Hope

Two stories today. This first one is from the New York Times Timeless Lincoln Memento Is Revealed describes the very careful opening of the back of Lincoln’s first watch -- by the National Museum of American History -- as it was thought a secret message was inscribed therein. Indeed, there was “a message secretly engraved by a watchmaker who repaired it in 1861” which read as follows: Jonathan Dillon April 13- 1861 Fort Sumpter was attacked by the rebels on the above date. J Dillon April 13- 1861 Washington thank God we have a government Jonth Dillon.

Here was an immigrant watchmaker who grasped the significance of the moment and felt compelled to inscribe his observations for some future generation, inside the watch of the President of the United States, which, as fate would have it, he happened to be repairing.

I juxtapose this story to this magnificent NASA photograph of the Shuttle that was taken last night with the full moon. It is scheduled to blast off tonight. We visited the Kennedy Space Center a couple of years ago with our friends Beny and Maria who live in Sicily. Another Shuttle was on the launching pad at the time, almost an incomprehensible sight because of the scale of the Shuttle and its supporting structure.

From the near dissolution of the United States to the technology that can achieve such a scientific feat, in less than 150 years. Any country that can accomplish that should be able to find the resolve and the means to end the present financial crisis. We would all like to say: thank God we have a government.

Music For Our Times

Maybe it is merely a coincidence that directly or indirectly through professional musicians I recently received emails with the text of Karl Paulnack’s welcome address that was given to entering freshmen at the Boston Conservatory. Although this was made last September it is just making the rounds via email.

The timing of this address, at least the timing of it becoming well known at this particular moment in our economic malaise, is noteworthy. For the past decade we have “mortgaged” the country’s future for fast, easy gains, and government, corporate America, and consumers alike have been complicit in this unprecedented moral breakdown, perhaps similar to the roaring 20's, resulting in the depressed 30's which only WW II could rescind. Today we are left with the consequences of failing financial institutions, declining residential and commercial property, and other gathering storms, bad consumer loans and ultimately failing municipalities as their taxing power is dependent on a strong labor market and real estate values, and finally inflation. And the global nature of the crisis just makes it more frightening. This collapse is building a crescendo of anxiety.

It is easy to think of the arts being irrelevant in such an atmosphere. This is the very idea that Paulnack’s address contradicts. In fact, music is not only relevant but also essential to our survival. This address by the director of the Boston Conservatory music division who is also an accomplished pianist should be required reading during these tumultuous times.

Paulnack reminds as that even in WWII’s concentration camps there was music. “Art is part of survival; art is part of the human spirit, an unquenchable expression of who we are. Art is one of the ways in which we say, ‘I am alive, and my life has meaning.’”

Or after 9/11 the author remembers, “people sang around fire houses, people sang ‘We Shall Overcome.’ Lots of people sang America the Beautiful. The first organized public event…was the Brahms Requiem, later that week, at Lincoln Center, with the New York Philharmonic. The first organized public expression of grief, our first communal response to that historic event, was a concert. That was the beginning of a sense that life might go on. The US Military secured the airspace, but recovery was led by the arts, and by music in particular, that very night.”

The essence of his message is “music is one of the ways we make sense of our lives, one of the ways in which we express feelings when we have no words, a way for us to understand things with our hearts when we cannot with our minds.” He therefore charges the incoming freshman: “I expect you not only to master music; I expect you to save the planet. If there is a future wave of wellness on this planet, of harmony, of peace, of an end to war, of mutual understanding, of equality, of fairness, I don’t expect it will come from a government, a military force or a corporation. I no longer even expect it to come from the religions of the world, which together seem to have brought us as much war as they have peace. If there is a future of peace for humankind, if there is to be an understanding of how these invisible, internal things should fit together, I expect it will come from the artists, because that’s what we do. As in the concentration camp and the evening of 9/11, the artists are the ones who might be able to help us with our internal, invisible lives.”

The full address can be read here.

Perhaps this is one of those times when music “is needed to make sense of our lives.” Music is among the oldest of human activity (certainly predating economics!) and as Daniel Levitin states in his innovative work This is Your Brain on Music, an argument “in favor of music’s primacy in human (and proto-human) evolution is that music evolved because it promoted cognitive development. Music may be the activity that prepared our pre-human ancestors for speech communication and for the very cognitive, representational flexibility necessary to become humans.”

One of my favorite melodies is from a similar era, the depression years, the plaintive, ironical song, Smile, written by Charlie Chaplin, for the 1936 film Modern Times, in which he starred. In the film, Chaplin’s Little Tramp struggles to survive the Great Depression and the indifference of the modern industrialized world. The song’s melody captures the sadness of the times while the lyrics remind us to “smile and maybe tomorrow, you'll see the sun come shining through.” This is my own brief piano rendition of Smile in Windows Media format.
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The 177K

“I looked at my 401K and it’s now a 201K ba-dum-bum-CHING!" So, the joke goes today, but, don’t look now, it’s a 177K based on the S&P 500 as shown below. If you were able to buy the inverse of the change in the National Debt during the same period, your 401K would be a 485K. Interestingly, invested in gold it would be about the same, 498K, and with the 30 year Treasury bond you’d have a 544K for the same period. So much for hindsight, but much to be said about asset allocation.

The water torture nature of the decline in equity values, without the capitulation everyone has been waiting for, as well the disappearance of Bear Stearns, Lehman Brothers, Merrill Lynch, and the implosion of AIG, Bank of America, Citi, GM and, now, even GE, speaks worlds about the gravity of the situation. AIG has become a bottomless pit into which we have dumped $170 billion in taxpayer’s money and now have 79.9% ownership of an asset that seems destined to become a black hole of unknown proportions. While President Obama’s sincerity in following through on promises for health care reform and other social issues is applauded – and highly trumpeted on the government’s new web site http://www.recovery.gov/ -- if our financial institutions entirely fail, everything else becomes meaningless.

Paul Volcker gave one of the clearest explanations as to how we got to this point in a speech he gave in Canada a couple of weeks ago, saying “this phenomenon can be traced back at least five or six years. We had, at that time, a major underlying imbalance in the world economy. The American proclivity to consume was in full force. Our consumption rate was about 5% higher, relative to our GNP or what our production normally is. Our spending – consumption, investment, government — was running about 5% or more above our production, even though we were more or less at full employment. You had the opposite in China and Asia, generally, where the Chinese were consuming maybe 40% of their GNP – we consumed 70% of our GNP.”
Full text: http://www.ritholtz.com/blog/2009/02/paul-volcker/

He argued, “in the future, we are going to need a financial system which is not going to be so prone to crisis and certainly will not be prone to the severity of a crisis of this sort.” In effect the Glass-Steagall Act that had been enacted during Depression 1.0 separating commercial and investment banks -- and had been repealed in 1999 thanks to Phil Gramm and other deregulation zealots– needs to be reinstated during this Depression 2.0. Where is Paul Volcker to lead the way back to the 401K?

October-07 401K
November-07 383K
December-07 380K
January-08 357K
February-08 344K
March-08 342K
April-08 359K
May-08 362K
June-08 331K
July-08 328K
August-08 332K
September-08 301K
October-08 251K
November-08 232K
December-08 234K
January-09 214K
February-09 190K
March-09 177K
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Publishers Gone Wild

HarperCollins Puts Its Money on New ‘It Books’ Imprint
http://www.nytimes.com/2009/03/05/books/05harper.html.
“Tapping into the zeitgeist” with the “It Books” imprint? “The collected works of Twitterdom”? Please pass the barf bag.

Instead of recognizing that the publishing industry needs to set itself apart from the fierce competition of other media, doing what only it can do well – like discovering and publishing new fiction and meaningful non-fiction -- they run like a moth to the flame. They want people to turn from TV, movies and the Internet to books by publishing the very kind of content best suited for their competition, content aimed at those who are addicted to the competing media? “Escapism, fun, and style” in book form -- lots of luck with that kind of strategic thinking. Might as well send those titles directly to the remainder tables.

Makes publishing nothing sound like a more attractive strategy. http://lacunaemusing.blogspot.com/2009/02/plastics-and-publishing.html
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Brother, Can you Spare a Dime?

Only about $57 billion more to go until the Public Debt tops $11 trillion. Since I last wrote about this on January 12 http://lacunaemusing.blogspot.com/2009/01/bailout-math-and-implications.html it has soared by some $332 billion, so the $11 trillion mark is just around the corner. Something I failed to notice before: the government gratefully accepts “contributions” to reduce the debt (no kidding) so I include the appropriate information from the government’s web site:

How do you make a contribution to reduce the debt?

Make your check payable to the Bureau of the Public Debt, and in the memo section, notate that it is a Gift to reduce the Debt Held by the Public. Mail your check to:

Attn Dept G
Bureau Of the Public Debt
P. O. Box 2188
Parkersburg, WV 26106-2188
http://www.treasurydirect.gov/govt/resources/faq/faq_publicdebt.htm#DebtOwner
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The Brave New World and the Economy Converge

Once in a while our local paper, The Palm Beach Post, gets a leg up on the rest of the newspaper media, covering a South Florida story that is probably gaining traction in other parts of the country. It is certainly a sign of our times, bioethical issues colliding with the consequences of financial hardship. The headline says it all: More people choosing to turn their bodies into money-makers. http://www.palmbeachpost.com/search/content/local_news/epaper/2009/02/24/0223body4cash.html Besides selling mundane body components such as blood, plasma or one’s hair, eggs and “womb rental” are in demand and pay big bucks.

Donating eggs can fetch $5,000 while rent-a-womb surrogacy can “net from $18,000 to $70,000, whatever the couple and the carrier agree to.”

Interestingly, there is a Catch 22: “not everyone qualifies as a donor, and women whose only reason to volunteer is that they're broke are often rejected.” So, if you really need the money, don’t bother to apply.

Furthermore, egg donors must be non-smokers, which is understandable, but they must also agree to take injections of fertility drugs, hopefully not to the degree to produce a litter as the Californian octuplet mother.

The Boca Fertility IVF Center “once had only one catalog of donors. Now there are two binders with a total of 100 donors. They include blondes, brunettes, whites, blacks, Asians, even Jewish women, who used to be difficult to find.” As the economy deteriorates, genetic engineering or selective breeding could be on the rise.

"O wonder!
How many goodly creatures are there here!
How beauteous mankind is!
O brave new world!
That has such people in't!"
(Shakespeare's The Tempest from which Aldous Huxley derived the title of his famous novel).

Economists, meet the Bioethicists.
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Taking a Break in Key West

I need a break from the constant drumbeat of downbeat news, Russian and American satellites colliding in space, British and French nuclear submarines colliding deep under the Atlantic, and the spiraling economic Armageddon, chasing an unknown vortex. I hark back to the happier times of the recent holidays when we visited Key West with our son.

Jonathan and I shared a camera. We apparently have a similar eye, as I can no longer remember exactly who took what picture. My father was a professional photographer and I would like to think a little of it rubbed off on me, but Jonathan has the advantage of being born into the digital generation and manipulates the features of a digital camera as second nature. Here he is “working” on my first computer, an Apple II, almost thirty years ago.


We walked through Key West’s less frequented side streets. It was a beautiful December day, not humid, temperatures in the 80s. Some of the photos illustrate Key West’s iconoclastic nature, some its beauty, and others the passage of time and disrepair.



Attitude Free Zone

Sliver Moon Fence

It Don’t Come Off

Roof Shadows

Tropical Leaf

Key-West-Mobile

Balcony Beer Bottle

A Sailor’s Delight

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Moral Hazard of Loan Modification

One can empathize with Ric Santelli’s widely heard rant and the reaction in the Blogosphere: http://www.fundmymutualfund.com/2009/02/rick-santelli-speaks-for-silent.html. No doubt the people who played by the book have the short stick in the $75 billion Homeowner Stability Initiative (“HSI”), but unless some way can be found to deal with the twin time bomb of mortgage foreclosures and more importantly, jobs and the threat of further job loss, the economy will continue to disintegrate.

There are people in homes who are employed but who borrowed too much or at terms that they can no longer afford, and who now may be motivated to simply walk away from their home and rent down the block and save a bundle. Hopefully, this group will be the plan’s focus. Yes, if they walk their credit rating will become impaired, but outside of that it becomes a simple business decision. How the HSI deals with principal reduction has a weighty bearing on the moral hazard issue.

Proposals that involve reducing the mortgage principal balance have called for banks or the taxpayer (whoever takes the hit for the lowered principal) having a “call” on the appreciated value of the home (over the new principal amount) if the home is sold in the future. So, if the home’s original mortgage was based on, say, a principal of $300k and the new principal is $200k, the bank/taxpayer would be entitled to the appreciated (assuming there is any) difference between $200k and the selling price in the future up to the original principal value. The problem with that approach is why would the seller bother to hold out for a price above $200k – there is no incentive (unless in the unlikely event the home can be sold for more than the original principal amount) – or would the bank then take it over as a foreclosure? Seems to me the bank/taxpayer needs a phased in participation in the selling price to avoid foreclosure down the road, or to provide incentive for the homeowner to get the best possible price, keeping government and/or the bank out of those logistics.

Thus, as far as principal reduction is concerned, the devil is in the detail, and it is here that the core moral hazard issue seems to lie. Other approaches of lowering the mortgage interest rate or converting adjustable rates to an affordable fixed rate or increasing the loan term are more straightforward and quantifiable and would seem to be easier to deal with – from a moral hazard perspective -- than principal reduction. It certainly makes sense to find a way to help people who are employed and can afford a reasonable monthly payment to stay in their homes.
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Another Shoe to Drop

Turn the bailout hose this way. Here is one waiting for a future one of unknown proportions: “Government pension agency braces for recession” http://biz.yahoo.com/ap/090216/pension_bailout.html

The magnitude of the potential problem is best understood by going to The Pension Benefit Guaranty Corporation’s web site www.pbgc.gov for a description of its mission. The PBGC “is a federal corporation created by the Employee Retirement Income Security Act of 1974. It currently protects the pensions of nearly 44 million American workers….PBGC receives no funds from general tax revenues. Operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans. PBGC pays monthly retirement benefits, up to a guaranteed maximum, to more than 631,000 retirees in 3,860 pension plans that ended. Including those who have not yet retired and participants in multiemployer plans receiving financial assistance, PBGC is responsible for the current and future pensions of about 1,274,000 people.”

The PBGC already has an $11 billion deficit but the astounding part of the article cited above is the former Director, Charles Millard’s contention that “a new investment strategy, which allows the PBGC to invest more aggressively in stocks and alternative investments, makes it less likely that it will need a multibillion-dollar congressional bailout.”

That is the “strategy” to “protect” current and future pensions? Here is yet another government “safety net” that is not only vulnerable to the economic downturn but also has hitched it’s star to the future prospects of the stocks and alternative investments.
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Plastics and Publishing

The commoditization of publishing due to the convergence of trade publishing and other forms of entertainment in a digital age is just but one nail in the coffin of the industry. Even non-trade segments of the industry, such as professional and educational publishing, are struggling with issues of digital delivery, and they have also been caught up in the same financial contagion sweeping Wall Street. These publishers have reacted by cutting their lists, reducing staff, and delaying the signing of new contracts and product development, the same kind of short-term thinking prevalent in American business.

The publishing industry seems to be at an inflection point, with the “trade” part shrinking, fighting all other forms of entertainment proliferating on line, via the Ipod, even the cell phone, cable TV, Netflix, etc. and, now, the emergence of Amazon as a publisher in its own right via its Kindle e-book reader, and educational publishing changing slower than it needs to in order to make the Web more of an opportunity than a threat. Somewhere between the space of the large media publishing organization and the small on demand publisher there would seem to be an opportunity for the strong independent publisher.

Here a just some of the recent developments to consider:

▪ HarperCollins, Houghton Mifflin Harcourt, Penguin Group, Random House and Simon & Schuster have all announced salary freezes or layoffs, or both.

▪ As of October book sales fell 7 percent compared with the same period the previous year.

▪ Houghton Mifflin Harcourt has put a freeze on acquiring most new titles for its trade division while HarperCollins has closed its nonfiction division.

▪ Even the venerable Oxford University Press, the largest university press, laid off 60 people from its US operation, almost a tenth of its staff.

▪ Amazon has ramped up the manufacturing of a new version of its Kindle reader and acquired a new work by Stephen King that will be published exclusively (initially at least) on the Kindle.

The last event is particularly significant. Amazon’s first version is estimated to have sold 500,000 copies. Kindle 2.0 is sleeker, easier to use and even will read the text aloud, still another issue for publishers. While intellectual content is now routinely delivered on the Web, mass-market fiction to date has been the exclusive stronghold of the printed book and therefore the publishing industry. Now best-selling authors can bypass the publisher.

But many publishers are also exposed to the subrogation of internal financing to private equity and the leveraged buyout. By 2006 private equity firms were flocking to the industry:
http://www.boston.com/news/world/europe/articles/2006/08/10/private_equity_eyeing_book_publisher_bids_sources/

A former colleague of mine wrote me: “I’ve always been jealous of those of you who were in publishing during the days when it was different from other corporations. I've become quite disillusioned with the business as a whole, basically because it seems every other day you hear that some great long-time member of the publishing community is being pushed out, and someone who was the CEO of a deodorant company or something is coming in to run things. Next thing you know, that company goes under.”

But mergers and acquisitions and the pursuit of the holy grail of synergy are not new. I was involved in several during my career. The most ludicrous one was early in my publishing days. A small publicly owned conglomerate owned the company I worked for at the time. This firm also had a consumer plastics company. The accountants discovered the "process" of making consumer plastic products was similar to books as you make a master (camera ready copy for photo offset or a mold for plastic products) and from the master you make duplicates. Perfect accounting synergy as you capitalize the cost of the master and write it off during the lifespan of the product. So, we became part of the "Plastics and Publishing" division and in their 1971 annual report our books were displayed along side plastic hangers, dishes, and jewelry cases!

And, publishers managed during other dire economic times. There were serious downturns in the mid 1970’s when the prime rate rose for the first time to double digits, in the early 1980s when Paul Volker ratcheted interest rates to unprecedented levels in response to the CPI reaching almost 15 percent, and a recession in 1991 that resembled the present one (although not as severe) as it was a liquidity crisis. At that time the excesses of the 1980s were in the process of self-correcting. Individuals and state and local governments who leveraged their finances found they were without the funds to even carry on day-to-day operations. Many of these loans were underwritten by real estate values that had simply disappeared.

Today’s debt has now been magnified by a huge multiple thanks to exotic financial instruments, resulting in an even more serious liquidity crisis. My mantra was a publisher should be able to operate “out of a tent,” making the investment in talented people and buying services rather than investing capital in plant and equipment, or, even worse, in unrealistic print runs and pricing, everything to keep financing costs to the minimum. Leveraged finance and publishing are a bad mix.

Long-term thinking is needed in the industry. Or, as another colleague of mine noted: “These publishers are like a group in the desert that decides to camp in place and stop expending energy so their limited water will keep them alive longer. By this strategy they will live a little longer but die they surely will.” This is the time for stronger independent publishers to expand their lists while leveraged corporate behemoths are contracting, if necessary practicing attrition rather than layoffs, seeking new authors while competitors caught in the financial mess are not publishing them. By swimming against the tide, rethinking their role in a digital world, independent publishers can help bring the publishing industry back from stagnation. “Camping in place” is not an option.
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Our Financial Crucible

I was watching some of the House Financial Services Committee’s hearings yesterday with the chief executives of Goldman Sachs, JPMorgan Chase, Bank of America, Citigroup, Morgan Stanley, State Street Bank, Wells Fargo Bank, and Bank of New York sitting there like a bunch of guilty school boys, being berated by their elders. These firms were the lucky recipients of the $700 billion banking bailout.

A number questions were posed to score points for our lawmakers, questions that were expected to be answered by a show of the hands so we all can see the scarlet letter of guilt. Questions along the lines of “how many of you have received government money but have changed your credit card terms?” The perplexed guilty parties sort of looked at each other (obviously wondering what is meant by the question), and as one would timidly raise his hand, the others would slowly follow. These questions went on and on, an embarrassment to those who posed them, those who were forced to answer, and those of us who are relying on this “system” to fix the problem. (Although they did manage to get John Mack of Morgan Stanley to say, “We are sorry.”)

Most of these lawmakers are the very ones who once pressured financial institutions to make loans available to everyone no matter what their creditworthiness so they could boast their beneficence to their constituency. And the bankers are the same financial wizards who created leveraged products that passed off tremendous risk to investors, and, now, to us. We also had a Federal Reserve that fed the fire with practically free money, leaving Alan Greenspan recently wondering, “I still don't fully understand how it happened or why it happened.”

One can empathize with the feelings of outrage, especially now that we learn that some seven hundred Merrill Lynch employees “earned” bonuses of more than one million dollars in 2008 as the firm lost $27 billion. Yesterday the apologists on CNBC generally defended Wall Street bonuses because even when a financial firm overall loses money there are individual “producers” who make pockets of money. The CNBC cheerleaders went on to say that these “producers” need to be “incentified” – otherwise they will be left only with their base salaries. Most people might be content with the latter and isn’t this the kind of “incentive” which motivated “producers” to take excessive risk in the first place?

The questions posed at the witch-hunt hearings centered on why banks are not lending out all the money they received. What planet do our representatives live on? You can’t force banks to lend money if people do not have jobs or are worried about losing jobs, and that is the central element in the crucible of today’s financial times. Just a cursory look at the chart Job losses in Recent Recessions prepared by Barry Ritholtz dramatically goes to the heart of the matter:

http://www.ritholtz.com/blog/2009/02/job-losses-comparing-recessions/
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West Palm Beach Hosts Sondheim

As Stephen Sondheim would say, “life is Company!” A few days ago we saw the great man himself at the Kravis Center in “A Conversation with Stephen Sondheim” with musical examples. As Updike is to contemporary American literature, Sondheim is to contemporary American music. When he walked onto the stage, Ann and I held our breath: a living legend before us. We’ve seen many Sondheim shows and revivals and even have a small “connection” with him through our old hometown of Westport, Ct. where Sondheim served as an apprentice at the Westport Country Playhouse in 1950. But this was such a different experience.

I wasn’t sure what such an evening might be like, although I suspected the venue would be a discussion prompted by a moderator, in this case Sean Patrick Flahaven the Associate Editor of The Sondheim Review http://www.sondheimreview.com/ with musical illustrations by Kate Baldwin who apparently was a last minute replacement for Christine Ebersole. Kate is a quintessential Sondheim singer, someone with a wonderful voice who articulates every word with the emotive intent of the song. The pianist, Scott Cady, was equally up to the task of communicating the subtleties and rhythms of the master’s music.

In fact, that is what Sondheim’s work is all about, the perfect marriage of lyric and music. As he explained in his “Conversation,” “I write for actors.” I watched him watch Kate sing the examples, wondering, exactly what was he thinking. Was he remembering how and when he wrote those pieces, or was he subliminally critiquing her performance, or was he just taking in the evening, as we were, a tribute to a legend?

I had hoped to hear more about the music itself, his comments on the particular pieces that were sung during the evening, but most of the night was about his reminiscences of his fabulous career. Having followed Sondheim, I was familiar with most of his musical works but was amused by some of the “inside information” he shared such as, in addition to Sweeny Todd, his musical Into the Woods had been prepared for film, although it never made it to the screen. This version was created with Jim Henson puppets alongside such luminaries as Robin Williams, Roseanne Barr and Steve Martin. With Henson’s death, this project ended.

I also learned he wrote a musical, Saturday Night, in 1954 when he was only 23 http://en.wikipedia.org/wiki/Saturday_Night_(musical), but it was not produced until about ten years ago. I think of it as a precursor to his portrayal of urban life in his breakthrough musical Company (the first Sondheim musical we saw when we lived in Manhattan in 1970). Saturday Night has a breathtakingly beautiful piece “What More do I Need?” which Kate Baldwin sung as the opening example. I was so taken with it I immediately bought an mp3 copy on Amazon (very competently sung by Dawn Upshaw but I like Kate’s version which is only accompanied by the piano) and then downloaded the sheet music from FreeHandMusic.com using the Solero Music Viewer (great service for musicians – allows you to buy just one piece, download it, even transpose it, and then print it). I’ve been sort of “consumed” playing the song since then. It can be seen on YouTube, sung by Anne Hathaway of all people (never knew she could sing so well). http://www.youtube.com/watch?v=JRBLlnN8YbU

Rodgers and Hammerstein brought the musical to a new plane making the songs intrinsic to the plot. (Hammerstein in fact was Sondheim’s mentor.) With Company Sondheim took the Broadway musical to the next level, and he has elevated it ever since. http://en.wikipedia.org/wiki/Company_(musical). Sondheim is in a class of his own. As he explained in “Conversations” Company is not a plot driven musical. He thinks of it as it as a work of art you can look at from different perspectives and find different meanings.

Before seeing “Conversations” we rented the brilliant 2007 revival of the show, filmed for PBS and now available on DVD, staring Raul Esparza. Esparza’s interview on the DVD is worth the price alone – how it feels to play in a Sondheim musical. Company is chock full of Sondheim’s trademark conversational songs, works of art in their own right, looking at the foibles of relationships and what life means without them. Baldwin sang “Another Hundred People” from the show.

Most of my piano repertoire is focused on the great American Songbook, the work of Bill Evans, and the music of Stephen Sondheim. I regularly play his pieces; they are intricate, and while some are not necessarily melodic, many are beautiful, and all are memorable. His lyrics and music are so closely intertwined that just hearing the music is like looking at an impressionist painting without the brush stokes or reflections of light. But, I hear the lyrics in my mind as I play, and I am continually drawn to his work.

“Not a Day Goes By” is one of Sondheim’s more poignant ballads which is sung twice in his 1981 musical Merrily We Roll Along, first as a statement of a husband’s unequivocal love for a wife who now wants to divorce him, and then as a reprisal (in this musical time goes backward) on the day they were married. The ambiguous lyrics can be read at http://music.yahoo.com/Stephen-Sondheim/Not-A-Day-Goes-By/lyrics/818119 and my rendition of the song can be heard here:

[Sorry, but the link to this song was subsequently removed by Google Pages]

Life is Company. Thank you Stephen Sondheim!
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Accountability

It’s been called “draconian” by compensation “experts,” the same ones that are employed by the financial services industry – a proposed cap of $500,000 for the “top executives” of companies receiving the TARP funds. Pass the collection hat for the CEOs of Bank of America, Citigroup, and General Motors who pocketed more than $37 million in total compensation in 2007, probably the peak year of the chimerical financial derivative.

But what about the rouges gallery of financial wizards who misrepresented risks to investors and yet cumulatively pulled down hundreds of $millions from an unsuspecting public and fled the scene, such as John Thain, Stan O’Neal, Robert Rubin, Chuck Prince, Dick Fuld, et al.?

To the rescue, a grass roots “claw-back” movement is underway, orchestrated by Nouriel Roubini, the NYU economist who warned about the current crisis years ago and Nassim Taleb, author of “The Black Swan: The Impact of the Highly Improbable.” http://lacunaemusing.blogspot.com/2009/01/black-swan-reveries.html)

Unless Rubin and others like him are made to mandatorily return their bonuses or are given some other punishment, the system that regrettably emerges is one "in which it’s the worst of capitalism and socialism, a situation in which profits were privatized and losses were socialized. We taxpayers have the worst."

See http://www.facebook.com/group.php?gid=51818722129&ref=mf

Aging and Writing

Marking the passing of a great American novelist, The New York Times Weekend Review carried an outstanding essay "John Updike’s Mighty Pen" by Charles McGrath http://www.nytimes.com/2009/02/01/weekinreview/01mcgrath.html?emc=eta1

Especially interesting was the Video A Conversation with John Updike, taped in October 2008, with Sam Tanenhaus, the editor of the Book Review, “about the craft of fiction and the art of writing.” Disquieting to think he died only a few months later, but listening to the interview I was struck how much he ruminated about aging and writing. He said that he was currently working on an historical novel set in the 1st century, but not knowing much about the period he was trying to educate himself, lamenting, though, that “maybe I’m too old to be educated.” He also said he was thrilled that the New Yorker had recently accepted two of his short stories as he was “trying to keep [his] name in the New Yorker after a long draught.” “It makes me feel like a real person to get a short story in the New Yorker.”

He went on to observe (and much of this is paraphrased here) that there comes a moment in a writer’s life when you are full of material untouched in your mind and seemingly urgent and it merges with enough skill to get it down, but this skill tends to peak in an American writer’s late 20s or early 30s. In those years I could bring a naiveté and therefore a sense of wonderment to my writing. “I’m not ashamed of my later work, but feel there is an unforced energy in the earlier work.” We never idolize anything beyond youth in this country. Consequently, we’re all failed youths, as we don’t believe in the wisdom of the ages especially now that so many people live forever in old age homes. Some of our greatest writers were Hemingway and Fitzgerald; “their idea of happiness is to be young.” And those words concluded the interview.

I closely identify. In Florida that sense of aging, a feeling of irrelevancy, is particularly pervasive. As Updike says in Rabbit at Rest, “There’s a lot of death in Florida, if you look. The palms grow by the lower branches dying and dropping off. The hot sun hurries the life cycles along….Even friendship has a thin, provisional quality, since people might at any minute buy another condominium and move to it, or else up and die.”

I thought my feelings might be confined to those of a retired businessperson living in the “sunshine state.” But my friend Bruce, a teacher and a writer living in Massachusetts, to whom I sent the New York Times link, seems to have had a similar reaction. This business of aging, still trying to stay productive, moving forward with learning as being the very essence of living, is something I would like to think we share with Updike. Here are Bruce’s comments on the Updike interview:

I listened to the interview and was, of course, attentive to his remarks about aging and youth. Naturally, I immediately applied what he said to myself to see if I thought it was true. My conclusion about me is that I am profoundly and forever naive. Thus, I'm surprised that because I am old I am invisible. I am surprised that my students don't realize that I am wise and learned. Oh, they do to a degree, but their best perceptions of me are ones that leave out my age. I'm surprised that young teachers with a few exceptions do not seek me out. I am surprised I am not valued because I have so much experience. Perhaps, I am, but it's not apparent to me. I like what Updike said about the unforced energy of youth. I think that's true, but an older man needs to seek to find what imparts an unforced energy to his own endeavors. I keep returning to Bronte's remark about being appreciated and expecting to get credit for what you do. Don't she says, or you will spend your life waiting. Then again in our own conception of ourselves we are never appreciated enough. Thus, we are back to Ecclesiastes and vanity. In any case, I liked the interview, especially the remarks about America and youth

See http://lacunaemusing.blogspot.com/2008/02/old-friends.html for more about Bruce.

Updike at Rest

John Updike passed away today. I deeply grieve. I’ve read most of his works, particularly his novels, except his most recent one, The Widows of Eastwick. Ironically, I just finished his penultimate novel, Terrorist, which I mentioned in my last entry.

Updike has been my companion since I began to read his work, starting with Rabbit, Run soon after it was published in 1960. The image of the young high school basketball star, Harry 'Rabbit' Angstrom, going up for a jump shot, “his hands like wild birds” as I recall Updike’s description, is indelibly etched in my mind. I have followed Rabbit through cycles of life that seem to mirror mine. Those novels Rabbit, Run, Rabbit Redux, Rabbit Is Rich, and Rabbit At Rest were each published at the beginning of a new decade (as well as his briefer Rabbit Remembered published at the beginning of this decade). Each captures the Zeitgeist of those moments in time. Updike had an ear for language, the mores of the American suburbs, and wrote with an erudition befitting his Harvard education.

Although his sexually charged Couples published in 1968 might have put him in the mainstream of widely read contemporary American writers, I love some of his lesser-known works such as Roger’s Version and Toward the End of Time.

But I was constantly drawn to Harry ‘Rabbit’ Angstrom who was about ten years older than I. When I read Rabbit At Rest I wondered whether there would be a similar fate, “escaping” to Florida, only to become lazy, flabby, and depressed. As it turns out, I did follow Harry to the sunshine state, and about ten years after him, but I would like to think that is the only similarity. After all, I always had Updike to keep me company, to help keep me engaged.

Updike increasingly ruminated about death in his later works, as one is prone to do as one ages: an acceptance that it happens to all of us – “no one gets out alive” – as we flippantly say. It’s the singular part we must play in this birth/death comic tragedy that we wonder about. I found myself looking for clues of Updike’s own feelings in his recent literature.

From Terrorist comes one of Updike’s more poignant passages, describing the thoughts of Jack Levy (the novel’s aging high school guidance counselor) in the dark of the early morning: …Jack has personal misery, misery that he “owns,” as people say now – the heaviness of the day to come, the day that will dawn through all this dark. As he lies there awake, fear and loathing squirm inside him like the components of a bad restaurant meal – twice as much food as you want, the way they serve it now. Dread slams shut the door back into sleep, an awareness, deepening each day, that all that is left on Earth for his body to do is to ready itself for death. He has done his courting and mating; he has fathered a child, he has worked to feed that child, little sensitive Mark with his shy cloudy eyes and slippery lower lip, and to furnish him with all the tawdry junk the culture of the time insisted he possess, to blend in with his peers. Now Jack Levy’s sole remaining task is to die and thus contribute a little space, a little breathing room, to this overburdened planet. The task hangs in the air just above his insomniac face like a cobweb with a motionless spider in the center.”

What great writing. Just to key these words makes me shudder with the knowledge that there will be no future Updike novels. We have lost a truly great American writer and, for me, a heartfelt companion..

Early in the Morning

It is early in the morning on the eve of President-elect Obama’s inauguration – in fact very early, another restless night. When it is so early and still outside, sound travels and I can hear the CSX freight train in the distance, its deep-throated rumbling and horn warning the few cars out on the road at the numerous crossings nearby.

Perhaps subconsciously my sleeplessness on this, the celebration of Martin Luther King’s birthday, relates to the incongruous dreamlike images of the bookends of my political consciousness, from the Little Rock desegregation crisis of 1957, the freedom marches that culminated with the march on Washington in 1963 and Martin Luther King’s historic "I Have a Dream" speech, to the inauguration tomorrow of our first Afro-American President. All this breathtaking demonstration of profound social change in just my lifetime.

Much has now been said comparing Obama to Lincoln. In my “open letter” to Obama that I published here last May http://lacunaemusing.blogspot.com/2008/05/open-letter-to-senator-obama.html I said “Your opponents have criticized your limited political experience, making it one of their main issues in attacking your candidacy. Lincoln too was relatively inexperienced, something he made to work to his advantage. Forge cooperation across the aisle in congress, creating your own ‘team of rivals’ as Doris Kearns Goodwin described his cabinet in her marvelous civil war history.”

The Lincoln comparison is now omnipresent in the press, not to mention his cabinet selections indeed being a team of rivals. But I am restless because of what faces this, the very administration I had hoped for: a crisis of values as much as it is an economic one. The two are inextricably intertwined.

I am reading an unusual novel by one of my favorite authors, John Updike, Terrorist. One of the main characters, Jack Levy laments: “My grandfather thought capitalism was doomed, destined to get more and more oppressive until the proletariat stormed the barricades and set up the worker’ paradise. But that didn’t happen; the capitalists were too clever or the proletariat too dumb. To be on the safe side, they changed the label ‘capitalism’ to read ‘free enterprise,’ but it was still too much dog-eat-dog. Too many losers, and the winners winning too big. But if you don’t let the dogs fight it out, they’ll sleep all day in the kennel. The basic problem the way I see it is, society tries to be decent, and decency cuts no ice in the state of nature. No ice whatsoever. We should all go back to being hunter-gathers, with a hundred-percent employment rate, and a healthy amount of starvation.”

The winners in this economy were not only the capitalists, the real creators of jobs due to hard work and innovation, but the even bigger winners: the financial masters of the universe who learned to leverage financial instruments with the blessings of a government that nurtured the thievery of the public good through deregulation, ineptitude, and political amorality. This gave rise to a whole generation of pseudo capitalists, people who “cashed in” on the system, bankers and brokers and “financial engineers” who dreamt up lethal structures based on leverage and then selling those instruments to an unsuspecting public, a public that entrusted the government to be vigilant so the likes of a Bernie Madoff could not prosper for untold years. Until we revere the real innovators of capitalism, the entrepreneurs who actually create things, ideas, jobs, our financial system will continue to seize up. That is the challenge for the Obama administration – a new economic morality.

Walt Whitman penned these words on the eve of another civil war in 1860:

I hear America singing, the varied carols I hear,
Those of mechanics, each one singing his as it would be blithe and strong,
The carpenter singing his as he measures his plank or beam,
The mason singing his as he makes ready for work, or leaves off work,
The boatman singing what belongs to him in his boat, the deckhand singing on the steamboat deck,
The shoemaker singing as he sits on his bench, the hatter singing as he stands,
The woodcutter's song, the ploughboy's on his way in the morning, or at noon intermission or at sundown,
The delicious singing of the mother, or of the young wife at work, or of the girl sewing or washing,
Each singing what belongs to him or her and to none else,
The day what belongs to the day--at night the party of young fellows, robust, friendly,
Singing with open mouths their strong melodious songs.

It is still early in the morning as I finish this but the sun is rising and I’m going out for my morning walk. Another freight train is rumbling in the distance. I hear America singing.

.

The Bernie Reality Show

What a brave new financial world, one that can produce the confluence of a Bernie Madoff, his feeder funds, the regulatory (that is the lack of regulations) environment where such a Ponzi scheme could thrive over decades, and the eager investors who convinced themselves that their steady “returns” in good and bad markets were an entitlement of their connections and station in life (as Jane Austen might have put it), not to be questioned by them. Now there is the endless media frenzy over Madoff, even including a camera trained on Madoff’s apartment building in NYC. This is the perfect diversion from the more serious financial landscape of trillion dollar bailouts with consequences no one can foretell.

The same society that gave rise to Madoffian cupidity and deception is also addicted to reality shows such as American Idol, Survivor, etc. so here is the idea: give the man his own TV program, such as the one depicted in The Truman Show! That way, Bernie’s every movement voyeuristically can be monitored with all advertising revenue going to the “BMVBF” (Bernie Madoff Victim Bailout Fund). What’s the sense of sending him to prison only to make license plates? After the BMVBF is fully funded, sponsorship can then be diverted to TARP, TAF, TSLF, ABCP, HOPE and all the other bailout acronyms, present and future. Thanks Bernie!

Bailout Math and Implications

In an effort to try to understand the more than $8 trillion guarantee our government has made to bailout our financial mess, I tried to assemble a spreadsheet and before long I was drowning in acronyms and conflicting information that was beginning to remind me of an elaborate shell game a Bernie Madoff might have constructed. How can we manage to make transparency so confusing?

To the rescue, though, is a magnificent, clear summary published by Bianco Research which came to my attention through the From Behind the Headlines blog by Michael Kahn http://quicktakespro.blogspot.com/. While the details can be seen from what was published in SFO Magazine http://sfomag.com/images/charts/012009/GettingTech_fig1_0109.jpg here is a summary of Bianco's work (figures are in billions):

Measuring the Size of the Bailouts

THE FEDERAL RESERVE (Net Portfolio Commercial Paper Funding,
Term Auction Facility, Other Assets, Money Market Investor Funding Facility, MBS/FHLB Agency in Reverse Auctions, Term Securities Lending Facility, AIG Loan, Primary Credit Discount, Asset Backed Commercial Paper Liquidity, Primary Dealers and Others, Bear Stearns Assets, Securities Lending Overnight, Secondary Credit)
FEDERAL RESERVE TOTAL $5,065.0 Maximum / $1,839.5 Current

THE FDIC (FDIC Liquidity Guarantees, Loan Guarantee to GE)
FDIC TOTAL $1,539.0 Maximum / $139.0 Current

TREASURY DEPARTMENT (Fannie/Freddie Bailout, Spring 08 Stimulus Package, Treasury Exchange Stabilization Fund, Tax Break for Banks, Citibank Asset Backstop, Tem Asset-Backed Securities Loan Facility)
TREASURY DEPT TOTAL $1,803.0 Maximum / $597.0 Current

FHA (Hope for Homeowners) $300 Maximum / $300 Current

DEPT ENERGY (Auto Loans) $25 Maximum / $25 Current

GRAND TOTAL $8,707.0 Maximum / $2,875.5 Current

Here is a translation of how this looks in “real dollars:”
$8,707,000,000,000/$2,875,500,000,000

These staggering figures are before the Obama infrastructure / jobs programs get into full swing, so we can be talking about more than $9 trillion. To put this in perspective, according to the Congressional Budget Office GDP in 2009 will be $14.2 trillion, while outlays will be $3.5 trillion and total revenues $2.3, a deficit of some $1.2 trillion.

This assumes we can have confidence in government projections. Looking at the real world in a rear view mirror, this is how the budget deficits have been ramping up the National Debt since the Bush administration took office:

9/30/2000 $5,674,178,209,887
9/30/2001 $5,807,463,412,200
9/30/2002 $6,228,235,965,597
9/30/2003 $6,783,231,062,744
9/30/2004 $7,379,052,696,330
9/30/2005 $7,932,709,661,724
9/30/2006 $8,506,973,899,215
9/30/2007 $9,007,653,372,262
9/30/2008 $10,024,724,896,912
1/8/2009 $10,608,325,323,173

I include the latest figure (more than a $½ trillion increase in only 100 days) from the following handy calculator http://www.treasurydirect.gov/NP/BPDLogin?application=np as it shows a parabolic trend. The extent to which the bailouts work is going to enormously impact the budget projections, both on the revenue and outlay sides of the ledger. Tweaking the former down because of the severity of the recession and the latter upwards because of more bailouts puts us on an irreversible course. It was not long ago that the main discussion concerning the long-term budget centered on the ticking time bombs of Social Security, Medicare, and Medicaid. These threats have not disappeared, but they become even more formable as our precious resources have to be spent on surviving today to wage that war tomorrow.

The foregoing figures come from the Congressional Budget Office. Their published outlook http://www.cbo.gov/ftpdocs/99xx/doc9958/01-08-Outlook_Testimony.pdf is remarkably pointed:

The Budget Outlook for 2009
The federal fiscal situation in 2009 will be dramatically worse than it was in 2008. Under the assumption that current laws and policies remain in place (that is, not accounting for any new legislation), CBO estimates that the deficit this year will total $1.2 trillion, more than two and a half times the size of last year’s. As a percentage of GDP, the deficit this year will total 8.3 percent (as compared with 3.2 percent in 2008)––the largest since 1945.

The deterioration in the fiscal picture results from both increased outlays and decreased revenues. Relative to what they were last year, outlays will rise dramatically— by 19 percent according to CBO’s estimates. Much of that increase is a result of policy responses to the turmoil in the housing and financial markets—particularly spending for the TARP and the conservatorship of Fannie Mae and Freddie Mac. In addition, economic developments have reduced tax receipts (particularly from individual and corporate income taxes) and boosted spending on programs such as those providing unemployment compensation and nutrition assistance as well as those with cost-of-living adjustments.

Without changes in current laws and policies, CBO estimates, outlays will rise from $3.0 trillion in 2008 to $3.5 trillion in 2009 (see Table 5). Mandatory spending is projected to grow by almost $570 billion, or by 36 percent; nearly three-quarters of that growth results from the activities of the TARP and CBO’s treatment of Fannie Mae and Freddie Mac as federal entities. Discretionary spending is projected to grow by $52 billion, or by 4.6 percent. In contrast, net interest is anticipated to decline by 22 percent as a result of lower interest rates and lower inflation. In total, outlays will be equal to 24.9 percent of GDP, a level exceeded only during the later years of World War II.

Spending for certain other mandatory programs is expected to rise sharply this year. The faltering economy has increased outlays for unemployment compensation and the Supplemental Nutrition Assistance Program. Unemployment compensation is projected to nearly double— from $43 billion last year to $79 billion this year— as a result of increased unemployment and legislation to date extending such benefits. Outlays for the nutrition assistance program are expected to grow by 27 percent— from $39 billion to $50 billion—primarily because of increases in caseloads and benefits (resulting from higher food prices).

The three largest mandatory programs—Social Security, Medicare, and Medicaid—are all anticipated to record growth of at least 8 percent this year. Some of that growth stems from the relatively high rate of inflation recorded early in 2008, which boosted cost-of-living adjustments for retirees and the cost of health care. In addition, rising unemployment will add to Medicaid spending by increasing the number of beneficiaries.

Discretionary spending under current laws and policies is projected to grow by 4.6 percent in 2009. In CBO’s baseline, defense outlays rise by 5.0 percent and nondefense outlays by 4.1 percent. However, most programs are currently operating under a continuing resolution, which holds funding for 2009 at the level provided for 2008. Final appropriations and additional funding for operations in Iraq and Afghanistan may increase outlays for 2009 and beyond, and any stimulus package may raisediscretionary spending further.

Crow

Crow Island, Latitude 41.0612081 and Longitude -73.3906734, the epicenter of our boating life. This continues the boating thread that began with the following two entries:
http://lacunaemusing.blogspot.com/2008/07/living-on-boat.html
http://lacunaemusing.blogspot.com/2008/08/lake-years.html

At high tide it’s just a small pile of rocks but at low tide it’s part of the Crow bar, connecting two of the Norwalk, CT islands, Copps Island and Chimon Island. This link shows those two larger islands, with Copps in the foreground. Crow bar can be seen connecting to Chimon. http://www.norwalkct.org/PictureTour/IslandsNorth.htm

Aside from the Thimble Islands further east, the Norwalk Islands is one of the largest groups of islands in the Long Island Sound. There are a number of coves and anchorages, which make boating something special there. http://en.wikipedia.org/wiki/Norwalk_Islands We called the water to the east of Crow Island “home” for countless weekends. When anchored there one would think you are in a far away place, with few signs of civilization except for the conspicuous presence of the Manresa Island Power Plant on the mainland in Rowayton (see the stack at the lower right of this photo).

Before the GPS became ubiquitous, Crow’s waters were relatively private as Beers Rocks and other assorted rocks loom just beneath the surface making it somewhat treacherous to find one’s way into the area. Many a boat has damaged its running gears in such attempts, and the word spread quickly, keeping other boaters out.

But, with local knowledge, passage is relatively safe, especially when dead low tide is avoided. So, for years friends and we enjoyed the waters as a private enclave. And, as members of the Outboard Cruising Club, an old local club, we even own the deed to that pile of rocks, called Crow. As the tide recedes, a little sandy beach emerges, a great spot our kids went to in our dinghies and where I dutifully walked our little Schnauzers when we had them, first Muffin and then Treat. One could find me there at dawn (my favorite time of the day) as my family and friends slept.

During the summers, Crow was our community, not the towns in which we lived, and our kids became best friends there. The usual routine was to go out to the island on Friday night. Ann would load up the boat, pick up Jonathan at school, and I would meet them Norwalk Cove Marina after work and off we would go in the setting sun to our anchorage
There, we would meet Ray and Sue, John and Cathy, Richard and Marlene, Tony and Betty, Bob and Bev, and Shel and Naomi (the only stalwart sail boaters in the group). Weather cooperating, we would raft together in groups, and dingy back and forth between boats.

We began our voyage to Crow with just a thought: we wanted an activity our family would enjoy doing together, something to get me away from my all-consuming work. We considered a small vacation cottage on Connecticut’s Candlewood Lake, much smaller than Lake George where we had vacationed before, but closer to our home. We began to get serious about that alternative, but the idea of cleaning more gutters and more home repairs were off-putting.
Our home in Weston was only a few miles from the beautiful Long Island Sound, where I had boated as a child, and that is why we began to consider boating. We initially imagined ourselves as sail boaters, quietly gliding upon the waters of the Sound to the coves and towns near its shores but we first needed to learn more about boating in general and the Sound in particular. So in January 1983 we enrolled in a Coast Guard auxiliary course to learn the basics of boating.

Coincidentally, in the summer of 1981 there was a boating tragedy in our nearby waters off of Port Jefferson, the sinking of the ‘Karen E’ – this became the focus of the course as the captain of the ship, a 36’ Trojan, did everything totally wrong causing untold tragedy for his family and friends. He left Port Jefferson as dark was closing in, for a port in Connecticut and failed to recognize the lights of a tugboat with a barge in tow, piloting his boat between the two. The Karen E ran into the steel tow cable and sunk somewhere between Brookhaven, L.I., and Old Saybrook, Connecticut. His wife and daughter were killed in the accident, along with three friends. Miraculously, the Karen E’s captain made it to shore after swimming half the night.

Studying this case made us acutely aware of the gaps in our knowledge, not only about boating, but sailing in particular, which is yet another skill one must master. We therefore decided that once we earned our Coast Guard Power Squadron certificates, that we would buy a powerboat and perhaps work our way up to a sailboat. So, in the spring of 1983, graduation “diplomas” in hand, we looked for a boat.

Our search ended at Norwest Marine, a small boat yard on the Norwalk River, with a few dozen slips and rack storage. There we bought our first boat, a used 20’ cuddy cabin with a single inboard-outboard engine, which we dubbed the ‘Annie H’ and even ventured to “far off” Eaton’s Neck (only a few miles across the Sound) and to some of the anchorages around the 52 acre Norwalk Island, Sheffield, the only island with a lighthouse, although now deactivated: http://www.lighthousefriends.com/light.asp?ID=786

After only a few weeks though, coming back from a day on the Sound, the boat began taking on water. Ann was bailing out with a bucket as I tried to get the boat back to our slip. We discovered the block was cracked. We had bought a bumboat.

The owner of the marina agreed to take the boat in on trade for a new boat. We would have been better off doing that in the first place, so we traded for a new 22’ “Holiday Express.” It had a little sleeping area under the rear seats in addition to the cuddy cabin and a tiny stand up head, all in 22’ so the three of us could spend an overnight or even more time on the boat. We anxiously awaited delivery of our new Annie H” which was promised for the 4th of July weekend.

Late in the day on June 28, 1983 Ann was driving back from Greenwich on I95. Several hours later, the Mianus River Bridge on I95 in the Cos Cob section of Greenwich, Connecticut – the very span she had just traversed -- collapsed, killing three people and injuring three. Because of that collapse, the delivery of our boat was delayed as it was on a trailer, scheduled to cross the bridge the following day. It had to be rerouted, as did all truck traffic, north to Route 84 and then south to reconnect with I95. As I recall, our new Annie H did not arrive until after the July 4th holiday.

For the remainder of that summer though we were out on the Annie H every weekend and even ventured to a port that became one of our favorites over the years, Essex, CT, some six miles up the Connecticut River. There we discovered the joys of the famous Griswold Inn one of the oldest continuously operated inns in the country, having opened its doors for business in 1776. The original architecture and the marine art in the main dinning room http://www.griswoldinn.com/Pages/Dining.htm conveys the sense of embarking in a time machine, transported to the time the Declaration of Independence was signed.

Coming back from Essex we ran along the old QE2, which was taking a “cruise to nowhere” in the Long Island Sound. Ironically, we had crossed the Atlantic in October 1977on the QE2 when Jonathan was still a baby – here dressed in his sailor’s outfit -- and here we were running alongside this leviathan in our little 22 footer. By today’s cruise ship standards, the QE2 would now be considered a small ship.

Most of that summer we spent around Sheffield Island and at Mt. Misery Cove just to the East of the entrance to Port Jefferson harbor, a sandpit with 60 foot high bluffs which we would climb to view the harbor and the Long Island Sound. We even managed to persuade Ann’s Mom to go out with us when she was visiting from California.

But one afternoon we had taken my Dad and our friend, Arlene, out for the day on the south side of Sheffield. We anchored and the current was running strong. Ann and Jonathan were swimming near the boat and the current swept them away to the west (luckily, Jonathan was in a life jacket). Showing my inexperience and my overconfidence in my swimming ability, I tried to swim to them with an extra life jacket, somehow thinking I could bring them back to the anchored boat. I almost drowned and had to be fished out of the water by a passing vessel. The captain NEVER leaves the ship!

Ann had given me an anniversary gift that year, a modest little book by Janet Groene, How to Live Aboard a Boat, which she inscribed as follows: Honey – Here’s to a “dream come true” one day! Happy Anniversary, Love, Ann. Little did we know at that time where our obsession would lead. The following year there would be a new boat and there would be others after that but more on those and our times at Crow and other cruises in another entry.

Meanwhile, as it so neatly merges my publishing and historical interests with information on our home cruising grounds, I am appending a section from the United States Coast Pilot by the U.S. Coast and Geodetic Survey, published by the Government Printing Office in 1918. This was scanned as part of the Google Books Library Project from a copy at the University of California library.

This passage, written almost 100 years ago, is very detailed (a disclaimer for anyone not interested in boating or the area). Although some features are antiquated, it captures the essence of the Norwalk Islands and its environs:

NORWALK ISLANDS are a group of islands, rocks, and shoals which extend from 1 to nearly 2 miles off the north shore of Long Island Sound and have a length of 6 miles from Georges Rock to Greens Ledge lighthouse. Cockenoe Island Harbor and Sheffield Island Harbor, good at low water for vessels of about 9 and 12 feet draft, respectively, are available anchorages, and are the approaches to Norwalk River. These anchorages are marked by Pecks Ledge and Greens Ledge lighthouses and are easily made. The bottom is very irregular around the islands and rocks in the Norwalk Islands; and, although the area is well surveyed, vessels should, as a measure of safety, avoid all broken ground and proceed with caution when crossing shoal areas.

Cockenoe Island, at the eastern end of Norwalk Islands, is marked on its south side by two knolls, the rest of the island being low and level. A bar, dry in places at low water but with general depths of 1 to 2 feet, connects the island with the north shore at Seymours Point. Cockenoe Island Shoal is an extensive and dangerous area which extends 1.5 miles eastward and east-southeastward and .5 mile southward from Cockenoe Island. The least depths found are shown on the chart, but the entire area is exceedingly broken with boulders and should be avoided by strangers, even in small craft.

Georges Rock, awash at lowest tides, is at the eastern end of the shoal, and is marked off its northeast side by a black buoy. A gas and bell buoy marks the southeast end of the shoal. Vessels rounding the eastern end of Cockenoe Island Shoal should give the buoys a good berth.

Channel Rock, with 2 feet over it, lies 400 yards southwestward of Cockenoe Island, and is marked by a red buoy placed 300 yards south- westward of the rock.

Cockenoe Island Harbor lies westward of Cockenoe Island, and is marked by Pecks Ledge lighthouse. It has anchorage for vessels of less than 9 feet draft, and is also an entrance from eastward to Norwalk River. The best anchorage for vessels is in the deeper part of the harbor, depths 12 to 25 feet, lying northward and northwestward of the lighthouse. Vessels should proceed with caution at low water when crossing the shoal with 12 to 15 feet lying southward and westward of Channel Rock buoy.

Directions, Cockenoe Island Harbor. — From eastward pass southward of Cockenoe Island Shoal gas and bell buoy, steer 254° true (W % S mag.) until Pecks Ledge lighthouse bears northward of 285° true (NW by W % W mag.), then steer for the lighthouse until up with Channel Rock buoy, and then pass eastward and northward of the lighthouse at a distance of 200 to 300 yards. From westward give the edge of the shoals a good berth until Pecks Ledge lighthouse bears westward of 350° true (N mag.), and then steer this course with the lighthouse on the port, bow, passing preferably eastward of the 12-foot spot lying 250 yards southeastward of the lighthouse.

The following islands and rocks are on the northwest side of Cockenoe Island Harbor : Sprite Island is high and has some trees. Calfpasture Island has several houses and a few trees. The island eastward of Calfpasture Island is low and covered with boulders. Sheep Rocks are covered at half tide. East White Rock is a high, white rock. Grassy Hammock Rocks are bare at half tide; the rock at the south end of the group is awash at high water, and is marked by Grassy Hammock light.

Pecks Ledge lighthouse, on the west side at the entrance of Cockenoe Island Harbor, is a white conical tower, middle part brown, on a pier.

Goose Island and Grassy Island are low. The rest of the Norwalk Islands are hilly and are partly settled. Chimons Island is marked by a windmill and water tank. Copps Island has a prominent survey signal. Sheffield Island, the westernmost of the Norwalk Islands, is marked by a disused lighthouse tower (granite building). There is a boat landing on the north side of Sheffield Island.

Great Reef, lying 14 mile southward of the western end of Sheffield Island, is covered at half tide and marked by a spindle. Hiding Eocks, Old Baldy, and Old Pelt, lying northwestward of Great Reef, are bare at low water.

Greens Ledge is a rocky ridge extending from Sheffield Island to Greens Ledge lighthouse. There is little depth and rocks bare at low water in places for a distance of nearly % mile from the island, and thence to the lighthouse there is a depth of about 7 feet on the ledge. Depths of 10 to 15 feet extend about 400 yards westward and southwestward from the lighthouse, and this part of the ledge is marked at its southwest end by a red buoy. A rocky ledge, on which the least depth found is 22 feet, extends 1 mile west-southwestward from the lighthouse.

Greens Ledge lighthouse is a conical tower, lower half brown, upper half white, on a pier. Budd Reef, a small ledge with a least depth of 25 feet, lies % mile south-southeastward of Greens Ledge lighthouse. The bottom is very broken on the south side of Greens Ledge, and deep-draft vessels should pass southward of Budd Reef and the ledge with a least found depth of 22 feet lying % mile south-southwestward of Copps Island.

Sheffield Island Harbor, also known as Norwalk Harbor, is formed by the western Norwalk Islands. It is frequently used in the fall and winter, and by tows. The depths at the anchorage northwestward of Sheffield Island range from 12 to 16 feet. The directions from westward for Norwalk River lead through the harbor. The shoal flats on the north side of the harbor have rocks and boulders in places. A black buoy and a horizontally striped buoy mark the edge of the shoals with depths less than 10 feet on the north side of the harbor southwestward of Tavern Island.

Tavern Island has a number of houses. Little Tavern Island is marked by a prominent, high water tank. A row of piles extends from Tavern Island to Little Tavern Island. A rock covered at half tide lies 250 yards northeastward of Little Tavern Island. A bare rock, marked by telegraph poles, lies westward of Little Tavern Island. A shoal with little depth over it extends 250 yards south-westward of Tavern Island. A rock bare at low water lies about half-way between the southwest end of Tavern Island and the wharf at Wilson Point.

The following are objects near the channel leading from Sheffield Island Harbor to Norwalk River. White Rock shows above high water. White Rock Reef light, northward of White Rock, is located in a depth of about 9 feet on the southeast edge of the channel. Long Beach light is on the east side of the channel, near the end of the reef extending northwestward from Long Beach. Round Beach light is on the northwest side of the channel at the entrance of Norwalk River, and lies 400 yards westward of Hound Beach. The latter is a grassy shoal awash at high water, and is marked on its western side by a private spindle with cask.

NORWALK RIVER is on the north side of Long Island Sound northward of Norwalk
Islands, and is important commercially. The river has been improved by dredging a channel 150 feet wide and 10 feet deep to South Norwalk, and 100 feet wide and 8 feet deep to Norwalk. The principal entrance to the river is from westward, through Sheffield Island Harbor, and is good for a depth of 10 feet at low water. The entrance from eastward, through Cockenoe Island Harbor, is good for a depth of about 7 feet at low water. The deepest draft of vessels going up to South Norwalk and Norwalk is about 14 feet at high water.

Dorlons Point, marked by a clubhouse and wharf, is on the east side of Norwalk River 1/2 mile above the entrance. On the west side of the river abreast Dorlons Point is a shallow creek, crossed by a lift bridge with an opening 30 feet wide, above which are several marine railways to which a draft of 3 feet can be taken at high water.

South Norwalk is an important commercial and manufacturing city on the west bank of Norwalk River about 1% miles above its mouth. The depths at the wharves below the bridges range from about 5 to 12 feet.

East Norwalk, opposite South Norwalk, is reached through a channel dredged 75 feet wide and 6 feet deep, which is used mainly by small pleasure craft. In 1917 the channel had shoaled to a depth of 2.2 feet, and at low water is marked by the flats. Fitchs Point light marks the entrance of the channel at the junction with the main channel leading to South Norwalk. A stake and flag marks the southeast point of the entrance and another stake the turn abreast the lower wharves. The upper section of the channel is marked on both sides by stakes, to which small craft moor. The yacht club is at the head of navigation.

Norwalk is a city on both banks of Norwalk River at the head of navigation 1.1 miles above South Norwalk. There is a depth of about 10 feet at the wharves. The channel from South Norwalk to Norwalk is winding, with extensive flats on both sides, and requires local knowledge, even at low water, to follow it. Bridges. — Two bridges cross the river at South Norwalk. The lower one is a double-leaf lift, with an opening 70 feet wide. The second, or railroad bridge, is a center pier draw, with an opening 60 feet wide on either side…..Freight steamers make regular trips to New York from Norwalk and South Norwalk. The latter is on the main line of the N. Y., N. H. & H. R. R. Supplies. — Coal and water can be had at the wharves of South Norwalk and Norwalk. Provisions, gasoline, and other supplies can be obtained. Ice forms in the river and usually obstructs navigation for about six weeks in winter. Tides. — The mean rise and fall of tides is 6.9 feet. Some local knowledge is required to follow the best water in Norwalk River and approaches. Proceed with caution and preferably on a rising tide.

Black Swan Reveries

As a change of pace – away from my normal interest in literature and biography -- I read Nassim Taleb’s The Black Swan; The Impact of the Highly Improbable. He basically argues that experience and therefore planning counts for little. We are all governed by extraordinary effects of unanticipated extraordinary events and not by planning the minutia from the observed experience of the past. Essentially, our planning tools, the normal statistical methods we use are only effective in “Mediocristan" a world in which extremes are limited, such as the normal height of human beings, and therefore a random selection of that particular universe is anticipatable and measurable. He contrasts Mediocristan with "Extremistan" the world in which chaotic extremes reign and therefore a random sampling will not be representative. Hence, it is fruitless to plan for such extremes. So much for free will.

We are left with a world we can plan for “inside the box” but the true impact to that world occurs outside the box.

It’s sort of an in your face, edgy presentation by Taleb, very cynical in some respects. I empathize with the latter because of years of corporate planning. With the development of, first, VisiCalc, then Lotus 123, and now Excel, this kind of planning has been taken to such an extreme that the process itself probably keeps half of corporate America employed. It always amused me; I used to call it the battle of the spreadsheets – central corporate vs. the operating companies.

Part of that “planning” involves associating or connecting past events and “making sense” out of them. He calls that “naïve empiricism,” a “natural tendency to look for instances that confirm our story or our vision of the world….Alas, with tools, and fools, anything can be easy to find. You take past instances that corroborate your theories and treat them as evidence.” Even more profound is his observation: “We humans are the victims of an asymmetry in the perception of random events. We attribute our successes to our skills, and our failures to external events outside our control, namely to randomness. We feel responsible for the good stuff, but not for the bad. This causes us to think that we are better than others at whatever we do for a living.” Decades of corporate life leave me saying Amen to that.

But, isn’t the existence of the worlds of Mediocristan vs. Extremistan self-evident? Obviously, we can only think within the box when dealing with processes such as sales forecasting, budgeting, etc., basing them on the past statistics from Mediocristan. And a “black swan event” is going to have a profound impact on the world of Mediocristan. We mere humans do not have much control over an asteroid hitting our planet. Taleb’s problem with the foregoing is that we think we do.

Besides being a mathematician and philosopher, Taleb is a hedge fund manager. I was therefore interested in how he translates his philosophy to investment. Essentially, he takes the position that 85% of one’s portfolio should be allocated to “risk free investments,” specifically US Treasury Bills and the remaining 15% into very high risk investments that could have an exponential payoff in a Black Swan event from the world of Extremistan. So after a very convincing and sometimes disturbing philosophical argument the author seems to fall victim to the very blindness he decries. Are T-Bills “risk free,” especially as the US seems to be on a course to guarantee every debt and every major corporate shortfall, not to mention the twin time bombs of Social Security and Medicare/Medicaid as the baby boomers retire and unemployment rises? Now there is a Black Swan.

Fuel Efficient Cars Threaten Our Roads?

The Associated Press reports: “Oregon looks at taxing mileage instead of gasoline.”

Oregon is among a growing number of states exploring ways to tax drivers based on the number of miles they drive instead of how much gas they use, even going so far as to install GPS monitoring devices in 300 vehicles. The idea first emerged nearly 10 years ago as Oregon lawmakers worried that fuel-efficient cars such as gas-electric hybrids could pose a threat to road upkeep, which is paid for largely with gasoline taxes.

Not only are other states considering the same but Congress is as well!

Is this the apex of political stupidity / absurdity? Fuel-efficient cars pose a threat to road upkeep? Why not just mandate that the nation’s highways can only be used by SUVs? Here we are with an ideal opportunity – now that many have “adjusted” to $4.00 gasoline – to implement a federal fuel tax that would:

* support our decaying infrastructure and mass transit
* hasten the conversion to more fuel-efficient vehicles
* reduce our dependence on foreign oil from rogue nations
* promote the development of our nascent alternative energy industry, all domestic jobs

Instead, our backboneless political representatives seek what they think is the path of least resistance, one that has the resonance of big brother watching. The recent decline in oil prices is an opportunity to establish a nationwide gas tax to finally achieve important national objectives, ones that we've postponed for decades because of political expediency.