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September 29, 2008
High & Low Finance
After the Deal, the Focus Will Shift to Regulation By FLOYD NORRIS
Even before Congress passes a $700 billion bank bailout that nearly all legislators believe to be both necessary and unpopular, the jostling has begun over legislation that may prove to be the first test for the next president: How to reshape the financial system and its regulation.
It is clear that the old system failed — it wouldn’t need the bailout otherwise — but the diagnosis of why that happened may be crucial in deciding what changes are needed.
Already, liberals are blaming the deregulation that began under Ronald Reagan for letting a financial system get out of control, and conservatives are pointing to market interventions by liberals — notably efforts to assure mortgage loans for the poor and minorities — as being the root cause of the mess.
Conservatives are also pointing to accounting rules, which forced banks to write down the value of their loans, and to excesses by Fannie Mae and Freddie Mac, the government-sponsored mortgage enterprises that have since been nationalized, whose troubles they have tried to tie to Democrats.
Both sides roundly denounce Wall Street greed, but there is no clear legislative solution to that, so such rhetoric is more likely to shape the campaign than the postelection legislative battle.
When the liberals talk about deregulation, they most often point to the Gramm-Leach-Bliley Act of 1999, which tore down the last remaining walls between commercial banks and investment banks.
But there is little evidence to tie much of the problem to that law. Most of the walls, erected during the Depression, had already been breached over many years, with the approval of regulators. Besides, the first major failures of this crisis, Bear Stearns and Lehman Brothers, were investment banks that did not go into commercial banking in a big way.
Instead, it might be more appropriate to describe the problem as “unregulation.” That regulation was scaled back was less of a factor than Wall Street’s finding ways around regulation by establishing new products that could work between the cracks. Those new products grew to dominate the financial system, and they turned out to be prone to collapse.
Both parties bear responsibility for that, because there was little controversy over it when it was happening. Alan Greenspan, then the chairman of the Federal Reserve, believed that the new products could distribute risk to investors, who were better able to bear it than was the banking system he was charged with regulating, and few legislators were willing to challenge Mr. Greenspan on what appeared to be an arcane issue.
But the family that can take the most credit for that is the Gramms, Phil and Wendy. It was Wendy Gramm, as chairwoman of the Commodity Futures Trading Commission in the early 1990s, who championed keeping her agency out of derivative trading. It was Phil Gramm, as the chairman of the Senate Banking Committee, who pushed through legislation in 2000 to assure that no future C.F.T.C., let alone any other regulator, would have jurisdiction over such products.
At the same time that the credit-default swap market was growing, so were hedge funds, which became behemoths that were largely exempt from any regulation.
The logic behind both of those decisions was that regulation was about protecting individual investors. Because small investors could not invest in hedge funds or mortgage-backed securities or credit-default swaps, the government had no reason to interfere with private enterprise.
It turns out that those products could threaten the entire financial system, and their abuse could produce a credit crisis affecting virtually everyone.
One obvious answer is that the new regulation system should not have so many loopholes. It is possible that the old markets and old products do have too much regulation, and that deregulation in some areas would be appropriate. But the guiding principle should be that similar products and similar institutions deserve similar regulation. If large institutional investors are required to disclose their positions every quarter, why should large hedge funds be treated differently?
That principle will need to be applied internationally as well, which will require diplomacy and a willingness to consider views of governments that are much less sympathetic to financial innovation.
The growth of the new financial system also tends to undermine the conservative argument that much of the problem can be traced to the Community Reinvestment Act, which was passed by Congress in 1977. It has been cited by some bankers as a reason they made what turned out to be bad loans, but most of the worst loans appear to have been made outside of the banking system, by mortgage brokers not subject to its rules.
Similarly, Fannie Mae and Freddie Mac undoubtedly bought many loans that should not have been made. But the worst loans were privately syndicated and snapped up by investors.
The accounting rule requiring banks to mark their assets to their market value has been widely blamed for producing losses that alarmed investors. Newt Gingrich, the former House speaker, said Sunday on the ABC program “This Week” that “between half to 70 percent of the problem” was caused by the rule, and some Republican legislators pushed to have the bailout bill suspend the rule.
But if one wants to look at accounting rules as a cause, it would be more productive to examine the rules that permitted the crisis to grow without being noticed, not at the rule that finally brought the truth to public attention.
When the Financial Accounting Standards Board met after the Enron scandal to tighten the rules over off-balance-sheet entities, it permitted banks to continue keeping many assets off their balance sheets, under rules that now — belatedly — are being changed. Out of sight should not have meant out of mind, as many of the off-balance-sheet items have produced major losses.
Similarly, the rules permitted banks to turn groups of mortgages into securities and report profits even though they retained some of the risk that the mortgages would go bad. By underestimating that risk, the banks reported higher profits than they should have, and the executives qualified for larger bonuses. Many of the recent losses are just reversing profits that, in reality, were never earned.
In any case, it is too late to abandon mark-to-market accounting. Just how reassuring to investors would it be for the government to issue a rule saying it is O.K. for banks to value assets for far more than anyone would pay for them?
Perhaps the most important cause of this disaster is one that probably does not need legislation: belief in so-called rocket scientists and their computer models, which used the past to forecast the future, and did so with complete, and completely unjustified, assurance.
It was that faith that led rating agencies to give top-grade classification to securities that were in fact very risky and led investors to buy them. It was that faith that led regulators to defer to the banks’ own risk models in determining how much capital they needed. It was that faith that led senior managements of Wall Street firms — many of whom had only a general understanding of what their traders were doing — to assume that risk was under control when it was not.
That faith is gone now. It will not come back soon.
The legislation next year will shape the efforts of the American financial system to right itself, and to provide credit to families and businesses without taking undue risks that can again threaten to destroy the system. The details of those decisions will be far more important than the details of the bailout that is about to be approved.
Monday, September 29, 2008
Sunday, September 28, 2008
David Leonhardt: Bubblenomics
David Leonhardt: Bubblenomics
07:29 AM CDT on Sunday, September 28, 2008
The past two weeks, by any standard, have been extraordinary for the U.S. economy and its financial system. Merrill Lynch, which was founded during Woodrow Wilson's administration, agreed to be bought for a bargain-basement price, while Lehman Brothers, which dates to John Tyler's presidency, simply collapsed.
By the end of last week, the federal government agreed to buy hundreds of billions of dollars in securities that no bank wanted. It appears to be the government's biggest fiscal intervention since the Great Depression, designed to get the financial markets working again and keep a credit freeze from sending the economy into a deep recession. But even if the economy avoids a tailspin, the next couple of years aren't likely to feel especially good. It's been a long period of excess, and the hangover could be long, as well.
Also Online
Rod Dreher: And it was written, our blame
Steve Bartlett: Former mayor on Wall Street mess
For the near future, the most likely outcome remains slow economic growth, scant income gains for most workers and, for investors, disappointing returns from stocks and real estate. If consumers begin to cut back on their debt-fueled spending, things could get worse.
Yet, historic though this tumult has been, there is something familiar about what is happening. Once again, we are seeing the puncturing of a speculative bubble that was the result of asset prices soaring high above the underlying value of the assets. For as long as markets have existed, bubbles have formed. And whenever one of those bubbles begins to leak, it typically needs years to deflate, causing enormous economic damage as it does.
Only now, for instance, are the bubbles of the past decade and a half, first in the stock market and then in real estate, starting to go away. It's easy to think of the turmoil of the past 13 months as being unconnected to the stock bubble of the 1990s, which appeared to end with the dot-com crash of 2000 and 2001. That crash brought down the overall stock market by more than a third, its worst drop since the 1970s oil crisis. Corporate spending on new equipment then plunged and employment fell for three straight years.
But dramatic though it was, the dot-com crash did not actually come close to erasing the excesses of the 1990s. Indeed, by some of the most meaningful measures, Wall Street after the crash looked a lot more like it was in a bubble than a bust.
As late as 2004, financial services firms earned 28.3 percent of corporate America's total profits, according to Moody's Economy.com. That was somewhat lower than it had been over the previous few years, but still almost double the financial sector's average share of profits throughout the 1970s and '80s. By 2007, the share had fallen only marginally, to 27.4 percent.
Meanwhile, the share of wages and salaries earned by employees of financial services firms continued to climb and reached a peak last year. Of every dollar paid to the U.S. workforce in 2008, almost 10 cents went to people working at investment banks and other finance companies, up from about 6 or 7 cents throughout the 1970s and '80s.
How did this happen? For one thing, the population of the United States (and most of the industrialized world) was aging and had built up savings. This created greater need for financial services. In addition, the economic rise of Asia – and, in recent years, the increase in oil prices – gave overseas governments more money to invest. Many turned to Wall Street.
Nonetheless, a significant portion of the finance boom also seems to have been unrelated to economic performance and thus unsustainable. Benjamin M. Friedman, author of The Moral Consequences of Economic Growth, recalled that when he worked at Morgan Stanley in the early 1970s, the firm's annual reports were filled with photographs of factories and other tangible businesses. More recently, Wall Street's annual reports tend to highlight not the businesses that firms were advising so much as finance for the sake of finance, showing upward-sloping graphs and photographs of traders.
"I have the sense that in many of these firms," Dr. Friedman said, "the activity has become further and further divorced from actual economic activity."
Which might serve as a summary of how the current crisis came to pass. Wall Street traders began to believe that the values they had assigned to all sorts of assets were rational because, well, they had assigned them.
Traders sliced mortgages into so many little pieces that they forgot what they were really trading: contracts based on increasingly shaky loans. As the crisis has spread, other loans have started going bad as well. Hyun Song Shin, an economist at Princeton, estimates that banks have thus far absorbed only about one-third to one-half of the losses they will eventually be forced to take.
One of the few pieces of good news is that Wall Street finally seems to be coming to grips with the depth of its problems. You can see that most clearly, perhaps, in stock prices, which have at long last fallen from the stratospheric levels of the past decade.
The classic measure of whether the stock market is overvalued is the price-earnings ratio, which divides stock prices by annual corporate earnings. At the height of the bubble, in 2000, companies in the Standard & Poor's 500 Index were trading at 36 times their average earnings over the previous five years. It was the highest valuation since at least the 1880s, according to the economist Robert Shiller.
By 2004, surprisingly enough, the ratio had dropped only to about 26, still higher than at any point since the 1930s. At the start of last year, it was still 26.
The ratio has dropped closer to its post-World War II average of 17 in the last couple of weeks. At least by this one measure, stocks are no longer blatantly overvalued.
This doesn't necessarily mean they are done falling. For one thing, corporate profits could decline, particularly if households begin pulling back on spending. The unusually rapid rise of consumer spending over the past two decades is arguably the third bubble confronting the economy. It has happened thanks in part to a huge increase in debt, which may now be coming to an end, just as Wall Street's love affair with debt appears to be ending as well.
And even if the economy does better than expected, investors may still turn pessimistic. "We tend to go through pendulum swings," said Joel Seligman, the president of the University of Rochester, a longtime Wall Street observer. There are long periods of over-exuberance, in which investors worry that they are missing the next great thing, followed by crises that make those same investors fear that the world as they know it is coming to an end.
That seemed to be the case a week and a half ago, when share prices of Goldman Sachs and Morgan Stanley plunged even though the firms were still making money. Glenn Schorr, a UBS analyst, wrote an e-mail to clients saying, "Stop the Insanity."
But bubbles inevitably produce insanity, both on the way up and the way down. The formerly laissez-faire Bush administration, along with the Federal Reserve, now says the only way to restore sanity to the markets is for the government to buy an enormous pile of mortgage-related securities. Theoretically, the government could turn a profit on the securities if they can be sold for higher prices when normal conditions return.
But few expect that outcome. Sen. Richard Shelby of Alabama, the ranking Republican on the Senate Banking Committee, estimated that the ultimate cost to taxpayers could be in the range of $1 trillion, or about 2 ½ times as large as this year's federal budget deficit.
A guiding principle of economic policy in recent years has been that nobody is smart enough to diagnose a bubble until it has already deflated. This was one of Alan Greenspan's mantras during his tenure as the chairman of the Fed. His successor, Ben Bernanke, said much the same thing when he took office in 2006. As they saw it, no matter how high stock prices rose relative to profits, or no matter how high house prices rose relative to rents, regulators deferred to the collective wisdom of the market.
The market is usually right, after all. Even when it isn't, Mr. Greenspan maintained, pricking a bubble before it grew too large could stifle innovation and hurt other parts of the economy. Cleaning up the aftermath of a bubble is easier and less expensive, he argued. We're living through that cleanup now.
David Leonhardt writes about economics for The New York Times. His e-mail address is leonhardt@nytimes.com.
07:29 AM CDT on Sunday, September 28, 2008
The past two weeks, by any standard, have been extraordinary for the U.S. economy and its financial system. Merrill Lynch, which was founded during Woodrow Wilson's administration, agreed to be bought for a bargain-basement price, while Lehman Brothers, which dates to John Tyler's presidency, simply collapsed.
By the end of last week, the federal government agreed to buy hundreds of billions of dollars in securities that no bank wanted. It appears to be the government's biggest fiscal intervention since the Great Depression, designed to get the financial markets working again and keep a credit freeze from sending the economy into a deep recession. But even if the economy avoids a tailspin, the next couple of years aren't likely to feel especially good. It's been a long period of excess, and the hangover could be long, as well.
Also Online
Rod Dreher: And it was written, our blame
Steve Bartlett: Former mayor on Wall Street mess
For the near future, the most likely outcome remains slow economic growth, scant income gains for most workers and, for investors, disappointing returns from stocks and real estate. If consumers begin to cut back on their debt-fueled spending, things could get worse.
Yet, historic though this tumult has been, there is something familiar about what is happening. Once again, we are seeing the puncturing of a speculative bubble that was the result of asset prices soaring high above the underlying value of the assets. For as long as markets have existed, bubbles have formed. And whenever one of those bubbles begins to leak, it typically needs years to deflate, causing enormous economic damage as it does.
Only now, for instance, are the bubbles of the past decade and a half, first in the stock market and then in real estate, starting to go away. It's easy to think of the turmoil of the past 13 months as being unconnected to the stock bubble of the 1990s, which appeared to end with the dot-com crash of 2000 and 2001. That crash brought down the overall stock market by more than a third, its worst drop since the 1970s oil crisis. Corporate spending on new equipment then plunged and employment fell for three straight years.
But dramatic though it was, the dot-com crash did not actually come close to erasing the excesses of the 1990s. Indeed, by some of the most meaningful measures, Wall Street after the crash looked a lot more like it was in a bubble than a bust.
As late as 2004, financial services firms earned 28.3 percent of corporate America's total profits, according to Moody's Economy.com. That was somewhat lower than it had been over the previous few years, but still almost double the financial sector's average share of profits throughout the 1970s and '80s. By 2007, the share had fallen only marginally, to 27.4 percent.
Meanwhile, the share of wages and salaries earned by employees of financial services firms continued to climb and reached a peak last year. Of every dollar paid to the U.S. workforce in 2008, almost 10 cents went to people working at investment banks and other finance companies, up from about 6 or 7 cents throughout the 1970s and '80s.
How did this happen? For one thing, the population of the United States (and most of the industrialized world) was aging and had built up savings. This created greater need for financial services. In addition, the economic rise of Asia – and, in recent years, the increase in oil prices – gave overseas governments more money to invest. Many turned to Wall Street.
Nonetheless, a significant portion of the finance boom also seems to have been unrelated to economic performance and thus unsustainable. Benjamin M. Friedman, author of The Moral Consequences of Economic Growth, recalled that when he worked at Morgan Stanley in the early 1970s, the firm's annual reports were filled with photographs of factories and other tangible businesses. More recently, Wall Street's annual reports tend to highlight not the businesses that firms were advising so much as finance for the sake of finance, showing upward-sloping graphs and photographs of traders.
"I have the sense that in many of these firms," Dr. Friedman said, "the activity has become further and further divorced from actual economic activity."
Which might serve as a summary of how the current crisis came to pass. Wall Street traders began to believe that the values they had assigned to all sorts of assets were rational because, well, they had assigned them.
Traders sliced mortgages into so many little pieces that they forgot what they were really trading: contracts based on increasingly shaky loans. As the crisis has spread, other loans have started going bad as well. Hyun Song Shin, an economist at Princeton, estimates that banks have thus far absorbed only about one-third to one-half of the losses they will eventually be forced to take.
One of the few pieces of good news is that Wall Street finally seems to be coming to grips with the depth of its problems. You can see that most clearly, perhaps, in stock prices, which have at long last fallen from the stratospheric levels of the past decade.
The classic measure of whether the stock market is overvalued is the price-earnings ratio, which divides stock prices by annual corporate earnings. At the height of the bubble, in 2000, companies in the Standard & Poor's 500 Index were trading at 36 times their average earnings over the previous five years. It was the highest valuation since at least the 1880s, according to the economist Robert Shiller.
By 2004, surprisingly enough, the ratio had dropped only to about 26, still higher than at any point since the 1930s. At the start of last year, it was still 26.
The ratio has dropped closer to its post-World War II average of 17 in the last couple of weeks. At least by this one measure, stocks are no longer blatantly overvalued.
This doesn't necessarily mean they are done falling. For one thing, corporate profits could decline, particularly if households begin pulling back on spending. The unusually rapid rise of consumer spending over the past two decades is arguably the third bubble confronting the economy. It has happened thanks in part to a huge increase in debt, which may now be coming to an end, just as Wall Street's love affair with debt appears to be ending as well.
And even if the economy does better than expected, investors may still turn pessimistic. "We tend to go through pendulum swings," said Joel Seligman, the president of the University of Rochester, a longtime Wall Street observer. There are long periods of over-exuberance, in which investors worry that they are missing the next great thing, followed by crises that make those same investors fear that the world as they know it is coming to an end.
That seemed to be the case a week and a half ago, when share prices of Goldman Sachs and Morgan Stanley plunged even though the firms were still making money. Glenn Schorr, a UBS analyst, wrote an e-mail to clients saying, "Stop the Insanity."
But bubbles inevitably produce insanity, both on the way up and the way down. The formerly laissez-faire Bush administration, along with the Federal Reserve, now says the only way to restore sanity to the markets is for the government to buy an enormous pile of mortgage-related securities. Theoretically, the government could turn a profit on the securities if they can be sold for higher prices when normal conditions return.
But few expect that outcome. Sen. Richard Shelby of Alabama, the ranking Republican on the Senate Banking Committee, estimated that the ultimate cost to taxpayers could be in the range of $1 trillion, or about 2 ½ times as large as this year's federal budget deficit.
A guiding principle of economic policy in recent years has been that nobody is smart enough to diagnose a bubble until it has already deflated. This was one of Alan Greenspan's mantras during his tenure as the chairman of the Fed. His successor, Ben Bernanke, said much the same thing when he took office in 2006. As they saw it, no matter how high stock prices rose relative to profits, or no matter how high house prices rose relative to rents, regulators deferred to the collective wisdom of the market.
The market is usually right, after all. Even when it isn't, Mr. Greenspan maintained, pricking a bubble before it grew too large could stifle innovation and hurt other parts of the economy. Cleaning up the aftermath of a bubble is easier and less expensive, he argued. We're living through that cleanup now.
David Leonhardt writes about economics for The New York Times. His e-mail address is leonhardt@nytimes.com.
Saturday, September 27, 2008
Out of the Shadows and Into the Harsh Light By FLOYD NORRIS
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September 27, 2008
Off the Charts
Out of the Shadows and Into the Harsh Light By FLOYD NORRIS
THE credit default swaps market — a market that for years was kept out of view and away from any regulation — has suddenly turned into a political hot potato in Washington.
The chairman of the Securities and Exchange Commission said this week that regulation was needed immediately, while the secretary of the Treasury said efforts were already under way to get things under control, and urged caution.
Such swaps, which enable lenders to a company to purchase what amounts to insurance that will protect them if the company defaults on its debts, have grown exponentially in recent years, with the nominal amount of debt guaranteed rising to more than $62 trillion at the end of last year from $631 billion in mid-2001.
The sudden interest in the market stems from two separate but related developments. The collapse of a major firm in the market could set off a chain of problems, a fact that has scared the Treasury Department this year.
In addition, speculators who think a financial firm will fail can buy credit-default swaps. They will profit if they are right. But even if the firm is not in trouble, an increase in the price of those swaps may scare other investors, and send the company’s stock down. That prospect has alarmed the S.E.C. As the political debate was growing, the International Swaps and Derivatives Association, a trade group, reported that the amount of outstanding credit-default swaps declined in the first half of 2008, something that had never happened before.
The 12 percent decline, to $54.6 trillion, still left the market vastly larger than the total amount of debt that can be insured. The huge total reflects the way the market is structured, as well as the fact that someone does not need to actually be owed money by a company to be able to buy a credit-default swap. In that case, the buyer is betting that the company will go broke.
Within that huge market, many contracts offset one another — assuming that all parties honor their commitments. But if one major firm goes broke, the effect could snowball as others are unable to meet their commitments.
In regulated futures markets, contracts are centrally cleared. If you buy an oil futures contract on Monday, and sell it on Wednesday, you have made your profit (or taken your loss) and you no longer have any stake in whether oil prices rise or fall. But if you buy a credit-default swap on Monday from one firm, and sell an identical swap on Wednesday to another firm, you still face the potential of risk if the party that sold the swap to you is unable to pay when a default occurs, perhaps years later.
“One of the major reasons that the government helped out in the Bear Stearns situation,” Treasury Secretary Henry M. Paulson Jr. testified at a Senate hearing this week, “was to avoid throwing it into bankruptcy with all the credit-default swaps.”
Mr. Paulson said the Federal Reserve Bank of New York was working to develop protocols for that market to deal with a failure of a big player, and indicated that he did not see a need for legislation.
But Christopher Cox, the S.E.C. chairman, said Congress should act. “Neither the S.E.C. nor any regulator has authority over the C.D.S. market, even to require minimum disclosure to the market,” he testified. “The market is ripe for fraud and manipulation,” he added.
The S.E.C. is investigating possible fraud, although no charges have been brought, and is looking for cases where someone may have purchased credit-default swaps to drive up their price and persuade others that a company was in trouble.
The swaps market has been exempt from regulation since it began to grow, thanks to legislation the industry sought. The industry argued that regulation would drive business overseas, and that no regulation was needed because ordinary investors did not trade in the market.
In announcing the decline in the amount of swaps outstanding, Robert Pickel, the chief executive of the trade group, said it reflected industry efforts “to reduce risk by tearing up economically offsetting transactions, and demonstrates the industry’s ongoing commitment to reduce risk and enhance operational efficiency.”
The accompanying charts show the growth of the amount of credit-default swaps outstanding, and show how those totals compare with the total amount of outstanding loans from banks and others to corporations and foreign governments. Even with the decline, the swaps volume is more than three times the debt total.
Floyd Norris comments on finance and economics in his blog at norris.blogs.nytimes.com.
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September 27, 2008
Off the Charts
Out of the Shadows and Into the Harsh Light By FLOYD NORRIS
THE credit default swaps market — a market that for years was kept out of view and away from any regulation — has suddenly turned into a political hot potato in Washington.
The chairman of the Securities and Exchange Commission said this week that regulation was needed immediately, while the secretary of the Treasury said efforts were already under way to get things under control, and urged caution.
Such swaps, which enable lenders to a company to purchase what amounts to insurance that will protect them if the company defaults on its debts, have grown exponentially in recent years, with the nominal amount of debt guaranteed rising to more than $62 trillion at the end of last year from $631 billion in mid-2001.
The sudden interest in the market stems from two separate but related developments. The collapse of a major firm in the market could set off a chain of problems, a fact that has scared the Treasury Department this year.
In addition, speculators who think a financial firm will fail can buy credit-default swaps. They will profit if they are right. But even if the firm is not in trouble, an increase in the price of those swaps may scare other investors, and send the company’s stock down. That prospect has alarmed the S.E.C. As the political debate was growing, the International Swaps and Derivatives Association, a trade group, reported that the amount of outstanding credit-default swaps declined in the first half of 2008, something that had never happened before.
The 12 percent decline, to $54.6 trillion, still left the market vastly larger than the total amount of debt that can be insured. The huge total reflects the way the market is structured, as well as the fact that someone does not need to actually be owed money by a company to be able to buy a credit-default swap. In that case, the buyer is betting that the company will go broke.
Within that huge market, many contracts offset one another — assuming that all parties honor their commitments. But if one major firm goes broke, the effect could snowball as others are unable to meet their commitments.
In regulated futures markets, contracts are centrally cleared. If you buy an oil futures contract on Monday, and sell it on Wednesday, you have made your profit (or taken your loss) and you no longer have any stake in whether oil prices rise or fall. But if you buy a credit-default swap on Monday from one firm, and sell an identical swap on Wednesday to another firm, you still face the potential of risk if the party that sold the swap to you is unable to pay when a default occurs, perhaps years later.
“One of the major reasons that the government helped out in the Bear Stearns situation,” Treasury Secretary Henry M. Paulson Jr. testified at a Senate hearing this week, “was to avoid throwing it into bankruptcy with all the credit-default swaps.”
Mr. Paulson said the Federal Reserve Bank of New York was working to develop protocols for that market to deal with a failure of a big player, and indicated that he did not see a need for legislation.
But Christopher Cox, the S.E.C. chairman, said Congress should act. “Neither the S.E.C. nor any regulator has authority over the C.D.S. market, even to require minimum disclosure to the market,” he testified. “The market is ripe for fraud and manipulation,” he added.
The S.E.C. is investigating possible fraud, although no charges have been brought, and is looking for cases where someone may have purchased credit-default swaps to drive up their price and persuade others that a company was in trouble.
The swaps market has been exempt from regulation since it began to grow, thanks to legislation the industry sought. The industry argued that regulation would drive business overseas, and that no regulation was needed because ordinary investors did not trade in the market.
In announcing the decline in the amount of swaps outstanding, Robert Pickel, the chief executive of the trade group, said it reflected industry efforts “to reduce risk by tearing up economically offsetting transactions, and demonstrates the industry’s ongoing commitment to reduce risk and enhance operational efficiency.”
The accompanying charts show the growth of the amount of credit-default swaps outstanding, and show how those totals compare with the total amount of outstanding loans from banks and others to corporations and foreign governments. Even with the decline, the swaps volume is more than three times the debt total.
Floyd Norris comments on finance and economics in his blog at norris.blogs.nytimes.com.
Markets Can’t Wait for Congress to Act By JOE NOCERA
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September 27, 2008
Talking Business
Markets Can’t Wait for Congress to Act By JOE NOCERA
Here we go again.
Just nine days ago — Thursday, Sept. 18 — financial Armageddon was warded off when word began to leak about the government’s giant bailout plan. The news first broke around 2:10 p.m., when Bloomberg moved an article quoting Senator Charles E. Schumer, Democrat of New York, as saying the government was considering a “permanent” plan to address the financial crisis. (In fact, as Mr. Schumer told me later, he had not meant for his words to sound so definitive; he really didn’t know the planning was so far along.)
Then, less than an hour later, CNBC reported that an “R.T.C.-type plan” was being readied by the Treasury Department. That did it. In the time between the Bloomberg article and the CNBC report, the stock market rose 145 points. In a 45-minute burst right after the CNBC report, stocks rose another 270 points. The Dow closed up 410 points.
And by the time Treasury Secretary Henry M. Paulson Jr. made his big speech on Friday morning, laying out some of the details of the government’s $700 billion bailout plan, a good deal of the pressure in the markets had eased. The credit-default swap spreads narrowed on Morgan Stanley and Goldman Sachs, meaning that the credit market was less worried about the possibility that they might default.
Morgan Stanley, which had been frantically negotiating a merger with Wachovia, stopped the negotiations. Money market funds, which had been hit hard by withdrawals earlier in the week, saw an inflow of money. Other credit indicators also suggested that the credit markets were unfreezing.
Here we are a week later, and guess what? Armageddon is again approaching. All week long, the credit-default swap spreads on Morgan Stanley widened, until, by Friday, they were actually worse than they were at any time during the previous week. (And this time, the chief executive, John J. Mack, can’t blame the short-sellers for his troubles, since short-selling in financial stocks has been temporarily banned.)
On Thursday, investment-grade loans were trading lower than junk bonds, because investors were selling off their most liquid assets to raise capital. Wachovia, the nation’s fifth-largest bank holding company, suddenly appeared to be in deep trouble: “Wachovia is trading as if it’s going to fail,” Dave Klein, a manager at Credit Derivatives Research, said on Friday. Washington Mutual was seized by the government. The markets may not be as panicked as they were last week, but with every passing day, the situation is getting increasingly dangerous.
Or, to put it another way, with every passing day, Congress is fiddling while Rome is burning.
Last week, I wrote a column suggesting that the Paulson plan was unlikely to fix the enormous problems facing the financial markets and the country’s faltering economy. I am still not sure it will work — or that it is the best possible solution — but this week, I have a different, more urgent concern.
Whatever its imperfections — and despite the possibility it might not work — it needs to be approved, quickly. I’m praying that by the time the markets open on Monday, Congressional leaders will have reached a consensus on the bailout plan. We’re running out of time.
I know there is something tremendously galling about the prospect of Americans putting $700 billion — or more — of their tax dollars at risk to come to the aid of banks and investment banks whose reckless behavior has so damaged the country. They gamed the system. They lined their pockets. They made terrible, terrible mistakes. I’m as angry about it as you are.
I am also aware that there are lots of smart people who don’t like the bailout plan. On my blog the other day, I posted a letter to the House leadership from more than 200 economists. They complained about what they saw as the plan’s essential unfairness (“The plan is a subsidy to investors at taxpayers’ expense”), its ambiguity (“Neither the mission of the new agency nor its oversight are clear”), and the potential that it might ultimately weaken the very markets it was aimed at saving. The objection of the House Republicans who are currently blocking the plan — namely, that a taxpayer bailout of this magnitude should be avoided if at all possible — also deserves to be taken seriously.
Finally, I’ve been hearing a number of interesting ideas that could well turn out to be better than the Paulson plan. One of the most intriguing ones comes from Andrew Feldstein, the chief executive of Blue Mountain Capital Management, a hedge fund that specializes in credit instruments. He proposes that instead of buying bad assets that are crippling the balance sheets of the nation’s banks, the government should establish a “good bank” that would buy only solid assets.
By setting up such a bank — Mr. Feldstein envisions having the government put up $300 billion and taking an equity stake, so that taxpayers can profit when it is sold after the crisis passes — the government would make it possible for credit to “again flow to deserving borrowers.” Bad banks might eventually fail — but they would have a place to sell their good assets as they liquidate. Healthier institutions could once again start lending. Taxpayers would face much less risk.
If the country had more time, I would argue that we put ideas like that into the sunlight and see if they flower. But we don’t have any more time. Nine days ago, the financial markets were staring into the abyss; the only thing that pulled them back was the news that the Treasury and the Federal Reserve had come up with a bailout plan.
And the only thing that has kept them from falling back is the expectation that the plan will be approved quickly. For a while, it looked as if that was exactly what would happen.
Mr. Paulson and Federal Reserve chairman, Ben S. Bernanke, spent the early part of the week defending the plan before Congress. While they faced tough questioning, their main point came through: they had to act fast, otherwise the economy would crater.
Behind the scenes, Congressional leaders began to hammer out the outline of a deal, with the Democrats insisting on strong oversight for the fund, curbs on executive compensation for institutions that sold off their toxic securities to the government and aid for struggling homeowners, among other things.
On Thursday, after an arduous three-hour meeting, it appeared a deal had been struck, but it quickly fell apart after House Republicans — and Senator John McCain — objected to it. That afternoon, I had a short conversation with Representative Barney Frank, the Democrat from Massachusetts who leads the House Financial Services Committee. He was seething.
“Spencer was in the meeting with us the whole time,” he said. He was referring to Representative Spencer Bachus of Alabama, who was representing the House Republicans in the negotiations. “And now here comes John McCain acting like Andy Kaufman — ‘Here I come to save the day.’ Inserting presidential politics into this is just —— ” He stopped suddenly. Whatever word he had in mind he didn’t want to share with a reporter.
There is no question that a large part of the reason House Republicans are objecting to the Paulson plan is because of the potential loss of taxpayers’ money.
“Putting $700 billion of taxpayers’ money at risk — that’s not something we do every day,” said an aide to the House minority staff (who requested anonymity because he was not authorized to speak for the leadership). Indeed, the proposal offered by Representative John A. Boehner, the House minority leader — to create a government-backed insurance pool to guarantee mortgage-backed securities — is another of those interesting ideas that would deserve merit if there were more time.
But it is also true that much of the opposition to the Paulson plan is purely ideological — there are Republicans who believe that the bailout plan is a step toward socialism. And it appears that they would rather see the economy go down the tubes than do something they find ideologically distasteful.
And that’s what is so infuriating. Henry Paulson is not what you’d call a socialist — nor is Ben Bernanke or President Bush. They are all holding their noses as they sell this plan. Barney Frank is allied with Mr. Paulson and a president he holds in low esteem because he, too, believes this is a step the country has to take.
And so do the markets themselves, which is the most important point of all. Psychology always drives market behavior, and right now, the markets are desperately clinging to the idea that the Paulson plan is the only hope of regaining the confidence of borrowers, lenders and investors. Politics is politics, but the markets are not going to wait forever for a deal to be struck. In fact, I don’t think they are going to wait much past the weekend. No deal, no credit markets. It’s as basic as that.
And if that happens, the consequences will be far more pressing than the failure of a Morgan Stanley or a Goldman Sachs. You won’t be able to get a mortgage. Credit card rates will skyrocket. Businesses will be unable to expand and grow. Unemployment will rise.
Every part of our economy depends on the credit markets. I know you’ve heard it before, but it bears repeating. If we do not claw our way out of this crisis, the country will face a severe recession.
On Friday, the German finance minister, Peer Steinbrück, predicted that America would “lose its superpower status in the global financial system.” He may well turn out to be right, but let’s worry about that later, O.K.?
Right now, our elected representatives need to get down to business and agree to pass the Paulson plan. If they don’t, they — and we — will live to regret it.
Michael M. Grynbaum contributed reporting.
The New York Times
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September 27, 2008
Talking Business
Markets Can’t Wait for Congress to Act By JOE NOCERA
Here we go again.
Just nine days ago — Thursday, Sept. 18 — financial Armageddon was warded off when word began to leak about the government’s giant bailout plan. The news first broke around 2:10 p.m., when Bloomberg moved an article quoting Senator Charles E. Schumer, Democrat of New York, as saying the government was considering a “permanent” plan to address the financial crisis. (In fact, as Mr. Schumer told me later, he had not meant for his words to sound so definitive; he really didn’t know the planning was so far along.)
Then, less than an hour later, CNBC reported that an “R.T.C.-type plan” was being readied by the Treasury Department. That did it. In the time between the Bloomberg article and the CNBC report, the stock market rose 145 points. In a 45-minute burst right after the CNBC report, stocks rose another 270 points. The Dow closed up 410 points.
And by the time Treasury Secretary Henry M. Paulson Jr. made his big speech on Friday morning, laying out some of the details of the government’s $700 billion bailout plan, a good deal of the pressure in the markets had eased. The credit-default swap spreads narrowed on Morgan Stanley and Goldman Sachs, meaning that the credit market was less worried about the possibility that they might default.
Morgan Stanley, which had been frantically negotiating a merger with Wachovia, stopped the negotiations. Money market funds, which had been hit hard by withdrawals earlier in the week, saw an inflow of money. Other credit indicators also suggested that the credit markets were unfreezing.
Here we are a week later, and guess what? Armageddon is again approaching. All week long, the credit-default swap spreads on Morgan Stanley widened, until, by Friday, they were actually worse than they were at any time during the previous week. (And this time, the chief executive, John J. Mack, can’t blame the short-sellers for his troubles, since short-selling in financial stocks has been temporarily banned.)
On Thursday, investment-grade loans were trading lower than junk bonds, because investors were selling off their most liquid assets to raise capital. Wachovia, the nation’s fifth-largest bank holding company, suddenly appeared to be in deep trouble: “Wachovia is trading as if it’s going to fail,” Dave Klein, a manager at Credit Derivatives Research, said on Friday. Washington Mutual was seized by the government. The markets may not be as panicked as they were last week, but with every passing day, the situation is getting increasingly dangerous.
Or, to put it another way, with every passing day, Congress is fiddling while Rome is burning.
Last week, I wrote a column suggesting that the Paulson plan was unlikely to fix the enormous problems facing the financial markets and the country’s faltering economy. I am still not sure it will work — or that it is the best possible solution — but this week, I have a different, more urgent concern.
Whatever its imperfections — and despite the possibility it might not work — it needs to be approved, quickly. I’m praying that by the time the markets open on Monday, Congressional leaders will have reached a consensus on the bailout plan. We’re running out of time.
I know there is something tremendously galling about the prospect of Americans putting $700 billion — or more — of their tax dollars at risk to come to the aid of banks and investment banks whose reckless behavior has so damaged the country. They gamed the system. They lined their pockets. They made terrible, terrible mistakes. I’m as angry about it as you are.
I am also aware that there are lots of smart people who don’t like the bailout plan. On my blog the other day, I posted a letter to the House leadership from more than 200 economists. They complained about what they saw as the plan’s essential unfairness (“The plan is a subsidy to investors at taxpayers’ expense”), its ambiguity (“Neither the mission of the new agency nor its oversight are clear”), and the potential that it might ultimately weaken the very markets it was aimed at saving. The objection of the House Republicans who are currently blocking the plan — namely, that a taxpayer bailout of this magnitude should be avoided if at all possible — also deserves to be taken seriously.
Finally, I’ve been hearing a number of interesting ideas that could well turn out to be better than the Paulson plan. One of the most intriguing ones comes from Andrew Feldstein, the chief executive of Blue Mountain Capital Management, a hedge fund that specializes in credit instruments. He proposes that instead of buying bad assets that are crippling the balance sheets of the nation’s banks, the government should establish a “good bank” that would buy only solid assets.
By setting up such a bank — Mr. Feldstein envisions having the government put up $300 billion and taking an equity stake, so that taxpayers can profit when it is sold after the crisis passes — the government would make it possible for credit to “again flow to deserving borrowers.” Bad banks might eventually fail — but they would have a place to sell their good assets as they liquidate. Healthier institutions could once again start lending. Taxpayers would face much less risk.
If the country had more time, I would argue that we put ideas like that into the sunlight and see if they flower. But we don’t have any more time. Nine days ago, the financial markets were staring into the abyss; the only thing that pulled them back was the news that the Treasury and the Federal Reserve had come up with a bailout plan.
And the only thing that has kept them from falling back is the expectation that the plan will be approved quickly. For a while, it looked as if that was exactly what would happen.
Mr. Paulson and Federal Reserve chairman, Ben S. Bernanke, spent the early part of the week defending the plan before Congress. While they faced tough questioning, their main point came through: they had to act fast, otherwise the economy would crater.
Behind the scenes, Congressional leaders began to hammer out the outline of a deal, with the Democrats insisting on strong oversight for the fund, curbs on executive compensation for institutions that sold off their toxic securities to the government and aid for struggling homeowners, among other things.
On Thursday, after an arduous three-hour meeting, it appeared a deal had been struck, but it quickly fell apart after House Republicans — and Senator John McCain — objected to it. That afternoon, I had a short conversation with Representative Barney Frank, the Democrat from Massachusetts who leads the House Financial Services Committee. He was seething.
“Spencer was in the meeting with us the whole time,” he said. He was referring to Representative Spencer Bachus of Alabama, who was representing the House Republicans in the negotiations. “And now here comes John McCain acting like Andy Kaufman — ‘Here I come to save the day.’ Inserting presidential politics into this is just —— ” He stopped suddenly. Whatever word he had in mind he didn’t want to share with a reporter.
There is no question that a large part of the reason House Republicans are objecting to the Paulson plan is because of the potential loss of taxpayers’ money.
“Putting $700 billion of taxpayers’ money at risk — that’s not something we do every day,” said an aide to the House minority staff (who requested anonymity because he was not authorized to speak for the leadership). Indeed, the proposal offered by Representative John A. Boehner, the House minority leader — to create a government-backed insurance pool to guarantee mortgage-backed securities — is another of those interesting ideas that would deserve merit if there were more time.
But it is also true that much of the opposition to the Paulson plan is purely ideological — there are Republicans who believe that the bailout plan is a step toward socialism. And it appears that they would rather see the economy go down the tubes than do something they find ideologically distasteful.
And that’s what is so infuriating. Henry Paulson is not what you’d call a socialist — nor is Ben Bernanke or President Bush. They are all holding their noses as they sell this plan. Barney Frank is allied with Mr. Paulson and a president he holds in low esteem because he, too, believes this is a step the country has to take.
And so do the markets themselves, which is the most important point of all. Psychology always drives market behavior, and right now, the markets are desperately clinging to the idea that the Paulson plan is the only hope of regaining the confidence of borrowers, lenders and investors. Politics is politics, but the markets are not going to wait forever for a deal to be struck. In fact, I don’t think they are going to wait much past the weekend. No deal, no credit markets. It’s as basic as that.
And if that happens, the consequences will be far more pressing than the failure of a Morgan Stanley or a Goldman Sachs. You won’t be able to get a mortgage. Credit card rates will skyrocket. Businesses will be unable to expand and grow. Unemployment will rise.
Every part of our economy depends on the credit markets. I know you’ve heard it before, but it bears repeating. If we do not claw our way out of this crisis, the country will face a severe recession.
On Friday, the German finance minister, Peer Steinbrück, predicted that America would “lose its superpower status in the global financial system.” He may well turn out to be right, but let’s worry about that later, O.K.?
Right now, our elected representatives need to get down to business and agree to pass the Paulson plan. If they don’t, they — and we — will live to regret it.
Michael M. Grynbaum contributed reporting.
Paul Newman: An Actor Whose Baby Blues Came in Shades of Gray By MANOHLA DARGIS
September 28, 2008
An Appraisal
An Actor Whose Baby Blues Came in Shades of Gray By MANOHLA DARGIS
Paul Newman always wore his fame lightly, his beauty too. The beauty may have been more difficult to navigate, when he was young in the 1950’s and still being called the next Marlon Brando, establishing his bona fides at the Actors Studio and on Broadway.
Yet Mr. Newman, who died at his home in Westport, Conn., on Friday, never seemed to resent his good looks, as some men did; instead, he shrugged them off without letting them go. He learned to use that flawless face, so we could see the complexities underneath. And later, when age had extracted its price, he learned to use time too, showing us how beauty could be beaten down and nearly used up.
You see the dangerous side of his beauty in “Hud,” Martin Ritt’s irresistible if disingenuous 1963 drama about a Texas ranching family in which Mr. Newman plays the womanizing son of a cattleman (the Hollywood veteran Melvyn Douglas), who’s hanging onto a fast-fading way of life. The movie traffics in piety: the father refuses to dig for the oil that might change the family’s fortunes because he doesn’t approve of sucking the land dry. Mr. Newman plays the son, Hud, and it’s his job to sneer at the old man’s naïveté and to play the villain, which he does so persuasively that he ends up being the film’s most enduring strength.
A lot of reviewers clucked about Hud and Mr. Newman’s grasping bad-boy ways (the word they used then was materialism), but the camera loves this cowboy Lothario so much — or, rather, the actor playing him — that his father’s high-and-mighty ways don’t stand a chance. Nobody else much does, either: when Hud hits on the family housekeeper (a smoky-voiced, smoking Patricia Neal), he sinks back in her bed and, with his nose deep in a daisy, asks with a leer, “What else you good at?” Rarely has the act of smelling a flower seemed as delectably dirty. It’s no wonder that Pauline Kael, who refused to buy just about anything else this movie was selling, gave Mr. Newman his due.
There are some men, Kael wrote, who “project such a traditional heroic frankness and sweetness that the audience dotes on them, seeks to protect them from harm or pain.” Mr. Newman did that for Kael, enough so that she was inspired to write about her own past and the California town that she “and so many of my friends came out of” — and, here, I think she means girlfriends — “escaping from the swaggering small-town hotshots like Hud.”
What’s striking is that what got Kael going wasn’t the actor or his performance but the man, who, because he seemed to offer up an intangible part of himself, something genuine and real, something we could take home, became a true movie star.
I don’t think Mr. Newman was ever as beautiful as he is in “Hud.” His lean, hard-muscled body seems to slash against the wide-screen landscape, evoking the oil derricks to come, and the black-and-white cinematography turns his famous baby blues an eerie shade of gray. The character would be a heartbreaker if he were interested in breaking hearts instead of making time with the bodies that come with them. That’s supposed to make Hud a mean man, but mostly he seems self-interested. No one is tearing him apart and Mr. Newman doesn’t try to plumb the depths with the role, which makes the character and the performance feel more contemporary than many of the head cases of the previous decade. He finds depths in these shallows.
Early in his career, Mr. Newman was often mistaken for Brando, so much so that he took to signing the other man’s autograph. Both studied at the Actors Studio and jumped to Hollywood, but there’s not much else to connect them beyond our demand for the Next Big Thing. The resemblance seems hard to grasp now, given their trajectories and how differently the two register onscreen: Brando sizzles, while Mr. Newman is as cool as dry ice. And unlike Brando, who at his death was often unkindly remembered for his baroque excesses, Mr. Newman seemed immune, bulletproof. (An exception: his support for Eugene McCarthy, which landed him on Nixon’s enemies list.) He had a talent for evasion.
It was a talent that served him well during the 1960s, the decade in which he picked up the mantle of Hollywood stardom that Brando had shrugged off. Mr. Newman was one of the dominating male screen figures of that decade, appearing in critical and commercial successes like “Cool Hand Luke,” a 1967 prison movie-cum-religious-allegory, and the 1969 western “Butch Cassidy and the Sundance Kid,” in which he found a partner in charm in Robert Redford. These days, 1969 is more often remembered for another buddy movie, “Easy Rider,” but “Butch Cassidy” may have had more lasting impact on the so-called New Hollywood, which struck gold with two photogenic male leads whose easy, breezy rapport helped transform rebellion into a salable, lucrative package.
Mr. Newman, who signed a contract with Warner Brothers in the 1950s, was a transitional figure between the old Hollywood and the new. Warners foolishly put him in a ludicrous 1954 costume extravaganza called “The Silver Chalice.” He did better as the boxer Rocky Graziano in the 1956 biopic “Somebody Up There Likes Me.” His Lower East Side accent is so thick it could have been served on rye at Katz’s Delicatessen, but he holds the screen with his pretty-boy kisser and an intense, at times wild physical performance that suggests a terrific will behind that impeccable facade. He seems to be hurling himself at the camera, as if desperate to get our attention.
The roles improved, as did the performances, and suddenly he didn’t seem to be trying as hard. He’s silky smooth as a pool shark named Fast Eddie in Robert Rossen’s 1961 high-key drama “The Hustler,” in which Jackie Gleason, Piper Laurie and George C. Scott each take turns stealing scenes. At first Mr. Newman seems outclassed by his co-stars — the film asks the actor, a nibbler rather than an outright thief, to do too much big acting. But he’s still awfully good. He seduces and repels by turn, pulling you in so you can watch him peel Fast Eddie’s defenses like layers of dead skin. It’s a wonder there was anything left by the time he revived the character 25 years later in “The Color of Money.”
He won an Oscar in 1987 for best actor for resurrecting Fast Eddie in that Martin Scorsese film, a piteously delayed response from his peers, who dangled six such nominations before giving up the prize. (Hedging its bets, the Academy of Motion Picture Arts and Sciences had tossed Mr. Newman an honorary Oscar the year before.) He’s superb in “The Color of Money,” gracefully navigating its slick surfaces and periodically scratching beneath them, playing a variation on what had by then in movies like “The Drowning Pool” (1975), “Slap Shot” (1977) and “The Verdict” (1982) become a defining Newman type: the guy on the hustle who seems to have nothing much left but keeps his motor running, just in case.
The movies are not kind to older actors and yet Mr. Newman walked away from this merciless business seemingly unscathed. During his second and third acts, he kept his dignity partly by playing men who seemed to have relinquished theirs through vanity or foolishness. Some of them were holding on to decency in an indecent world; others had nearly let it slip through their fingers.
Decency seems to have come easily to Mr. Newman himself, as evidenced by his philanthropic and political endeavors, which never devolved into self-promotion. It was easy to take his intelligence for granted as well as his talent, which survived even the occasional misstep. At the end of “The Drowning Pool,” a woman wistfully tells Mr. Newman, I wish you’d stay a while. I know how she feels.
An Appraisal
An Actor Whose Baby Blues Came in Shades of Gray By MANOHLA DARGIS
Paul Newman always wore his fame lightly, his beauty too. The beauty may have been more difficult to navigate, when he was young in the 1950’s and still being called the next Marlon Brando, establishing his bona fides at the Actors Studio and on Broadway.
Yet Mr. Newman, who died at his home in Westport, Conn., on Friday, never seemed to resent his good looks, as some men did; instead, he shrugged them off without letting them go. He learned to use that flawless face, so we could see the complexities underneath. And later, when age had extracted its price, he learned to use time too, showing us how beauty could be beaten down and nearly used up.
You see the dangerous side of his beauty in “Hud,” Martin Ritt’s irresistible if disingenuous 1963 drama about a Texas ranching family in which Mr. Newman plays the womanizing son of a cattleman (the Hollywood veteran Melvyn Douglas), who’s hanging onto a fast-fading way of life. The movie traffics in piety: the father refuses to dig for the oil that might change the family’s fortunes because he doesn’t approve of sucking the land dry. Mr. Newman plays the son, Hud, and it’s his job to sneer at the old man’s naïveté and to play the villain, which he does so persuasively that he ends up being the film’s most enduring strength.
A lot of reviewers clucked about Hud and Mr. Newman’s grasping bad-boy ways (the word they used then was materialism), but the camera loves this cowboy Lothario so much — or, rather, the actor playing him — that his father’s high-and-mighty ways don’t stand a chance. Nobody else much does, either: when Hud hits on the family housekeeper (a smoky-voiced, smoking Patricia Neal), he sinks back in her bed and, with his nose deep in a daisy, asks with a leer, “What else you good at?” Rarely has the act of smelling a flower seemed as delectably dirty. It’s no wonder that Pauline Kael, who refused to buy just about anything else this movie was selling, gave Mr. Newman his due.
There are some men, Kael wrote, who “project such a traditional heroic frankness and sweetness that the audience dotes on them, seeks to protect them from harm or pain.” Mr. Newman did that for Kael, enough so that she was inspired to write about her own past and the California town that she “and so many of my friends came out of” — and, here, I think she means girlfriends — “escaping from the swaggering small-town hotshots like Hud.”
What’s striking is that what got Kael going wasn’t the actor or his performance but the man, who, because he seemed to offer up an intangible part of himself, something genuine and real, something we could take home, became a true movie star.
I don’t think Mr. Newman was ever as beautiful as he is in “Hud.” His lean, hard-muscled body seems to slash against the wide-screen landscape, evoking the oil derricks to come, and the black-and-white cinematography turns his famous baby blues an eerie shade of gray. The character would be a heartbreaker if he were interested in breaking hearts instead of making time with the bodies that come with them. That’s supposed to make Hud a mean man, but mostly he seems self-interested. No one is tearing him apart and Mr. Newman doesn’t try to plumb the depths with the role, which makes the character and the performance feel more contemporary than many of the head cases of the previous decade. He finds depths in these shallows.
Early in his career, Mr. Newman was often mistaken for Brando, so much so that he took to signing the other man’s autograph. Both studied at the Actors Studio and jumped to Hollywood, but there’s not much else to connect them beyond our demand for the Next Big Thing. The resemblance seems hard to grasp now, given their trajectories and how differently the two register onscreen: Brando sizzles, while Mr. Newman is as cool as dry ice. And unlike Brando, who at his death was often unkindly remembered for his baroque excesses, Mr. Newman seemed immune, bulletproof. (An exception: his support for Eugene McCarthy, which landed him on Nixon’s enemies list.) He had a talent for evasion.
It was a talent that served him well during the 1960s, the decade in which he picked up the mantle of Hollywood stardom that Brando had shrugged off. Mr. Newman was one of the dominating male screen figures of that decade, appearing in critical and commercial successes like “Cool Hand Luke,” a 1967 prison movie-cum-religious-allegory, and the 1969 western “Butch Cassidy and the Sundance Kid,” in which he found a partner in charm in Robert Redford. These days, 1969 is more often remembered for another buddy movie, “Easy Rider,” but “Butch Cassidy” may have had more lasting impact on the so-called New Hollywood, which struck gold with two photogenic male leads whose easy, breezy rapport helped transform rebellion into a salable, lucrative package.
Mr. Newman, who signed a contract with Warner Brothers in the 1950s, was a transitional figure between the old Hollywood and the new. Warners foolishly put him in a ludicrous 1954 costume extravaganza called “The Silver Chalice.” He did better as the boxer Rocky Graziano in the 1956 biopic “Somebody Up There Likes Me.” His Lower East Side accent is so thick it could have been served on rye at Katz’s Delicatessen, but he holds the screen with his pretty-boy kisser and an intense, at times wild physical performance that suggests a terrific will behind that impeccable facade. He seems to be hurling himself at the camera, as if desperate to get our attention.
The roles improved, as did the performances, and suddenly he didn’t seem to be trying as hard. He’s silky smooth as a pool shark named Fast Eddie in Robert Rossen’s 1961 high-key drama “The Hustler,” in which Jackie Gleason, Piper Laurie and George C. Scott each take turns stealing scenes. At first Mr. Newman seems outclassed by his co-stars — the film asks the actor, a nibbler rather than an outright thief, to do too much big acting. But he’s still awfully good. He seduces and repels by turn, pulling you in so you can watch him peel Fast Eddie’s defenses like layers of dead skin. It’s a wonder there was anything left by the time he revived the character 25 years later in “The Color of Money.”
He won an Oscar in 1987 for best actor for resurrecting Fast Eddie in that Martin Scorsese film, a piteously delayed response from his peers, who dangled six such nominations before giving up the prize. (Hedging its bets, the Academy of Motion Picture Arts and Sciences had tossed Mr. Newman an honorary Oscar the year before.) He’s superb in “The Color of Money,” gracefully navigating its slick surfaces and periodically scratching beneath them, playing a variation on what had by then in movies like “The Drowning Pool” (1975), “Slap Shot” (1977) and “The Verdict” (1982) become a defining Newman type: the guy on the hustle who seems to have nothing much left but keeps his motor running, just in case.
The movies are not kind to older actors and yet Mr. Newman walked away from this merciless business seemingly unscathed. During his second and third acts, he kept his dignity partly by playing men who seemed to have relinquished theirs through vanity or foolishness. Some of them were holding on to decency in an indecent world; others had nearly let it slip through their fingers.
Decency seems to have come easily to Mr. Newman himself, as evidenced by his philanthropic and political endeavors, which never devolved into self-promotion. It was easy to take his intelligence for granted as well as his talent, which survived even the occasional misstep. At the end of “The Drowning Pool,” a woman wistfully tells Mr. Newman, I wish you’d stay a while. I know how she feels.
Friday, September 26, 2008
Credit Enters a Lockdown By PETER S. GOODMAN
TimesPeople
The New York Times
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September 26, 2008
Economic Memo
Credit Enters a Lockdown By PETER S. GOODMAN
The words coming out of Washington this week about the American financial system have been frightening. But many have raised the possibility that the Bush administration is fear-mongering to gin up support for its $700 billion bailout proposal.
In many corporate offices, in company cafeterias and around dining room tables, however, the reality of tight credit already is limiting daily economic activity.
“Loans are basically frozen due to the credit crisis,” said Vicki Sanger, who is now leaning on personal credit cards bearing double-digit interest rates to finance the building of roads and sidewalks for her residential real estate development in Fruita, Colo. “The banks just are not lending.”
With the economy already suffering the strains of plunging housing prices, growing joblessness and the new-found austerity of debt-saturated consumers, many experts fear the fraying of the financial system could pin the nation in distress for years.
Without a mechanism to shed the bad loans on their books, financial institutions may continue to hoard their dollars and starve the economy of capital. Americans would be deprived of financing to buy houses, send children to college and start businesses. That would slow economic activity further, souring more loans, and making banks tighter still. In short, a downward spiral.
Fear of this outcome has become self-fulfilling, prompting a stampede toward safer investments. Investors continued to pile into Treasury bills on Thursday despite rates of interest near zero, making less capital available for businesses and consumers. Stock markets rallied exuberantly for much of Thursday as a bailout deal appeared in hand. Then the deal stalled, leaving the markets vulnerable to a pullback.
“Without trust and confidence, business can’t go on, and we can easily fall into a deeper recession and eventually a depression,” said Andrew Lo, a finance professor at M.I.T.’s Sloan School of Management. “It would be disastrous to have no plan.”
The Bush administration has hit this message relentlessly. On Capitol Hill, Treasury Secretary Henry M. Paulson Jr. warned of a potential financial seizure without a swift bailout. Federal Reserve Chairman Ben S. Bernanke — an academic authority on the Great Depression — used words generally eschewed by people whose utterances move markets, speaking of a “grave threat.”
In a prime-time television address Wednesday night, President Bush, who has described the strains on the economy as “adjustments,” put it this way: “Our entire economy is in danger.”
The considerable pushback to the bailout reflects discomfort with the people sounding the alarm. Mr. Paulson, a creature of Wall Street, asked Congress for extraordinary powers to take bad loans off the hands of major financial institutions with a proposal that ran all of three pages. Subprime mortgages have been issued with more paperwork than Mr. Paulson filled out in asking for $700 billion.
“The situation is like that movie trailer where a guy with a deep, scary voice says, ‘In a world where credit markets are frozen, where banks refuse to lend to each other at any price, only one man, with one plan can save us,’ “ said Jared Bernstein, senior economist at the labor-oriented Economic Policy Institute in Washington.
And yet, the more he looked at the data, the more Mr. Bernstein became convinced the financial system really does require some sort of bailout. “Things are scary,” he said.
For nonfinancial firms during the first three months of the year, the outstanding balance of so-called commercial paper — short-term IOUs that businesses rely upon to finance their daily operations — was growing by more than 10 percent from a year earlier, according to an analysis of Federal Reserve data by Moody’s Economy.com. From April to June, the balance plunged by more than 9 percent compared with the previous year.
This week, the rate charged by banks for short-term loans to other banks swelled to three percentage points above the most conservative of investments, Treasury bills, with the gap nearly tripling since the beginning of this month. In other words, banks are charging more for even minimal risk, making credit tight.
Suddenly, people who have spent their careers arguing that government is in the way of progress — that its role must be pared to allow market forces to flourish — are calling for the biggest government bailout in American history.
“We are in a very serious place,” said William W. Beach, an economist at the conservative Heritage Foundation in Washington. “There is risk of contagion to the entire economy.”
Even before the stunning events of recent weeks — as the government took over the mortgage giants Fannie Mae and Freddie Mac, Lehman Brothers disintegrated into bankruptcy, and American International Group was saved by an $85 billion government bailout — credit was tight, sowing fears that the economy would suffer.
The demise of those prominent institutions and anxiety over what could happen next has amplified worries considerably.
“The problem is so big that if somebody doesn’t step in, it will cause a panic,” said Michael Moebs, an economist and chief executive of Moebs Services, an independent research company in Lake Bluff, Ill. “Things could worsen to the point that we could see double-digit unemployment.”
This week, Mr. Moebs said he heard from two clients, one a bank and the other a credit union in a small city in the Midwest, now in serious trouble: Both are heavily invested in Lehman, Fannie Mae and Freddie Mac.
“One is going to lose about 80 percent of their capital if they can’t cash those in, and the other is going to lose about half,” Mr. Moebs said.
The credit union is located in a city in which the auto industry is a major employer — an industry now laying off workers. Yet as people try to refinance mortgages to hang on to homes and extend credit cards to pay for gas for their job searches, the local credit union is saying no.
“They have become very restrictive on who they are lending to,” Mr. Moebs said. “They can’t afford a loss. Their risk quotient is next to zero. You have a financial institution that really can’t help out the local people who are having financial difficulties.”
Along the Gulf of Mexico, in Cape Coral, Fla., Michael Pfaff, a mortgage broker, has become accustomed to constant telephone calls from local real estate agents begging for help to save deals in danger of collapsing for lack of finance.
“The underwriters are terrified and they’re dragging their feet, and making more excuses not to close loans,” Mr. Pfaff said. “Basically, they just don’t want the deals.”
Three years ago, when Cape Coral was among the fastest-appreciating real estate markets in the nation, Mr. Pfaff specialized in financing luxury homes with seven-figure price tags. “Now I’m doing a $32,000 loan on a mobile home,” he said.
Finance is still there for people with unblemished credit, he said. Mr. Pfaff recently closed a deal for a couple in Indiana that bought a second house in Cape Coral, a waterfront duplex for $300,000. Their credit score was nearly impeccable, and they had a 20 percent down payment, plus income of nearly $8,000 a month.
For people like that, conditions have actually improved since the government took over the mortgage giants. A month ago, Mr. Pfaff could secure 30-year fixed rate mortgages for about 7 percent. On Thursday, he was quoting 6 percent.
But those with less-than-ideal credit are increasingly shut out of the market, Mr. Pfaff said, and there are an awful lot of those people. So-called hard money loans, for those with problematic credit but large down payments, were easy to arrange as recently as last month.
“That money has just dried up,” Mr. Pfaff said. “I’m afraid. I’m 54 years old, and I’ve seen a lot of hyperventilating in my life, but I absolutely believe that this is a very serious issue.”
Credit Enters a Lockdown
September 26, 2008, 7:54 am
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The words coming out of Washington this week about the American financial system have been frightening. But many have raised the possibility that the Bush administration is fear-mongering to gin up support for its $700 billion bailout proposal.
In many corporate offices, in company cafeterias and around dining room tables, however, the reality of tight credit already is limiting daily economic activity, The New York Times’s Peter S. Goodman says.
“Loans are basically frozen due to the credit crisis,” Vicki Sanger, who is now leaning on personal credit cards bearing double-digit interest rates to finance the building of roads and sidewalks for her residential real estate development in Fruita, Colo., told The Times. “The banks just are not lending.”
With the economy already suffering the strains of plunging housing prices, growing joblessness and the new-found austerity of debt-saturated consumers, many experts fear the fraying of the financial system could pin the nation in distress for years.
Without a mechanism to shed the bad loans on their books, financial institutions may continue to hoard their dollars and starve the economy of capital. Americans would be deprived of financing to buy houses, send children to college and start businesses. That would slow economic activity further, souring more loans, and making banks tighter still. In short, a downward spiral.
Fear of this outcome has become self-fulfilling, prompting a stampede toward safer investments. Investors continued to pile into Treasury bills on Thursday despite rates of interest near zero, making less capital available for businesses and consumers. Stock markets rallied exuberantly for much of Thursday as a bailout deal appeared in hand. Then the deal stalled, leaving the markets vulnerable to a pullback.
“Without trust and confidence, business can’t go on, and we can easily fall into a deeper recession and eventually a depression,” Andrew Lo, a finance professor at M.I.T.’s Sloan School of Management, told The Times. “It would be disastrous to have no plan.”
The Bush administration has hit this message relentlessly. On Capitol Hill, Treasury Secretary Henry M. Paulson Jr. warned of a potential financial seizure without a swift bailout. Federal Reserve Chairman Ben S. Bernanke — an academic authority on the Great Depression — used words generally eschewed by people whose utterances move markets, speaking of a “grave threat.”
In a prime-time television address Wednesday night, President Bush, who has described the strains on the economy as “adjustments,” put it this way: “Our entire economy is in danger.”
The considerable pushback to the bailout reflects discomfort with the people sounding the alarm. Mr. Paulson, a creature of Wall Street, asked Congress for extraordinary powers to take bad loans off the hands of major financial institutions with a proposal that ran all of three pages. Subprime mortgages have been issued with more paperwork than Mr. Paulson filled out in asking for $700 billion.
“The situation is like that movie trailer where a guy with a deep, scary voice says, ‘In a world where credit markets are frozen, where banks refuse to lend to each other at any price, only one man, with one plan can save us,’ “ Jared Bernstein, senior economist at the labor-oriented Economic Policy Institute in Washington, told The Times.
And yet, the more he looked at the data, the more Mr. Bernstein became convinced the financial system really does require some sort of bailout. “Things are scary,” he told The Times.
For nonfinancial firms during the first three months of the year, the outstanding balance of so-called commercial paper — short-term IOUs that businesses rely upon to finance their daily operations — was growing by more than 10 percent from a year earlier, according to an analysis of Federal Reserve data by Moody’s Economy.com. From April to June, the balance plunged by more than 9 percent compared with the previous year.
This week, the rate charged by banks for short-term loans to other banks swelled to three percentage points above the most conservative of investments, Treasury bills, with the gap nearly tripling since the beginning of this month. In other words, banks are charging more for even minimal risk, making credit tight.
Suddenly, people who have spent their careers arguing that government is in the way of progress — that its role must be pared to allow market forces to flourish — are calling for the biggest government bailout in American history.
“We are in a very serious place,” William W. Beach, an economist at the conservative Heritage Foundation in Washington, told The Times. “There is risk of contagion to the entire economy.”
Even before the stunning events of recent weeks — as the government took over the mortgage giants Fannie Mae and Freddie Mac, Lehman Brothers disintegrated into bankruptcy, and American International Group was saved by an $85 billion government bailout — credit was tight, sowing fears that the economy would suffer.
The demise of those prominent institutions and anxiety over what could happen next has amplified worries considerably.
“The problem is so big that if somebody doesn’t step in, it will cause a panic,” Michael Moebs, an economist and chief executive of Moebs Services, an independent research company in Lake Bluff, Ill., told The Times. “Things could worsen to the point that we could see double-digit unemployment.”
Wednesday, September 24, 2008
Dear Iraqi Friends By THOMAS L. FRIEDMAN
TimesPeople
The New York Times
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September 24, 2008
Op-Ed Columnist
Dear Iraqi Friends By THOMAS L. FRIEDMAN
From: President George W. Bush
To: President Jalal Talabani of Iraq, Prime Minister Nuri Kamal al-Maliki, Speaker Mahmoud al-Mashadani
Dear Sirs, I am writing you on a matter of grave importance. It’s hard for me to express to you how deep the economic crisis in America is today. We are discussing a $1 trillion bailout for our troubled banking system. This is a financial 9/11. As Americans lose their homes and sink into debt, they no longer understand why we are spending $1 billion a day to make Iraqis feel more secure in their homes.
For the past two years, there has been a debate in this country over whether to set a deadline for a U.S. withdrawal from Iraq. It seemed as if the resolution of that debate depended on who won the coming election. That is no longer the case. A deadline is coming. American taxpayers who would not let their money be used to subsidize their own companies — Lehman Brothers, Bear Stearns and Merrill Lynch — will not have their tax dollars used to subsidize your endless dithering over which Iraqi community dominates Kirkuk.
Don’t misunderstand me. Many Americans and me are relieved by the way you, the Iraqi people and Army have pulled back from your own brink of self-destruction. I originally launched this war in pursuit of weapons of mass destruction. I was wrong. But it quickly became apparent that Al Qaeda and its allies in Iraq were determined to make America fail in any attempt to build a decent Iraq and tilt the Middle East toward a more democratic track, no matter how many Iraqis had to be killed in the process. This was not the war we came for, but it was the one we found.
Al Qaeda understood that if it could defeat America in the heart of the Arab-Muslim world, that it would resonate throughout the region and put Al Qaeda and its allies in the ascendant. Conversely, we understood that if we could defeat Al Qaeda in Iraq, in collaboration with other Arabs and Muslims, that it would resonate throughout the region and pay dividends. Something very big was at stake here. We have gone a long way toward winning that war.
At the same time, I also came to realize that in helping Iraqis organize elections, we were facilitating the first ever attempt by the people of a modern Arab state to write their own social contract — rather than have one imposed on them by kings, dictators or colonial powers. If Iraqi Shiites, Sunnis and Kurds can forge your own social contract, then some form of a consensual government is possible in the Arab world. If you can’t, it is kings and dictators forever — with all the pathologies that come with that. Something very big is at stake there, too.
It’s not the stakes that have changed. It is the fact that you are now going to have to step up and finish this job. You have presumed an endless American safety net to permit you to endlessly bargain and dicker over who gets what. I’ve been way, way too patient with you. That is over. We bought you time with the surge to reach a formal political settlement and you better use it fast, because it is a rapidly diminishing asset.
You Shiites have got to bring the Sunni tribes and Awakening groups, who fought the war against Al Qaeda of Iraq, into the government and Army. You Kurds have got to find a solution for Kirkuk and accept greater integration into the Iraqi state system, while maintaining your autonomy. You Sunnis in government have got to agree to elections so the newly emergent Sunni tribal and Awakening groups are able to run for office and become “institutionalized” into the Iraqi system.
So pass your election and oil laws, spend some of your oil profits to get Iraqi refugees resettled and institutionalize the recent security gains while you still have a substantial U.S. presence. Read my lips: It will not be there indefinitely — even if McCain wins.
Our ambassador, Ryan Crocker, has told me your problem: Iraqi Shiites are still afraid of the past, Iraqi Sunnis are still afraid of the future and Iraqi Kurds are still afraid of both.
Well, you want to see fear. Look in the eyes of Americans who are seeing their savings wiped out, their companies disappear, their homes foreclosed. We are a different country today. After a decade of the world being afraid of too much American power, it is now going to be treated to a world of too little American power, as we turn inward to get our house back in order.
I still believe a decent outcome in Iraq, if you achieve it, will have long-lasting, positive implications for you and the entire Arab world, although the price has been way too high. I will wait for history for my redemption, but the American people will not. They want nation-building in America now. They will not walk away from Iraq overnight, but they will not stay there in numbers over time. I repeat: Do not misread this moment. God be with you.
George W. Bush.
The New York Times
Printer Friendly Format Sponsored By
September 24, 2008
Op-Ed Columnist
Dear Iraqi Friends By THOMAS L. FRIEDMAN
From: President George W. Bush
To: President Jalal Talabani of Iraq, Prime Minister Nuri Kamal al-Maliki, Speaker Mahmoud al-Mashadani
Dear Sirs, I am writing you on a matter of grave importance. It’s hard for me to express to you how deep the economic crisis in America is today. We are discussing a $1 trillion bailout for our troubled banking system. This is a financial 9/11. As Americans lose their homes and sink into debt, they no longer understand why we are spending $1 billion a day to make Iraqis feel more secure in their homes.
For the past two years, there has been a debate in this country over whether to set a deadline for a U.S. withdrawal from Iraq. It seemed as if the resolution of that debate depended on who won the coming election. That is no longer the case. A deadline is coming. American taxpayers who would not let their money be used to subsidize their own companies — Lehman Brothers, Bear Stearns and Merrill Lynch — will not have their tax dollars used to subsidize your endless dithering over which Iraqi community dominates Kirkuk.
Don’t misunderstand me. Many Americans and me are relieved by the way you, the Iraqi people and Army have pulled back from your own brink of self-destruction. I originally launched this war in pursuit of weapons of mass destruction. I was wrong. But it quickly became apparent that Al Qaeda and its allies in Iraq were determined to make America fail in any attempt to build a decent Iraq and tilt the Middle East toward a more democratic track, no matter how many Iraqis had to be killed in the process. This was not the war we came for, but it was the one we found.
Al Qaeda understood that if it could defeat America in the heart of the Arab-Muslim world, that it would resonate throughout the region and put Al Qaeda and its allies in the ascendant. Conversely, we understood that if we could defeat Al Qaeda in Iraq, in collaboration with other Arabs and Muslims, that it would resonate throughout the region and pay dividends. Something very big was at stake here. We have gone a long way toward winning that war.
At the same time, I also came to realize that in helping Iraqis organize elections, we were facilitating the first ever attempt by the people of a modern Arab state to write their own social contract — rather than have one imposed on them by kings, dictators or colonial powers. If Iraqi Shiites, Sunnis and Kurds can forge your own social contract, then some form of a consensual government is possible in the Arab world. If you can’t, it is kings and dictators forever — with all the pathologies that come with that. Something very big is at stake there, too.
It’s not the stakes that have changed. It is the fact that you are now going to have to step up and finish this job. You have presumed an endless American safety net to permit you to endlessly bargain and dicker over who gets what. I’ve been way, way too patient with you. That is over. We bought you time with the surge to reach a formal political settlement and you better use it fast, because it is a rapidly diminishing asset.
You Shiites have got to bring the Sunni tribes and Awakening groups, who fought the war against Al Qaeda of Iraq, into the government and Army. You Kurds have got to find a solution for Kirkuk and accept greater integration into the Iraqi state system, while maintaining your autonomy. You Sunnis in government have got to agree to elections so the newly emergent Sunni tribal and Awakening groups are able to run for office and become “institutionalized” into the Iraqi system.
So pass your election and oil laws, spend some of your oil profits to get Iraqi refugees resettled and institutionalize the recent security gains while you still have a substantial U.S. presence. Read my lips: It will not be there indefinitely — even if McCain wins.
Our ambassador, Ryan Crocker, has told me your problem: Iraqi Shiites are still afraid of the past, Iraqi Sunnis are still afraid of the future and Iraqi Kurds are still afraid of both.
Well, you want to see fear. Look in the eyes of Americans who are seeing their savings wiped out, their companies disappear, their homes foreclosed. We are a different country today. After a decade of the world being afraid of too much American power, it is now going to be treated to a world of too little American power, as we turn inward to get our house back in order.
I still believe a decent outcome in Iraq, if you achieve it, will have long-lasting, positive implications for you and the entire Arab world, although the price has been way too high. I will wait for history for my redemption, but the American people will not. They want nation-building in America now. They will not walk away from Iraq overnight, but they will not stay there in numbers over time. I repeat: Do not misread this moment. God be with you.
George W. Bush.
The Power of Negative Thinking By BARBARA EHRENREICH
TimesPeople
The New York Times
Printer Friendly Format Sponsored By
September 24, 2008
Op-Ed Contributor
The Power of Negative Thinking By BARBARA EHRENREICH
GREED — and its crafty sibling, speculation — are the designated culprits for the financial crisis. But another, much admired, habit of mind should get its share of the blame: the delusional optimism of mainstream, all-American, positive thinking.
As promoted by Oprah Winfrey, scores of megachurch pastors and an endless flow of self-help best sellers, the idea is to firmly believe that you will get what you want, not only because it will make you feel better to do so, but because “visualizing” something — ardently and with concentration — actually makes it happen. You will be able to pay that adjustable-rate mortgage or, at the other end of the transaction, turn thousands of bad mortgages into giga-profits if only you believe that you can.
Positive thinking is endemic to American culture — from weight loss programs to cancer support groups — and in the last two decades it has put down deep roots in the corporate world as well. Everyone knows that you won’t get a job paying more than $15 an hour unless you’re a “positive person,” and no one becomes a chief executive by issuing warnings of possible disaster.
The tomes in airport bookstores’ business sections warn against “negativity” and advise the reader to be at all times upbeat, optimistic, brimming with confidence. It’s a message companies relentlessly reinforced — treating their white-collar employees to manic motivational speakers and revival-like motivational events, while sending the top guys off to exotic locales to get pumped by the likes of Tony Robbins and other success gurus. Those who failed to get with the program would be subjected to personal “coaching” or shown the door.
The once-sober finance industry was not immune. On their Web sites, motivational speakers proudly list companies like Lehman Brothers and Merrill Lynch among their clients. What’s more, for those at the very top of the corporate hierarchy, all this positive thinking must not have seemed delusional at all. With the rise in executive compensation, bosses could have almost anything they wanted, just by expressing the desire. No one was psychologically prepared for hard times when they hit, because, according to the tenets of positive thinking, even to think of trouble is to bring it on.
Americans did not start out as deluded optimists. The original ethos, at least of white Protestant settlers and their descendants, was a grim Calvinism that offered wealth only through hard work and savings, and even then made no promises at all. You might work hard and still fail; you certainly wouldn’t get anywhere by adjusting your attitude or dreamily “visualizing” success.
Calvinists thought “negatively,” as we would say today, carrying a weight of guilt and foreboding that sometimes broke their spirits. It was in response to this harsh attitude that positive thinking arose — among mystics, lay healers and transcendentalists — in the 19th century, with its crowd-pleasing message that God, or the universe, is really on your side, that you can actually have whatever you want, if the wanting is focused enough.
When it comes to how we think, “negative” is not the only alternative to “positive.” As the case histories of depressives show, consistent pessimism can be just as baseless and deluded as its opposite. The alternative to both is realism — seeing the risks, having the courage to bear bad news and being prepared for famine as well as plenty. We ought to give it a try.
Barbara Ehrenreich is the author, most recently, of “This Land Is Their Land: Reports From a Divided Nation.”
The New York Times
Printer Friendly Format Sponsored By
September 24, 2008
Op-Ed Contributor
The Power of Negative Thinking By BARBARA EHRENREICH
GREED — and its crafty sibling, speculation — are the designated culprits for the financial crisis. But another, much admired, habit of mind should get its share of the blame: the delusional optimism of mainstream, all-American, positive thinking.
As promoted by Oprah Winfrey, scores of megachurch pastors and an endless flow of self-help best sellers, the idea is to firmly believe that you will get what you want, not only because it will make you feel better to do so, but because “visualizing” something — ardently and with concentration — actually makes it happen. You will be able to pay that adjustable-rate mortgage or, at the other end of the transaction, turn thousands of bad mortgages into giga-profits if only you believe that you can.
Positive thinking is endemic to American culture — from weight loss programs to cancer support groups — and in the last two decades it has put down deep roots in the corporate world as well. Everyone knows that you won’t get a job paying more than $15 an hour unless you’re a “positive person,” and no one becomes a chief executive by issuing warnings of possible disaster.
The tomes in airport bookstores’ business sections warn against “negativity” and advise the reader to be at all times upbeat, optimistic, brimming with confidence. It’s a message companies relentlessly reinforced — treating their white-collar employees to manic motivational speakers and revival-like motivational events, while sending the top guys off to exotic locales to get pumped by the likes of Tony Robbins and other success gurus. Those who failed to get with the program would be subjected to personal “coaching” or shown the door.
The once-sober finance industry was not immune. On their Web sites, motivational speakers proudly list companies like Lehman Brothers and Merrill Lynch among their clients. What’s more, for those at the very top of the corporate hierarchy, all this positive thinking must not have seemed delusional at all. With the rise in executive compensation, bosses could have almost anything they wanted, just by expressing the desire. No one was psychologically prepared for hard times when they hit, because, according to the tenets of positive thinking, even to think of trouble is to bring it on.
Americans did not start out as deluded optimists. The original ethos, at least of white Protestant settlers and their descendants, was a grim Calvinism that offered wealth only through hard work and savings, and even then made no promises at all. You might work hard and still fail; you certainly wouldn’t get anywhere by adjusting your attitude or dreamily “visualizing” success.
Calvinists thought “negatively,” as we would say today, carrying a weight of guilt and foreboding that sometimes broke their spirits. It was in response to this harsh attitude that positive thinking arose — among mystics, lay healers and transcendentalists — in the 19th century, with its crowd-pleasing message that God, or the universe, is really on your side, that you can actually have whatever you want, if the wanting is focused enough.
When it comes to how we think, “negative” is not the only alternative to “positive.” As the case histories of depressives show, consistent pessimism can be just as baseless and deluded as its opposite. The alternative to both is realism — seeing the risks, having the courage to bear bad news and being prepared for famine as well as plenty. We ought to give it a try.
Barbara Ehrenreich is the author, most recently, of “This Land Is Their Land: Reports From a Divided Nation.”
The Power of Negative Thinking By BARBARA EHRENREICH
September 24, 2008
Op-Ed Contributor
The Power of Negative Thinking By BARBARA EHRENREICH
GREED — and its crafty sibling, speculation — are the designated culprits for the financial crisis. But another, much admired, habit of mind should get its share of the blame: the delusional optimism of mainstream, all-American, positive thinking.
As promoted by Oprah Winfrey, scores of megachurch pastors and an endless flow of self-help best sellers, the idea is to firmly believe that you will get what you want, not only because it will make you feel better to do so, but because “visualizing” something — ardently and with concentration — actually makes it happen. You will be able to pay that adjustable-rate mortgage or, at the other end of the transaction, turn thousands of bad mortgages into giga-profits if only you believe that you can.
Positive thinking is endemic to American culture — from weight loss programs to cancer support groups — and in the last two decades it has put down deep roots in the corporate world as well. Everyone knows that you won’t get a job paying more than $15 an hour unless you’re a “positive person,” and no one becomes a chief executive by issuing warnings of possible disaster.
The tomes in airport bookstores’ business sections warn against “negativity” and advise the reader to be at all times upbeat, optimistic, brimming with confidence. It’s a message companies relentlessly reinforced — treating their white-collar employees to manic motivational speakers and revival-like motivational events, while sending the top guys off to exotic locales to get pumped by the likes of Tony Robbins and other success gurus. Those who failed to get with the program would be subjected to personal “coaching” or shown the door.
The once-sober finance industry was not immune. On their Web sites, motivational speakers proudly list companies like Lehman Brothers and Merrill Lynch among their clients. What’s more, for those at the very top of the corporate hierarchy, all this positive thinking must not have seemed delusional at all. With the rise in executive compensation, bosses could have almost anything they wanted, just by expressing the desire. No one was psychologically prepared for hard times when they hit, because, according to the tenets of positive thinking, even to think of trouble is to bring it on.
Americans did not start out as deluded optimists. The original ethos, at least of white Protestant settlers and their descendants, was a grim Calvinism that offered wealth only through hard work and savings, and even then made no promises at all. You might work hard and still fail; you certainly wouldn’t get anywhere by adjusting your attitude or dreamily “visualizing” success.
Calvinists thought “negatively,” as we would say today, carrying a weight of guilt and foreboding that sometimes broke their spirits. It was in response to this harsh attitude that positive thinking arose — among mystics, lay healers and transcendentalists — in the 19th century, with its crowd-pleasing message that God, or the universe, is really on your side, that you can actually have whatever you want, if the wanting is focused enough.
When it comes to how we think, “negative” is not the only alternative to “positive.” As the case histories of depressives show, consistent pessimism can be just as baseless and deluded as its opposite. The alternative to both is realism — seeing the risks, having the courage to bear bad news and being prepared for famine as well as plenty. We ought to give it a try.
Barbara Ehrenreich is the author, most recently, of “This Land Is Their Land: Reports From a Divided Nation.”
Op-Ed Contributor
The Power of Negative Thinking By BARBARA EHRENREICH
GREED — and its crafty sibling, speculation — are the designated culprits for the financial crisis. But another, much admired, habit of mind should get its share of the blame: the delusional optimism of mainstream, all-American, positive thinking.
As promoted by Oprah Winfrey, scores of megachurch pastors and an endless flow of self-help best sellers, the idea is to firmly believe that you will get what you want, not only because it will make you feel better to do so, but because “visualizing” something — ardently and with concentration — actually makes it happen. You will be able to pay that adjustable-rate mortgage or, at the other end of the transaction, turn thousands of bad mortgages into giga-profits if only you believe that you can.
Positive thinking is endemic to American culture — from weight loss programs to cancer support groups — and in the last two decades it has put down deep roots in the corporate world as well. Everyone knows that you won’t get a job paying more than $15 an hour unless you’re a “positive person,” and no one becomes a chief executive by issuing warnings of possible disaster.
The tomes in airport bookstores’ business sections warn against “negativity” and advise the reader to be at all times upbeat, optimistic, brimming with confidence. It’s a message companies relentlessly reinforced — treating their white-collar employees to manic motivational speakers and revival-like motivational events, while sending the top guys off to exotic locales to get pumped by the likes of Tony Robbins and other success gurus. Those who failed to get with the program would be subjected to personal “coaching” or shown the door.
The once-sober finance industry was not immune. On their Web sites, motivational speakers proudly list companies like Lehman Brothers and Merrill Lynch among their clients. What’s more, for those at the very top of the corporate hierarchy, all this positive thinking must not have seemed delusional at all. With the rise in executive compensation, bosses could have almost anything they wanted, just by expressing the desire. No one was psychologically prepared for hard times when they hit, because, according to the tenets of positive thinking, even to think of trouble is to bring it on.
Americans did not start out as deluded optimists. The original ethos, at least of white Protestant settlers and their descendants, was a grim Calvinism that offered wealth only through hard work and savings, and even then made no promises at all. You might work hard and still fail; you certainly wouldn’t get anywhere by adjusting your attitude or dreamily “visualizing” success.
Calvinists thought “negatively,” as we would say today, carrying a weight of guilt and foreboding that sometimes broke their spirits. It was in response to this harsh attitude that positive thinking arose — among mystics, lay healers and transcendentalists — in the 19th century, with its crowd-pleasing message that God, or the universe, is really on your side, that you can actually have whatever you want, if the wanting is focused enough.
When it comes to how we think, “negative” is not the only alternative to “positive.” As the case histories of depressives show, consistent pessimism can be just as baseless and deluded as its opposite. The alternative to both is realism — seeing the risks, having the courage to bear bad news and being prepared for famine as well as plenty. We ought to give it a try.
Barbara Ehrenreich is the author, most recently, of “This Land Is Their Land: Reports From a Divided Nation.”
Monday, September 22, 2008
Giorgio Morandi's still-lifes. by Peter Schjeldahl
The Art World
Tables for One
Giorgio Morandi's still-lifes. by Peter Schjeldahl September 22, 2008
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"Natura Morta" (1954). Italians so revered Morandi that Fellini used him as a symbol of lofty sensibility in "La Dolce Vita."
"Natura Morta" (1954). Italians so revered Morandi that Fellini used him as a symbol of lofty sensibility in "La Dolce Vita."
Keywords
Morandi, Giorgio;
Painters;
Metropolitan Museum of Art;
Italians;
Retrospectives;
Still-Lifes;
Abramowicz, Janet
In my ideal world, the home of everyone who loves art would come equipped with a painting by Giorgio Morandi, as a gymnasium for daily exercise of the eye, mind, and soul. I want the ad account: "Stay fit the Morandi way!" Take your dream pick from among the hundred and ten works in the potent retrospective of the Italian modern master now at the Metropolitan Museum. You can hardly go wrong with anything dated after 1920 or so, once Morandi, who died in 1964, at the age of seventy-three, had worked through his early involvements with Cézanne, Cubism, Futurism, and the pittura metafisica of Giorgio de Chirico and Carlo Carrà. But make your choice a still-life. Morandi painted some striking landscapes and the odd, tentative self-portrait, but the arenas of his greatness were the tabletops in his small studio. He passed nearly his entire life in an apartment in Bologna with his mother, until her death, in 1950, and three younger sisters, who, like him, never married. (His businessman father died in 1909, four years before Morandi's graduation from Bologna's art academy.) Morandi's stagings of his repertory company of nondescript bottles, vases, pitchers, and whatnot are definitive twentieth-century art works. They breathe intimacy with the past—Piero della Francesca, Chardin—and address a future that still glimmers, just out of reach. They remain unbeatably radical meditations on what can and can't happen when three dimensions are transposed into two. Morandi will always rivet painters and educate all who care for painting.
He seems to have cared for nothing else. If he ever had a sexual interest, it is unrecorded. He first set foot outside Italy in 1956, and then only in Switzerland. His most frequent forays were to Florence, to consult Piero, Masaccio, Giotto, and Uccello. A man "unwilling even to squash an insect in his garden," according to a fine biography by Janet Abramowicz, "Giorgio Morandi: The Art of Silence," he suffered a breakdown when he was drafted into the Italian Army, in 1915, after which he was excused from service. He supported himself by teaching painting and etching. (His etchings amaze, triggering subliminal sensations of color with nothing but variations in crosshatched black lines.) He had friends, and he liked to laugh, with the ironical and at times scathing humor of a sensitive man. The academic establishment in Bologna, a university town, disparaged him until late in his career. He participated in the right-wing, ruralist Strapaese movement of the late nineteen-twenties. His attitude toward Mussolini, whose regime gave him teaching jobs, was more positive than not, although he was briefly imprisoned in 1943 for associating with anti-Fascists. (If ever an artist merited political amnesty, on the ground of unworldliness, it would be Morandi.) Fame came to him after the war: he won first prize for an Italian painter at the 1948 Venice Biennale, and became so revered in Italy that filmmakers, notably Federico Fellini, in "La Dolce Vita," used his work as a ready symbol of lofty sensibility. Morandi had a last adventurous phase of nearly abstract drawings and watercolors that condense into swift marks a lifetime of looking.
* from the issue
* cartoon bank
* e-mail this
The still-lifes vary from bright to crepuscular in tone, from crisply limned to almost illegibly blurred, and, in texture, from creamy to arid. To describe any one of them as exemplary is to provoke tacit protests from the rest. So, in general: The paintings present objects singly, side by side, or in overlapping groups. They feel monumental because they are viewed at eye level, or from just above. (Morandi, who stood six feet four, built a high table that he often used for that purpose.) He disregarded the receding plane of the tabletop, often shrouding the back edge with brown paper, so that it wouldn't distract him. The horizon of that edge commonly seems arbitrary, and the tabletop itself may be woozily indefinite. Morandi anchors his objects frontally, pressed against our gaze. He often paints them all but flat, adding only dim highlights and perfunctory shadings, which at first excite and then gently relax our automatic effort to read roundedness and depth in the pictures. It can take time—minutes, not seconds—to get over what we think we are seeing and to behold what's there. But a sensitive eye may catch on right away. The most helpful piece of writing on Morandi that I know is the painter Vija Celmins's description of her first encounter with one of his still-lifes (in 1961, when she was twenty-one), which "projected an extraordinary set of grays far into the gallery and into my eyes. On closer inspection, I discovered how strange the painting was, how the objects seemed to be fighting for each other's space. One could not determine their size or location. They appeared both flat and dimensional, and were so tenderly painted that the paint itself seemed to be the subject."
The ambiguity of "size or location" is key to Morandi's indelible modernity. It's as if he had set out, time and again, to nail down the whatness of his objects but couldn't get beyond the preliminary matter of their whereness. (He didn't much value the things in themselves. Photographs show that some were slathered or, in the case of clear glass bottles, filled with pigments—they were dedicated to painting the way animals are raised for food.) Morandi was free of the organizing prejudice of perspective. Go look at a Cézanne after seeing this show. It will seem old-fashioned. Conventional pictorial space remained a safety net for the great Frenchman, whose influence Morandi subsumed. Even Picasso didn't as fully abandon perspective—smashing it to localized bits in his Cubism, letting it creep in where it was convenient thereafter. Morandi fumbled, thrillingly, amid the ruins of mental concepts of space. He reversed the thrust of his beloved early-Renaissance inventors of perspective. In an Uccello, say, we register both a mathematical formula of spatial recession and the fact that it is clumsily artificial. Even the majestic Piero fell short of dissolving the preëminent appeal of the painted surface into the fiction of a window view. (Leonardo would do that.) Morandi's eye and mind lived in the surface, marooned there by honest, anxious skepticism. Dramatic uncertainty intensified in his work as he aged. In one of the show's last paintings (the one I want to take home), a jug, whose ochre hue interpenetrates with that of the wall behind it, abuts a tall box in livid, very pale blue; a corrugated ball, half ochre and half greenish blue, rests on the gray table in what would be the foreground—were not the picture, in its effect, all foreground. Dark, jittery outlines startlingly anticipate a look of late work by Philip Guston. That's not unusual in Morandi, whose explorations fortuitously scout the distinctive qualities of subsequent artists. The step from some of his landscapes—with forms at once filmy in color and corporeal in substance—to certain works by the brilliant Luc Tuymans is almost no step at all.
Painting for Morandi was manual labor, first and last. For a time, he ground his own pigments. He stretched his own canvases, constantly varying their proportions. (In the Met show, there are almost as many different sizes of picture as there are pictures.) No one work builds on another. Infinitely refined, Morandi never succumbs to elegance. Even his effulgently pinkish floral still-lifes abjure virtuosity, though they beguile. (One might be made of ice cream; another stiffens to marzipan.) That's because the exigencies of rendering—tiny slippages between eye and hand—constituted, for him, a permanent emergency, requiring incessant adjustment. (Rose petals may jam up like large people competing to pass through a small door.) He did not have a style. He had a signature: "Morandi," written large, often, to broadcast that a picture had done all it could. He is a painter's painter, because to look at his work is to re-create it, feeling in your wrist and fingers the sequence of strokes, each a stab of decision which discovers a new problem.
Color works hard in Morandi. His hues tend toward muddy pastels, always warm. He employs an unabridged dictionary of browns. Even his blues and greens usually secrete invisibly admixed red or yellow, insuring the projection of "an extraordinary set of grays far into the gallery" which Celmins noted. The colors are muted like voices lowered so as not to disturb a sleeper; but their melody and tone penetrate. A Morandi grabs your eye at any distance. Moreover, it's the same picture at any distance, as resolved and unresolved near at hand as far away. (His comprehension of art history skips the Baroque and every other type of synthesized illusion.) Morandi has never been a popular artist and never will be. He engages the world one solitary viewer at a time. The experience of his work is unsharable even, in a way, with oneself, like a word remembered but not remembered, on the tip of the tongue. ♦
Tables for One
Giorgio Morandi's still-lifes. by Peter Schjeldahl September 22, 2008
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"Natura Morta" (1954). Italians so revered Morandi that Fellini used him as a symbol of lofty sensibility in "La Dolce Vita."
"Natura Morta" (1954). Italians so revered Morandi that Fellini used him as a symbol of lofty sensibility in "La Dolce Vita."
Keywords
Morandi, Giorgio;
Painters;
Metropolitan Museum of Art;
Italians;
Retrospectives;
Still-Lifes;
Abramowicz, Janet
In my ideal world, the home of everyone who loves art would come equipped with a painting by Giorgio Morandi, as a gymnasium for daily exercise of the eye, mind, and soul. I want the ad account: "Stay fit the Morandi way!" Take your dream pick from among the hundred and ten works in the potent retrospective of the Italian modern master now at the Metropolitan Museum. You can hardly go wrong with anything dated after 1920 or so, once Morandi, who died in 1964, at the age of seventy-three, had worked through his early involvements with Cézanne, Cubism, Futurism, and the pittura metafisica of Giorgio de Chirico and Carlo Carrà. But make your choice a still-life. Morandi painted some striking landscapes and the odd, tentative self-portrait, but the arenas of his greatness were the tabletops in his small studio. He passed nearly his entire life in an apartment in Bologna with his mother, until her death, in 1950, and three younger sisters, who, like him, never married. (His businessman father died in 1909, four years before Morandi's graduation from Bologna's art academy.) Morandi's stagings of his repertory company of nondescript bottles, vases, pitchers, and whatnot are definitive twentieth-century art works. They breathe intimacy with the past—Piero della Francesca, Chardin—and address a future that still glimmers, just out of reach. They remain unbeatably radical meditations on what can and can't happen when three dimensions are transposed into two. Morandi will always rivet painters and educate all who care for painting.
He seems to have cared for nothing else. If he ever had a sexual interest, it is unrecorded. He first set foot outside Italy in 1956, and then only in Switzerland. His most frequent forays were to Florence, to consult Piero, Masaccio, Giotto, and Uccello. A man "unwilling even to squash an insect in his garden," according to a fine biography by Janet Abramowicz, "Giorgio Morandi: The Art of Silence," he suffered a breakdown when he was drafted into the Italian Army, in 1915, after which he was excused from service. He supported himself by teaching painting and etching. (His etchings amaze, triggering subliminal sensations of color with nothing but variations in crosshatched black lines.) He had friends, and he liked to laugh, with the ironical and at times scathing humor of a sensitive man. The academic establishment in Bologna, a university town, disparaged him until late in his career. He participated in the right-wing, ruralist Strapaese movement of the late nineteen-twenties. His attitude toward Mussolini, whose regime gave him teaching jobs, was more positive than not, although he was briefly imprisoned in 1943 for associating with anti-Fascists. (If ever an artist merited political amnesty, on the ground of unworldliness, it would be Morandi.) Fame came to him after the war: he won first prize for an Italian painter at the 1948 Venice Biennale, and became so revered in Italy that filmmakers, notably Federico Fellini, in "La Dolce Vita," used his work as a ready symbol of lofty sensibility. Morandi had a last adventurous phase of nearly abstract drawings and watercolors that condense into swift marks a lifetime of looking.
* from the issue
* cartoon bank
* e-mail this
The still-lifes vary from bright to crepuscular in tone, from crisply limned to almost illegibly blurred, and, in texture, from creamy to arid. To describe any one of them as exemplary is to provoke tacit protests from the rest. So, in general: The paintings present objects singly, side by side, or in overlapping groups. They feel monumental because they are viewed at eye level, or from just above. (Morandi, who stood six feet four, built a high table that he often used for that purpose.) He disregarded the receding plane of the tabletop, often shrouding the back edge with brown paper, so that it wouldn't distract him. The horizon of that edge commonly seems arbitrary, and the tabletop itself may be woozily indefinite. Morandi anchors his objects frontally, pressed against our gaze. He often paints them all but flat, adding only dim highlights and perfunctory shadings, which at first excite and then gently relax our automatic effort to read roundedness and depth in the pictures. It can take time—minutes, not seconds—to get over what we think we are seeing and to behold what's there. But a sensitive eye may catch on right away. The most helpful piece of writing on Morandi that I know is the painter Vija Celmins's description of her first encounter with one of his still-lifes (in 1961, when she was twenty-one), which "projected an extraordinary set of grays far into the gallery and into my eyes. On closer inspection, I discovered how strange the painting was, how the objects seemed to be fighting for each other's space. One could not determine their size or location. They appeared both flat and dimensional, and were so tenderly painted that the paint itself seemed to be the subject."
The ambiguity of "size or location" is key to Morandi's indelible modernity. It's as if he had set out, time and again, to nail down the whatness of his objects but couldn't get beyond the preliminary matter of their whereness. (He didn't much value the things in themselves. Photographs show that some were slathered or, in the case of clear glass bottles, filled with pigments—they were dedicated to painting the way animals are raised for food.) Morandi was free of the organizing prejudice of perspective. Go look at a Cézanne after seeing this show. It will seem old-fashioned. Conventional pictorial space remained a safety net for the great Frenchman, whose influence Morandi subsumed. Even Picasso didn't as fully abandon perspective—smashing it to localized bits in his Cubism, letting it creep in where it was convenient thereafter. Morandi fumbled, thrillingly, amid the ruins of mental concepts of space. He reversed the thrust of his beloved early-Renaissance inventors of perspective. In an Uccello, say, we register both a mathematical formula of spatial recession and the fact that it is clumsily artificial. Even the majestic Piero fell short of dissolving the preëminent appeal of the painted surface into the fiction of a window view. (Leonardo would do that.) Morandi's eye and mind lived in the surface, marooned there by honest, anxious skepticism. Dramatic uncertainty intensified in his work as he aged. In one of the show's last paintings (the one I want to take home), a jug, whose ochre hue interpenetrates with that of the wall behind it, abuts a tall box in livid, very pale blue; a corrugated ball, half ochre and half greenish blue, rests on the gray table in what would be the foreground—were not the picture, in its effect, all foreground. Dark, jittery outlines startlingly anticipate a look of late work by Philip Guston. That's not unusual in Morandi, whose explorations fortuitously scout the distinctive qualities of subsequent artists. The step from some of his landscapes—with forms at once filmy in color and corporeal in substance—to certain works by the brilliant Luc Tuymans is almost no step at all.
Painting for Morandi was manual labor, first and last. For a time, he ground his own pigments. He stretched his own canvases, constantly varying their proportions. (In the Met show, there are almost as many different sizes of picture as there are pictures.) No one work builds on another. Infinitely refined, Morandi never succumbs to elegance. Even his effulgently pinkish floral still-lifes abjure virtuosity, though they beguile. (One might be made of ice cream; another stiffens to marzipan.) That's because the exigencies of rendering—tiny slippages between eye and hand—constituted, for him, a permanent emergency, requiring incessant adjustment. (Rose petals may jam up like large people competing to pass through a small door.) He did not have a style. He had a signature: "Morandi," written large, often, to broadcast that a picture had done all it could. He is a painter's painter, because to look at his work is to re-create it, feeling in your wrist and fingers the sequence of strokes, each a stab of decision which discovers a new problem.
Color works hard in Morandi. His hues tend toward muddy pastels, always warm. He employs an unabridged dictionary of browns. Even his blues and greens usually secrete invisibly admixed red or yellow, insuring the projection of "an extraordinary set of grays far into the gallery" which Celmins noted. The colors are muted like voices lowered so as not to disturb a sleeper; but their melody and tone penetrate. A Morandi grabs your eye at any distance. Moreover, it's the same picture at any distance, as resolved and unresolved near at hand as far away. (His comprehension of art history skips the Baroque and every other type of synthesized illusion.) Morandi has never been a popular artist and never will be. He engages the world one solitary viewer at a time. The experience of his work is unsharable even, in a way, with oneself, like a word remembered but not remembered, on the tip of the tongue. ♦
Goldman, Morgan Stanley Bring Down Curtain on Wall Street Era By Christine Harper and Craig Torres
Goldman, Morgan Stanley Bring Down Curtain on Wall Street Era By Christine Harper and Craig Torres
Sept. 22 (Bloomberg) -- The Wall Street that shaped the financial world for two decades ended last night, when Goldman Sachs Group Inc. and Morgan Stanley concluded there is no future in remaining investment banks now that investors have determined the model is broken.
The Federal Reserve's approval of their bid to become banks ends the ascendancy of the securities firms, 75 years after Congress separated them from deposit-taking lenders, and caps weeks of chaos that sent Lehman Brothers Holdings Inc. into bankruptcy and led to the rushed sale of Merrill Lynch & Co. to Bank of America Corp.
``The decision marks the end of Wall Street as we have known it,'' said William Isaac, a former chairman of the Federal Deposit Insurance Corp. ``It's too bad.''
Goldman, whose alumni include Henry Paulson, the Treasury Secretary presiding over a $700 billion bank bailout, and Morgan Stanley, a product of the 1933 Glass-Steagall Act that cleaved investment and commercial banks, insisted they didn't need to change course, even as their shares plunged and their borrowing costs soared last week.
By then, it was too late. As financial markets gyrated -- the Dow Jones Industrial Average whipsawed 1,000 points in the week's last two days -- and clients defected, executives at the two firms concluded they had no choice. The Federal Reserve Board met at 9 p.m. yesterday and considered applications delivered that day, said Michelle Smith, a spokeswoman for the central bank. The decision was unanimous, she said.
`Blood in Water'
``There's blood in the water in the industry and the sharks are circling,'' Peter Kovalski, who helps oversee about $10 billion at Alpine Woods Capital Investors LLC, said at the end of last week. ``It all comes down to perception and the current trust within the community.''
Wall Street hasn't had such a shakeup since the 1980s, when firms including Morgan Stanley and Bear Stearns Cos. went public and London's financial markets were altered forever with the so-called Big Bang reforms implemented in 1986. Bear Stearns disappeared in March, when it was bought by JPMorgan Chase & Co.
The announcement paves the way for the two New York-based firms, both of which will now be regulated by the Fed, to build their deposit base, potentially through acquisitions. That will allow them to rely more heavily on deposits from retail customers instead of using borrowed money -- the leverage that led to the undoing of Bear Stearns and Lehman.
Morgan Stanley has taken $15.7 billion of writedowns and losses on mortgage-related securities and other types of loans since the credit crunch started last year. Goldman's tally stands at about $4.9 billion. While both companies have remained profitable and avoided money-losing quarters suffered by Lehman and Merrill Lynch, their revenue from sales and trading and investment banking have been declining this year.
Depositors Rule
``Deposit-banking is king right now,'' said David Hendler, an analyst at CreditSights Inc. in New York. ``It's the only meaningful critical-mass way to make money.''
Morgan Stanley may feel it has more time to contemplate alternatives to the deal that it began to shape last week with Wachovia Corp., said Tony Plath, a finance professor at the University of North Carolina at Charlotte.
``This means Morgan Stanley is reassessing its plan for a merger with Wachovia,'' Plath said. ``Morgan Stanley is going to try to go it alone, and I expect it will try to buy a bank with a market-to-book ratio that is next to nothing. It means they are walking away from Wachovia.''
Morgan Stanley, the second-biggest securities firm until this week, had $36 billion of deposits and three million retail accounts at the end of August. The company plans to convert its Utah-based industrial bank into a national bank.
`Certainty'
``This new bank holding structure will ensure that Morgan Stanley is in the strongest possible position,'' Chairman and Chief Executive Officer John Mack, 63, said in a statement last night. ``It also offers the marketplace certainty about the strength of our financial position and our access to funding.''
Goldman, the largest and most profitable of the U.S. securities firms, will become the fourth-largest bank holding company. The firm already has more than $20 billion in customer deposits in two subsidiaries and is creating a new one, GS Bank USA, that will have more than $150 billion of assets, making it one of the 10 largest banks in the U.S., the firm said in a statement last night. The firm will increase its deposit base ``through acquisitions and organically,'' Goldman said in a statement last night.
``Goldman Sachs, under Federal Reserve supervision, will be regarded as an even more secure institution with an exceptionally clean balance sheet and a greater diversity of funding sources,'' Lloyd Blankfein, 54, Goldman's chairman and CEO, said in the statement.
Citigroup, JPMorgan
The Washington-based Fed is the primary regulator of bank- holding companies, which are firms that own or control banks. Citigroup Inc., Bank of America Corp. and JPMorgan are bank- holding companies regulated by the Fed.
Securities firms, by contrast, had been regulated by the Securities and Exchange Commission. The SEC's future becomes dimmer with the change in Goldman and Morgan Stanley's structures.
``You can't kiss goodbye to the last two important investment banks without noting that the house is empty,'' said David Becker, a former SEC general counsel who is now a partner at Cleary Gottlieb Steen & Hamilton in Washington. ``It's a downward spiral where the less significant the population you regulate, the less your available resources.''
Less Risky
The change is also likely to lead to less risk-taking by the companies and possibly lower pay for their employees. Both Goldman and Morgan Stanley held more than $20 of assets for every $1 of shareholder equity, making them dependent on market funding to operate.
Goldman, in particular, has been remarkable for the high bonuses it pays to its employees. Goldman's CEO and two co- presidents were each paid more than $67 million last year.
``They're going to have to protect their deposit bases by law, and the days of high leverage are gone,'' said Charles Geisst, a finance professor at Manhattan College in Riverdale, New York, who wrote ``Wall Street: A History.'' ``The days of the big bonuses are gone.''
Sept. 22 (Bloomberg) -- The Wall Street that shaped the financial world for two decades ended last night, when Goldman Sachs Group Inc. and Morgan Stanley concluded there is no future in remaining investment banks now that investors have determined the model is broken.
The Federal Reserve's approval of their bid to become banks ends the ascendancy of the securities firms, 75 years after Congress separated them from deposit-taking lenders, and caps weeks of chaos that sent Lehman Brothers Holdings Inc. into bankruptcy and led to the rushed sale of Merrill Lynch & Co. to Bank of America Corp.
``The decision marks the end of Wall Street as we have known it,'' said William Isaac, a former chairman of the Federal Deposit Insurance Corp. ``It's too bad.''
Goldman, whose alumni include Henry Paulson, the Treasury Secretary presiding over a $700 billion bank bailout, and Morgan Stanley, a product of the 1933 Glass-Steagall Act that cleaved investment and commercial banks, insisted they didn't need to change course, even as their shares plunged and their borrowing costs soared last week.
By then, it was too late. As financial markets gyrated -- the Dow Jones Industrial Average whipsawed 1,000 points in the week's last two days -- and clients defected, executives at the two firms concluded they had no choice. The Federal Reserve Board met at 9 p.m. yesterday and considered applications delivered that day, said Michelle Smith, a spokeswoman for the central bank. The decision was unanimous, she said.
`Blood in Water'
``There's blood in the water in the industry and the sharks are circling,'' Peter Kovalski, who helps oversee about $10 billion at Alpine Woods Capital Investors LLC, said at the end of last week. ``It all comes down to perception and the current trust within the community.''
Wall Street hasn't had such a shakeup since the 1980s, when firms including Morgan Stanley and Bear Stearns Cos. went public and London's financial markets were altered forever with the so-called Big Bang reforms implemented in 1986. Bear Stearns disappeared in March, when it was bought by JPMorgan Chase & Co.
The announcement paves the way for the two New York-based firms, both of which will now be regulated by the Fed, to build their deposit base, potentially through acquisitions. That will allow them to rely more heavily on deposits from retail customers instead of using borrowed money -- the leverage that led to the undoing of Bear Stearns and Lehman.
Morgan Stanley has taken $15.7 billion of writedowns and losses on mortgage-related securities and other types of loans since the credit crunch started last year. Goldman's tally stands at about $4.9 billion. While both companies have remained profitable and avoided money-losing quarters suffered by Lehman and Merrill Lynch, their revenue from sales and trading and investment banking have been declining this year.
Depositors Rule
``Deposit-banking is king right now,'' said David Hendler, an analyst at CreditSights Inc. in New York. ``It's the only meaningful critical-mass way to make money.''
Morgan Stanley may feel it has more time to contemplate alternatives to the deal that it began to shape last week with Wachovia Corp., said Tony Plath, a finance professor at the University of North Carolina at Charlotte.
``This means Morgan Stanley is reassessing its plan for a merger with Wachovia,'' Plath said. ``Morgan Stanley is going to try to go it alone, and I expect it will try to buy a bank with a market-to-book ratio that is next to nothing. It means they are walking away from Wachovia.''
Morgan Stanley, the second-biggest securities firm until this week, had $36 billion of deposits and three million retail accounts at the end of August. The company plans to convert its Utah-based industrial bank into a national bank.
`Certainty'
``This new bank holding structure will ensure that Morgan Stanley is in the strongest possible position,'' Chairman and Chief Executive Officer John Mack, 63, said in a statement last night. ``It also offers the marketplace certainty about the strength of our financial position and our access to funding.''
Goldman, the largest and most profitable of the U.S. securities firms, will become the fourth-largest bank holding company. The firm already has more than $20 billion in customer deposits in two subsidiaries and is creating a new one, GS Bank USA, that will have more than $150 billion of assets, making it one of the 10 largest banks in the U.S., the firm said in a statement last night. The firm will increase its deposit base ``through acquisitions and organically,'' Goldman said in a statement last night.
``Goldman Sachs, under Federal Reserve supervision, will be regarded as an even more secure institution with an exceptionally clean balance sheet and a greater diversity of funding sources,'' Lloyd Blankfein, 54, Goldman's chairman and CEO, said in the statement.
Citigroup, JPMorgan
The Washington-based Fed is the primary regulator of bank- holding companies, which are firms that own or control banks. Citigroup Inc., Bank of America Corp. and JPMorgan are bank- holding companies regulated by the Fed.
Securities firms, by contrast, had been regulated by the Securities and Exchange Commission. The SEC's future becomes dimmer with the change in Goldman and Morgan Stanley's structures.
``You can't kiss goodbye to the last two important investment banks without noting that the house is empty,'' said David Becker, a former SEC general counsel who is now a partner at Cleary Gottlieb Steen & Hamilton in Washington. ``It's a downward spiral where the less significant the population you regulate, the less your available resources.''
Less Risky
The change is also likely to lead to less risk-taking by the companies and possibly lower pay for their employees. Both Goldman and Morgan Stanley held more than $20 of assets for every $1 of shareholder equity, making them dependent on market funding to operate.
Goldman, in particular, has been remarkable for the high bonuses it pays to its employees. Goldman's CEO and two co- presidents were each paid more than $67 million last year.
``They're going to have to protect their deposit bases by law, and the days of high leverage are gone,'' said Charles Geisst, a finance professor at Manhattan College in Riverdale, New York, who wrote ``Wall Street: A History.'' ``The days of the big bonuses are gone.''
Sunday, September 21, 2008
525,600 Minutes to Preserve By CHARLES ISHERWOOD
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The New York Times
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September 21, 2008
525,600 Minutes to Preserve By CHARLES ISHERWOOD
“RENT” closed with the usual celebratory brouhaha. Hours before its final curtain on Sept. 7, the sidewalk in front of the Nederlander Theater, where the musical had played for more than a dozen years, was strewn with barricades signaling the potential presence of celebrity — or at least the expensively self-important. Gawkers piled up three or four deep behind the barriers, cellphones in picture-taking mode.
Sure enough, a freshly minted young tabloid star stepped out of a car and splashed into the glare of television cameras, looking at home in the spotlight, her long tresses curling picturesquely across her shoulders, beautiful accessory boyfriend huddled protectively (if a little shortly) at her elbow.
She was Blake Lively, a star of “Gossip Girl.” Or so I was told by the daughter of a colleague. And that Abercrombie boy was no mere human bangle but a star in his own right, Penn Badgley, of the same television series.
“Oh, my God, I’m such a teenager,” my informant added sheepishly, and charmingly, embarrassed by her excitement. She needn’t have been. In the presence of celebrities who cause paparazzi stampedes — even celebrities you’ve only vaguely heard of — most of us regress to jittery teendom just a little. She at least had the excuse of actually being a teenager.
Blake and Penn soon moved onto the red carpet, into the theater and presumably out of my life. (But by the way, when did soap actors begin acquiring the names of soap characters?) Yet as I watched “Rent,” I wondered what these two glittery young stars would make of the world conjured onstage by Jonathan Larson, an urban landscape in which hope and promise were shadowed by disease and despair. It is a milieu far removed from the New York of today — and thank goodness. While rents may be even more dizzyingly out of reach for struggling artists in new-millennium New York, a plague no longer casts a pall over the city’s creative community.
Today’s Blakes and Penns, born in the late 1980s, had not hit puberty when “Rent” opened on Broadway in 1996, after it scorched its way into history at its Off Broadway premiere at the New York Theater Workshop. Would they be perplexed by the frequent allusions to AZT, a problematic if promising early therapy for H.I.V.? Would they have any understanding of the grimmer details of what the characters go through?
For what struck me on my return to the show — which I had not seen on Broadway since shortly after it opened — was how deeply it is saturated in the anxious, dark, embattled mood of the moment in which it was created, when AIDS was ravaging the bohemian enclaves of New York and every other major city.
The passing of time can transform your perceptions of art. When I first saw “Rent,” I found some of its characters flimsy and stereotyped. (I admit I still cringe at the cheesy outfits of the drag-queen character, Angel; drag queens of my acquaintance were and are far more stylish.) At the time I was roughly the age of the East Villagers in the musical, and while I lived in Los Angeles for most of my 20s, I visited New York regularly and certainly moved among people a lot like them: recent college grads with more attitude and artistic aspirations than money.
Perhaps because I lived in a milieu similar to the one depicted onstage, in which the specter of early death seemed to cast its shadow everywhere, the immediacy of the show did not seem particularly remarkable. Maybe because the surface details of the characters’ experience were familiar to me, they seemed shallowly drawn onstage, sketched in shorthand. I suspect I overlooked the depth of feeling with which Larson wrapped a generation of young, ambitious and threatened characters in a musical embrace.
What impressed me most forcibly at the final performance was the empathetic reach of the writing, the generosity of spirit driving both words and music. Larson lived among and loved the people he was writing about, ached for their losses, expressed their fears, dreams and everyday indignities in sharp lyrics and evocative melodies that drew on both Broadway forms and pop and rock sounds.
One of the weaknesses that bothered me a dozen years ago — the ending that finds the doomed Mimi springing back to life after appearing to expire — strikes me today as a flaw that Larson may have recognized but could not bring himself to correct. The integrity of art must have seemed a less urgent priority than the dissemination of hope. The awkward affixing of a happy ending to a fundamentally tragic story was a form of prayer, a plea that life might imitate art. I probably rolled my eyes at this absurd resurrection in 1996; this time I fought back tears.
Larson’s book and lyrics are steeped in references to the physical and psychological struggles faced by people with AIDS in the 1980s and ’90s, before the drug cocktails that have made the disease more manageable. Four of the play’s main characters — the heroin-addicted Mimi; her ex-heroin-addict boyfriend, Roger; the black activist, Tom Collins; and his lover, Angel — are H.I.V.-positive. The musical also includes a sequence set at a support group for people with H.I.V. or AIDS. One of the show’s most moving songs — “Will I?” — consists of just three questions set to a simple, mournful, gently shaped melody, sung not by the principal characters but by the more anonymous members of the support group:
Will I lose my dignity?
Will someone care?
Will I wake tomorrow from this nightmare?
You probably need to have lived among gay men coming of age during the years when AIDS became a global calamity to recognize just how much bone-deep knowledge of the specific terrors of the time is packed into those three little lines.
They conjure the afflictions of the opportunistic infections that made the disease such a dreadful one; the stigma that was attached to it; the fear of dying lonely and abandoned; and the vague, oppressive, almost unbearable anxieties that young people — with the disease or living in terror of contracting it — had to live with every day. The epidemic left a psychic mark on a generation of artists as surely as the Vietnam War did; the difference is that many of the artists responding to AIDS ultimately succumbed to the condition, their mature responses to it never to be shown on gallery walls or in theaters.
Larson himself, of course, did not live to enjoy the global success of “Rent” or to see how, in just a few years, the fates of characters like Mimi, Roger and Angel would have been altered by advances in the treatment of AIDS. In one of the saddest circumstances in theater history he died at 35 of an aortic aneurysm after the final dress rehearsal of the Off Broadway run. (I should add that AIDS continues to claim lives today, in New York and across the globe, and the medical advances have inadvertently led to a disturbing ignorance about the realities of living with H.I.V.)
“Rent” has been a phenomenal success in New York and around the world, and the story does not stop with the end of its first Broadway run. The final performance, filmed in high-definition digital video, will be screened this week at some 500 movie theaters in the United States and Canada. (Details are at thehotticket.net/rent.) A new tour, featuring Adam Pascal and Anthony Rapp from the original cast, begins in Cleveland in January.
And while you might expect that a musical grounded so specifically in a historical moment would have a date stamp on its endurance, the surprising resurgence of “Hair” this summer in Central Park provides proof to the contrary. Diane Paulus’s frisky production of that frolicking-hippie musical from 1967 will move to Broadway next year.
Nostalgia for the flower-power era is surely behind much of the enthusiasm for the show, which remains a sweet but rather scattered and shallow exploration of a complex time. But wait a minute — I once thought that was the rap on “Rent.” Whether either musical is perfect seems beside the point. Just a dozen years after its premiere “Rent” has become a vital, even precious document of a tumultuous era — much like “Hair,” in truth.
On the way home from the theater I remained under the spell of the musical’s powerful evocation of a time that is not very distant chronologically but seems eons ago spiritually. “How did we get through it?” I found myself asking, recalling the years of grim statistics and rumored advances in treatment that didn’t pan out, the burdensome sadness, the fear and sense of futility as yet more news came about the illness of a friend or acquaintance or luminary.
Instantly I caught myself. How did we get through it? Too many of us didn’t.
The New York Times
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September 21, 2008
525,600 Minutes to Preserve By CHARLES ISHERWOOD
“RENT” closed with the usual celebratory brouhaha. Hours before its final curtain on Sept. 7, the sidewalk in front of the Nederlander Theater, where the musical had played for more than a dozen years, was strewn with barricades signaling the potential presence of celebrity — or at least the expensively self-important. Gawkers piled up three or four deep behind the barriers, cellphones in picture-taking mode.
Sure enough, a freshly minted young tabloid star stepped out of a car and splashed into the glare of television cameras, looking at home in the spotlight, her long tresses curling picturesquely across her shoulders, beautiful accessory boyfriend huddled protectively (if a little shortly) at her elbow.
She was Blake Lively, a star of “Gossip Girl.” Or so I was told by the daughter of a colleague. And that Abercrombie boy was no mere human bangle but a star in his own right, Penn Badgley, of the same television series.
“Oh, my God, I’m such a teenager,” my informant added sheepishly, and charmingly, embarrassed by her excitement. She needn’t have been. In the presence of celebrities who cause paparazzi stampedes — even celebrities you’ve only vaguely heard of — most of us regress to jittery teendom just a little. She at least had the excuse of actually being a teenager.
Blake and Penn soon moved onto the red carpet, into the theater and presumably out of my life. (But by the way, when did soap actors begin acquiring the names of soap characters?) Yet as I watched “Rent,” I wondered what these two glittery young stars would make of the world conjured onstage by Jonathan Larson, an urban landscape in which hope and promise were shadowed by disease and despair. It is a milieu far removed from the New York of today — and thank goodness. While rents may be even more dizzyingly out of reach for struggling artists in new-millennium New York, a plague no longer casts a pall over the city’s creative community.
Today’s Blakes and Penns, born in the late 1980s, had not hit puberty when “Rent” opened on Broadway in 1996, after it scorched its way into history at its Off Broadway premiere at the New York Theater Workshop. Would they be perplexed by the frequent allusions to AZT, a problematic if promising early therapy for H.I.V.? Would they have any understanding of the grimmer details of what the characters go through?
For what struck me on my return to the show — which I had not seen on Broadway since shortly after it opened — was how deeply it is saturated in the anxious, dark, embattled mood of the moment in which it was created, when AIDS was ravaging the bohemian enclaves of New York and every other major city.
The passing of time can transform your perceptions of art. When I first saw “Rent,” I found some of its characters flimsy and stereotyped. (I admit I still cringe at the cheesy outfits of the drag-queen character, Angel; drag queens of my acquaintance were and are far more stylish.) At the time I was roughly the age of the East Villagers in the musical, and while I lived in Los Angeles for most of my 20s, I visited New York regularly and certainly moved among people a lot like them: recent college grads with more attitude and artistic aspirations than money.
Perhaps because I lived in a milieu similar to the one depicted onstage, in which the specter of early death seemed to cast its shadow everywhere, the immediacy of the show did not seem particularly remarkable. Maybe because the surface details of the characters’ experience were familiar to me, they seemed shallowly drawn onstage, sketched in shorthand. I suspect I overlooked the depth of feeling with which Larson wrapped a generation of young, ambitious and threatened characters in a musical embrace.
What impressed me most forcibly at the final performance was the empathetic reach of the writing, the generosity of spirit driving both words and music. Larson lived among and loved the people he was writing about, ached for their losses, expressed their fears, dreams and everyday indignities in sharp lyrics and evocative melodies that drew on both Broadway forms and pop and rock sounds.
One of the weaknesses that bothered me a dozen years ago — the ending that finds the doomed Mimi springing back to life after appearing to expire — strikes me today as a flaw that Larson may have recognized but could not bring himself to correct. The integrity of art must have seemed a less urgent priority than the dissemination of hope. The awkward affixing of a happy ending to a fundamentally tragic story was a form of prayer, a plea that life might imitate art. I probably rolled my eyes at this absurd resurrection in 1996; this time I fought back tears.
Larson’s book and lyrics are steeped in references to the physical and psychological struggles faced by people with AIDS in the 1980s and ’90s, before the drug cocktails that have made the disease more manageable. Four of the play’s main characters — the heroin-addicted Mimi; her ex-heroin-addict boyfriend, Roger; the black activist, Tom Collins; and his lover, Angel — are H.I.V.-positive. The musical also includes a sequence set at a support group for people with H.I.V. or AIDS. One of the show’s most moving songs — “Will I?” — consists of just three questions set to a simple, mournful, gently shaped melody, sung not by the principal characters but by the more anonymous members of the support group:
Will I lose my dignity?
Will someone care?
Will I wake tomorrow from this nightmare?
You probably need to have lived among gay men coming of age during the years when AIDS became a global calamity to recognize just how much bone-deep knowledge of the specific terrors of the time is packed into those three little lines.
They conjure the afflictions of the opportunistic infections that made the disease such a dreadful one; the stigma that was attached to it; the fear of dying lonely and abandoned; and the vague, oppressive, almost unbearable anxieties that young people — with the disease or living in terror of contracting it — had to live with every day. The epidemic left a psychic mark on a generation of artists as surely as the Vietnam War did; the difference is that many of the artists responding to AIDS ultimately succumbed to the condition, their mature responses to it never to be shown on gallery walls or in theaters.
Larson himself, of course, did not live to enjoy the global success of “Rent” or to see how, in just a few years, the fates of characters like Mimi, Roger and Angel would have been altered by advances in the treatment of AIDS. In one of the saddest circumstances in theater history he died at 35 of an aortic aneurysm after the final dress rehearsal of the Off Broadway run. (I should add that AIDS continues to claim lives today, in New York and across the globe, and the medical advances have inadvertently led to a disturbing ignorance about the realities of living with H.I.V.)
“Rent” has been a phenomenal success in New York and around the world, and the story does not stop with the end of its first Broadway run. The final performance, filmed in high-definition digital video, will be screened this week at some 500 movie theaters in the United States and Canada. (Details are at thehotticket.net/rent.) A new tour, featuring Adam Pascal and Anthony Rapp from the original cast, begins in Cleveland in January.
And while you might expect that a musical grounded so specifically in a historical moment would have a date stamp on its endurance, the surprising resurgence of “Hair” this summer in Central Park provides proof to the contrary. Diane Paulus’s frisky production of that frolicking-hippie musical from 1967 will move to Broadway next year.
Nostalgia for the flower-power era is surely behind much of the enthusiasm for the show, which remains a sweet but rather scattered and shallow exploration of a complex time. But wait a minute — I once thought that was the rap on “Rent.” Whether either musical is perfect seems beside the point. Just a dozen years after its premiere “Rent” has become a vital, even precious document of a tumultuous era — much like “Hair,” in truth.
On the way home from the theater I remained under the spell of the musical’s powerful evocation of a time that is not very distant chronologically but seems eons ago spiritually. “How did we get through it?” I found myself asking, recalling the years of grim statistics and rumored advances in treatment that didn’t pan out, the burdensome sadness, the fear and sense of futility as yet more news came about the illness of a friend or acquaintance or luminary.
Instantly I caught myself. How did we get through it? Too many of us didn’t.
Performance of His Life: He Composed Himself By MICHAEL TILSON THOMAS
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The New York Times
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September 21, 2008
Music
Performance of His Life: He Composed Himself By MICHAEL TILSON THOMAS
LEONARD BERNSTEIN didn’t sleep much. That was just as well, since so many nights were show nights. The show — much more than a concert — was an intricate evening-long routine that had developed over his lifetime. By the last decade it went something like this.
As he awoke from a nap and performed his ablutions, you could hear the splashing, singing and kvetching over the whole apartment. It was a ritual for shaking off fatigue and the dread of having to push everything uphill all over again. The washing helped him reconnect with the “spotless servant of music” persona, one of his most treasured. A light supper followed, some light conversation and maybe a glance at the score as he quietly gathered strength. In the limo he was starting to feel the zone of his performance, testing it with snatches of old songs or punch lines.
By the time he hit the stage door, he was full of cheery greetings for everyone in sight. When he got his call, he would stand just offstage, saying his mantra, kissing his Koussevitzky cufflinks, taking the final drags of his cigarette. At the last possible second he handed it to a stagehand or cup bearer, and he was on.
He presented himself to the audience, welcoming it, blessing it and preparing it for the music’s first sounds. He turned toward the players, acknowledging them as old comrades, looking each right in the eyes. He waited for the audience to settle down, then gave his upbeat.
Those near him onstage might hear his upbeat as well as see it. He was quite vocal. He hummed, moaned, grunted, ground his teeth and breathed heavily. He used to say, “You should conduct exactly as you would play the piano.” It was a physical thing. He immersed himself in the stream of the work, pulling all the instruments under his fingers.
If it was a first night, the piece, though painstakingly rehearsed, might never have been played through completely. The players, unsure exactly what he was going to do or how it all fitted together, had to watch him every second. He liked that. He knew that musicians could get buried in their parts, looking fixedly at the same notes they had played thousands of times. He wanted the whole band to be out there with him in an experience that felt more like improvisation. He liked fun and a whiff of danger.
He thought that a performance should reveal the emotional states the composer had experienced while creating the work. For him that meant being totally involved emotionally and physically. He felt he wasn’t really doing his best unless he was swaying on the precipice of his endurance. Whether he was conducting Mahler or playing a Haydn trio, it was the same: oceans of sweat, fluttering eyes, hyper-reactive athleticism.
It’s what everyone expected. But none of it was put on. It was his authentic essential experience of music and of life. Whatever he had to do to achieve it, maintain it, he did. The public loved it, understanding that it was all part of the supreme sacrifice of himself that he was making for them.
After the final number the stagehand and cup bearer handed him a lighted cigarette and a silver tumbler filled with Scotch the second he got off the stage. A few puffs, a few gulps, and he bounded or staggered on again. When the ovation finally died down, another performance began.
Legions of autograph seekers thronged to him backstage. He would size up his supplicants with a deftness Lord Chesterfield might have admired, shifting his roles among counselor, classmate, rake. It took a long time, and there were usually still receptions and suppers ahead. As the hour grew late, sponsors and staffers might look for an opportunity to sneak out, but he would always spot them and bellow, “Sit down and shut up!” His attitude seemed to be, “After all I’ve given, I deserve anything I can get.”
It was all a part of an essential rite in which his sharing of himself could make his demons go away, at least for a while. He knew that what he most desired to do he could only do alone. But being alone was, well, lonely, and scary, and it was in the lonely moments that he realized how much it was costing him to be himself: that more than anything, by his standard, he wasn’t composing enough.
He knew that his own music was his greatest gift and message. There was a time when composing was easy for him, but it got harder as the years went on. To write the kind of music he dreamed of required time, and there was never enough time.
He knew how much his music mattered to people. He knew that it charmed them. But what he was yearning for was reverence. After all, Copland, his immediate mentor and model, had managed it. Copland’s much-beloved populist pieces like “Rodeo” were balanced by thorny ones like the Piano Variations and the Short Symphony. Their message was hard, uncompromising.
But for Bernstein the composer, compromise and collaboration seemed essential, inescapable. He thrived and suffered in his artistic partnerships: Jerome Robbins, Arthur Laurents, Stephen Sondheim. Robbins, especially, could get under his defenses and make him doubt that anything he had done was worthy. He put so much of himself into his writing, and when nothing came of it, it was an unbearable torture.
He also put a lot of other composers into his writing. But however much he may have borrowed, the whole was much more than the sum of its parts. It all added up to an instantly recognizable and authentic him. The references came completely ingenuously, and they didn’t bother him. In fact they amused him. He would grin, shrug and say, “Everybody steals, but you’ve got to steal classy.”
His music has a right-guy, right-place, right-time quality that says even tough things with a breezy confidence. He was that guy. He became the presiding maestro of the free world’s victory parties. After World War II it was Bernstein in Prague, Paris, Vienna, performing Copland’s Third Symphony. After the Six-Day War, it was Bernstein in Israel doing Mahler on Mount Scopus. Bernstein and the New York Philharmonic mopped up in South America after Vice President Nixon’s disastrous motorcade. And during the cold war Bernstein hugged Shostakovich in Moscow and performed Beethoven at the Berlin Wall.
He took American music to Europe; he brought European music here. And talk about confidence; he took European music back to the Europeans. His festivals of Mahler and Nielsen caused their music to be more highly valued in their own lands. I can still hear him announcing, “I’m going to Budapest to teach the Hungarians how to play Bartok.” And he did.
It was thrilling, but it fed on itself. He stood at the center of a cultural empire with everyone looking to him as the arbiter of taste and acceptance. For a while he felt he could do anything: conduct, compose, make videos, bridge the generation gap, champion justice for radical political causes, no matter what the cost. Then, like the nation whose spirit he epitomized, he began to flinch. He feared he was being subsumed by the trappings of his fame, by the agendas of the organizations he served.
By the early ’70s he realized the danger. That is what “Mass” was really about. He carried on, the bravest of old campaigners, never losing his faith in the ideals of his youth and thrilled to see them reborn in new generations. But of himself, amid the relentless fetes, he would say, “I’m at the very peak of my decline.”
These were the years of the tours from hell. Where was he? Vienna, Rome, Tel Aviv, Paris, Tanglewood, Sapporo? Why was he there? Old friendships, new projects, bigger deals, concern for a young artist or cultural organization, because white asparagus was in season, because his loden coat had worn out, because his wife and his boyfriend were dead? And he wasn’t composing enough.
His music took a darker cast. The major pieces of the last years, like “A Quiet Place,” “Dybbuk” and “Arias and Barcarolles” largely avoided heart-on-sleeve confessions and flirted with the hermetic procedures of the 12-tone system. He treated a tone row as a game. His anagram skills made lattices of notes that yielded quartets, twisted torch songs, anything he desired. They sound like him, but their prevailing mood is turgid, despairing, even desperate.
There is a relentless search in these works for emotional honesty and intellectual rigor, and at the same time for reconciliation, simplicity and, as in the title of his last opera, “a quiet place,” where he could be generous, vulnerable, simple.
It was hard for him to let himself be simple. He usually felt that he needed to put himself and everyone else through some major test before he could relax. Composition had become another test, an agon. But writing a piece for someone he loved was a different story. Seeing him possessed by the perfect vision for a birthday or anniversary song was like witnessing a minor miracle.
It was always about people. He wrote his music for them, gave his performances for them. He wanted to teach them, touch them, include them. He wanted them to be a part of the family. He adored his own family, relishing its complex mythology, accepting the brickbats of his siblings, the challenges of his children and the love and counsel of his wife, Felicia, whose warmth and easy elegance made so much of his world possible. She set the standard of what was fitting. When she told him “Pull up your socks,” he did.
There was easy banter and brilliance at their table, and silliness and lots of love. The atmosphere was Yiddishkeit showbiz competitive, but the feeling was above all warm and inclusive. From the moment you pulled up a chair, you felt you were at home. I think he wanted you to feel the same way in the first bars of his music.
Sometimes the pileup of responsibilities was too much to bear. When that happened, he would turn night into day: stay up all night, go to sleep at 6 in the morning, have breakfast in the late afternoon. This way he could avoid people and stay in his own space without giving too much offense.
But put him back in front of an audience, and he was back on again, in search of new friends. Some of his greatest performances were given at postconcert parties for audiences of a few dozen. He would settle himself at the piano and begin a sequence of killer numbers: movie production spectacles, Victorian tear-jerkers, understated supper club rarities or operatic coloratura showstoppers sung in a subvocal rumble that Dietrich would have envied.
He knew he had everyone in his power and relished it. Never more so than the night in Washington when an esteemed critic came forward to say a wobbly good night and collapsed at his feet. “Look,” Bernstein said, “there he is, one of America’s most distinguished journalists, passed out, helpless before me. Why couldn’t you be Harold Schonberg?”
Even in the midst of the whirlwind of his life he found time to be with young artists. Mostly he had to be a kind of hit-and-run mentor, dispensing maxims and anecdotes in brief master classes in the back seats of limos. So much of his own experience had been thinking and learning on his feet in front of a hundred or a few thousand people that he knew the drill.
After one of my early performances of Mahler’s Fifth Symphony the conversation went like this. M. T. T.: “What do you think about the Adagietto?” L. B.: “What do I think? I think that when you’ve made up your mind about what it really means to you, it won’t matter what I or anyone else thinks. You’ll just know.”
So what can you say about a guy like this? So nurturing, so confrontational. He gave so much. He cared so much. I once asked him, “Did anyone ever get so much done and have so much fun as you have?”
“I don’t know,” he replied. “Mozart, maybe.” But he always needed more.
In the last years he was playing a game of chicken with his spirit and his health. The time ran out, and — as he had feared — he hadn’t composed enough. But in what he did compose he left us a real tracing of the places his spirit had been. Even if you never met him or saw him, his music tells you how life tasted to him, and that’s what he really wanted.
There was never any question of what he believed, what he championed. It was the joy of music. He lived it.
Michael Tilson Thomas will conduct the San Francisco Symphony at Carnegie Hall on Wednesday evening to kick off the citywide festival Bernstein: The Best of All Possible Worlds. This article is adapted from a larger one that appears on his Web site, MichaelTilsonThomas.com.
The New York Times
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September 21, 2008
Music
Performance of His Life: He Composed Himself By MICHAEL TILSON THOMAS
LEONARD BERNSTEIN didn’t sleep much. That was just as well, since so many nights were show nights. The show — much more than a concert — was an intricate evening-long routine that had developed over his lifetime. By the last decade it went something like this.
As he awoke from a nap and performed his ablutions, you could hear the splashing, singing and kvetching over the whole apartment. It was a ritual for shaking off fatigue and the dread of having to push everything uphill all over again. The washing helped him reconnect with the “spotless servant of music” persona, one of his most treasured. A light supper followed, some light conversation and maybe a glance at the score as he quietly gathered strength. In the limo he was starting to feel the zone of his performance, testing it with snatches of old songs or punch lines.
By the time he hit the stage door, he was full of cheery greetings for everyone in sight. When he got his call, he would stand just offstage, saying his mantra, kissing his Koussevitzky cufflinks, taking the final drags of his cigarette. At the last possible second he handed it to a stagehand or cup bearer, and he was on.
He presented himself to the audience, welcoming it, blessing it and preparing it for the music’s first sounds. He turned toward the players, acknowledging them as old comrades, looking each right in the eyes. He waited for the audience to settle down, then gave his upbeat.
Those near him onstage might hear his upbeat as well as see it. He was quite vocal. He hummed, moaned, grunted, ground his teeth and breathed heavily. He used to say, “You should conduct exactly as you would play the piano.” It was a physical thing. He immersed himself in the stream of the work, pulling all the instruments under his fingers.
If it was a first night, the piece, though painstakingly rehearsed, might never have been played through completely. The players, unsure exactly what he was going to do or how it all fitted together, had to watch him every second. He liked that. He knew that musicians could get buried in their parts, looking fixedly at the same notes they had played thousands of times. He wanted the whole band to be out there with him in an experience that felt more like improvisation. He liked fun and a whiff of danger.
He thought that a performance should reveal the emotional states the composer had experienced while creating the work. For him that meant being totally involved emotionally and physically. He felt he wasn’t really doing his best unless he was swaying on the precipice of his endurance. Whether he was conducting Mahler or playing a Haydn trio, it was the same: oceans of sweat, fluttering eyes, hyper-reactive athleticism.
It’s what everyone expected. But none of it was put on. It was his authentic essential experience of music and of life. Whatever he had to do to achieve it, maintain it, he did. The public loved it, understanding that it was all part of the supreme sacrifice of himself that he was making for them.
After the final number the stagehand and cup bearer handed him a lighted cigarette and a silver tumbler filled with Scotch the second he got off the stage. A few puffs, a few gulps, and he bounded or staggered on again. When the ovation finally died down, another performance began.
Legions of autograph seekers thronged to him backstage. He would size up his supplicants with a deftness Lord Chesterfield might have admired, shifting his roles among counselor, classmate, rake. It took a long time, and there were usually still receptions and suppers ahead. As the hour grew late, sponsors and staffers might look for an opportunity to sneak out, but he would always spot them and bellow, “Sit down and shut up!” His attitude seemed to be, “After all I’ve given, I deserve anything I can get.”
It was all a part of an essential rite in which his sharing of himself could make his demons go away, at least for a while. He knew that what he most desired to do he could only do alone. But being alone was, well, lonely, and scary, and it was in the lonely moments that he realized how much it was costing him to be himself: that more than anything, by his standard, he wasn’t composing enough.
He knew that his own music was his greatest gift and message. There was a time when composing was easy for him, but it got harder as the years went on. To write the kind of music he dreamed of required time, and there was never enough time.
He knew how much his music mattered to people. He knew that it charmed them. But what he was yearning for was reverence. After all, Copland, his immediate mentor and model, had managed it. Copland’s much-beloved populist pieces like “Rodeo” were balanced by thorny ones like the Piano Variations and the Short Symphony. Their message was hard, uncompromising.
But for Bernstein the composer, compromise and collaboration seemed essential, inescapable. He thrived and suffered in his artistic partnerships: Jerome Robbins, Arthur Laurents, Stephen Sondheim. Robbins, especially, could get under his defenses and make him doubt that anything he had done was worthy. He put so much of himself into his writing, and when nothing came of it, it was an unbearable torture.
He also put a lot of other composers into his writing. But however much he may have borrowed, the whole was much more than the sum of its parts. It all added up to an instantly recognizable and authentic him. The references came completely ingenuously, and they didn’t bother him. In fact they amused him. He would grin, shrug and say, “Everybody steals, but you’ve got to steal classy.”
His music has a right-guy, right-place, right-time quality that says even tough things with a breezy confidence. He was that guy. He became the presiding maestro of the free world’s victory parties. After World War II it was Bernstein in Prague, Paris, Vienna, performing Copland’s Third Symphony. After the Six-Day War, it was Bernstein in Israel doing Mahler on Mount Scopus. Bernstein and the New York Philharmonic mopped up in South America after Vice President Nixon’s disastrous motorcade. And during the cold war Bernstein hugged Shostakovich in Moscow and performed Beethoven at the Berlin Wall.
He took American music to Europe; he brought European music here. And talk about confidence; he took European music back to the Europeans. His festivals of Mahler and Nielsen caused their music to be more highly valued in their own lands. I can still hear him announcing, “I’m going to Budapest to teach the Hungarians how to play Bartok.” And he did.
It was thrilling, but it fed on itself. He stood at the center of a cultural empire with everyone looking to him as the arbiter of taste and acceptance. For a while he felt he could do anything: conduct, compose, make videos, bridge the generation gap, champion justice for radical political causes, no matter what the cost. Then, like the nation whose spirit he epitomized, he began to flinch. He feared he was being subsumed by the trappings of his fame, by the agendas of the organizations he served.
By the early ’70s he realized the danger. That is what “Mass” was really about. He carried on, the bravest of old campaigners, never losing his faith in the ideals of his youth and thrilled to see them reborn in new generations. But of himself, amid the relentless fetes, he would say, “I’m at the very peak of my decline.”
These were the years of the tours from hell. Where was he? Vienna, Rome, Tel Aviv, Paris, Tanglewood, Sapporo? Why was he there? Old friendships, new projects, bigger deals, concern for a young artist or cultural organization, because white asparagus was in season, because his loden coat had worn out, because his wife and his boyfriend were dead? And he wasn’t composing enough.
His music took a darker cast. The major pieces of the last years, like “A Quiet Place,” “Dybbuk” and “Arias and Barcarolles” largely avoided heart-on-sleeve confessions and flirted with the hermetic procedures of the 12-tone system. He treated a tone row as a game. His anagram skills made lattices of notes that yielded quartets, twisted torch songs, anything he desired. They sound like him, but their prevailing mood is turgid, despairing, even desperate.
There is a relentless search in these works for emotional honesty and intellectual rigor, and at the same time for reconciliation, simplicity and, as in the title of his last opera, “a quiet place,” where he could be generous, vulnerable, simple.
It was hard for him to let himself be simple. He usually felt that he needed to put himself and everyone else through some major test before he could relax. Composition had become another test, an agon. But writing a piece for someone he loved was a different story. Seeing him possessed by the perfect vision for a birthday or anniversary song was like witnessing a minor miracle.
It was always about people. He wrote his music for them, gave his performances for them. He wanted to teach them, touch them, include them. He wanted them to be a part of the family. He adored his own family, relishing its complex mythology, accepting the brickbats of his siblings, the challenges of his children and the love and counsel of his wife, Felicia, whose warmth and easy elegance made so much of his world possible. She set the standard of what was fitting. When she told him “Pull up your socks,” he did.
There was easy banter and brilliance at their table, and silliness and lots of love. The atmosphere was Yiddishkeit showbiz competitive, but the feeling was above all warm and inclusive. From the moment you pulled up a chair, you felt you were at home. I think he wanted you to feel the same way in the first bars of his music.
Sometimes the pileup of responsibilities was too much to bear. When that happened, he would turn night into day: stay up all night, go to sleep at 6 in the morning, have breakfast in the late afternoon. This way he could avoid people and stay in his own space without giving too much offense.
But put him back in front of an audience, and he was back on again, in search of new friends. Some of his greatest performances were given at postconcert parties for audiences of a few dozen. He would settle himself at the piano and begin a sequence of killer numbers: movie production spectacles, Victorian tear-jerkers, understated supper club rarities or operatic coloratura showstoppers sung in a subvocal rumble that Dietrich would have envied.
He knew he had everyone in his power and relished it. Never more so than the night in Washington when an esteemed critic came forward to say a wobbly good night and collapsed at his feet. “Look,” Bernstein said, “there he is, one of America’s most distinguished journalists, passed out, helpless before me. Why couldn’t you be Harold Schonberg?”
Even in the midst of the whirlwind of his life he found time to be with young artists. Mostly he had to be a kind of hit-and-run mentor, dispensing maxims and anecdotes in brief master classes in the back seats of limos. So much of his own experience had been thinking and learning on his feet in front of a hundred or a few thousand people that he knew the drill.
After one of my early performances of Mahler’s Fifth Symphony the conversation went like this. M. T. T.: “What do you think about the Adagietto?” L. B.: “What do I think? I think that when you’ve made up your mind about what it really means to you, it won’t matter what I or anyone else thinks. You’ll just know.”
So what can you say about a guy like this? So nurturing, so confrontational. He gave so much. He cared so much. I once asked him, “Did anyone ever get so much done and have so much fun as you have?”
“I don’t know,” he replied. “Mozart, maybe.” But he always needed more.
In the last years he was playing a game of chicken with his spirit and his health. The time ran out, and — as he had feared — he hadn’t composed enough. But in what he did compose he left us a real tracing of the places his spirit had been. Even if you never met him or saw him, his music tells you how life tasted to him, and that’s what he really wanted.
There was never any question of what he believed, what he championed. It was the joy of music. He lived it.
Michael Tilson Thomas will conduct the San Francisco Symphony at Carnegie Hall on Wednesday evening to kick off the citywide festival Bernstein: The Best of All Possible Worlds. This article is adapted from a larger one that appears on his Web site, MichaelTilsonThomas.com.
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