Smith is NOT dumb. He's not stupid either. He's a good business person and from what I gather from having "off the board" conversations is that he is drawing heavily upon venture capital and banks to "float" the resort. Use and lose other peoples money. That's why it's risky to be in the venture capital business. You can make huge windfall type of profits or you can lose your shirt, pants, and boxers. Smith didn't get to have deep pockets from not being business savy.
I definitely wasn't saying he's stupid. He's no dummy, but I know a lot of smart people who have blown wads of cash on toys that are bad investments. I think there's a separation there between real investments and playtoys. Rich people spend money all the time on frivolous things...think Jay Leno and his cars, or John Travolta on his planes, etc. It's all a big money pit, but they can spend the money however they want since they "earned" it. I think this is the same thing...it's viewed as a toy in Smith's mind, not an investment.
Even if he has borrowed some money, I would bet a beer drinking goat that >50% of the cost of that place has come straight out of his pocket, or that it's all collateralized. Even the dumbest sub-prime lender isn't going to write a mortgage on $50 million of improvements to Lajitas Texas without some direct collateral.
Which goes back to my point...I think Lajitas is a terrible business plan (I reserve the right to be proven wrong, and even at 50% occupancy they're doing better than I would have thought). But that doesn't matter since it's not a business plan in the first place. And now that (I believe) it has reached critical mass, it isn't going away.
