The SALT Conference 2010 held last week in Las Vegas was a confluence of 1,500 participants’ thoughts, opinions, and often pure speculations as to the direction of the Global economy and its markets. Much like the market’s recent spike in volatility, the tone of the conference reflected an increasing concern that the rapid “V” shape recovery in liquid asset prices was not reflective of the weak economic strength of the Global economy; primarily in Europe and to a lesser degree North America. If anything, we may be heading back in through the out door of the recession many thought we had left behind.

It was interesting to note that on the first day of the conference two of the conference’s guest speakers were convicted felons; Michael Milken and Frank Abagnale. Their very insightful speeches were followed later that evening by a keynote address from former President Bill Clinton who was impeached by the House of Representatives. While seemingly not intended as the theme of the conference, these individuals seemed to provide an ironic backdrop to the conference. To varying degrees these distinguished individuals were accused of their own distinct “excesses” at some point in time. Today, they are prominent and significant contributors to numerous Global causes while building tremendous legacies.

As I listened intently to their collective words, I could not help but think of the Global market’s own “excesses” of recent years and what legacy we will leave for future generations.
While the conference was self-contained in the Nevada dessert, the events in Greece and uncertainty in the Euro and the EU were reminders that what goes on in Vegas is still influenced by an ever increasing Global environment. Much of this thought process was on display during a macro-economic forum on the second day including notable market personalities Nouriel Roubini and Jeremy Siegel. Their respective doom versus recovery banter captured the essence of the conference – uncertainty.

As the US economy sits seemingly on a precipice, what are the answers and what are the solutions? I thought Michael Milken’s comments provided some directive. Paraphrasing, “an individual can secure non-recourse 30 year mortgage financing cheaper than Microsoft can obtain financing” is part of the structural problem. Consensus on the dais and within the audience is that these types of deficiencies abound and that significant corrective financial sacrifice must be made. There is no bailout for the US. The concept of “too big to fail” fails.

Reflecting on the conference during my flight home, I was drawn to the apparent paradox of how the aforementioned guest speakers were able to experience adverse personal events – their own recession - and emerge stronger. These cruel to be kind life lessons are not dissimilar from what the US and most of the developed World is experiencing. Either we learn from the abuses of our own fiscal excesses and prosper or we go in through the out door of the continuing recession and back into deeper uncertainty.

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