MyTunes

Reading someone’s Ipod playlist is a modern version of reading his diary. What are a person’s habits of mind or cultural background, and where are they catalogued? On his Ipod, of course, or in my case in CD mixes burned from Itunes downloads.

It is a revealing process. There is no generalized and non-specific icon such as just owning the White Album. I have to pick a song, one song, 99 cents at a time, making an affirmative choice of What I Like, not just what is on the CD. It would be an invasion of privacy if someone were to see the 150 songs I have downloaded to date, worse than, say, a dissection of my wardrobe or house furnishings. There is something about our music and its choices which defines us.

What do I see in my list?

Age and gender come screaming off the list. Bob Dylan is the only artist with 6 entries, although I would note that later work (Hurricane) and even new work (Spirit on the Water) define me as a genuine Dylan guy, not someone who got off the bus in 1970.

Bruce Springsteen would be tied for second with 3 entries (including live Thunder Road) were it not for an oddball personal favorite - the Everly Brothers. I do have their 1957 debut album with its elegant liner notes (“Frails sent mail by the bale”), but I am partial to their ballads (Devoted to You, Love Hurts)

My folk music period is long, but perhaps not really as deep as I think. I have Woody Guthrie (Pastures of Plenty) and the Weavers (If I Had a Hammer – pre-Peter Paul and Mary), but not really genuine folk like Delta Blues from the 30’s. The Cambridge coffeehouse world circa 1960 is prominent with Jim Kweskin (Washington at Valley Forge), Eric Andersen (Thirsty Boots), Dave Van Ronk (Nobody Knows You) and Tom Rush (No Regrets) who we actually saw live a couple of weeks ago. He is pushing 70.

Some choices are like The History of Rock and Roll (Rock Around the Clock, Heartbreak Hotel, Rave On, Come Go With Me) and some are perhaps Evolutionary Folk (Suite: Judy Blue Eyes, Touch of Grey) with some End of An Era Rock (Hotel California, Man on the Moon).

Some choices are just for fun – I like pairing Lipstick on Your Collar with It’s My Party, (I thought about their bookends Who’s Sorry Now and Judy’s Turn to Cry) and I did my Sue trilogy together (Robin Luke’s Suzy Darlin, Sue Thompson’s Norman and Suzy Quattro & Stormin Norman Stumbing In), passing on Wake Up Little Susie. I always wonder about songs glorifying war (Kingston Trio The Alamo, or Sink the Bismarck).

What I discover, though is that when not looking for artist or genre I seem to head more than my intellect would like toward the Bubblegum aisle. In the A’s alone I have ABBA’s Dancing Queen, Air Supply’s Lost in Love and America’s Sister Golden Hair. I fear there are that many in each letter of the alphabet. I like melodies, harmonies and simple rhythms. I am anesthetized on the table. The bubblegum is probably the most embarrassing.

Or perhaps the omissions. Women are seriously underrepresented, although Linda Ronstadt has 3 (Long, Long Time, Desperado, and Blue Bayou), Norah Jones (Don’t Know Why) is this century and I include miscellaneous salutes to Bonnie Raitt (Nick of Time) and Carol King (Tapestry). Black music, which perhaps today is almost all music, is present (Johnny B. Goode – or is that a black guy playing white music?) and a few others from Motown, but all old, nothing of current black music. My loss.

Looking at my list I would say that I’m a white guy over 60 for whom music is nostalgia and no longer the lifeblood that it was 40 years ago. The modern music I like is throwback music, not current. The collection is mainstream, falling off the track before Aerosmith in the 1980’s, more or less Bubblegum since then, with some breadth in a sidetrack of Cambridge Folk which had its day. I will need some help from Son #2, an expert in the industry to develop a list that will create a more sophisticated profile.

The Bailout

Which side are you on boys
Which side are you on?
Marching down to
Washington
Which side are you on?

The old civil rights song says that sometimes we have to choose. Either “fer it or agin it”. The government is coming to our economic rescue, and while the bailout plan is probably mostly stupid and ineffectual even Contrarian is not contrarian enough to be “agin”.

The current plan is in flux, but generally it will cost about $850 billion split between tax reductions and handouts. I am dubious of both.

We have some experience with handouts. Who could ever forget, or perhaps more accurately who remembers the American Recovery and Reinvestment Plan of 2008. The government printed $170 billion and mailed it to all taxpayers - $600 per person, $1200 per couple with various income levels. The consensus is that the net effect on the economy was negligible. It appears that sending every American to the Mall for a day will not re-open 560 closed Circuit City stores or 580 Linens ‘N Things stores. That is not surprising.

We also have some experience with bailouts. The TARP program put out some $350 billion over the Fall of 2008. Although it was initially intended to relieve banks of troubled assets there are various complications with that, and the Treasury used the funds instead to provide liquidity to financial institutions who used it to shore up balance sheets rather than make loans and, unbelievably, to pay executive bonuses. I am inclined to believe that the TARP money probably did some good in preventing a collapse of the credit system.

Now we see Senator DeMint (R, S. Carolina) arguing that the bailout should be mostly tax reductions. He is demented. Rep. Barney Frank (D, Mass) correctly points out to him that he has never seen a tax cut pay for a bridge repair. The Democrats ignore the experience of the last rebate to maximize the pandering, and we can only imagine the lobbying fees paid to get an additional allocation of millions for the National Endowment for the Arts and new furniture for the Department of Homeland Security. The concept of economic stimulus was lost months ago as the hogs line up at the trough.

Which side to be on? The tax reductions are insidious and the rebates are ineffectual. The proposed infrastructure expenditures will either take years to go through the system or go to the first unworthy projects available, and the proposed bailout of state governments merely rewards their unwillingness to raise taxes to pay for their programs. I have no sympathy for the states. Raise taxes.

I am for it. I guess it is more important to appear to do something than to get it right, because there may be no getting it right. Somewhere some innovation or psychological upturn may get the economy onto a sounder footing. Although anyone should be unhappy about the proposed deficit spending, the current need for the spending merely accents how wrong it was during the Bush administration. Let’s move on.

The Market

It has been 6 months in which “the market” has behaved poorly and shown the conventional wisdom at its worst. The conventional wisdom is encapsulated in modern portfolio theory, that a balanced portfolio of domestic and international equities, bonds and cash will perform with some consistency, flattening out the highs and lows of speculation. The usual expression is that in any 10 year period stocks will outperform bonds. Think again.

In the last 10 years U.S. equities have underperformed all models. Fidelity’s flagship Magellan Fund of large and growth companies has a 10 year average return of -4.77%. Their fund which most closely reflects a portfolio theory in a single fund is the Asset Manager which has an average 10 year return of 1.02%, only positive because of its bond component.

I and almost everyone else took a beating in the market in 2008. On the whole the geniuses were the most aggressive and took the biggest beatings. I am among the fortunate for whom the beating means only rethinking and re-orienting. Others are not so lucky, but will still get by. I think of retirees I know who thought they were comfortable with $2 million and now have $1.5 million. Or people who thought they were rich with $5 million and now have $3 million. No one will feel very sorry for them, they will be OK in the scope of things, but their lives are a little different now and not what they planned.

I would feel better if there were any lesson to be learned, and I have two thoughts. First, it seems that the stock market is not an investment at all. It is pure gambling. What normal or even sophisticated person could understand the financial condition of Citibank? Large companies are opaque, an investor cannot understand either the business model or even the financial condition of the market leaders, so there is no rational basis for investing. Citibank stockholders have lost 90% of their investments over a couple of years. Small companies on the other hand are fed and limited by big companies and took the biggest beatings in 2008. Even if an investor can understand the finances and business of a small company its public stock price is at the mercy of larger forces.

My second thought is that our current financial system does not primarily reward stockholders. The staff and players in the market eat enough of the profits to increase the stockholders’ risk significantly. The investment bankers get a percentage of the gross off the top, mutual funds get a percentage for winning or losing, and the hedge fund managers usually get 20% of the gains. The management of most public companies controls the passive Boards of Directors, and an unkind commentator could believe that General Motors and Citibank have simply been looted by management. The amount of profit which has to be earned by a public company to pay the overhead, the financing institutions and management guarantees in many cases that the stockholders are unlikely to see any increase in value of most companies, and any gains which are made are significantly diluted by management stock options.

In 10 years the Dow Jones Industrial Average has gone from 9000 to 8000. I do not know if it will go up or down or nowhere in the next 10 years. What I think is that whatever it does will not be because of anything that is or can be known to me or anyone and it will not be reflective of value to shareholders. It is only gambling on the psychology of other people. Good luck to all of us.