Finishing the Hat Redux

Finished Sondheim's book Finishing the Hat but his melody lingers on.

The title of the book is a song title he wrote for Sunday in the Park With George (George Seurat, the Pointillist painter) and although that musical is after the cut off for this first volume of his "Collected Lyrics with Attendant Comments, Principles, Heresies, Grudges, Whines and Anecdotes," he says it is “the only song I’ve written which is an immediate expression of a personal internal experience.” And that experience is about what it means to create a work of art, "That, however you live, / There's a part of you always standing by, / Mapping out the sky, / Finishing a hat... / Starting on a hat../ Finishing a hat... / Look, I made a hat.../ Where there never was a hat."

Although now eighty years old, Sondheim still seems to be blazing new trails, with this book and the eagerly anticipated sequel which will cover the balance of his career and his continuing observations on Broadway colleagues and collaborators. (One of his criticisms of his mentor, Oscar Hammerstein -- and Richard Rodgers as well --- is that at a certain point in their careers, they no longer progressed, writing their musicals with a certain formula. Sondheim allows no grass to grow under his feet!) I began this "review" (on a very personal level) before completing this first published volume, unable to contain my enthusiasm.

So I now pick up with Little Night Music "suggested" by Ingmar Bergman's Smiles of a Summer Night. Sondheim says it gave him the opportunity to organize a musical around his favorite musical form, theme and variations, in which a theme is presented, and then follows various changes to that theme, either in key, harmony, orchestration or a more complicated musical variation to the theme which might even be unrecognizable, with a coda which usually repeats the theme in some way. His description of his meeting with Ingmar Bergman a year after Little Night Music opened, to discuss a possible collaboration on another project is priceless. Sondheim said to him: "...I have to know what you thought of the show, and please don't hesitate to tell me whatever you feel, as I have a very thick skin and I know our version is lightweight and doesn't begin to convey the depths of your movie....I'm sure I went babbling on a good deal longer, but he graciously cut me off. 'No, no, Mr. Sondheim, please. I enjoyed the evening very much. Your piece has nothing to do with my movies, it merely has the same story.' I thought: only someone with that understanding and generosity would realize, must less say, such a thing. and then came the kicker: 'After all, we all eat from the same cake.'"

Sondheim's most recorded song (over five hundred) is from this show, "Send in the Clowns." Paraphrasing Sondheim, it used to be the song, not the singer that made a song, but in this pop generation, it's now the singer (or song group) not the song. It was amazing to him that the song won the Grammy Award of the Song of the Year in 1975, the last song to do so from a musical. Per Sondheim, "The success of 'Send in the Clowns' is still a mystery to me."

The Frogs, with which I was completely unfamiliar, is an experimental piece he was asked to write for the Yale Repertory Theater, "one of the most deeply unpleasant professional experiences I've ever had." The producer was one of the worst kind: "the academic amateur." But he admits "it offered me a chance to harangue an audience, to use a chorus a cappella to make sound effects, to write massed choral music, and to indulge in vulgarity, adolescent humor and moral preachment, just like Aristophanes."

With his Pacific Overtures Sondheim moved to a new level in his fusion of music and lyric, using the structure of Haiku poetry in his lyrics, his dedication to the principle that "less is more." I've never seen Pacific Overtures although Ann had when it first opened on Broadway and when I asked her what she thought, she said that at the time it was so different from anything else she had seen, she didn't know what to think other than she knew it was a work of genius.

It is all part of Sondheim's quest to "finish the hat." In this musical Sondheim has the opportunity, however, to "thumb his nose" at Gilbert (of Gilbert and Sullivan) with a piece from the show "Please Hello": As he said, "I...would like to point out with suitable pride that the lyric is historically accurate as an account not only of the succession of arrivals but of the specifics of each country's demands. The music, unsurprisingly, is a series of pastiches: Sousa march, Gilbert and Sullivan patter, Dutch clog dance, Russian dirge and French can-can. In the interests of thumbing my nose at Gilbert, I summoned up a meticulous series of inner rhymes without distorting syntax, syntax distortion being a feature excused by his fans as part of his style, but something which I deplore, as I deplore it in Hart, Gershwin and Coward."

Ann & I were at a dinner party and we were talking about Sondheim's next work in the book, Sweeny Todd, and I was surprised by their unanimous abhorrence of the musical. Although I understand an aversion to some of the gruesome scenes, I think they were simply not getting it, lyrics and music perfectly synchronized, one existing for the other. Perhaps it is because unlike the classic musicals of Rodgers and Hammerstein, some Sondheim musicals do not let you merrily exit afterwards humming the melodies. But Sondheim haunts and certainly his love of suspense music, the macabre, and his less than sympathetic view of mankind (Rodgers and Hammerstein's musicals always ending on an uplifting note in spite of any darkness that might inhabit part of their musicals), comes through in Sweeny Todd, off-putting to the audience in its graphic violence, "blood" even spurting as far as the orchestra pit in some performances. How can an audience which loves an Rodgers and Hammerstein's buoyantly optimistic "There's a bright golden haze on the meadow" reconcile itself to Sondheim's bleak "There's a hole in the world / Like a great black pit / And it's filled with people / Who are filled with shit"?

Sondheim describes the work as a "dark operetta" and really a "movie set for a stage" so it is no wonder that Tim Burton's translation of the musical to screen starring Johnny Depp and Helena Bonham Carter is considered (by Sondheim) to be the most successful adaptation of one of his works for the silver screen. The movie is remarkable as neither Depp or Carter had ever sung before. Singing Sondheim is difficult enough for trained singers as his lyrics come fast and furious in many songs with few spells for breathing. In fact, the DVD edition of the movie is the perfect way to see Sweeny Todd, turning on English subtitles, sort of like reading the libretto of an opera while the performance is underway. It's the best method of fully appreciating what Sondheim accomplishes with this and his other opera-like musicals.

Finishing the Hat concludes with his Merrily We Roll Along, which reminds me a little of Company, as it is a contemporary urban piece, also about friendships, and somewhat autobiographical as it concerns a songwriter. ("In my heyday as a young songwriter, I played many requests at many parties through the short attention span of the requesters and suffered many opinions of producers and directors who felt that their credentials demanded that they have something critical to say.") Although there are memorable pieces in the musical, it closed after only a handful of performances, but with subsequent revivals, Sondheim tweaked it over the years.

The time line of the play is in reverse as our songwriter (Frank) devolves from being a rich Hollywood type to his beginnings on Broadway. It has one of my favorite Sondheim songs, "Not a Day Goes By" sung with two different meanings, first as Frank's final plea of love when his wife wants to divorce him and then in a reprise as a love song on their wedding day. Because of the reverse time line, it is the complete opposite of the usual reprise (think of Rodgers and Hammerstein's "People Will Say We're in Love" or "If I Loved You").

"Not a Day Goes By" is one of the many pieces I regularly perform by Sondheim. Although his music is best appreciated with his lyrics, that song reminds me of the other wonderfu,l frequently melodic, pieces by him that I enjoy playing as piano solos. True, there are others that do not work as solos, but I think Sondheim gets a bad rap for not being melodic. As I play mostly from "fake books" (which provide melody and chords and it is left to the pianist to improvise everything else) I have limited choices of Sondheim pieces. Still, there are many in my repertoire. Sondheim confesses a penchant for "list songs" (as do many other lyricists, think again of Rodgers and Hammerstein's "My Favorite Things" from Sound of Music which we just saw brilliantly performed at the Maltz Jupiter Theatre) and so, I am concluding with my own list, those Sondheim songs that I like to perform, all from The Ultimate Broadway Fake Book .....

Anyone Can Whistle (Anyone Can Whistle)
Being Alive (Company)
Broadway Baby (Follies)
Company (Company)
Good Thing Going (Merrily We Roll Along)
I'm Still Here (Follies)
In Buddy's Eyes (Follies)
Johanna (Sweeny Todd)
Little Night Music (Little Night Music)
The Little Things We Do Together (Company)
Losing My Mind (Follies)
Not a Day Goes By (Merrily We Roll Along)
Not While I'm Around (Sweeny Todd)
Pretty Women (Sweeny Todd)
Remember? (Little Night Music)
Send in the Clowns (Little Night Music)
Side By Side By Side (Company)
Someone is Waiting (Company)
Sorry-Grateful (Company)
Waiting for the Girls Upstairs (Follies)
Who's That Woman? (Follies)
You Could Drive A Person Crazy (Company)

American Dream Diminished

Owning a home was once a cornerstone of the American Dream. Go to school, work hard, get married, buy a home with a mortgage, have children, try to give them better opportunities than you had, work hard some more to pay off the mortgage, retire and do the things you couldn't do while you were working. It all sounds prosaic now, even old fashioned, but I suppose if I had to describe my life in a few words, that description would be a rough outline. Lucky for me, I loved my work so I never thought a moment about following just about the same blueprint as did my parents.

They were children of the Great Depression and after the war, the urge to own a home was overwhelming, a symbol of financial security and success. Levittown became the poster child for postwar suburbs throughout the country, and upon my father's return from WWII, they immediately bought their first house, around the corner from my grandparents' home, and blocks from my other grandparents, in Richmond Hill (borough of Queens in NYC). I think they paid less than $5,000 (this is 1946 mind you) and we lived there until I was 13 when we moved to a larger home, in a "better section" of the same community. Both homes still stand today, remarkably unchanged as these photos from Google Street Views attest. Those were the only homes they owned during their entire lifetimes.

By comparison, our home-owning has been more prolific (and equally remarkable, our past homes have been renovated to such a degree they are now nearly unrecognizable). After renting apartments in Brooklyn and the upper West Side of Manhattan, we finally ultimately moved to Connecticut where I was then working, first renting a small house in Westport, and then finally buying our first home which was almost across the street from where we were renting. It was 1971, the beginning of a steady increase in real estate prices and by 1974 we sold that first home and moved into a larger one in neighboring Weston where we lived for the next 22 years and raised our family.

The 1990s saw a moderation of real estate prices -- even a decline in some areas. It was the time of the savings and loan crisis, but with our children out on their own or off to college, our two acre home in Weston seemed unnecessary and we wanted a home in a "neighborhood" and by the water, so we sold and bought a 100 year old cape on the Norwalk River in East Norwalk. We thought that might be our home for the rest of our lives but, unexpectedly, my working life was at its end four years later and that is when we decided to move to Florida, the fourth home we've owned and, who knows, perhaps our last.

But, someplace along the way, the American Dream of home owning has become an American Nightmare. Foreclosures and the federal takeover of Fannie Mae and Freddie Mac are just ongoing symptoms of the developing crisis that has stemmed from the housing bubble of 2000-2007, mortgages being eagerly issued by banks with zero down to less than credit-worthy buyers, or to those in the "business" of flipping homes for profit, these loans condoned or even mandated by government. This activity and Wall Street's eagerness to cash in by taking inappropriate subprime loans and rolling them into exotic collateralized mortgage obligations, "rated" AAA by another accomplice in this crime against the American Dream, the rating agencies, conning investors into thinking they were getting a "guaranteed" return on a "riskless" investment, fueled the fire.

Also complicit is the Federal Reserve. By addressing the crisis with "Quantitative Easing" the Federal Reserve has postponed the day of reckoning. By Federal Reserve Chairman Ben Bernanke's own admission in a November 2010 Washington Post opinion piece, it is the "wealth effect" of past QE's that has contributed to the stock market's recovery, saying "higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending." This Fed induced bubble simply accelerates the "boom bust cycle," one that may end ugly when 'the can' can no longer be kicked down the road.

We all see the macro effects of QE, the rise in speculative investments, animal spirits being drawn out by low interest rates, a surge in commodity prices (of which there are relatively fixed amounts in relation to monetary creation out of thin air) but the gorilla in the room is our state and local governments. There has been a sudden flood of articles about their failing finances; a Google search will unleash an avalanche of them and I've written about this before as well.

In a nutshell, our state and local governments have promised too much in their pension obligations and now that the revenue tide is running against them with lower property tax revenues from falling real estate prices and foreclosures, not to mention their poor fiscal habit of financing certain projects with the assumption there will always be the opportunity to roll over debt with more debt in the future, the homeowner finds himself in the crosshairs. The cavalry of the Federal Reserve which rode to the rescue of banks and AIG has decided to leave municipalities and homeowners to their own devices, Bernanke saying "we have no expectation or intention to get involved in state and local finance. [States] should not expect loans from the Fed."

Consequently, it is now a vicious cycle, lower property values begetting a smaller pie for municipalities, which results in millage increases being levied by local taxing authorities, which in turn results in still lower property values. Being a homeowner today leaves one obligated to share in the past profligacy and poor planning of one's local government. Many would have difficulty selling their homes at any price to escape this obligation, turning the American dream of home owning into a nightmare.

Pelican on a Piling

It might be the silliest and saddest looking bird we regularly see in South Florida, seen resting here on a piling of our dock this morning, but the Pelican has a certain beauty, especially when it cruises only feet above the water, suddenly climbs and then dives into the water, tucking its wings at the last moment to turn its inelegant body almost into an arrow, taking a fish into its beak.

Dawn Rises on a Fresh Snow

As much as I generally do not miss the winters in the Northeast, there is that magical time when the snow is still pristine and the stillness of the dawn arrives, that a certain majesty of nature's creation is in evidence. Luckily, sites like WestportNow.com capture such moments in their photographs, and here is an exceptional one they posted today of Westport's Compo Beach (CT).

.

Senseless to the Sublime

The last two nights make me think of Franz Kafka's The Hunger Artist, in which a famous fasting artist is on display in a circus menagerie, the crowds pushing past him to get to watch the lions stalk and feed. "He immediately got an earful from the shouting of the two steadily increasing groups, the ones who wanted to take their time looking at the hunger artist, not with any understanding but on a whim or from mere defiance—for him these ones were soon the more painful—and a second group of people whose only demand was to go straight to the animal stalls." It is a highly symbolic story of how artists sacrifice themselves for their art and the general public's ignorance of what great artistry demands and preference for sensational pursuits.

One of the reasons we live in this area of Florida is for the cultural diversity it has to offer. True, it does not have the advantages of a London or a New York in its breadth or consistently high quality, but knowing where to go can uncover some wonderful cultural events. Case in point, our favorite small theatre where we never miss a production, Palm Beach Dramaworks. But the largest theatre in the area is West Palm Beach's Kravis Center for the Performing Arts and we've seen some fine musical revivals there over the last several years, South Pacific standing out in my mind, and some special programs such as when Sondheim visited for an evening discussion of his works.
Admittedly, it was with some trepidation that we got tickets for the Kravis’ production of Beauty and the Beast but Ann had tried to see the Broadway version, liked some of the music, and never could get tickets so we were hoping that this touring production would at least be on par. Tuesday night we saw the opening and it was so dreadful that we left at intermission. This review gives some of the details although it is actually very restrained in its criticism.


It is a Disney dumb-down production presumably for the kiddies, with one dimensional slapstick characters, but, amazingly, most of the adult audience seemed to be laughing at the childish humor which at best rose to the level of a sitcom. The fact that a Beauty and the Beast could flourish for so long on the Great White Way says much about the public's taste in musicals. We should have known better!

The following evening we sought redemption, having long ago booked tickets for a series we have followed for years, Keyboard Conversations ® with Jeffrey Siegel at The Society of the Four Arts in Palm Beach. These are "unique concert-plus-commentary format in which he speaks to the audience about the music before performing each work" in their entirety. Wednesday night was one of the most demanding programs we've ever heard this highly-acclaimed American pianist perform, tackling three of the most difficult pieces written for the piano by Johann Sebastian Bach (Chromatic Fantasia and Fugue, BWV 903), Samuel Barber (Fugue from Piano Sonata, Op. 26), and Ludwig Van Beethoven (Sonata No. 23 in F minor, Op. 57 --- the "Appassionata). Mr. Siegel playfully calls the program "Three Great B's Bach, Beethoven and Barber" (the latter B normally reserved for Brahms, but this is the 100th birthday celebration of Barber, one of America's leading composers, a contemporary of Bernstein and Copeland). In addition he played two of Barber's "Excursions" which I had never heard and reminded me so much of some of Gershwin and Copeland.

The physicality of the performance was astounding. As I play the piano myself, I have a special appreciation for what Siegel accomplished last night, performing the entire program without sheet music, keeping up with the tremendous technical demands of these pieces. Indeed at the end of the night, when he conducted his traditional audience question and answer portion of the program, he seemed, justifiably, physically spent, perhaps like the artist in Kafka's story. But this audience was brought to a standing ovation in appreciation.


Antidote du jour.......

.

We're On a Crazy Carousel

The passage of still another year reminds me of Jacquel Brel's brilliant waltz from the late 1960's musical review: Jacques Brel Is Alive and Well and Living in Paris. It is a song that begins slowly, sanely, gathering tempo as it culminates breathlessly at the end. I was playing that song during the anticlimax of Y2K.

We're on a carousel / A crazy carousel / And now we go around / Again we go around / And now we spin around / We're high above the ground / And down again around / And up again around / So high above the ground / We feel we've got to yell / We're on a carousel / A crazy carousel

My "blogger friend" Mark over at Fund My Mutual Fund, whom I've referenced before in these virtual pages, has been writing, strategizing, constantly working towards the goal of starting his own mutual fund. He is pursuing the golden ring on this carousel of life, following his dream, and this year he will finally realize it. His New Year's message revealed many of the details that led to this culminating moment and I applaud him for his tenacity.

Decades earlier, like Mark, I followed my own dream, carving out a niche in the publishing world, one that fascinates me to this day, but at one time in my life I had considered a career change and perhaps if the Internet existed then, I might have followed a different path. It wasn't that I had a falling out with my interest in publishing, but I too had become enamored by "the markets" and fancied myself an "investor."

My interest started out by investing in some of the Nifty Fifty ( many of which crashed and burned under their own overvalued weight in the poor economic, high inflationary years of the 1970's), and then with the help of VisiCalc (the precursor of Lotus 1-2-3, in turn the precursor of Excel) and my first computer (an Apple II), came up with what I thought was a "bullet proof" system of investing in convertible debentures. I even marketed a VisiCalc template ("Converticalc") to analyze them. Well, as we all sooner or later recognize, there is no infallible system, and making investing an avocation can be as dangerous as being your own surgeon, so now I rely on people like Mark and, I am not ashamed to admit (in this era of "fast money"), I'm also a buy-and-holder, investing in selected dividend aristocrats selling at reasonable price/earnings to growth ratios. But Mark's New Year's message reminds me that things might have turned out differently if I followed my other dream to its logical conclusion.

The program drew interest at the time and there was even some discussion with a major brokerage house about starting a mutual fund based on it. By today's computer standards the program is laughable, but mind you this was nearly thirty years ago. A new publication, Financial & Investment Software Review, which was dedicated to "microcomputerized investing" carried my article on investing in "converts" in its Summer, 1983 issue. I wish I could just give a link to the article, but I have to paste it below in its entity as it doesn't exist anywhere on the Web. Actually, the concepts haven't changed that much -- as far as straight investing in Convertibles is concerned -- but the nature of these instruments have changed with the advent of computer driven arbitrage. They are not for the faint of heart.

So, this is now water under the proverbial bridge for me, but things could have turned out differently if my interest in investing finally outweighed my passion for the publishing business. Follow your dream in 2011 and watch for the launch of Mark's "Paladin Long-Short Fund."

Evaluating Convertible Debentures by Robert Hagelstein (Financial & Investment Software Review, Summer, 1983, Volume 1, No. 3)

Convertible debentures are an unusual investment opportunity but largely have been overlooked because of the complexities in evaluating them and because of the relative illiquidity of the marketplace. During the last several years, however, convertible debentures have been issued by a growing number of companies and in larger numbers, significantly improving their liquidity. This factor, in combination with the widespread availability of the microcomputer for analysis, makes convertible debentures suitable for most portfolios. Much of the following discussion of convertibles has been adapted from the manual that accompanies CONVERTICALC , a VISICALC® template that was developed for the evaluation of convertible debentures.

Convertible debentures are debt instruments that are convertible into common stock. They share the most attractive aspects of both kinds of investments, the appreciation prospects of equity with the high current income of a bond. In addition, the debt characteristic of the convertible creates an investment floor, a point at which the convertible will not decline, even if, theoretically, the common declines to nearly no value (assuming bankruptcy is not the cause of the decline).

Despite the focus on convertible debentures in this article, there are also convertible preferred issues that may be of interest to the investor. A drawback to this convertible security is preferred stock has no maturity date at which time one can expect to receive par value for the investment. Nonetheless, many of the evaluation techniques discussed below can be applied to these convertibles should the investor wish to include such issues in an investment portfolio.

Corporations issue convertible bonds as an inexpensive means of raising capital. In effect, a convertible offering is an equity offering in the future, allowing the corporation to issue a debt instrument with a coupon rate much lower than prevailing rates. Until recently, convertibles were mostly the exclusive province of corporations with lower debt ratings. Persistent high interest rates have changed this; even Kodak and IBM have issued or filed to issue convertible securities.

There are several publications that follow convertible debentures, each providing essential information needed to evaluate them: the number of shares into which each debenture is convertible (the "conversion ratio"), the coupon and maturity date, the quality rating as a debt issue, the amount of debentures outstanding, and the identification of the issuer and the issue into which it is convertible (some are convertible into the common stock of companies other that that of the issuer). These publications include Standard & Poor's Bond Guide, Moody's Bond Record, and the Value Line Convertibles Service. They also provide some of the computations used to analyze convertibles, particularly Value Line.

SOFTWARE PROGRAM
CONVERTICALC not only gives the critical formulas for evaluating convertibles, but it also provides the data on approximately one-hundred of the most actively traded issues on the NYSE and AMEX exchanges. The user can add or substitute other issues, replicating the evaluation formulas.

Nevertheless, there is no computer program that can forecast the direction of security prices. There are a host of intangibles affecting investors' perceptions of value, many of these relating to investor psychology rather than to fundamental values. CONVERTICALC is intended to be an investment aid and does not offer any prescribed buy/sell decisions, It endeavors to supply information to evaluate convertible debentures in relation to one another and in relation to the underlying common stock.

As convertible debentures can be exchanged into the underlying common stock, at the option of the holder, the appreciation prospects of the common is crucial to evaluating its corresponding convertible, Traders convinced that the common will move substantially higher within a short period of time, are normally better off buying the common than the convertible. Longer term investors, particularly conservative ones to whom current income is important, may find the convertible to be the better choice. In both cases, however, the first step in making a buy decision is determining whether the common stock is desirable.

Convertibles selling at a large discount from par may be especially attractive to long-term investors. Such issues enable one to "lock" into a virtually guaranteed capital gain, even if the underlying common stock should fail to appreciate during the period. Another consideration is the convertible's bid and asked price. This spread will normally be small for issues actively traded on the NYSE or AMEX. It can be considerable for issues with a relatively small float and for those traded over-the-counter.

Most convertible are "callable" by the issuer, requiring the holder to either sell at the call price or convert into common stock. It is not unusual for convertibles to be called once the issue is selling at substantially more than par. Usually, convertibles are callable at prices higher than par during the first few years after issuance, declining to par as the date of maturity approaches. Many are callable at par long before maturity. For this reason Moody's Bond Record is an invaluable companion for investors considering buying convertibles: current call terms are specified.

CONVERSION PREMIUM
A key element in evaluating convertibles is the issue's "conversion premium." This premium represents the percentage at which the convertible is selling over its "conversion value" (the number of shares into which one debenture is convertible multiplied by the current price of the common stock). The lower the premium, the more likely the convertible will move in relation to the underlying common stock while the higher the premium the more likely the convertible will move in relation to interest rates. Convertibles with low premiums, having relatively high yields and fast "payback" periods (see below), are generally the best buys (if, of course, the common stock merits a buy). Such convertibles will appreciate with the common stock and provide greater yields than the common stock, giving the investor the best of two worlds: capital gains and lower downside risk.

As the conversion premium is intrinsic to evaluating convertible values, the CONVERTICALC disk includes a section sorted by conversion premium. Generally, those convertibles carrying premiums of less than 5% will follow nearly all of the underlying common stock's rise. However, some of these same issues may be equally vulnerable to a substantial decline of the common while others may follow only half the common's decline. The potential magnitude of a convertible's downside risk relates to its yield in relation to those paid by non-convertibles of similar quality. Obviously, convertibles with yields to maturity approaching those prevailing for straight debt issues that would decline the least even if the underlying common stock should decline (see the discussion of the "investment premium" below).

It is possible to quantify the potential price relationship between an underlying common stock and a convertible debenture, plotting what is known as the "convertible curve" on a x/y axis graph. An awareness, however, of a convertible's conversion and investment premiums generally obviates the need to maintain such graphs.
Then, there is the concept of "payback period," the amount of time it will take to recover the conversion premium from the additional yield provided by the convertible over the common stock, This is important when considering whether one buys the convertible or the underlying common, When a convertible has a relatively long payback period and the premium is not excessive the common stock yields nearly the same as the convertible. If the dividend is relatively secure, the common stock may be a better value than the convertible,

INVESTMENT PREMIUM
The concept of "investment premium" can be as important to one's investment decision as the conversion premium, The former represents the percentage a convertible debenture is selling above its investment value (as if it is devoid of its convertibility feature). In order to ascertain this percentage, it is necessary to identify the debt quality of the convertible being considered. Access to Moody's or Standard & Poor's bond publications will provide a bond rating for the issue, For this reason, it is necessary for the investor to know the yield to maturity of the convertible being considered. Even if the investor is not looking for high current yield, yield to maturity is the basis for comparing convertible to straight bonds, CONVERTICALC provides an approximate yield to maturity calculation.

Quantifying the investment premium is a method of judging the potential "floor" for the price of a convertible, a means of establishing the magnitude of the investment risk, A convertible with virtually no investment premium is selling at its investment value. Such issues are more likely to be more sensitive to changes in interest rates than movement of the underlying common stock This is also a characteristic of convertibles with high conversion premiums. Therefore, generally, the investment premium and the conversion premium will tend to be the reciprocal of the other, high investment premiums following low conversion premiums and vice versa, Sometimes one can find convertibles with relatively low investment AND conversion premiums, These are the undervalued issues that should be sought by the investor; they have nearly the same upside potential as the common stock with very little downside risk if the common stock should decline (assuming static interest rates).

The investment premium may be quantified by using a hand-held calculator or the remaining memory available on the VISICALC matrix. After the bond rating for the convertible issue being evaluated has been ascertained, and the prevailing yield for equivalent non-convertible debt issues has been established, a bond table would reveal at what price the convertible would have to sell to yield the prevailing rate. Then, by subtracting the current price from the price at which it would have to sell to yield the prevailing rate and dividing the remainder by the current price, the investment premium can be calculated. Common sense can generally substitute for an actual calculation. In comparing a number of convertibles chosen on the basis of relatively low conversion premiums, ones of roughly the same investment grade, those with the highest yields to maturity have the lowest investment premiums.

Convertibles should not only be analyzed against one another and against the underlying common stock; they should also be evaluated against themselves over a period of time. Maintaining a file on a regular basis and recording changes in the key convertible evaluation components - conversion premium, yield, and payback period - enables the investor to "plot" bands of values. Market volatility, earnings growth, interest rate movements will profoundly affect these statistics. By observing these movements as computed by CONVERTICALC, the investor can decide when the common is overpriced in relation to the convertible or vice versa. One may want to sell a convertible whose conversion and investment premiums have become too excessive and switch into one with lower premiums and/or a higher yield. By observing diligent portfolio management the investor can maximize return and minimize risk.
"Evaluating Convertible Debentures" © 1983 by Robert Hagelstein. CONVERTICALC, is a VISICALC® template formatted for 64 K APPLE II® DOS 3.3. APPLE® is a registered trademark of Apple Computer, Inc. VISICALC® is a registered trademark of VISICORP''.

.

The Kindle is a Grinch

Ann wanted one thing for the holidays, a Kindle, so badly in fact, she opened that box from Amazon as soon as my gift arrived, activated the device and now she carries it with her wherever she goes.

But I was not thinking through the serious collateral damage in giving her such a Christmas present. It now deprives me of the one great gift giving pleasure I have had at this time of the year, deciding what books to give her, wrapping them carefully, taking such pleasure in hopefully guessing what she would love, handling those handsome books, some with deckled edges or beautiful illustrations, and then sharing the experience of watching her open them on Christmas morning. Simply put, I now no longer have anything that I love to buy for the holidays as I really don't enjoy almost any other gift giving.

The truth be told, I would also slip in a book or two that I know I would enjoy reading, maybe a recent novel by Anne Tyler who we both love. And that is another Kindle theft -- how does she share a downloaded Tyler novel with me after she is finished reading it if she is always on the Kindle?

I'm not a Luddite, and see the advantages of the Kindle, particularly for traveling, but apparently it is addictive -- once hooked, that is how one reads. The holidays have changed enough for us, having raised our children, they now living far away, so we have segued from the snowy family Christmases in Connecticut, the big fresh cut tree, setting up the train set for the kids and wrapping their presents, and let's not forget one another, to the artificial holidays here in Florida (although there is a wonderful tradition here to light luminaria all along our road on Christmas Eve) .

The only remnant of our own Christmas decorations is now a wreath on our door, but, still, there was always the anticipation of giving books for the holiday, a pleasure now stolen by the Kindle Grinch.

Nonetheless, from Christmases past, Happy Holidays to all, and to all a good-night!

.

Winter Solstice

The winter solstice was special this year because of a rare eclipse of the moon. But for the last thirty years or so it also has been a special day for my friend, Ray, and myself. Wherever we may be, we always made it a point to speak on that day. This ritual was to acknowledge that although the long cold days of winter were just beginning, the days were getting longer and it will only be a matter of time until our families would be back boating together again on the Long Island Sound and spending many weekends at our mooring off the Norwalk Islands. It also marked the beginning of our thinking about our traditional summer vacation at Block Island

Now, with our families grown, and both being retired, our boating lives have changed and in fact as he and Sue now spend their winters in the Bahamas on their boat 'Last Dance,' and we live in Florida, except during the summers when we still live on our boat 'Swept Away' in Connecticut (and they return to Norwalk as well on their boat), perhaps this particular day has lost some of its significance. Nonetheless, I will make the call or await Ray's call and we will talk, perhaps of days gone by but also of next summer, but certainly to commemorate the moment.

Coincidentally, when Google Maps updated last summer, Ann and I just happened to be out on our boat that day, alone at the mooring we had shared for so many of those summer days. By putting in the Lat/Lon coordinates in Google Maps 41.061561,-73.388698 will first show the nearest land, and below that point the green arrow points to our boat on that particular day. A rare happenstance, a satellite view of the moment, perhaps like an eclipse on the winter solstice?
.

My Second Session with Freud

In the blink of an eye almost a half year has gone by since we saw the NYC premiere of Freud’s Last Session by Mark St. Germain, wondering how it will translate to the venue of Dramaworks in West Palm Beach. Last night we attended the preview of the production which was directed by Bill Hayes, who is also the Producing Artistic Director of Dramaworks, the best (and most serious) theater in South Florida. He had promised something "different" than the NYC production, and he delivered.

The play is about a fictitious meeting between two great thinkers, C.S. Lewis, the Christian apologist, and Sigmund Freud, the father of psychoanalysis and a staunch atheist, towards the end of Freud's life and at the onset of WW II and is set in Freud's study in London. In a sense, the outbreak of war is another "character" in the play, one which helps develop the dramatic tension. It is a perfect conceit to spin a play about great ideas confronting the inexplicable transience of life and the gathering storm of man's inhumanity to man. Still there is a playful humor between these two great philosophers and this helps to relieve some of the tension of the intellectual dialogue. They both seem to agree on one thing: "humor tips the scales."

The New York Times review of the NYC production, while overall praising the work, was critical of there being a “lack of tension” or lack of “suspense.” Dramaworks has addressed that, getting to more of the core emotions of the two, sometimes finding they share more as human beings in spite of their philosophical differences. Of course it helps to have two fine actors to direct, Dennis Creaghan who I will always remember for his role as Don, the owner of the junk shop in David Mamet's American Buffalo which played last year. It shows the range of his acting abilities to go from the staccato street dialogue of Mamet to the thoughtful, brooding pronouncements of a Freud. Chris Oden, playing Freud's foil, C.S. Lewis, always seems to have the perfect theist rejoinder to Freud's scientific view, and Oden plays the role convincingly with passion.

I had said in my "review" of the NYC production that we felt as if we were in Freud's study, but that sensation has been used to even greater advantage by Hayes, and his set designer Michael Amico, in the intimate setting of Dramaworks' theatre, where the audience sits, literally, on the very edge of the stage in a stadium seating configuration -- rather than having to look up at the action as it was presented in NY. Dramaworks has perfectly replicated a typical London mews apartment and faithfully captured Freud's study with his ancient artifacts, even down to copying the chair he sat in!

Kudos again to Palm Beach Dramaworks, theater to think about which always rises to the occasion.

Finishing The Hat

This is one of the most remarkable documents of the theater that I've ever read, so exceptional in fact that I'm having trouble breezing through it, instead savoring every word. So even though I'm only half-way through, I'm writing a "first installment review," a respite from the political and economic shenanigans I've been held hostage to over the last few weeks. I prefer to think about great literature, music, or theater and Finishing The Hat; Collected Lyrics (1954-1981) with Attendant Comments, Principles, Heresies, Grudges, Whines and Anecdotes (Alfred A. Knopf, 2010) is a perfect Trifecta.

This is a detailed account of the American Broadway theater (1954-1981) written by our greatest living Broadway composer and lyricist, Stephen Sondheim, arguably the greatest ever.

As the subtitle hints, it is not only an erudite, introspective, and sometimes self deprecating account of his own works with the complete lyrics, both those retained and discarded for the shows he wrote during the period, it is also a frank discussion of the "major players" of his time, most of whom he of course knew or knows, and some of whom he did not but nonetheless influenced him in some way. I call this book "a document" as only a first-hand participant of Sondheim's stature could make his reminiscences a treasure-trove which will be studied by students of Broadway for years to come. We can eagerly await Sondheim's next installment covering the musicals after 1981.

Although as a young man Sondheim struggled to become known as a composer, Finishing The Hat understandably focuses on his lyrics as visiting his music in the same detail would require technical knowledge few of us mere mortals possess. He sets out his mantra for lyrics -- for which he gives attribution to Oscar Hammerstein, his mentor, and Strunk and White's The Elements in Style -- as follows:


1. Content Dictates Form
2. Less is More
3. God is in the Details

As an example of the latter he quotes his lyrics "Losing My Mind" from Follies, one of my many favorite Sondheim pieces, one that is in my own piano repertoire. Funny, I've played this song hundreds of times and never made the connection that as Sondheim puts it, "musically, this was less an homage to, than a theft of, Gershwin's 'The Man I Love,' with near-stenciled rhythms and harmonies" (although the lyrics are more along the lines of Dorothy Fields, a lyricist Sondheim holds in higher esteem than Ira Gershwin). Now I can clearly see the similarities, never noticing them in my many renditions of both songs. But the "God is in the Details" issue is from the last stanza of that song where Sondheim uses the word "To" in the fourth line from the end rather than the more prosaic "And"

"I dim the lights
And think about you,
Spending sleepless nights
To think about you.
You said you loved me,
Or were you just being kind?
Or am I losing my mind?"

Per Sondheim: "...using the word 'to' instead of 'and' ...takes Sally a step further into her obsession with Ben and offers a nice example of the subtle powers of the English language. As I keep saying, God is in the details."

No doubt Sondheim's best work begins when he is both lyricist and composer, finding the perfect marriage of the subtleties of the English language with the progressions and rhythms of music. But before establishing himself as a composer (although he was both lyricist and composer for his rarely performed earliest work, Saturday Night, in 1954), his friend, Oscar Hammerstein, persuaded him first to take on the role of lyricist for West Side Story with the renowned composer, Leonard Bernstein, who according to Sondheim, thought himself "poetic," which set up a continuing battle, Sondheim trying to write lyrics within the characters and Bernstein wanting an unrealistic poetic lyric. Sondheim then was too young and inexperienced and frequently had to accede to Bernstein's demands, something he is still not happy about. I love Sondheim's comments regarding the song "America": "Some lines of this lyric are respectable - sharp and crisp, but some melt in the mouth as gracelessly as peanut butter...."

While things went better when he collaborated with Jule Styne for Gypsy, he felt he was ready to write both the music and lyrics but the show's star, Ethel Merman, insisted on a "name" composer for the show. Nonetheless, Sondheim had respect for Styne, thought he captured the right atmosphere in the music for the show, and undoubtedly learned a trick or two from that collaboration.

His disaster collaboration was with none other than the great Richard Rodgers in the writing of Do I hear a Waltz? in 1964. This came on the heels of "two successful" musicals for which Sondheim wrote both lyrics and music, the commercially successful A Funny Thing Happened on the Way to the Forum in 1962 and the artistically successful (but commercial failure) Anyone Can Whistle in 1964 which, although it closed after only nine performances, was another great learning experience for the young artist, preparing him for greater successes in the future. The title song from Anyone Can Whistle is also one of my own personal favorites and when I play it on the piano I almost feel is if I am practicing a yoga exercise, "It's all so simple: / Relax, let go, let fly. / So someone tell me why / Can't I?" Some, according to Sondheim, thought this particular song was autobiographical, to which Sondheim replies, "To believe [this song] is my credo is to believe that I'm the prototypical Repressed Intellectual and that explains everything about me. Perhaps being tagged with a cliché shouldn't bother me, but it does, and to my chagrin I realize it means that I care more about how I'm perceived than I wish I did. I'd like to think this concern hasn't affected my work, but I wouldn't be surprised if it has." How's that for frankness?

In any case, back to his collaboration with Richard Rodgers, something he took on at the request of the, then, dying Oscar Hammerstein, and as a means to make a "ton of money" after the flop of Anyone Can Whistle. It was, as he admits, an act of self-deception, it made him "feel noble to sublimate my need to write music in order to support his [Hammerstein's] forlornly abandoned partner...Warmed by the personal aspects of the venture and rationalizing the right and left, I agreed to write the lyrics, as wrongheaded a decision as I've ever made." Sondheim found Rodger's creative abilities were failing him and once he wrote music for a piece he refused to alter any of it for the lyrics. It was a spiritless collaboration and as Sondheim says it "was not a bad show, merely a dead one." So with the failure of a work he loved, Anyone Can Whistle, and the failed collaboration of Do I Hear a Waltz, Sondheim began his voyage into a brilliant career as "I learned the only reason to write a show is for love -- just not too much of it."

His musical Company, which is about marriage, or perhaps more aptly, about the potential misery of marriage, is one of my favorites and I have a coincidental personal connection with it as well as it opened on the same day as my second marriage. Also, the main character's name is Robert, and I play most of the music from Company on the piano, with the notable exception of "Getting Married Today" which is technically demanding and is best heard sung. Sondheim points out the irony that all his training under Hammerstein to write an integrated book musical had to be rethought for this show as it is an ensemble production, with the music having to comment on the subject, and not necessarily advancing the plot. Also, it required Sondheim to interpret the intricacies of a subject he had not personally experienced: marriage. He had to interview Richard Rodgers daughter, Mary, to acquire "secondhand experience" on the subject.

What emerged is a brilliant collection of characters and songs, perfect for the subject and the cynical 70s. I was happy to learn that Sondheim's favorite version of the musical is the same one as ours, the 2006 production staring Raul Esparza. All the characters play musical instruments in this production and Esparza as I recall had to learn to play the piano to accompany himself when singing my favorite piece from the show, "Being Alive." The entire show is a remarkable performance which is available on DVD. Again, in a self-effacing mood, Sondheim confesses the following about the show: "Chekhov wrote, 'If you're afraid of loneliness, don't marry.' Luckily, I didn't come across that quote till long after Company had been produced. Chekhov said in seven words what it took George [Furth, the writer of "The Book"] and me two years and two and a half hours to say less profoundly. If I'd read that sentence, I'm not sure we would have dared to write the show, and we might have been denied the exhilarating experience of exploring what he said for ourselves." (Disclaimer: I don't agree with Chekhov!)

In 1971 he followed up Company with another musical with a loose plot, Follies. It is Sondheim's tribute to the subject he loves the most, Broadway history and Follies allowed him "to imitate the reigning composers and lyricists from the era between the World Wars....What made these songwriters imitable was that most of them had a style independent of whatever show they were writing. Just as you can listen to almost any piece by Chopin without ever having heard it before and still know that it's Chopin, so it is with Arlen, or Gershwin, as well as with a lyric by W.S. Gilbert or Harburg or Porter or Hart, at least the lyrics they wrote once they'd found their voices." Follies has that great show-stopper, "I'm Still Here" as well as one of the most cynical pieces ever written on the subject of marriage: "Could I Leave You?"

But so much of the value of Finishing the Hat is Sondheim's observations about his contemporaries. Of course he pays homage to his "unsung collaborators" over the years, people such as Arthur Laurents and George Furth just to name a few, and then there are his accolades and criticisms of the composers and lyricists, and he frequently doesn't hold any punches:

Leonard Bernstein: "taught me by example..[and] there were other musical things that I learned from Lenny by osmosis...Many of the lyrics from West Side Story suffer from a self-conscious effort to be what Lenny deemed 'poetic.'"
Frank Loesser: "A master of conversational lyrics....Most impressive...the ideas behind his songs."
Alan Jay Lerner: "Smooth, appropriate lyrics but merely pleasant...No discernable style or personality." (Although Sondheim acknowledges that My Fair Lady was the most entertaining musical he's ever seen, except his own!)
Oscar Hammerstein II: "An earthy, optimistic lyricist...Sometimes gets carried away by 'pretty' words instead of accurate ones."
E.Y Harburg: "Often preoccupied with linguistic playfulness that is at its best charming and inventive."
Lorenz Hart: His writings were" jaunty but melancholy, forceful but vulnerable..verbally nimble, full of humor, and a lazy craftsman."
Ira Gershwin: "Often undone by his passion for rhyming, for which he sacrifices both case and syntax." Sondheim speculates that his obsession "to invent and dazzle" was an attempt to "bridge the gap" with his genius brother.
Irving Berlin: "Naturally colloquial lyrics that were deceptively simple."
Cole Porter: "Most immediately recognizable lyrics...Technically, in both music and lyrics, no one is better than Porter and few are his equals."
Dorothy Fields: "Leading exponent in her generation of the truly colloquial lyricists...Dorothy needed someone like Kern or Arlen or McHugh -- more openly emotional composers."
Noel Coward. Compares him unfavorably to Porter. Porter's "music is notably more inventive and colorful than Coward's." In their lyrics, "both make sport of the haut monde, but Porter does it with fondness, Coward with disdain."

Those are but a few of Sondheim's "attendant comments..heresies, grudges, whines and anecdotes.". He frequently devotes whole sections to his predecessors and contemporaries in Finishing The Hat and of course there will be others to follow in the succeeding pages. If that in itself is not worth the "price of admission," Finishing The Hat is also a fine example of the art of the book, and why a Kindle cannot replicate the look and feel of good book craftsmanship. It is an oversize format so the lyrics and text can occupy three columns and to accommodate numerous illustrations, musical handwritten scores by Sondheim, lyrics both typed and handwritten and edited with the author's notes, and photographs from the productions of his shows. I was intrigued by his thought process, working out lyrics as shown on facsimiles of his yellow legal pad notes. He even goes into detail regarding his writing habits (in a footnote) about how he bought a life time supply of a special pencil with reversible erasers, ones which are flat and can't roll off a table, as well as a 32 line yellow legal pad ("allowing alternate words to be written above one another without crowding or wasting space"). Sondheim's eye for detail is omniscient.

The book is beautifully designed, printed on a high opacity stock that reminds me of the Warren Patina paper I used in my production days in publishing, when the esthetics of the book were paramount. My one minor criticism of the design is the lyrics are not as easy to read as they are juxtaposed to Sondheim's commentary text which is in bold.

Sondheim ends Finishing The Hat with "Intermission" and likewise, this entry ends on the same note.

She's Quick on the Trigger

With targets not much bigger than the president's deficit commission. I don't think I've ever actually READ anything by Sarah Palin, although I've seen her paraded before TV cameras, so it was with some interest that I noted "her" opinion column in the Wall Street Journal, Why I Support the Ryan Roadmap; Let's not settle for the big-government status quo, which is what the president's deficit commission offers.


I had expected a folksy take on the topic in keeping with her TV persona, perhaps sprinkled with homey references to Alaska wildlife, or more aptly the disappearing wildlife when Sarah Oakley has her high-powered rifle with telescopic sight at her side, but instead was greeted by a more or less professionally written piece of journalism, quite possibly with the help of the people at News Corp which owns the WSJ and also owns Fox which in turn employs Ms. Palin. She or her ghost writer is "disappointed" in the deficit commission's recommendations but commends the commission for exposing "the large and unsustainable deficits that the Obama administration has created through its reckless 'spend now, tax later' policies." I go speechless when reading such an accusation, feeling like Melville's Billy Budd confronting the evil Claggett. Sarah, do you really believe what "you" wrote? Not only are the deficits at least partially shared by your Party (not to mention the National Debt most of which could be pinned on the Bush era), but Congress now has the opportunity to roll back some of the tax forgiveness for the super wealthy, both in terms of incremental tax rates and the inheritance tax, and your Party is stonewalling that prospect. However, pardon my impertinence, "a man never trifles / with gals who carry rifles...Annie Get Your Gun.

Rebels Without a Cause?

It was a "chicken-run" by the Republicans and the Democrats, drag-racing to the edge of the Bush Tax Cliff as the sun was setting, but who really bailed out of the car and who remained will be revealed in two years. In the movie, the adversaries, Jim (played by James Dean) and Buzz, check out the abyss of the cliff before climbing into their cars:

Buzz: This is the edge. That's the end.
Jim: Yeah. It certainly is.
Buzz: You know something? I like you. You know that?
Jim: Why do we do this?
Buzz: You got to do something, now don't you?

And that seems to be the nature of the "deal" between the two parties: "You got to do something, now don't you?" On the surface, President Obama caved in. Someone had to and it was pretty clear the Republicans were prepared to fly off the cliff to preserve the precious Bush tax cuts for "everyone," especially for the wealthiest, the old Razzle Dazzle 'em of trickle-down economics.

We now continue the drag race to the same cliff in two years but this one also includes the Presidential election. If the "compromise" just further expands the deficit without creating meaningful jobs, the Democrats will blame the Republicans who will be left in the car. Of course the American people will be in the passenger's seat. "This is the edge. That's the end."

Dueling Headlines

No sooner after writing the last entry of this same date, these two headlines from AP accosted my in box:

AP Extended unemployment benefits for nearly 2 million Americans begin to run out Wednesday, cutting off a steady stream of income and guaranteeing a dismal holiday season for people already struggling with bills they cannot pay. Unless Congress changes its mind, benefits that had been extended up to 99 weeks will end this month

AP GOP says it'll block bills until tax cuts extended. "While there are other items that might ultimately be worthy of the Senate's attention, we cannot agree to prioritize any matters above the critical issues of funding the government and preventing a job-killing tax hike."

Translation: if the peasants have no bread, let them eat cake! Translation for "job-killing tax hikes" for those in the highest income bracket: trickle-down economics with no basis in fact.

This was exactly my fear after the mid-term elections: If the Republicans and Tea Partiers interpret their gains to mean they now have carte blanche to keep the Bush tax cuts for the highest wealth tier -- people who would not be hurt by some roll back to pre-Bush tax levels -- the result will only increase the deficit further.

More posturing at our country's expense.

Cheery Tidings from the Social Security Administration

For the second year in a row, this happy news from the SSA, received in the mail yesterday: "Your Social Security benefits are protected against inflation. By law, they increase when there is a rise in the cost of living. The government measure changes in the cost of living through the Department of Labor's Consumer Price Index (CPI). The CPI has not risen since the last cost-of-living adjustment was determined in 2008. As a result, your benefits will not increase in 2011."

What a country, retirees are protected from the ravages of inflation, and, better news, yet, there is no inflation! Hooray! There is certainly no inflation in interest rates from CDs, that's well documented. Thank you, The Federal Reserve!

Of course the SSA's Cola adjustments are made through the most bizarre calculation. Sounds like a lot of sleight of hand, but here is an explanation.

It is interesting to review how the CPI gets measured and how such measurements might distort what inflation seniors really face. According to Bureau of Labor Statistics Consumer Price Index the prices of certain items have actually declined over the last year, specifically Window Drapes (8.00%), Peanut Butter (5.10%), Bedroom Furniture (5.00%), Dishes (4.40%), and Sports Equipment (4.00%). But, with the notable exception of Peanut Butter which many seniors may have resorted to consuming, these items are probably not frequently among their purchases. On the other hand, let's look at some of the offsetting increases: Funerals +2.20%, Dental Services +2.80%, Nursing Homes +3.50%, Physicians Services +3.50%, Prescription Drugs +3.90% and Hospital Services +9.30%

No inflation for seniors? Ha. Also, for a quick peek into the future, let's review the past: According to the Bureau of Labor Statistics, the purchasing power of a 1984 dollar is now $.458 while a 1967 dollar is only $ .153.

No doubt entitlement programs need to be looked at along with taxes to get our fiscal house under control, but inflating away the dollar and playing shell games with Social Security is what happens when Congress cannot agree on anything and political posturing is all our representatives seem to be able to do. We've become a sound bite democracy.

Meanwhile, on another, but related topic, the essay du jour is Bill Gross' latest, with his conclusion saying it all: "The United States in short, needs to make things not paper, but that is not likely unless we see a policy revolution in Washington DC. In the meantime, our unemployed will continue to fill out forms and stand in line. We’re living here in Allentown."

.

Happy Thanksgiving

A recent email exchange with my friend across the pond, Danny, in which I wished him a Happy Thanksgiving, reminded me that this is a uniquely American holiday (although he reciprocated the wishes with news about his growing family as well as noting the passing of people we both worked with -- we are of that age).

Yesterday's PBS broadcast of the New York Philharmonic's remarkable concert last March honoring Stephen Sondheim's 80th birthday is a joyous, American story. Sondheim has taken musical composition and lyrics to places no one could have imagined. I am grateful that we honor such genius in this country, even though his art is not main stream. Another gift he has given us is his recent book, Finishing the Hat. It is the story of his craft, brilliantly written (along with his lyrics), honestly presented, even self deprecating at times (but not often) along with his take on virtually every great participant in the American musical theatre, and he has known them all. Imagine if Beethoven took the time to explain his craft in his own words, but comprehensible enough for us mere mortals. But as I have not "finished" Finishing the Hat, more on that later.

And, although there is increased polarization in this country, at least we live in one of the few places where we can say what we think. But in the saying comes some responsibility and a friend of mine reminded me of that, criticizing my last entry, pointing out that liberal media, in spite of Fox News and other affiliated media , is still dominant in this country. That might be true, and I apologize to anyone I offend by anything I satirically write. However, exaggeration and sarcasm are the hallmarks of satire so some of what I say is not intended to be interpreted literally. Nonetheless, there are a plethora of views of our political system, and the economic paths we seem to be inexorably following, and thankfully in this country we can express those opinions.

Finally, to friends and family, both near and far, Happy Thanksgiving, my favorite holiday, a uniquely American one.


.

All the News That's Feigned to Print

The Rupert Murdoch owned Wall Street Journal reported yesterday that the Rupert Murdoch owned HarperCollins Publishers will sponsor a 10-day book tour by their author, Sara Palin, who is a contributor to the Rupert Murdoch owned Fox News.

The occasion is the publication of her book "America by Heart: Reflections on Family, Faith, and Flag," a follow-up to her best-selling "Going Rogue." In addition to those credentials for her inevitable run for the Presidency, Ms. Palin is also the star of her own reality TV show, "Sarah Palin's Alaska." Her daughter Bristol is indirectly campaigning by her appearance on "Dancing With the Stars," another prime time "reality" media production.

In addition to those qualifications, Ms. Palin has a bachelor's degree in communications, having attended a number of colleges in the pursuit of that degree, was a TV newscaster, and served as a mayor of a town of some five thousand people and for a couple of years as governor of Alaska with a population about the size of El Paso, Texas. She resigned her governorship to pursue her interests in self-promotion.

Besides having Rupert Murdoch's News Corp empire as a backer, she owes her political career to John McCain who brought her to the national stage in a desperate act to carry the 2008 presidential election.

Can this "rogue" politician continue to skillfully manipulate public opinion by charisma alone and a friend in high places? And will she continue to supply News Corp with all the fodder necessary for higher ratings, greater circulation and therefore more advertising and sales? A nice symbiotic partnership? You Betcha'

.

Get Over Your Junk

Get over it already! Having an implanted medical device for almost twenty years and having flown frequently both domestically and internationally during that period, I've had more pat downs than Tiger has had lap dances. Furthermore, having endured the indignity of backless hospital gowns and medical procedures on a number of occasions, my being naked on a faceless image of a body scan sure beats being blown to smithereens at 30,000 feet.

Amazing, this "outcry" against thorough airport screenings is exactly the kind of disruption terrorists want and the American public is buying right into it. Instead of just going through this in an orderly way to expedite the process, we conjure up images of our constitutional rights being violated. It will take only one tragic incident in the air to silence these critics, something they are inviting by their protests.

Do I think these rigid guidelines are the answer to combating terrorism in the skies? No, but they are part of a solution, and an easy one if everyone simply cooperates. Ten seconds in a body scanner is not too much to ask. Your "junk" is not so sacred. Stay home and never go to a hospital if you think it is.

What Happened and What Will the Future Bring?

The question relates to the midterm elections and the answer comes via the oblique route of my 50th high school reunion. In the summer I was invited to the reunion but unfortunately I would not be able to attend.

My "old" classmate, Eileen, who did a yeoman's job organizing the reunion was disappointed (as was I), but told me that our grade advisor from those by-gone years, Mr. Brickner would be there. I was delighted to hear his name again and to learn he was well. She said she would be meeting with him to finalize plans and she was still having difficulty addressing him as "Roger" rather than Mr. Brickner. I know what she meant. Our class had tremendous respect for Roger Brickner. And, for me, he was not only my advisor, but an important mentor (probably unknown to him). My first three years in high school were mostly wasted opportunities, but when I had Mr. Brickner for Honor Economics, all that changed. I wrote to Eileen that “he is one of the few teachers I so clearly remember as being encouraging of my dormant academic abilities and I would love to be able to be in touch with him to thank him.”

Ellen passed on the information and one day I received a phone call. It was Mr. Brickner, animated and enthusiastic, exactly as I remembered him from fifty years ago. I had the opportunity to personally thank him for being such a supportive teacher and asked him whether he still wore his trademark bow tie (no). We exchanged email addresses.

Suddenly I began to receive broadcast emails from him about the, then, upcoming midterm elections, detailed analyses covering the house, senate, and gubernatorial races, state by state, projecting winners and the reasons why. I was stunned by the scope of his knowledge and asked whether he worked professionally in this area after teaching. He wrote back, "My interest in politics is an enthusiastic avocation. I began to predict presidential elections as a teenager and since I thought Dewey would win in 1948 I have been lucky to pick every winner since that time. The key is understanding where the American people are each fall of a presidential year." Now I understood why he was the champion of mock political conventions in our high school. I participated in the one for 1960 and as I recall placed Margaret Chase Smith, the Senator from Maine, in nomination for the Presidency, which put me way ahead of the times (imagine, a woman President!).

His predictions were remarkably accurate, nailing almost all the races, and reading his forecasts was a better use of time than watching the network "calls" of the election. As the projections of all the major networks -- ABC, CBS, CNN, FOX, and NBC -- rely on the same exit poll information gathered by National Election Pool (NEP), their calls and analysis can be dully redundant. It was a breath of fresh air to read Roger's coverage and projections, all well before the exit polls gathered by NEP were distributed to the networks. After the election he sent a daily email dissecting the house, senate, and gubernatorial results. On November 9 he did an omnibus summary, musing about the possibilities for 2012, which I publish in its entirety as a valuable guest entry:

WHAT HAPPENED AND WHAT WILL THE FUTURE BRING?

Dear Friends:

First and foremost, the election just concluded (with still a few undecided races) WAS truly a remarkable one. It tore down past records. The Republicans now have more state legislators than they have had since 1928. They have seized control of the House to a greater extent than they have had since 1946. Hardly a record, they added six seats in the Senate, remaining behind by a 53-47 margin. In number of governors they are very close to their all time highs of the 1970's and 1980's.

What caused this surge to the Republicans? The public never accepted the assurances of the President and the Congressional leaders that the Medical Care measure was in their interests. They were appalled by the dealings in congress and the twisting of arms. Standard behavior in Congress, but not appreciated by the public. But if the Medical Care bill hurt, it was the inability of the Administration to lower significantly unemployment. There also was the feeling that nothing was being done to limit the power and the machinations of Wall Street and Big Business. Not spoken about in the campaign I believe it was an underlying factor. It not only united the left with the populist tea party right, but it activated the latter while depressing the former.

The president himself was a substantial factor. Not that he did not achieve Congressional measures he fought for, but that he seemed not to be able to communicate to the public easily. He was viewed as being "an educated elitist" who was not comfortable with ordinary people. A bit like Adlai Stevenson.

Losses in key areas were devastating. He lost 21% of the over 65 voters, who voted in a greater proportion than in 2008. On the other end the under 30's held in their support BUT far fewer got out to vote. White men, white women, less educated all shifted strongly to the Republicans. Blacks remained loyal to the Dems. Their proportion of the vote dropped however.

The tea party played a role in the 2010 election... it helped both the Republicans and the Democrats and it hurt both as well.. It is a dynamic loosely knit group of individuals motivated by a desire to change the way government has been going of late. It is quite the populist movement, hardly a sophisticated bloc of traditional activists tightly organized. It has had the effect of bringing out voters. It has encouraged participation of voters, particularly in Republican primaries, challenging both Conservative and Moderate party standards. In three cases it achieved the nomination of tea party types in areas where the general electorate not inclined to support them. They undoubtedly caused the Repubs. Senate seats in Delaware, Colorado and Nevada. Had the standard candidates run in these states the Senate would be 50-50. If Lieberman ( I-CT) or very conservative Ben Nelson ( D-NE) had switched to vote to organize for the Republicans it would be a different story. Tea party has surely hurt the Repubs. in these three states. The Dems. can see this as a ray of hope for them. However, the Republicans undoubtedly were invigorated by the support of many in the tea party. Perhaps now that they have a half dozen tea party Senators and perhaps 40-50 House members they will understand the process of politics more than their exuberant backers. Indeed, I see this Repub. bloc as I did the Blue Dog Dems in the last Congress. Many of the Blue Dogs lost as readers of these letters expected. Many of the tea party winners come from these Blue Dog CDs.

The tea party may become involved in the populist cause of punishing the greed on Wall Street and be joined by the left wing pseudo socialists in the President's party. Perhaps this unlikely coalition will be an interesting development of tea party influence. Keep watch for this.

As the lame duck Congress meets later this month, I shall return to the issues and the wisdom of how much a lame duck Congress should attempt especially after a watershed election.

What is in this election to help us understand the 2012 election? History tells us that presidents bounce back after major defeats in Congress after their first two years... TRUMAN, EISENHOWER, REAGAN, CLINTON. All were two term presidents (Truman less only 80+ days). Does this apply to Obama?? History says it may well. But, just to play the game of IF THE PRESIDENTIAL ELECTION WERE HELD TODAY WOULD YOU VOTE FOR OBAMA OR FOR ROMNEY? My guess is that would be an extremely close election with perhaps 1% separating the two. Electoral vote? Obama 271, Romney 267. that would see Obama losing four major states VA, NC, FL, OH. It would be a nail biting election. BUT the election is NOT now, it is in NOV 2012.

A POSSIBILITY for 2012 is for third party(s) may become significant. It would really shake things up. A centrist party a la Bloomberg or a frustrated Tea Party on the right could mess up anyone getting a majority of the electoral votes. If that happened then the House votes by delegation for one of the top 3 candidates popular vote. If that were to happen in 2012, the Repubs. would make the decision for they are in control of 33 state delegations and only 26 votes are needed. So given that reality, it would seem a Tea party third party is the more likely. A centrist party would have to win a majority of the votes for it to win, and if it ran and did not, the Repubs. would again be able to vote themselves in. THIS IS ALL CONSTITUTIONAL OK??

Time to take a break, Roger

Veterans Day Thoughts

On this Veterans Day I take a moment to remember my father who fought in WW II. He was a Signal Corps photographer, and although that doesn't sound very dangerous, he had his share of close calls, fears, and uncertainties. He did things he never imagined he'd be asked to do or see, such as having to film a German concentration camp as soon as it was liberated witnessing first-hand those demonic atrocities. Or having to go up in gliders to silently land near enemy lines, and, generally, having to be away from his wife (Penny) and young son (me). He rarely talked about those war years, preferring to just put that part of his life into a compartment, locking it and throwing away the key.

My father had some notoriety, appearing on the pages of Stars and Stripes, the venerable newspaper of the armed forces that has been published since the Civil War. My father was filming at enemy lines overlooking the Rhine River, under a German sign reading "Photography Forbidden."

Now that he is long gone I regret not trying to talk to him more about the experience. I have some of his letters that he wrote to my mother and my Uncle and below I quote one of my favorite passages as it is so revealing. Towards the end of the War he wanted to get home so badly. Who could blame him? I'm sure all Veterans, current and past share those feelings.

Here are my father’s hopes and thoughts on Aug. 12, 1945, in a letter to his brother, Phil, from Wiesbaden, Germany:

“As you no doubt already know, I informed my sweetheart [Penny] some very discouraging news – that is being stuck here as [part of the] occupational [force]. On the heels of that letter came the wonderful news that Japan is asking for surrender. As this wasn’t definite as yet, I can’t say that finally war is ended, but I’m sure it’s only a matter of a day or two.

The Atomic bombings, and Russia’s entry into the conflict just overwhelmed the Japanese, especially the Atom smasher, a deadly and destructive thing, which has great future development for the betterment of mankind, but what I fear is some nation to use it for a complete destruction of civilization. I hope that this fear never will materialize.

What I began to say concerning the news [staying here as part of the occupational force], which I hated to tell Penny, is this – the sudden ending of all hostilities can possibly bring me and hundreds of other guys back to homes sooner than is predicted. I’m sure that those who are the law makers at home aren’t going to leave us in these foreign lands against our will – especially as there are millions of other Joes who have never left the good old USA and faced a future of sudden death.

I fought for freedom, freedom for all peoples. Now that we have won victory over the oppressors, haven’t I the right to enjoy that freedom? The Army is composed of civilians. Is it not the democratic way that we all share the fruits of victory, especially those who fought for it and were fortunate enough to be sparred a hideous death?"

.

A Taxing Question

How rich is too rich? Actually, I published a book by that title almost twenty years ago and some of its ideas are as relevant today as it was then (How Rich Is Too Rich; Income and Wealth in America by Herbert Inhaber and Sidney Carroll: Praeger, 1992). Two points from that book stuck with me. First, there is the very descriptive opening chapter of looking at income distribution as an imaginary "sixty minute grand parade," tax payers being the marchers, grouped by their height which would be representative of their incomes, the first marchers having the lowest income and the last the highest, with "height" determined by the "average" taxable income being equal to the "average" height of an individual American. The "parade" in effect is an X/Y graph, the Y axis being the income (height), and the X axis being the minutes of the "parade." The first few minutes one sees no marchers even though we can hear some noise. These are people with negative height, those who report the loss of money in that taxable year. It isn't until about ten minutes into the parade that we see marchers between 10 and 24 inches in height and it isn't until 36 minutes we see the so called "average height" taxpayer march by. With about only 20 minutes left, heights begin to rise dramatically. With the last five minutes giants appear, people whose heads are so high we can hardly make out their faces without binoculars. The marchers in the very last minute of the parade are so tall we can only see their feet. These are people of accumulated, sometimes inherited, wealth and in the last few seconds the marchers are the size of sky scrapers. In effect, the parade shows a slowly rising gradient until the far right of the curve when it begins a parabolic rise and then shoots straight up off the graph.

While the numbers might have changed over the last twenty years, the concept has not. Probably, if anything, the "parade" has become even more dramatic, more parabolic, with a steeper rise at the end. And, those at the end of the parade pay now less as a percentage of their income to the government than at any time before.

To listen to the Tea Partiers, a roll back of taxes of the very wealthiest to pre-Bush rates, is an evil, evil thing. Just think of the trickle-down effect that would be lost to the little folk who stand in line for the crumbs falling from the tables of the fabulously wealthy. It is ironic that these dire warnings of the effects of a tax increase on the wealthy are carried into battle on banners hoisted by "Joe the Plumbers" -- it shows the power of the conservative media and the most virulent impact of the Internet. It just makes no sense that the people near the middle of the parade should become pawns for the people at the very end.

Actually, I think the converse is true: it is an evil thing for people who have benefitted from being able to accumulate wealth in the greatest of all capitalist democracies, not to give back more for that opportunity. The argument goes that asking these people to pay more will remove the incentive for them to work, and maybe if we're talking about 70 percent of one's income that might be true. But in 2000, people reporting AGIs of more than $1 million paid 28% of their income as taxes vs. 23% five years later. In 2005 there were 304,000 households reporting income of more than $1 million, more than a trillion dollars of income or $3.375 million per household. And mind you of those, there are a few at the very end of the "parade" with incomes that have so many zeros they would be hard to read. The latter are sports stars, entertainers, and, of course, very, very successful entrepreneurs. Are they going to work "less hard" by paying an additional five percent overall? That five percent would mean another $50 billion going to the US Treasury, at least a beginning to address the ongoing deficit. And, of course, if you look at the $250,00 level as the cut off as suggested by President Obama, there is much more to be gleaned, but given the midterm elections, that level is probably going to be raised if it is not eliminated altogether.

The alternatives that are occasionally pushed by the Tea crowd, such as a flat tax, is, in effect, a regressive tax, with the lower income people having to pay the same taxes on necessities as the wealthy, which just further splits the great economic divide in this country. A national sales tax does the same thing and as we are now so dependent on consumer spending, that could be the death knell for the economy. No, a progressive tax structure has been this country's basis for supporting it's national programs and we have been able to grow in spite of these supposed "disincentives" of higher taxes at a higher bracket.

No doubt the current tax structure is hopelessly and needlessly complicated and THAT is where the discussion should also be focused. There are so many loopholes, that a revised graduated tax structure would not have much teeth without addressing those as well. And then there is the issue of capital gains and dividends. We certainly want to encourage taxpayers to reinvest in our equity markets.

The other point I never forgot from that book was its commentary on the estate tax, arguing against the estate tax altogether, provided there was an alternative system of "estate dispersion." Rather than taxing one's estate at death, it suggested a tax-free dispersement up to a certain level per recipient (rather than per estate). For argument's sake, call that $1 million per recipient. Amounts exceeding that would begin to be taxed on some kind of graduated basis. Those would be life time totals, so if an individual receives money from different inheritances, they would be accumulated and taxed on that scale. "No longer would the estate tax system generate an American royalty -- those freed from the need ever to be economically productive. This alternative system would generate for all the incentive that most of us have in the outcome of our own economic lives. No longer would a large part of our national wealth be beyond responsive use."

Now, the incredibly wealthy could give a million dollars each to a thousand different people, all tax free (if those recipients also received no other inheritances in their lifetimes). The point is that those thousand people would put that capital to work, rather than vesting a billion dollars in one's immediate family who might decide to simply live off the income and pass it on to the next generation, and the next. Or he/she could still leave more to the immediate family, but it would be subject to taxation, perhaps substantial taxation on a graduated basis.

"Wealth great enough to entitle one to membership in the elite comes from two sources -- enormous earnings or inheritance. Prudent public policy should allow those, who, through individual ingenuity, talent, or luck, gain a fortune to use and enjoy it for life...but if these individuals have the power to transmit immense wealth to others after death...they can write the rules controlling this wealth, possibly many generations into the future. This breaks the chain of personal effort that is tightly bound, for most of us, to personal reward. Economic resources, controlled by rules set up by the dead, are denied to those who might well be more productive."

If the Republicans and Tea Partiers interpret their gains to mean they now have carte blanche to keep the Bush tax cuts for the highest wealth tier -- people who would not be hurt by some roll back to pre-Bush tax levels -- the result will only increase the deficit further. There would seem to be no upside to such an action; in effect it is a spending initiative something they claim to condemn. Failure to make tax reforms that lead to a more graduated income tax and closing loopholes, and not having a sensible inheritance tax also just further drives a stake between the haves and the have-nots.

On a related subject, the so called "wealth effect" the Federal Reserve is trying to engineer with its QE2, is still another factor favoring the haves. This is convincingly analyzed by my fellow blogger over at Fund My Mutual Fund in his posting Who Will Any Form of Intermediate Term Wealth Effect Really Help? Not the Masses. It is well worth reading.

A tranquil reprive from QE2 and the upcoming taxation battle in Congress