largest capitalized companies, Wynn Resorts and MGM Mirage have experienced sharp revenue declines.  The growth rates for annualized revenue for Wynn Resorts have fallen for four seven straight quarters and in its most recent quarter Wynn’s revenue declined by 4%, the first time that this has occurred over its last 16 quarters.  MGM Mirage’s revenue growth rate has been in decline for 16 consecutive quarters and its revenue has actually declined for its last five consecutive quarters.   The industry’s only other remaining big company, Las Vegas Sands generated a cumulative $10 Billion of negative free cash flow over its four-year period ending June 30, 2009.

It is my opinion that the fundamentals for this industry hit their all time peak in late 2007 and that it will be very difficult for this industry and its members to get back to those levels anytime soon.  I would avoid any investment in this industry.  For those investors who are willing to accept the risk in shorting stocks the shares of all three of these companies have been extremely volatile and are nearing rebounded prices where short sales could present a good trading opportunity.