"Illusions commend themselves to
us because they save us pain and allow us to enjoy pleasure instead. We must
therefore accept it without complaint when they sometimes collide with a bit of
reality against which they are dashed to pieces."
me introduce Mauldin's Rule of Thumb Concerning Unintended Consequences:
every government law hurriedly passed in response to a current or recent
crisis, there will be two or more unintended consequences, which will have
equal or greater negative effects then the problem it was designed to fix. A
corollary is that unelected institutions are at least as bad and possibly worse
than elected governments. A further corollary is that laws passed to appease a
particular group, whether voters or a particular industry, will have at least
three unintended consequences, most of which will eventually have the opposite
effect than the intended outcomes and transfer costs to innocent bystanders.
week we wonder about the consequences of the European Central Bank (ECB)
issuing over €1 trillion in short-term loans to try and postpone a banking
credit crisis and lower sovereign debt costs for certain peripheral countries
in Europe. What if, instead of holding the European Monetary Union (EMU or
Eurozone) together, that actually makes a breakup more likely? That would
certainly fall under the rubric of unintended consequences, and be worth our
time to contemplate in this week's letter.
what if the group that oversees credit default swaps declares an actual
sovereign debt default not to be a technical default in order to avoid a credit
crisis because CDSs would have to be paid? Could that actually undermine the
ability of smaller countries to borrow money at lower cost, if they could even
borrow it at all? Thus making the eventual outcome even worse? We will explore
these perplexing questions and more as we once again turn our attention to
But first, and quickly, we are
now ready to take reservations for the 9th Annual Strategic
Investment Conference, May 2-4, which this year will be in Carlsbad, California
for the first time, at a venue that will allow us to take a few more attendees
but still keep that intimate feeling. I host the conference, along with my partner
Jon Sundt and his team at Altegris Investments.
Each year I wonder how we could
make the conference any better, but I think we have done it. I must say that I
do not think any conference anywhere has the quality speaking line-up that we
do. It is the finest collection of top-notch raconteurs posing as economists
assembled anywhere. Each speaker is a headliner in his own right, wherever they
go. We have nothing but the best each year.
Look at this line-up: Dr. Woody
Brock, Mohamed El-Erian, Marc Faber, Niall Ferguson, Jeff Gundlach, David
Harding, Dr. Lacy Hunt, Paul McCulley, David McWilliams (from Ireland), David
Rosenberg, Jon Sundt, and your humble analyst. Plus the surprise guests.
Seriously, where else can you find all that talent under one roof? I design the
conference each year to be the one that I would want to attend. And Sundt and
team run as smooth and enjoyable a conference as you will find anywhere.
Signing up will also give you access to
exclusive papers and webinars. For example, next week I'll be
interviewing Winton Capital Management. For regulatory reasons, you will need
to speak with Altegris to verify your accredited-investor status, prior to
being allowed to attend. You can learn more and register by going to http://meetings.StrategicInvestmentConference.
I should note that the best
feature of the conference is the attendees themselves. You will make new
friends and meet old ones. And the speakers are very accessible. The price goes
up considerably on March 15, so register early. We always sell out, and I get
calls asking to get in at the last minute, and have no way to help. Don't
procrastinate. Register now. We are way ahead of last year on the pace of registrations.
Again, it will sell out. Do it now.