Friday, December 19, 2008

Another Ponzi Scheme

Tom Friedman made this observation but here’s some more documentation from the New York Times:

While Bernie Madoff was “making off” with his illegal Ponzi scheme, ignored by the SEC in spite of sufficient smoking guns everywhere, Wall Street, the banking industry, and mortgage brokers, went blithely along with it’s own “legal” Ponzi scheme:
* Borrowing cheap money courtesy of the Fed
* Lending it out with exotic mortgage deals, including nothing down zero interest rate loans, the interest being added to the principal, to borrowers of little ability to pay back the loans, except if real estate values pyramid to infinity
* Packaging these subprime mortgages into CMOs to be sold to gullible investors throughout the world – emphasizing their safety because of “diversification” and AAA debt ratings conferred by rating agencies, based on chimerical insurance contracts issued by under capitalized firms.

Everyone in the Wall Street food chain got rich. As the Times article pointed out, in 2008 “Merrill handed out $5 billion to $6 billion in bonuses that year. A 20-something analyst with a base salary of $130,000 collected a bonus of $250,000. And a 30-something trader with a $180,000 salary got $5 million.” The head mortgage trader for Merrill, Dow Kim, had a salary of $350,000 but with his bonus he “earned” $35 million.

But these riches were based on income that really did not exist, the profits that we, as taxpayers are now trying to restore to our financial system via the bonanza bailout program. Meanwhile, Bernie Madoff is allowed to stay out of jail, putting up “his” Manhattan townhouse as bail, bought with funds of his clients, and Wall Street wiz kids walk around with what is really taxpayer money.

“As a result of the extraordinary growth at Merrill during my tenure as C.E.O., the board saw fit to increase my compensation each year.” — E. Stanley O’Neal, the former chief executive of Merrill Lynch, March 2008

Wednesday, December 17, 2008

On the Mark

Here are two must read entries recently posted by a fellow blogger, someone I’ve mentioned before. As Mark states in his mission statement: “Raise $7M from readers to launch a real mutual fund. By providing a transparent platform for a virtual growth mutual fund, I'll create a mechanism by which readers can view my thought process & results in creating a 3-year return. I'll invest in 30-50 positions with secular growth trends with economic commentary thrown in.” He’s been doing this for more than a year now but the recent economic turmoil has delayed the launch. In the meantime, his readers have benefited from his interesting commentary and frequently prescient predictions.

The posts below were written before yesterday’s Federal Reserve announcement of historic interest cuts to near zero and its pledge to buy stressed securities and perhaps even long-term treasuries. The question is whether this will indeed lead to borrowing and spending, especially if unemployment rates continue to ramp up and if business confidence does not improve. If successful, we then have to deal with the inflationary implications of money creation and a deficit in the untold $ trillions. (Is borrowing good? Isn’t that one of the reasons we got into this mess in the first place?)

In spite of FDR’s attempt to work our way out of the Depression with the New Deal, it finally took the enormous deficit spending of WWII and of course the employment of millions by the military and by the industries needed to support the war effort, thereby ending the worst economic downturn in our history. It also required people to rally, sacrificing, working towards a common goal.

In other words, it takes more than spending. Perhaps that is another distinction between today’s economic crisis and what we faced during the Depression. Can President-elect Obama successfully make our decaying infrastructure and need for energy independence our “war?” Will we pull together or pull apart?

Monday, December 15, 2008

Madoff Bailout?

Why not? Every other deserving group gets one. Too big to fail! And, according to the WSJ, maybe through the Securities Investor Protection Corporation (SIPC) there may be a back door in covering some of the losses, although the SIPC only has $1.5 billion left in its coffers and there will have to be congressional action to increase the kitty.

When the tide goes out the muck materializes. For years Madoff reported steady returns from the firm’s “split-strike” conversion strategy, one of balancing puts and calls around a basket of large cap stocks and, presto, “steady” returns of some 7-9% no matter what the market does. Hint: when it's too good to be true....

Midas Madoff sucked his friends from the Palm Beach Country Club and Fund of Funds from around the world into the scheme (but, unfortunately many charitable and endowment funds as well). As one skeptical research firm, Aksia, reported to its clients concerning Madoff Securities, “We concluded that Friehling & Horowitz (Madoff’s audit firm) had three employees, of which one was 78 years old and living in Florida, one was a secretary, and one was an active 47 year old accountant (and the office in Rockland County, NY was only 13ft x 18ft large). This operation appeared small given the scale and scope of Madoff’s activities.” The entire audit trail consisted of paper transaction confirmations, which Madoff, himself, closely controlled. It finally took a market downturn of the magnitude of this past year, with redemption requests from Madoff’s clients, to finally expose the Ponzi scheme. The SEC couldn’t see this?

According to the Palm Beach Post, “investors needed at least $1 million to approach Madoff [and] being a member of the [Palm Beach Country] Club also helped. But even with those prerequisites there was little guarantee that Madoff would take the client.” Sort of the same deferential respect as demanded by the Soup Nazi in the Seinfield series.

The incident is yet another regulatory failure and another corrupt Joker in our economic house of cards.

Saturday, December 13, 2008

Copyright in the Internet Era

It is remarkable to witness the revolutionary changes in information dissemination, just during my working lifetime as a publisher, from the Gutenberg era to the Internet era over the course of only a few decades. I remember attending a conference at the New York Public Library in 1965 about the urgent need to use permanent durable, acid-free paper in all new publications. The NYPL’s collection was rapidly deteriorating, particularly those books and periodicals that were printed on groundwood pulp paper, the same as used in newspapers, and the library was beginning to spend as much on preservation as it was on acquisitions. Microfilm and microfiche (particularly “ultrafiche”) as well as mainframe computers, were being cited as possible solutions to preserving information. At the same time photocopying was becoming ubiquitous and libraries looked upon that as a possible method of disseminating information through library systems.

Today’s ambitious projects – basically Google’s objective to digitize just about everything (more than 7 million books scanned thus far) – makes the related copyright issues I was concerned with at the time, particularly The Williams and Wilkins Supreme Court decision ( look like a trivial warm-up act. I wrote an essay for a special 1974 issue of Confrontation – The Great Copyright Debate on that case (below). Focused on the then relatively “new” technology of photocopying, it seems antiquated, but the fundamental issues of fair use and the extent to which the rights of individuals or corporate authors, the creators of the information, can be usurped by the informational needs of the majority are even more alive in today’s Internet world. One only needs to check out Google’s ambitious project to understand the far-reaching impact the digital world is having on how we access information as well as who “owns” the information.

A Publisher's Viewpoint

By Robert Hagelstein

Nothing stirs the emotions of the educational and publishing communities more today then the copyright issue. For decades a tacit agreement between librarians and publishers (the "Gentlemen's Agreement" of 1939) had successfully governed photocopying by libraries of copyrighted materials. But that agreement was established before the advent of widespread use of relatively inexpensive electrostatic copying equipment and audio-visual duplicating equipment. It also preceded exponential information growth, increasingly expensive research materials, and higher education for the masses.

These factors have resulted in the large-scale copying of copyrighted audio visual and printed works by libraries, with the approval of the courts to the dismay and general disapproval of publishers and authors. Congress will ultimately decide whether such copying will continue.

On February 16, 1972, the United States Court of Claims found that the federal government was liable for infringement of copyrights held by Williams and Wilkins, a medical publisher. For years the National Library of Medicine had systematically copied, upon the request of researchers connected with those institutions, parts of periodicals (in some cases, complete articles) published by Williams and Wilkins.

On November 27, 1973, the Court of Claims reversed its historic opinion. The Williams and Wilkins Company appealed the reversal to the Supreme Court. Recently, the Supreme Court decided to review the case.

The Supreme Court's decision will undoubtedly influence the copyright revision bill, which for years has been under consideration by Congress. As the Court of Claims stated in its reversal decision, "the truth is that this is now preeminently a problem for Congress: to decide the extent photocopying should be allowed, the questions of a compulsory license and the payments (if any) to the copyright owners, the system for collecting those payments (lump-sum, clearinghouse, etc.), the special status (if any) of scientific and educational needs."

The issue has divided publishers and librarians, creating an adversary position where traditionally there has been one of cooperation. Publishers feel that the Williams and Wilkins reversal demands that they oppose almost any kind of library photocopying, while librarians are reportedly considering the decision as a green light to proceed with wholesale copying.

Robert Wedgeworth, Executive Director of the American Library Association, referred in the May 1974 issue of American Libraries to the Williams and Wilkins reversal as one "of our most impressive triumphs of the century." A letter from a librarian to Library Journal (February 15, 1973) states that "publishers and librarians are in adversary positions ... No amount of discussion will bridge that gap ... If you think you are on the winning side, why offer to compromise?" Publishers have been equally vocal and adamant concerning their position.

Though rights have been aired, there has been little discussion of the need to find a compromise solution-such as a rule for the use of copying equipment, and a means of compensating authors and publishers.

The rhetoric has also obscured recognition of the dissemination of knowledge as a common goal shared by all serious publishers and librarians. This recognition cannot be achieved without understanding of each group's respective roles, and the implications of what the lack of a compromise solution means.

The librarian's role is fairly clear. However, the inside workings of a library-acquisition, cataloging, and circulation of library materials-are complex. One can fully appreciate why--especially in a large academic library-the idea of keeping track of photocopies for the purpose of paying royalties is abhorrent.

Publishers of materials normally acquired by academic libraries must have highly specialized knowledge and formidable financial resources. Making information available in a structured manner so that it can be easily used is not a simple task. To ensure the participation of private industry in such an endeavor, the potential for a reasonable profit must be evident.

The burgeoning costs of research materials may prompt some to question why private industry is needed to publish information and to produce information systems. The Government Printing Office in Washington is capable of handling this responsibility, and libraries, as protectors and purveyors of information, can also be publishers.

The preservation of a truly free society, however, requires a diversity of information sources and opinions. Uncontrolled copying of information without proper compensation to authors and publishers would ultimately reduce the sources of information. Conceivably, more and more publishing would, out of necessity, be taken over by the federal government. Hence, the Government Printing Office, already one of the world's largest publishers, would be encouraged to support and control all kinds of research and writing. Government control of the dissemination of information is not in the best interest of librarians, publishers, authors, or of the public.

To prevent such a trend, a copyright law is needed which protects the rights of authors and publishers as well as librarians, providing for a method of compensation for photocopying copyrighted materials.

If the Court of Claims reversal were upheld and backed by Congress, not all publications and publishers would be equally affected. It is important to make a distinction here between trade publishing and information publishing. Trade publishing is the publication of books intended for a general market of readers, usually reached through bookstore distribution. The product of information publishing, however, is highly specialized and is destined for a relatively limited audience, especially libraries. Included in this category are scholarly and professional journals, information banks on microfilm or computer tape, scientific, technical, professional, and scholarly monographs, and proceedings and symposiums.

Since information materials are exclusively published for educational or research uses, commercial information publishers depend mostly on the education market for financial support. Trade publishers generally derive much of their income from other sources such as the sale of book club, paperback or movie rights. Therefore, any attempt to justify unlimited library photocopying as "fair use" because it is for "educational purposes only" would deprive the information publisher of its sole potential income source.

Although some forms of trade publications may be subjected to photocopying, it is unlikely, even if photocopying were condoned, that a novel or a general historical work would be systematically photocopied. Most libraries want to buy original editions for their collections, anticipating heavy use. Bound printed copies generally last longer than photocopies, bound or unbound. Because trade works are printed in much larger quantities for broader audiences, an original copy would probably be far less expensive than a photocopy. Furthermore, this kind of book is meant to be read in its entirety and does not lend itself to being photocopied in part only.

The converse is true of the information publication, which is especially structured so that it can be used in part. Because the audience for such a product is comparatively limited, unit costs and retail prices are higher; a photocopy, therefore, may indeed be far less expensive than an original copy.

Although the journal that you are reading is not an "information" publication per se, it can be grouped here because it is intended for a limited literary audience. Any kind of publication has certain fixed costs such as typesetting and overhead which are unaffected by the number of copies printed and sold. Confrontation may have cost $10 per page to typeset, yet you or your library may have paid only a few cents per page for it. If Confrontation were to become a casualty of uncontrolled photocopying with a resulting fifty percent circulation drop, that $10 per page would have to be absorbed by half the number of copies. Hence, the price would have to be raised. Photocopies would become less expensive in relationship to the escalating retail price. One can see why certain kinds of publications could become obsolete or prohibitively expensive.

An upholding of the Williams and Wilkins reversal by the Supreme Court and Congress could also indirectly encourage the growth of the cooperative library movement and photocopying of interlibrary loan material. The cooperative library system is a necessary means of dealing with information growth, and interlibrary loans by mail give wider access to little used materials. With photocopying equipment, however, one library could become a duplicator or a "publisher" of materials for another. Cooperative libraries could become publishing centers.

In 1949 ten universities formed a cooperative, which has grown to include seventy-eight institutions in a nationwide system called Center for Research Libraries. Two years ago the Center for Research Libraries received a $450,000 five-year grant from the Carnegie Corporation of New York to develop a national lending library of journals. If copying without restriction is allowed to persist, it is not impossible to imagine that someday the Center could be handling the publisher's traditional printing and distribution functions, purchasing the only copy of each journal issued by each publisher. Of course, the cost of each single copy to the Center would be the publisher's typesetting and overhead costs with a fair royalty for the author, plus a profit margin for the commercial publisher.

Another major cooperative was announced by the Research Libraries Group, which includes the New York Public Library, Columbia University, Yale University, and Harvard University. Joseph Rosenthal, who did the feasibility study on the group, although stating that he thought that publisher's sales loss would be "insignificant," did admit that publications that are "marginally economic will die out," and that those remaining would be more expensive should uncontrolled photocopying be allowed. The April 15, 1974 issue of Publishers Weekly states that "it has been widely reported that the consortium is taking the Court of Claims decision in that photocopying case as a go-ahead signal for wholesale copying."

Obviously, that is not to argue against cooperative library systems. They perform valuable services for smaller institutions, which would otherwise be deprived of access to library collections that only the largest universities can afford. However, by photocopying original materials instead of acquiring them, a library cooperative could compete with a private publisher, reprinting that publisher's materials. To discourage such activity and to compensate the creator of the information, publishers and authors should be in a position to grant reproduction rights and to collect royalties.

There is no simple solution to the problem; the endless discussion on copyright revision in Congress during these past few years attests to that fact. One criteria has frequently been applied to photocopying and possible copyright infringement: if photocopying saves the researcher the trouble of transcribing by hand, there should be no need for him to seek the copyright owner's permission (if such copying is not done for publication purposes). Copying should be prohibited, however, if it is done to enable the user to avoid purchasing the work. The former is an example of "fair use," the latter is not.

In 1968 the National Library of Medicine made 120,000 copies of journal articles, which amounted to about 1,200,000 pages. In 1970 the National Institute of Health made 86,000 copies from medical and scientific journals totaling 930,000 pages. This is what the United States Court of Claims had condoned.

Chief Judge Cowen stated in his dissenting opinion in the Williams and Wilkins reversal that "what we have before us is a case of wholesale, machine copying and distribution of copyrighted material by defendant's libraries on a scale so vast that it dwarfs the output of many small publishing companies… [the] defendant's photocopying ... meets none of the criteria for 'fair use…' While the library may look at the giving of a photocopy as a substitute for a loan, the user and would-be purchaser gets an exact copy of the original article which is a substitute for a purchased copy ... [they] are intended to be substitutes for, and serve the same purpose as the original articles; and serve to diminish plaintiffs potential market for the original articles ... "

A problem which has blocked a compromise solution --- one that has partially vindicated the libraries' position --- is the complex logistics of seeking permissions and processing payments for copying. It would be an overwhelming burden for each library to attempt to deal with each publisher's rights and permissions department. Also, keeping track of the exact number of copies and specific pages is a nearly impossible administrative task, especially when copying is done on a large scale.

It has been suggested that a central clearinghouse be established for processing permissions and payments for photocopying activities. This still could leave a complex bookkeeping function for libraries. Perhaps a more viable solution would be the establishment of an escalating pricing structure. There would be two prices for an order of the same book; the choice of price would be determined by the purchaser's option of photocopy rights. A lower price would be set for libraries and individuals who do not wish the right to photoduplicate the purchased book; a higher price would obtain for libraries which want the right to photocopy the work in whole or in part for their potential users. This latter price would be derived from a formula based on the number of potential users multiplied by the regular list price. (The number of potential users can be arrived at by using student enrollment if an academic library; library cardholders if a public library; or even the size of the library budget.) A cooperative library system would have to consider the multiple institutions it serves.

Representatives of the major library and publishing associations should be able to work out a fair and equitable formula. There is some precedent for such a system. One publisher has sold indexes to certain periodicals, basing the price on the number of periodicals held in the purchaser's collection, or on the library's periodicals budget.

Publishers and libraries must seek compromise solutions and make appropriate recommendations to Congress. If inflationary pressures continue to mount and orders for materials being copied remain static or begin to wane, the retail prices of these publications will undoubtedly rise. Those which are marginal will come under even greater pressure as prices rise. Even a slight loss of orders could condemn a host of journals, symposiums, and technical and reference works to extinction. As these information sources are smothered, pressures for government intercession would mount. Education would lose more than it gained.

The information explosion is indeed a reality. Modern techniques of storing and disseminating this information --- computers, microfilm, and photocopying equipment --- are necessary. Suitable copyright protection and appropriate licensing arrangements would ensure an adequate supply of information for a free society with growing information needs.

Wednesday, December 10, 2008

Anecdotal Headline Annotations

If I was handed a copy of today’s Wall Street Journal only a couple of years ago, I would have thought the headlines were a forecast of an ethical and economic Armageddon. How otherwise does one interpret the following captions, from just one day’s newspaper?

Governor Jailed in Alleged Crime Spree
In Illinois, Blagojevich Is Accused of Seeking to Sell Obama’s Senate Seat; Five-Year Corruption Probe

AIG Faces $10 Billion In Losses On Trades

The Stock Picker’s Defeat
The Fallen; Bill Miller. The declining fortunes of leading business figures. Second in a series.

Hard Times for Parmigiano Makers Have Italy Ponying Up the Cheddar
Government Tries a Bailout, ‘Just as There Was for Banks,’ to Help Struggling Producers

Fannie, Freddie Executives Knew of Risks

Restaurant Jobs, Like Tips, Shrink
Big US Employer Traditionally Has Served as a Fallback for Jobless, Immigrants

Panel to Criticize Handling of Bailout

Specifics of Stimulus Take Shape
Democratic Leaders Resist Growing Push for a Package Larger Than $500 Billion

Rangel’s Problems Dog Democrats

Pressure Mounts on Merkel for Bigger Fiscal Boost

Drop in Japan Tool Orders Exposes Global Spending Cutbacks

Developing Countries Feel Slump

Auto Bailout Moves Closer; Senate Battle Next Hurdle

China Urges Its Airlines to Curb Plane Orders

Pirate Attacks Keep Law Firm Buzzing

Sony to Cut 8,000 Jobs, Close Factories
Electronics Giant’s Turnaround Effort Undermined by Slumping Demand, Holiday Discounts

Resorts Feel Chill From Recession
Businesses and Consumers Curb Travel Plans; ‘AIG Effect’ Helps Create New Tone

GM Sees Sales Plunge in Brazil

NFL to Cut Jobs in Face of Recession

New York Times Holds Talks With Lenders

Safety Trumps Yield in Bill Sales
Investors Scoop Up 0% Short-Term Notes

Fed Weighs Selling Own Line Of Debt

Securities Firms Claw Back at Failed Bets

Some Commodities Investors Find Another Way to Lose Money

Reddy Ice Executives Gain On Prearranged Trading Plans

Tycoon’s Fall Is a Warning for Europe
Sanahuja Patriarch Loses Control of Metrovacesa; the Perils of Heavy Debt

Families Cut Back on Day Care As Costs – and Worries – Rise

These headlines are pretty much in order as they appear and although they are selective, there are no offsetting, positive ones. Perhaps that is merely a tendency towards yellow journalism to sell papers. But no wonder we all live in a state of anxiety without any real explanation as to how we have arrived at this point (although many commentators are adept to spinning plausible stories with the advantage of hindsight) and, certainly, without understanding how the forces behind these stories might play out in the future.

Wednesday, December 3, 2008

The Press is the Enemy

Amazing to read some of the latest Nixon tapes, particularly his comments on the media and academics, a leitmotif of the 2008 campaign, as Republicans condemned the media and intellectual conservatives deserted the Party.

"Never forget," Nixon tells national security adviser Henry Kissinger in a taped 1972 Oval Office conversation, "The press is the enemy. The establishment is the enemy. The professors are the enemy. Professors are the enemy," he repeated. "Write that on a blackboard 100 times and never forget it."

Here is Sarah Palin’s response to Katie Couric’s question “Do you think the coverage of you has been sexist?”

No, I don't. I mean, I know that there--it's obvious there's some double-standards here, you know, in terms of what the media has been doing, but I think that's more--I think more attributable to just the media elite, the Washington elite, not knowing who I am and just asking a whole lot of questions and not so much based on gender though, but based on just the fact that I'm not part of the Washington herd.

Wednesday, November 26, 2008

Coming to America

It took a local concert to briefly snap me out of my funk.

We live near a local theatre, the Eissey Campus Theatre, of the Palm Beach Community College. Over the years we’ve seen some wonderful performers and concerts there, subscribing to series featuring The Florida Sunshine Pops, a 65 piece orchestra under the direction of the venerable Richard Hayman who at the age of 18 started as a harmonica virtuoso in the Harmonica Rascals and became a leading arranger and conductor. And he is still conducting an orchestra at the age of 88!

The series always includes some of the finest singers – light opera and Broadway voices – and the genre is generally the Great American Songbook, my favorite.

The first concert of the season, last night, was Coming to America -- Celebrating The American People, Armed Forces and the individuals who chose America. It was a night filled with memorable patriotic songs and marches. One of the very talented singers was Teri Hansen, a soprano, who has that something extra for the stage – a great presence, a performer who gives her all to an appreciative audience. One of her numbers was a rousing rendition of Boogie Woogie Bugle Boy of Company B and during the orchestral interlude she boogied down to the front of the stage and grabbed me out of my seat and we did a Jitterbug, one of the two dances I’ve mastered (the other equally complicated one being the Twist). I think Teri was a little surprised.

But the surprise was mine, walking to our car afterwards, remarking to Ann that the night had a special meaning to me because the outcome of the election made the patriotic theme all the more poignant. Where else but in the United States of America can a Barack Obama rise to the highest office? I wrote an open letter to the then Senator Obama about my hopes last May:

The greatness of this nation is its ability to constantly reinvent itself. I wonder what Washington, Adams, Jefferson, and Franklin would think of their masterpiece that has managed to survive wars, both internal and external, slavery and reconstruction, depression, assassinations, and the constant ebb and flow of the political tides and, now, more than 200 years later, faces an epic economic crisis. Looking back at some of my prior postings, I lost sight of this underlying strength, our best hope of avoiding the fate of other great nations throughout history. It took a refrain from the Boogie Woogie Bugle Boy of Company B to remind me of our capacity to rise to such challenges.

Thursday, November 20, 2008

It’s Different This Time

Those are the famous words that have been used to explain any stock market anomaly. They were used in the era as the NASDAQ approached 5,000 to justify the heady prices at the time, or when oil was leaping towards $150 per barrel. But any parabolic rise or fall must regress to the mean. Or so it’s been in my lifetime

I need not go into detail here concerning all the dominant economic undercurrents of today, the toxic assets the TARP program was thought to be resolving, the government’s support of the Bear Stearns takeover, the collapse of Lehman Brothers, the bailouts of AIG, Freddie and Fannie, the discussions of bailing out Detroit’s automakers, the reverberations in the financial markets throughout the globe. However, as a child of depression era parents, I guess subliminally I’ve always feared the unspeakable: a deflationary spiral with no bottom in sight. And somehow if does FEEL different this time.

Having lived through several economic cycles and piloting a business through them, the implosion of equity values in the 70’s, the subsequent threat of hyperinflation, the high interest rates of the early 80’s, the collapse of real estate in the 90’s, the run-up on the heals of dire Y2K warnings, and finally the easy money that led to this decade’s real estate run up and the interconnected toxic financial instruments engineered by financial institutions and hedge funds to make them rich, leaving someone else (us) to hold the proverbial bag. But as a society we were willing participants, eagerly spending what we didn’t have; let future generations do the worrying! Our entire culture cried out buy, why postpone what you can have today, so we bought McMansions, Hummers, luxury goods, vacations, whatever our consumptive libidos desired, using our homes and credit cards as piggy banks.

And that is why this economic era does feel different than prior ones, at least to me, someone who has lived through these various cycles but only in the shadow of the Great Depression. We are just beginning to embark on the convulsive purging of these excesses. How it will end is anyone’s guess. Even Secretary of the Treasury, Hank Paulson, looks like a deer in the headlights, changing his mind about using the $700 billion to buy bad mortgage debt securities (the very $$ Congress had to immediately authorize as financial Armageddon was imminent), probably because he knows it’s not enough. And humbled Alan Greenspan, looking completely bewildered in his testimony to Congress in late October: “I made a mistake in presuming that the self-interests of organizations, specifically banks, were such as that they were best capable of protecting their own shareholders and their equity in the firms. Free markets did break down, and I think that, as I said, that shocked me. I still don't fully understand how it happened or why it happened.”

We had long placed Mr. Greenspan on a pedestal, trying to decipher “Greenspeak,” looking for little nuggets of wisdom to reassure ourselves that this time it was different as he ratcheted down interest rates for our borrowing pleasure. Now he is clearly admitting he has no clue why the present economic catastrophe has devolved. At least he can afford to admit his misjudgments, as he is no longer the Chairman of the Federal Reserve. But we now listen to Mr. Bernanke and Mr. Paulson, desperately clinging to the hope THEY know what they’re talking about. The only certainty now is nothing is predictable. It’s different this time.

Wednesday, November 12, 2008

Ron's Vietnam Trip

I met Ron in 1985 when my company acquired a publishing company of which he was the editor-in-chief. During the due diligence he looked me in the eye, shook my hand, and introduced himself. He didn’t fit the stereotype of a scholarly/professional editor and later I learned why. Although he had the requisite academic training as a graduate of William and Mary and was a student of military history, particularly the Civil War period, he was also an ex-marine, and served in the Vietnam conflict. He was extremely personable, while his demeanor was all business.

In addition to being colleagues, we became friends, and later in his career he left our company to lead the Naval Institute Press, an ideal position that combined his professional expertise as well as his passion for military history. He ultimately retired from that job and we remain friends to this day.

During company picnics Ron and I would “throw the pill” around before the requisite softball game. We both played baseball in our youths, we’re both lefties, and, we would like to think we can still throw a ball as we did in the “old days.” But now in retirement, he has been working on golf and he is a very good golfer. So good in fact, he was asked by a national golf magazine to serve as a consultant for a story about golf in Vietnam today as seen through the eyes of a U.S. veteran going back there to play. The Vietnam tourist agency wants to try to promote golf so they and the magazine supported the trip.

Ron accepted and recently returned from the assignment. Barbara, his significant other, met him there for part of the trip. I had sent Ron pictures of our recent southwest tour, which I wrote about in a prior blog entry. This is how Ron responded. It is such a remarkable, thoughtful document, with interesting observations about his trip to Vietnam, how America is now perceived there, that I include it below. Consider it a “guest blog entry:”

Enjoyed the photos of your trip. Your pictures are so well composed. The vibrant colors and magnificent landscapes/architecture of the SW were so alive. Lots of real postcards in the group. They brought back memories as my first job in publishing was a college traveler for Prentice-Hall based in Albuquerque. I drove most of the highways in NM, Eastern AZ, and West Texas. It was a fun job because out there and in those times professors were happy to talk to a salesman about books. They felt kind of cut off from mainstream academic American; and in their eyes, I represented the intellectual East. While this was certainly a misperception of me, I had great access to profs and sold lots of books.

I’m decompressing from my Vietnam trip. Vietnam is zooming down the market economy road (on their 80cc Hondas) with not a commie in sight! I had a wonderful trip on a number of levels (emotional, informational, etc.) and the golf courses I played were fabulous. While in Vietnam I celebrated my 65th in the same place I turned 25. Nice symmetry. Didn’t even think about Medicare! The magazine put me up in the most fabulous hotels (the Caravelle in Saigon where the journalists watched the fall of Saigon in ’75 from the rooftop bar, a former colonial French mansion/Emperor Bao Dai retreat in the 5,000 foot cool, alpine climate of Dalat, and a beautiful new beachside resort at the site of our old China Beach in country R&R spot near DaNang. Here I had a spectacular cottage right on the water. So there I was in a country where thousands of Americans died and hundreds of thousands of Vietnamese were killed; and, 40 years after the war, I’m playing golf!! And the Vietnamese like us and surprisingly bear no ill will towards Americans! So what was it all about? Nothing! Iraq, of course, will be the same. Those who believe the surge is working (or even ultimately relevant to the situation) need to review the history of the Vietnam War. We “surged” from 150,000 troops (same as Iraq) to 500,000 and it ultimately did no good. How quickly they forget.

I was able to spend some time in I Corps (around DaNang and Hue) and visit the places where I served. I even sat down in a village and talked with a former Viet Cong. His life has been tough because of Agent Orange but he was very polite. Once we determined that we were fighting each other in the same area at exactly the same time (Tet), a sort of bond developed between us. Over 70% of the population of Vietnam was born after the war and have no memory of it – only old farts like me and the VC! After the golf, Barbara came over and we spent a week touring places I never saw during the war e.g. Saigon, Hanoi, etc. Hanoi was terrific with lots of French Colonial architecture and large, beautiful lakes scattered throughout the city. Barbara and I ambled all through the old quarter of the city. We also took in a number of interesting and surprisingly good museums. Throughout the Barbara/Ron portion of the trip, we stayed in wonderful colonial hotels and ate in great restaurants with terrific food. You would have liked the hotel bars. In the evening they always had a pianist (accompanied variously by a saxophone, violin, singer) who played haunting “love and life” numbers from the 40s and 50s. The French influence in music still survives as many tunes were of the melancholy Charles Aznavour cafĂ© type. It was quite nice, relaxing, and romantic.

PS Attached is a picture of the old convoy commander at the top of the Hai Van pass on the road from DaNang to Hue – a route I ran many times. Notice the old French fortifications in the background. We always felt briefly safe when we got to this spot as it was manned by a platoon of marines.

Wednesday, November 5, 2008

President-Elect Obama

We were up most of the night watching the election returns, hoping on the one hand, but afraid of the “Bradley effect” on the other, and almost resigned to that possibility. When the election was called at 11 o’clock, we let our guard down and had a joyous celebration of hugs, high fives and kisses with our son Jonathan who is visiting. It was a time for some tears alongside our brimming happiness.

Ann said she wishes she were thirty years younger just to see what the real outcome of this election might be. But we’ve already lived through some of the most tumultuous years in American history with perhaps only the Revolutionary and the Civil War eras rivaling the events our lifetimes: WWII, the Cold War, the Civil Rights movement, Kennedy’s New Frontier and his assassination, the Vietnam War and its aftermath, the assassinations of Martin Luther King and Robert Kennedy, the ignominious resignation of Richard M. Nixon, the tearing down of the Berlin Wall, 9/11 and its aftermath including the uncalled-for war in Iraq, and finally the decline of our reputation abroad and our near economic bankruptcy.

I have no illusions that much will change in the near term, but at least we've set a new direction and I believe that is the main responsibility of a President, to establish a moral compass, define objectives, and rally the nation to participate in achieving them. No doubt this will require sacrifices and I think we’re finally prepared to make those.

What an historic night. It makes me think of how we felt when we watched Neil Armstrong walk on the moon -- it was with complete wonderment. To think our country has come this far. I wonder what our founding fathers would think of this election, a real validation of the ideals of our constitution (although it specifically postponed any action on slavery for at least the first twenty years of our young nation). However, like the Declaration of Independence, this election is also a statement to the rest of the world, something all Americans can take pride in, even with all the problems we must begin to address.

So we pass the baton to another generation, a generation that waged an incredible campaign – with the liberating technology of the Internet -- to achieve what I thought would not be possible in my lifetime, electing an African American to our nation’s highest office. Last May I wrote an “open letter” to Senator Obama, before he was officially designated the Democratic Party’s nominee. I still feel the same way:

One of the reasons I write this blog is to provide a personal, grassroots perspective on some of the major events of my lifetime. Last night was one of those moments.

Sunday, November 2, 2008


After a summer of living on the boat and traveling for the last couple of weeks, we finally returned home. Amazing how much can change -- even profoundly change in one’s life in just a few short weeks. For me it can be summed up in two words: the economy and Westport.

Not that the economy was much different since my last entry, it’s just that the market is just beginning to come to grips with what Nouriel Roubini has called "stagdeflation."

If Roubini is right, this will be unlike anything we’ve experienced in our lifetime, a severe protracted recession that is accompanied by deflationary forces -- instead of the inflationary beast with which we are at least familiar. This has taken down nearly all asset classes throughout the world. So much for the myth of diversification. In those few short weeks the changing economic winds have already impacted how we look at things as consumers and they portend a protracted period of unemployment growth. It strikes a nerve in all savers, wondering whether savings would be better off under the mattress or whether paper money might have any value at all. Personally, I worry about my sons who are navigating the prime of their working lives.

I mentioned Westport above, the town in Connecticut where I worked and lived for 30 years. While we were away this past month, two seismic changes occurred where we raised our family.
Paul Newman died. He was our neighbor at one time and I had the privilege of briefly working with his wife, Joanne Woodward, on a history of Westport. While I never had the opportunity of meeting him, I had often seen him in town, usually at local restaurants or at a farmer’s market or once when he parked his customized VW in our company parking lot to visit a building next door. The town treated him pretty much like anyone else and that is the way he wanted it. He was just there, around town, and of course larger than life on the screen, and because of his extensive charity work, even on bottles of salad dressing.

He was such a part of the fabric of all of our lives. I feel a profound sense of loss whenever I think of him, or see him on the screen or on those bottles of “Newman’s Own” which he funded to last into perpetuity for the benefit of progressive causes. He was iconic and an iconoclast at the same time, a person who I admired, a true maverick who lived his life the way he wanted, not the way Hollywood normally dictates.

The other news from my former hometown concerns the company I helped to build over nearly three decades, Greenwood Publishing Group, which was just recently sold to another company. Mergers and acquisitions are now the rule in the publishing business, so this was not surprising. I had been involved in several during my career. In fact the company had gone through a couple such changes since I left the business at the beginning of this decade. But, apparently this time, while the imprints will go on, the offices will be closed and many employees will be laid off. I feel so sad to hear this news.

While these events unfolded, we were visiting friends in the southwest, flying first to Albuquerque to pick up our car rental and then making our first stop in beautiful Santa Fe, NM

There we toured for several days and to visit my old friend, Jim, who I hadn’t seen in some 20 years. As I mentioned in my last entry, Jim and I started out our working career together. He’s become somewhat of a “mountain man” – in spite of health problems you can find him hiking the trails around Santa Fe when he’s not behind his desk, working on his two imprints, Western Edge Press and Sherman Asher Publishing It was fun to visit, to reminisce, to meet his friend, Judy, and to have his expertise in guiding us around the area.

From there we went on to Taos mainly to see the Taos Pueblo Indian Village, and then visited the Painted Desert and the Petrified Forest on our way to Sedona.

In Sedona we stayed with our friends Lew and Rosemary. Their home faces the Red Rocks of Sedona and at sunset one’s focus turns to that dramatic scene. At that time of day, it became a ritual to enjoy some wine and hors d’oeuvres, silently inhaling the beauty of the moment.

Afterwards, Lew played the piano – he is an accomplished musician and accompanies several singers, in particular our friend Nicole Pasternak when he is in Connecticut or she visits Sedona It was wonderful spending some time with them and to visit the natural wonders of Sedona.

From there we drove on to the Grand Canyon, staying at the famous El Tovar Hotel located on the Canyon Rim. From that location we watched both the sunset and sunrise. Words are inadequate to describe the scene.

After leaving the Canyon, we were determined to drive along a stretch of Route 66, from Seligman AZ to Kingman AZ with long vistas paralleling the Santa Fe RR, driving alongside freight trains numbering untold cars. It was a windy day and tumbleweeds crossed the road. In other words, Route 66 was pretty much as I had hoped and here are a few of my favorite photos I took along the way.

Our plans were to drive on to Las Vegas to see an old dear friend, Marge, and then catch a flight back to NY to pick up our car and stuff from the boat and begin our drive back to Florida. But before Las Vegas, I wanted to visit an old mining town along the way, Chloride, AZ (right near Grasshopper
Junction – no kidding). Talk about entering a time machine, as these photos attest.

We arrived in Las Vegas later in the afternoon. The last time we were there was to see Marge’s husband, Peter, a close friend of mine, more than 15 years ago. He had been diagnosed with cancer and we wanted to visit him. I wrote about this wonderful man and good friend last year:

Never my favorite city, Las Vegas has gone from excess to excess to the second power, a geometric growth of overindulgence, sort of emblematic of our country’s economic mess. Nonetheless, it was great to see Marge (who never visits the strip other than to see friends who might be passing through - such as ourselves). We did the “high life” bit in 24 hours, had an excellent dinner, enjoyed a Cirque du Soleil performance, and even committed $10 apiece to slot machines, from which I walked away $3 to the plus, after nearly losing everything. Ann, on the other hand, lost everything, period.

So after driving some 1,200 miles we boarded a Jet Blue flight for JFK wherewe picked up our car and began another 1,200 mile drive home from there.

Thursday, October 2, 2008


I think of them drifting by, sometimes blocking the sun which has now moved from summer to fall. When we arrived at the boat for the summer, I thought I would use the opportunity to write about our boating life.

I made a start but failed to get to the main part of the story. Where does the time go? It seems to accelerate as one gets older, each day a smaller percentage of one’s total lifetime and therefore the illusion of it passing more quickly.

I look forward to returning home but in between we’ve scheduled a trip to the Southwest, to visit friends in Santa Fe, Sedona, and Las Vegas. So for a while I’ll be offline and will have to wait until sometime later in the fall to continue the boating narrative.

We will be in Santa Fe on Oct. 5, exactly 44 years to the day after I started my first job in publishing. On that clear fall day I arrived so early at 111 Fifth Avenue that I found the building still closed. I walked around the neighborhood nervously waiting to get to my desk. Here’s the connection to Santa Fe: When I arrived I was assigned to someone who had printing and production experience – Jim -- as my liberal arts background sadly lacked any technical expertise. Jim and I became friends and in fact I lived with him for a while in the East Village after my divorce in the late 1960’s. Jim lives in Santa Fe now and it was at his urging that we decided to visit. Although we haven’t seen each other in many years, we’ve stayed in touch and now we’ll celebrate our 44th “anniversary” in his beautiful city!

So we leave this spot, pictured below, and these pages will be silent for a while.


Monday, September 29, 2008

Rest in Peace, Howard

My friend Howard died.

Since I wrote that piece, Howard was transferred to a hospice. I had one last conversation with him while he was there. He said he had little pain and the hospice staff was wonderful. His son had a birthday party for him, his 62nd, and he was very moved by the many friends and relatives who were able to attend. We said our goodbyes and I was so stunned by this dreamlike exchange, I asked to call again. I called at the appointed time but his phone was on do-not-disturb. I called again in a few days but was told to contact his family. And that is when I learned what I was afraid to hear. My good friend had passed.

His son will be establishing a web site and a charitable foundation for his father. His many sculptures will be on display and when on line, I’ll communicate the web address.

Rest in peace, Howard, I’ll miss you so.

Saturday, September 27, 2008

"What Years of Neglect and Lack of National Policy is Creating"

Although this was intended to be more of a personal journal, the recent political scene and financial crisis have interceded, and I’ve been somewhat consumed by these events. Their tentacles wrap around one’s personal life. It is hard not to obsess over our country’s future, and the world our children and grandchildren will inherit. Although I have referenced other writers and their opinions in these pages, most are my own.

But sometimes you come across something that just says it exactly as it must be said. In these rare cases it is best simply to pass it on and that is what I am doing here. I’ve mentioned “Trader Mark” before, a young man who is running a “virtual” mutual fund in the hope of starting his own. He provides a running commentary on the logic behind his trades and the portfolio and he usually intersperses those with social and economic commentary as, in the long run, these things are all related.

Here are links to two recent articles which says it better than I ever could – how the rest of the world sees our economic struggles and how utterly beholden we have become to economies we used to consider third world. The subtitle of the first says it all: “What Years of Neglect and Lack of National Policy is Creating.”

Interesting Reactions Worldwide - What Years of Neglect and Lack of National Policy is Creating
Views of the U.S. from Abroad

Friday, September 26, 2008

Political Cynicism

Here is one way to define the concept. Lead our country to the brink of economic disaster. Have the very administration which brought us there propose an emergency $700 billion “fix” to provide liquidity so our economic circulatory system does not seize up, the plan proposed by the Secretary of the Treasury and the Chairman of the Federal Reserve, with our President finally making a speech to the nation in which he warns of the dire consequences of congress not acting immediately. Congressional hearings immediately ensue, with the Democratic majority buying into the need for action. Both sides of the isle agree to the basic principles, including oversight protection, and we are told a deal is imminent. But wait, the Republican presidential candidate returns to Washington, on his white horse, his pearl handle pistol at his side and suddenly there is no agreement. A dangerous game of chicken unfolds: “If the Democrats and the President want the plan, let them pass it” the Republican choir sings. Heads we win, tails you lose. America or politics first?

PS Washington Mutual was just closed by the US Government, the largest failure of a US bank.

Monday, September 22, 2008

This “fundamental” is whining…

After Senator McCain declared the fundamentals of the economy were strong last week, he first defended his comment by saying that by “fundamentals” he meant us workers (first time I’ve been referred to as a “fundamental” – sort of makes me feel important) and then, finally, after the heavens opened up and Bernanke and Paulson rained down reality on the economic picture he not only conceded that a crisis had begun, but he also said the following at the Green Bay Chamber of Commerce: “We've heard a lot of words from Senator Obama over the course of this campaign…But maybe just this once he could spare us the lectures, and admit to his own poor judgment in contributing to these problems. The crisis on Wall Street started in the Washington culture of lobbying and influence peddling, and he was right square in the middle of it."

Huh? The political rhetoric from both sides has sometimes made me sick, enough to make me wish that Michael Bloomberg was running on a third party ticket, but McCain’s claim is so egregious I just can’t be silent.

To blame Obama while McCain has been in Congress for 26 years and was one of five United States Senators comprising the so-called "Keating Five" scandal during the 1980s is just plain unconscionable. He was also the former chairman and a present member of the United States Senate Committee on Commerce (although this committee does not have responsibility for the financial services industry) and until just last week has been an staunch advocate of deregulating financial markets, particularly supporting Senator Phil Gramm’s bill in 1999 which deregulated some restrictions on the financial services sector. Gramm has become a lead economic advisor for McCain’s presidential run, the same person who called us “fundamentals” a bunch of whiners, and the only economic problem we have is a “mental recession” (which he naturally blamed on the media, a favorite tactic McCain et al are using). In 1999 Obama was in the Illinois Senate and a Senior Lecturer teaching constitutional law at the University of Chicago Law School (as an aside, read the interesting article on his teaching years from yesterday’s New York Times

So how exactly is Obama responsible for the present economic crisis?

Friday, September 12, 2008

And the presidency goes to….

Why bother having elections? Seems like we could have a version of the Academy Awards decide the winner – the party which takes the most Oscars wins the election! This way we can recognize what has become central to the election process: mass media persuasion. No longer will we have to bother with the real issues, which have become subordinated to personality and presentation.

“And the Oscar for the best sound bite goes to…”

As Main Street’s political belief is manipulated by the images created by Madison Avenue types, let the big award of the evening go to the slickest national convention, with the supporting awards going to the best TV ads that pander to the emotional issues du jour. Special categories can go to the bloggers and the most forwarded email. As a bonus evening of entertainment before the awards, let MSNBC square off against FOX News with Jerry Springer as the moderator – the candidates themselves would not even be needed!

The electorate’s decision now resembles a consumer decision, not decided on the merits of the “product” but instead on brand image, carefully manipulated by focus groups and emotional advertising. It seems that the entire process has gotten out of hand. How about banning political advertising (and thereby also saving $millions) and solely determine national elections by a series of debates?

Thursday, September 11, 2008

That Infamous Day

9/11. It has been seven years but it seems like yesterday. We all remember where we were at that moment. The only comparable moment in my life is where I was when President Kennedy was assassinated.

On Sept. 11, 2001 we were on our boat in Norwalk, Ct., a clear somewhat breezy day with a deep blue sky. We had the TV on and, in complete disbelief, the tragedy unfolded before us all.

Although some fifty miles away, we could see the smoke drifting south from the Twin Towers. To this day I still feel that sense of incredulity. Did this really happen here? My son, Jonathan, had been interviewed only a couple of weeks before by Cantor Fitzgerald, on the 102nd floor of One WTC. They lost 685 employees on that fateful day. Jonathan had taken another job. Is it merely coincidence and accident that governs life’s outcomes? Or Shakespeare’s more cynical line from King Lear: “As flies to wanton boys, are we to the gods. They kill us for their sport.”

My older son is the poet of our family and this is what he wrote on that very day. One line in particular resonates: “If Hell opened up, and swallowed my life, it could not compete with what witnessed, I.” May we never forget:

By Chris Hagelstein

Terrorist troops and bodies strewn
in Twin Tower screams, destruction loomed.
News stations on a journalistic mission
under our Flag's lost transmission:
America's Death.

Judgement of Religious Decree
driving Boeing bombs with air fuel
circulating vultures from above the sea,
smashing their prey
on this plain sun-filled day.

Television digital debris rained on video,
Looping the same sequence of carnage.
The surgery of media controlled the flow
but the State of Blood remained unknown.

Prayers beneath each citizen’s eyes
were blessed wells now, for those who died.
No ceremony or speech could render a conclusion:
Those wired images played seemed like an illusion.

An Eye of some god was seeing us All
for each one's Blindness, was another’s Call,
and in the skies above Manhattan, masked in smoke
exhumed old gods of hatred and hope.

If Hell opened up, and swallowed my life,
It could not compete with what witnessed, I:
Buildings falling and heroes crushed:
As day burned to night
and life --- to dust.

Still, yet, in my hearts dismay,
Born here, I stand, no less bleeding
than those who survived this day:
For America is my body and my sea
executed on the stage of history.

Sunday, September 7, 2008


I spoke to my good friend Howard last week. At the end of June we had breakfast with him outside Washington on our drive up to Connecticut from Florida. Although we had not seen him for several years, probably since I left my job some eight years ago, we wanted to visit and lend our emotional support to what he was facing: lung cancer.

He had had successful surgery to remove a tumor sometime last year, but in a routine follow-up, they found a spot on his other lung, one that would be best treated with a combination of radiation and chemotherapy. When we saw him he was completing radiation and was beginning the chemo. Although he had lost weight, he said if it were not for the diagnosis, he felt completely fine. That he wouldn’t even know he was battling cancer and undergoing radiation. He was hopeful – and so were his physicians – that this would go into remission.

I’ve known Howard since 1976. We were both in our early 30’s, working in publishing, he at a company that bought the company I worked for.

Howard and I learned we were very much alike: compulsive workers, driven to build our businesses. Initially I suppose we viewed each other with some suspicion; unconsciously playing a workplace version of the childhood game, steal the bacon. But over time we became collaborators, particularly as Howard had migrated to the role of corporate development, so we were sort of symbiotically attached. We worked on acquiring and developing product, my making the basic argument and Howard putting the right corporate spin on things in terms of format and presentation, particularly after after a large foreign publishing firm acquired our companies.

Interestingly, Howard did not come from a business background. He was trained as a graphic artist and he was a very good one. He made the creative demands of that endeavor transferable to his corporate role. A perfectionist, he was not satisfied unless the documents he produced were done so with clarity and conviction.

Simply put, he made me look good. I remember in particular a proposal to greatly expand our reference book program. This entailed abrupt shifts in both product and market. I supplied the basic information and projections and he pulled it together into a cogent, persuasive proposal.

We shared similar working habits. He was the only person I could call if I got into the office at 6.30 am and find him at his desk. We got into the routine of checking on each other when we got in, not only a game of one-upsmanship, but a way of connecting personally. It was also a venue for reciprocal corporate insight – we seeing our parent company from two different perspectives and trying to divine logic and motives.

He was married when he was young too and his wife coincidentally was born on the same month, day and year as me. His artistic training was also being put to good use as his avocation, carving wildlife figures from balsa wood, and painting them to life-like perfection. I was touched when he gave us two of his works, the only ones he said he had ever parted with from his personal collection, a Manatee and a Koala bear. They proudly hang on the walls of our home in Florida.

When I retired and began consulting, Howard did as well. We joked about maybe collaborating as consultants calling the company the “Two Steins,” as both of our last names end in “stein.” Given his corporate development skills Howard had to turn away work, and since has had the luxury of picking and choosing the work he wants to do.

There was tragedy in his life though. His beloved wife developed MS and Howard made the decision to care for her at home himself. This was no easy task, emotionally and physically, as her health steadily deteriorated. Several years ago she passed away. My admiration of how he and his son faced this tragedy knows no bounds.

I was shocked when he told me that he was going to undergo a radical operation to remove a portion of his lung which proved to be cancerous. He faced this challenge with his usual fortitude and optimism, putting his trust in some of the best surgeons in the Washington area, convinced that he will beat this and recover.

The operation turned out to be more challenging than he imagined and he confided that he could never go through it again. But the operation was successful and they said he would only need a six month follow-up Cat scan.

But the scan revealed there was a new growth on his other lung, something surgery could not deal with; instead, radiation and chemotherapy was the recommended course of action. This brings me back to our brief visit with him on our way up from Florida.

About a month ago, only a few weeks after seeing him, I was stunned by a call from his son to tell me that he was back in the hospital and they had to discontinue the chemotherapy as it so seriously weakened him. Since then he’s lost the use of his legs and he is still in the hospital. The hope is a rehabilitation program might be feasible or he might have to go to a nursing home.

Howard said on the phone, “We've known each other too long for me to sugar coat this. My life is over as I’ve known it.” I anxiously await some good news.

Saturday, August 30, 2008

President Palin?

I am not the first to make this observation – in fact it is the most obvious, knee jerk reaction to John McCain’s pick of a VP running mate, but I might as well add my two cents. If, indeed, the VP selection is the most critical decision of a Presidential wannabe, McCain demonstrates how seriously deficient his judgment may be. Given his age and his prior health problems, I think we, the voters, have to consider Governor Palin’s credentials as if she is running for the Presidency.

I have expressed my disgust with Washington and its failed policies elsewhere in these pages:

And I stated my support of Barack Obama several months ago:

No doubt Sarah Palin is a bright, hard-working person – she certainly seems to come across as such in the media, but to possibly cast her in the role of the President of the United States seems to be just downright irresponsible by Senator McCain and as politically calculated, and demonstrating bad judgment, as some of his television ads.

Just my two cents.

Thursday, August 28, 2008

Investment Pet Peeve

Simply put: commissioned financial “advisors” are allowed within ten feet of an investor with limited resources and limited knowledge, the illusion of dealing with a recognized name giving a false sense of security. This system of investment deceit is sanctioned by the SEC itself. Consequently, they get involved in front loaded mutual funds that are frequently unsuitable for their financial circumstances.

The best remedy is education, but some do not have the time or inclination. Those with limited financial resources who are dependent on the income from their nest egg, or are risk adverse, are probably better off simply constructing a laddered CD program and let the program nearly self manage itself Or, let that be a component of an investment program and seek out one of the discount brokerage houses such as Schwab or Fidelity where no load funds can be bought to compliment the laddered CD portion (and where the CDs can be bought as well). Both firms have salaried (not commission compensated) representatives at their offices who can help.

For those who have a greater interest in investments, here are a few web sites I regularly read: First the guru of bonds, the very erudite Bill Gross who manages the largest bond investment portfolios in the world. You can read his regular monthly Investment Outlook column at Then there are the Weekly Market Comment columns of John Hussman, an economist who runs a couple of mutual funds: Nouriel Roubini's Global EconoMonitor is a very sobering view of the economy: As a recent New York Times magazine article made clear, Roubini’s observations have proven to be so prescient, one may be hard pressed to call him a pessimist Finally, there is hedge fund manager Jeff Matthews’ Is Not Making This Up blog who expresses his unique and sometimes irreverent perspective on investment topics.

Mutual funds are not completely transparent as the SEC restricts what managers can say, how often, and when. You can learn of changes in portfolio or investment strategy in retrospect via quarterly filings, but this information can be as much as three months after the fact. In this regard, I’ve been admiring “Trader Mark” whose objective is to raise $7 million to start a legitimate mutual fund that he has been managing as a “virtual fund” since last year, providing a running commentary on the logic behind his trades and his views on the economy and the market. Thus far his trading strategy has been effective in these very uncertain economic times. Once his Rising Tide Growth Fund is launched, regulatory restrictions will silence some of his commentary, but meanwhile, it is a good education to follow his exploits. (And I admire managers who invest their own money in their own funds – it really should be a requirement.) Here is where you can follow Mark:

Thursday, August 21, 2008

The Lake Years

This continues a previous blog entry: Once I left for college, my boating days were over for a while. In fact I never even thought about life on the water, or boating, until Ann and I were married in early 1970. This event coincided with my one and only change of jobs during my working career, leaving New York City to run a division of Greenwood Press which had just relocated to Westport, CT. Westport is on the Long Island Sound, probably, along with the Chesapeake, one of the most interesting bodies of water for the pleasure boater on the east coast. The Long Island Sound has been called the inland sea, boarded by the north coast of Long Island and the south coast of Connecticut, a narrowing funnel of water meeting New York’s East River and, through Hell’s Gate, the Hudson River.

Between these points are thousands of ports, marinas, coves, and anchorages, a boater’s dream. Still, that was not on my mind when I experienced these two major events within two months of one another, changing jobs and getting married (for the second time in my case, which made it even more momentous).

I initially did the reverse commute to Westport, keeping Ann’s rent controlled $83.00 per month one bedroom apartment at 33 west 63rd street pictured here, while I moved out of my studio at 66 west 85th street. Her apartment was ideally located between Central Park West and Columbus Avenue and it was hard to contemplate giving it up; therefore, we were determined to stay in NYC. So at about 6.00 am I would set out to my Chevrolet Nova which was parked in a lot a few blocks away and drive over to the West Side Highway to the Cross Westchester, to the Hutchinson Parkway, to the Merritt Parkway, to Exit 41 and onto the Greenwood office which, at the time, was on Riverside Avenue (more water – the office was on the Saugatuck River, directly south of the US 1 Bridge).

With minimal traffic, I would get into the office by 7.30 am and would normally leave around 6.00 pm, getting back to our apartment by 7.30 pm. Ann, meanwhile, was still working where we had met, at Johnson Reprint, 111 5th Avenue. I envied her short subway commute.

After one full winter and spring of this commute, someone in my office mentioned that she knew someone who was trying to rent a “caretaker’s cottage” that was on a 9-1/2 acre estate in northern Westport, near a waterfall and a fresh water swimming area, which eventually emptied into the Saugatuck River. As the renters were expected to do some of the rudimentary maintenance, the rent was only $125 per month. At that rate, we figured that we could maintain our rent controlled apartment and split our living between Westport and NYC.

The cottage was originally the estate’s living quarters for the chauffer and was attached to a three car garage. It had no central heat; just a tiny gas heater in the kitchen, a small dining room into which I was able to squeeze a barroom piano (two less octaves than the normal 88 keys), a little living room with stairs that led to the small bedroom where we slept on a platform bed. It was roughing it, but it was our introduction to our new life in Connecticut.

As it turned out, living out of two places was more difficult than we anticipated, never knowing what clothes were where, and working out schedules, so we finally decided to make our Westport cottage our main residence, and kept the apartment for occasional weekends in the city.

This led to Ann having to commute during the entire week to Manhattan on Metro North, my driving her to a 7.30 am train and then going to my office only five minutes from the train station, usually picking her up around 6.45 pm each evening. By then I was in the habit of taking home work from the office as well, so while she prepared dinner, I did my work or sometimes played the piano, working later. In the interest of full disclosure, while Ann rarely complained about the vicissitudes of commuting, working, and then returning home to play the role of housewife, over the years this has become a bone of contention, she pointing out that I never fully appreciated those sacrifices, which I guess I didn’t at the time. We were younger and had boundless energy. After all, I rationalized, I dropped her off and worked until I picked her up and then worked again once home, but I guess that didn’t quite compare to the Trifecta of working, commuting, and cooking. So, publically, I say I’m sorry that is the way it was, and maybe I could have helped more, but at the time I was obsessed with my career and my work.

I guess the foregoing does not have much to do with our boating lives but our personal history at the time is relevant as more details will reveal.

So aside from our careers and day to day work at living, we tried to fit some leisurely activity into our busy lives. But what to do? First we were convinced that we were campers. I loved the outdoors and although the totality of my camping life was confined to two weeks at a Boy Scout camp in the Poconos when I was about ten, and Ann’s experience was equally barren, we found ourselves examining camping stuff at the local Westport store, Barker’s. So we bought a tent, a Coleman stove, and a couple of sleeping bags and we were set to go. I found a campsite in northwest Connecticut and off we went one weekend in June.

Here I am shaving on the hood of our car and Ann is cooking up a storm for breakfast. Happy, weren’t we? What is not revealed in this the day after the awful night is the state of my allergies. For years I had respiratory problems when exposed to tree pollen. Over the years this condition has completely disappeared. But when we arrived at the campsite late in the afternoon we unknowingly bedded down in the midst of a pollen forest. At first I was fine. When I got up my eyes were tearing and I was wheezing, but managed to get though the morning. By the afternoon we had to pack up and head for the nearest air conditioned motel. By that evening I could hardly breathe and we considered a hospital visit. Needless to say, that was the end of our camping days, at least, camping on land.

Having eliminated camping from our vacation repertoire, we thought about a bucolic weekend at the Roaring Brook Ranch near Lake George, NY. During my high school years I had done some horseback riding in Forest Park, and Ann had a little experience too, so we thought a leisurely ride with a novice group might be fun. So we made a reservation and drove up to Lake George one weekend. Unfortunately, at the appointed time, the novice group was cancelled as there was a light rain and the trails were muddy. Heck, I thought, I know how to ride a horse so I went out with the advanced group. Ann wisely stayed behind.

But my experience with the docile truck horses of Forest Park was not well matched to the conditions. As we broke out into a gallop in single file, I saw one of the lead horses rear up, throwing its rider into the mud and spooking all the other horses, including mine who also decided to rear its clueless rider. I did everything wrong, dropping the reins and hanging for dear life onto the saddle. So, that was the end of my riding days.

But driving by Lake George we were struck by its sylvan beauty and its size and we made a mental note of wanting to visit the lake itself someday. In the meantime, before Jonathan was born, we continued with our professional lives, and bought our first house, right across the street from where we rented, on the road made famous by Robert Lawson’s book, Rabbit Hill. Two years later we moved again to nearby Weston, but more on this part of our lives in a later entry.

We returned to Lake George a number of times in the late 1970’s after Jonathan was born. We first rented a room in a lodge that provided meals family style. The lodge owned an island in the middle of the lake.

Here is Jonathan watching one of the excursion boats on the lake. We took that boat and explored the entirety of Lake George from The Village of Lake George, at the south end to Ticonderoga at the northern end. The Village itself was touristy and honky-tonk, but we loved the lake.

So, when Ann’s cousins, Sherman and Mimi visited the Lake with us one year, I rented a boat, a fast runabout with an outboard engine and even a steering wheel! All those old memories of my little wooden row boat were rekindled. While there was no Shelter Island to venture to in Lake George, there were little islands and that sense of freedom and adventure which defines the boating spirit came to the surface. I was hooked.

After two one-week summer vacations at the lodge we rented a cabin with our friends Robin and Joe who had a little girl, Jonathan’s age, Amy. Sharing a cottage was not the same as our own space and we decided upon a different venue for our next lake visit – one at the Finger Lakes in the Canandaigua region. Again, we found a lodge but one that rented cabins as we brought Ann’s mom, Rose, with us. We climbed to Rocky Point but the best part, again, was the ability to rent a boat and to explore the lake.

The following summer we visited Connecticut’s Lake Candlewood, a lake that was closer to us, although much smaller than Lake George and many of the Finger Lakes. We went out on a ski boat there with our friend, Carole, and her sister and brother-in-law, my one attempt at water skiing. I was an expert at meeting the water face first as soon as I began to get up on water skis.

We seriously looked into buying a cottage there at small community with a dock but the thought of having to clean the gutters of two houses began to overwhelm me, so we reconsidered this plan. While we loved boating on the Lake, it suddenly dawned on us that, in spite of many lovely weekend days at Westport’s Compo Beach, swimming and reading the Sunday Times, we were forgetting one of the greatest resources available to a pleasure boater right in our back yard: The Long Island Sound. That realization changed our boating lives and led to our next chapter, to be continued.

Monday, August 11, 2008

Starting Out in the Evening

One of the nice things about Netflix is the extent of their DVD movie library. If the movie is on DVD, you are nearly assured of being able to get it. Consequently, a treasure trove of independent and classic films is available.

Yesterday we saw a recent “indie” Starting Out in the Evening. The Wikipedia entry provides a good summary of the film and references for further reading:

It is about a forgotten writer in his twilight years, brilliantly played by Frank Langella, and a young graduate student who seeks him out to write her graduate thesis on him. It is also about the writer’s daughter and her lover. During the film, the characters are changed by one another.

It is also about the passing of time, the ravages of aging, and the substitution of contemporary culture for a more contemplative one of an earlier era. Self help and celebrity books now dominate the best seller lists while serious literature and criticism and the writers of the same are slowly disappearing. At one point the writer played by Langella offers the young student some works by Lionel Trilling and Edmund Wilson to read, only to find she has forgetfully left them behind. He sadly returns them to his bookshelf.

But, the main point of this entry is to praise the young director of the movie, Andrew Wagner, and his sensitive and profound narration that can be enjoyed with the movie. It is well worth running the entire move again with the director’s narration to fully appreciate the stunning achievement of the director and the four main actors in transforming this adaptation of a novel by Brian Morton to film in only eighteen days and on a budget of only $500k.

I am looking forward to future Andrew Wagner productions. Long live the independent film!