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 dot.com 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 dot.com 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.

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 café 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.

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: http://lacunaemusing.blogspot.com/2008/05/open-letter-to-senator-obama.html

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.

Home

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." http://www.bloomberg.com/avp/avp.htm?N=av&T=Roubini%20Sees%20%60Significant%20Downside%20Risk%27%20for%20Equities&clipSRC=mms://media2.bloomberg.com/cache/vycr2Mqgo39U.asf

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. http://www.westportnow.com/index.php?/v2/comments/westports_greenwood_publishing_to_close_150_jobs_cut/

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 http://www.shermanasher.com/newslett.html. 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 http://www.nicolepasternak.com/. 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: http://lacunaemusing.blogspot.com/2007/12/business-relationships.html

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.

Clouds

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.


http://lacunaemusing.blogspot.com/2008/07/living-on-boat.html http://lacunaemusing.blogspot.com/2008/08/lake-years.html

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.




.

Rest in Peace, Howard

My friend Howard died.
http://lacunaemusing.blogspot.com/2008/09/howard.html.

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.

"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
http://www.fundmymutualfund.com/2008/09/interesting-reactions-worldwide-what.html
Views of the U.S. from Abroad
http://www.fundmymutualfund.com/2008/09/views-of-us-from-abroad.html