Currency Market Ripoffs

News services report that banks have allegedly been ripping off customers in the foreign exchange markets. Major banks buying or selling foreign currencies for institutional investors have supposedly been cheery picking their day's transactions after the market closes, keeping the good trades for themselves, and sticking their customers with the lousy trades. Unlike the stock markets, there isn't a consolidated tape in the currency markets that reports transactions publicly, and customers are at a disadvantage in trying to figure out whether they've gotten fair prices. The banks have a free hand to turn lead into gold by keeping the golden trades for themselves and dumping the lead into customer accounts.

It's easy to be a winner in the financial markets if you have the benefit of hindsight and can help yourself to a do-over. It's even easier when you're transacting in an unregulated market that's largely opaque to your customers. The currency markets are unregulated, and only the naive and poorly read would be surprised by the recent allegations. After all, similar ripoffs occurred in the opaque mortgage-backed securities and derivatives markets, crucial parts of an unregulated shadow banking system whose collapse in 2007-08 continues to haunt our economy today. A recurring story of Wall Street is that insiders will rig the market against the public whenever they can. The news reports about currency trading ripoffs is just another iteration of that story.

That institutional customers, including some well-known money managers, were victimized brings to mind a lesson of the Bernie Madoff scandal: even the well-heeled and sophisticated are vulnerable. No one is safe when transparency and accountability are in short supply. Moreover, pension funds and other investment vehicles holding money for the benefit of middle class workers and investors are among the victims. This isn't just a problem for residents of Palm Beach.

Greater regulation of the currency markets, even simple measures like better recordkeeping of transactions and more timely confirmation of trades with customers, would enhance accountability. However, today's political climate precludes greater regulatory protections, even if pension funds and other repositories of middle-class assets are at risk. Some victims have filed lawsuits--the State of Virginia even intervened in one--and perhaps they'll recover their losses after a long slog through the courts. Otherwise, caveat emptor remains the word of the day.

The New York Stock Exchange-Deutsche Boerse Derivatives Merger

The proposed merger between the New York Stock Exchange and Deutsche Boerse would reportedly create a combination that earns at least half of its net income from trading derivatives. See http://www.bloomberg.com/news/2011-02-11/nyse-deutsche-boerse-merger-is-free-with-derivatives.html. The derivatives trading is probably concentrated in financial derivatives, like futures and options for U.S. Treasury securities or stock indexes. (Commodities futures are a relatively small part of the derivatives business.) The stock trading business, facing competition from smaller, faster dark pools and other operators, is evidently in decline.

The derivatives business is about risk management and risk transfer. When the leading exchange in America and the premier exchange in continental Europe join together to form a big risk management market, things are changing and not in a good way.

The fundamental role of the financial markets has historically been to facilitate capital formation. Capital formation consists first and foremost of the sale of stocks and bonds issued by business ventures to savers who want to share in the hoped for profits of those ventures. In other words, capital formation is about taking risks: investors taking risks to help entrepreneurs and established businesses take risks. When major financial markets combine to seek their futures in trading risk management products, one wonders how much capital is being sidetracked from growth oriented investment to speculation.

There is a historically valid role for commodities futures contracts in mitigating the risks of farmers, producers and manufacturers. But when Western financial markets focus more on swapping or selling risks, and less on facilitating capital formation, it's not that hard to understand why Asia is becoming an economic powerhouse while North America and Europe lag. Capital formation is booming in Asia. Fortunes are being made (and sometimes lost). Asia will do well over the next 50 years and perhaps longer because a lot of business risks are being taken, and surely some of those risks will pay off. (After 50 years, Asia's demographic profile will begin to resemble the industrialized world's--more older people and fewer younger people--and no one knows how that will play out.)

Very possibly, the combined NYSE-Deutsche Boerse will be stronger than the two exchanges individually. But its success doesn't necessarily signal prosperity for Western economies as a whole. Economic growth doesn't come from swapping risks. It comes from taking them. The Dutch didn't attain lasting prosperity from trading tulip bulbs. And the combination of the NYSE and Deutsche Boerse is ultimately, not that big a deal. What matters much more is boosting the flow of capital to pimply-faced kids huddled over computers in garages and college dorm rooms, nimble, tech-oriented machine tool companies, specialty steel companies, and other tinkerers and entrepreneurs from sea to shining sea.

The SEC Tackling Computerized Trading

More than half of all stock market trading is now done by computers. It was inevitable that the SEC would bring enforcement cases involving computerized trading. Late last week, the agency imposed administrative sanctions on a money manager named AXA Rosenberg, for allegedly misleading its clients about a software malfunction in the firm's trading software. AXA Rosenberg managed a "quant" fund that invested based on computer analysis of a variety of factors. According to the SEC, the computer software's risk management process did not work properly, resulting in over $200 million of losses. When AXA Rosenberg personnel uncovered the problem, they did not disclose it to clients when they should have, and instead misled investors by claiming the losses were due to market volatility. Among other things, AXA Rosenberg will pay a $25 million penalty. More importantly, it's reportedly lost over half the money it had under management, as investors apparently headed for the exits after news of the software problem came out. That must have really hurt. Other quant funds will take notice.

Although the AXA Rosenberg case concerns today's elaborate computerized trading, it is a straightforward application of the federal securities laws. Investors were told that their money would be invested through the use of computer algorithms and other computerized analysis, and the law dictates that they must also be informed of risks presented by material defects and deficiencies in the programming. Disclosure of risks has been required since the beginnings of the federal securities laws, and as far as legal theory goes, the AXA Rosenberg case is as traditional as fireworks on the Fourth of July.

The SEC faces much bigger problems with computerized trading, as illustrated by the Flash Crash of May 6, 2010. That day, the Dow Jones Industrial Average dropped 9% in a matter of minutes, only to recover after a few more minutes. Apparently, a large computer-driven sell order by a money manager triggered other selling by computers monitoring the market, which soon led to wide-spread computerized stock dumping. This kind of high-speed chaos, like turning a corner on a highway and driving right into a sandstorm, scared the bejesus out of investors and still keeps droves of them away from the market in spite of the ongoing bull run.

Computerized trading is based on relative price movements: stocks are bought or sold when prices in the near term appear as if they are about to rise or fall. The software senses that a stock is comparatively cheap, and sends out a buy order. Or it senses that a stock is comparatively expensive, and sends out a sell or short sell order. Then, if and when the market moves the way anticipated by the software, the computer then closes out the trade by ordering a sell or buy, respectively. All of this happens very quickly, sometimes in milliseconds.

Trading based on perceptions of relative prices is nothing new. Day traders and other short term speculators have, for generations, tried to profit from relative price movements. Many money managers trying to beat market averages invest based on their perceptions of relative price. But computers have taken it to an entirely new level. With the ability to trade in milliseconds, computers can sense and profit from a price trend before humans have time to blink. Computers probably trade with other computers most of the time and the price movements they attempt to exploit may well be caused by other computerized trading. Sentient beings (i.e., humans) are simply left behind.

But the heart of the stock market isn't found in the upswings and downswings caused by relative price changes. It's in the overarching, long term gains (and losses) reflected in the valuations, perhaps seemingly subjective and imprecise, sentient humans place on stocks over the course of years and decades. Without sentient pricing, if you will, the stock market wouldn't exist. No one would risk their savings in a market where the only hope of profit would be relative price changes based on the short term inclinations of whoever or whatever else might happen to be in the market at the moment.

The real challenge for the SEC will be to preserve sentient pricing's fundamental role in the stock markets. High speed computerized trading to exploit relative price changes cannot take primacy over the human element in the stock market. There will be times when the agency may want to limit or slow down the participation of computerized trading. Such measures would find precedent in historical stock market limits on index arbitrage trading (like the New York Stock Exchange's collars and sidecars). Possibly, position or transactional limits on the size or amounts of some kinds of computerized trading might be necessary to prevent a single firm from smacking the market too hard one way or the other. Other measures, depending on the state of the art of computerized trading, may also be in order.

It's one thing for a computer to beat a human in chess, or even in Jeopardy. But when computers beat humans with the humans' retirement savings at risk, we have a horse of a different color. The "secondary" market, as the day-to-day stock market is called in Wall Street parlance, exists to support the capital formation process and not to serve as a speculators' mosh pit. An entire generation of investors fled stocks after the 1929 Crash, and it's no accident that stocks did not recover their losses from that crash until 1954, 25 years later. Ultimately, what counts is the absolute value of stocks, and human investors are needed to sustain absolute value.

How to Really Find Cheap Gas

With gas prices rising, cheap fuel is all the more important. To find it, start with the price per gallon. There are plenty of websites that offer this information, but simply keeping your eyes peeled can work well--a lot of websites rely on user input to get their prices and they aren't always complete or up to date. You may find lower prices by being observant.

Having the price per gallon leaves open the question how large a gallon you're getting. Officially, a gallon is 231 cubic inches. But it would seem that not all gas stations calibrate their pumps to deliver the same size "gallon." If you watch your mileage closely and buy gas at several stations posting cheap prices, you may learn that some stations routinely pump more "gallons" into your tank than others. This means they are selling a smaller "gallon." Obviously, you want to buy the largest "gallon" you can.

To figure out which stations sell smaller gallons and which sell larger ones, keep track of your mileage between fill-ups. Using the trip odometer on your car may be the easiest way of doing this. Keep track of how many gallons go into your tank with each fill-up and calculate the mileage. Ideally, for the sake of consistency, you should use the same pump at each station you buy from and never overfill the tank. Buy at several cheap stations and then compare your mileage calculations. If one station stands out as giving you lower mileage (by selling you more gallons per fill-up), it may use a small "gallon." Conversely, if a particular station stands out in giving you good mileage (by selling fewer gallons per fill-up), it may use a larger "gallon."

I've noticed that there can be apparent differences of perhaps as much as 10% or more in the size of the "gallons" sold by different stations. With gas prices levitating above $3 per gallon, a "gallon" that's 10% smaller than a true gallon is actually more expensive if its posted price is as much as $0.30 lower than a station selling a true gallon. Since a price break of 30 cents per gallon will capture the attention of almost any reasonably sentient driver, the size of the gallon at a particular station really does matter.

If you have the same experience (i.e., either large or small gallons) several times at a particular station, you will have probably discovered a chiseler, or, alternatively, an honest station operator. Then, you'll know where to buy gas, and where not to.

The Skewed Distribution of Hope

The allocation of economic risks is a crucial social dynamic, as is illustrated by the evolution of the general business corporation. It was one of the greatest innovations of the 19th Century. While few historians have ranked it with the cotton gin, steam engine, telegraph, or railroad, the general business corporation had enormous impact on the business world.

The concept of a limited liability company had existed for centuries, but such entities were individually chartered at the pleasure of a monarch and only for a limited purpose, such as the building of a bridge or colonization of a prescribed area of North America. These ventures were perceived to be of great value but to involve high risks. The protection of limited liability (under which investors could lose only what they had invested and/or had committed to invest) was offered to induce investors to take the outsized risks.

State governments in 19th Century America expanded this narrow concept of a corporation to allow anyone to obtain a limited liability charter for any business (and later, nonprofit) purpose, by observing a few simple legal formalities, filing a document or two with the state, and paying nominal fees. The sudden availability of limited liability investment vehicles created an investment boom. Savers were willing to invest in speculative industries and businesses when they did not have to risk their entire fortunes. Corporations became the dominant form of business organization, and America morphed from being an agrarian society of yeoman farmers and pioneers to an economic giant. All this, in part because of a change in risks.

Of course, the downside risks didn't disappear. Remember that risk never dies. It can be shifted, but it must fall on someone somewhere. As regards corporations, many risks and costs that formerly fell on business owners were transferred to consumers, creditors and business counterparties like suppliers and customers. Entire new bodies of law--such as state jurisdictional expansions known as long arm statutes, and products liabilities laws--evolved to balance out some of the inequities to consumers, customers and counterparties resulting from the corporate boom. Financial products, such as preferred stock and collateralized bonds called debentures, were created to offer protection to investors primarily concerned with return of capital.

Nevertheless, the corporate form of business allowed the accumulation and consolidation of massive amounts of economic power, so much so that antitrust laws and regulatory agencies such as the Federal Trade Commission and the now defunct Interstate Commerce Commission were enacted in an effort to rein in these entities. The personal wealth created for owners of corporations was a crucial reason for the social unrest that manifested itself as the populism and sometimes anarchism of the Gilded Age.

The history of the corporation illustrates how a shifting of risks can have enormous economic and social consequences. A similar shifting of risks is taking place today. The bailouts of 2008, the Federal Reserve's never-ending accommodation, and the federal fiscal stimulus programs have supported and now revived America's corporate sector. Publicly traded corporations are reporting record amounts of profits. Wall Street compensation is rising to previously unattained heights. The federal government's financial and economic policies of the past four years have shifted much and perhaps most of the risk of economic downturns away from the corporate sector. Taxpayers have borne a lot of the cost (even if some bailouts have been profitable, others have not, and the added costs of unemployment compensation, other transfer payments and other social welfare programs must be added to the costs of bailouts). Also among the losers are savers, who have been saddled with severely reduced income, as the Fed has driven down interest rates. The unemployed bear a great burden, and lose hope as improvements in worker productivity allow businesses to save themselves and increase profitability without having to hire back many that they laid off. Foreign creditors holding dollar-denominated investments have taken losses as the dollar has gradually fallen in value.

The "recovery" in America is real only for the well-off. See http://blogger.uncleleosden.com/2011/01/tale-of-two-recoveries.html. Current unrest in Tunisia, Egypt and other nations illustrates how explosive a problem social inequity can be. While America is nowhere near a social revolution, the increasingly clear, extensive and continued shifting of the risks of economic downturns onto Americans less able to bear such burdens, and the well-publicized benefits to the well-off, is heightening the dissonance of our social dialogue. It's not an accident that the 1950s, which were actually a pretty messed up time, are now regarded with nostalgia. Those years saw a relatively equitable distribution of income and wealth in America. Being middle class meant that you were prosperous. Today, being middle class means you're barely getting by.

Almost all federal policy and legislation related to the economic travails of the past few years has been ad hoc, drafted on the backs of envelopes, and sometimes the product of messy compromises. Because of the desire for short term results, no one, it seems, is paying attention to the long term shifting of risks. This issue goes beyond the generational transfer of costs from the burgeoning federal deficit, and the rising inequity in the distribution of income and wealth. Government policies and programs are reallocating risks to concentrate future prosperity on a relative few. This amounts to a redistribution of hope. America is a nation of dreamers and hope is essential to the American way of life. America was founded on, among other things, the right to the pursuit of happiness. Even when Americans haven't had much income or wealth, they've been able to carry on and work hard if they had hope for the future. Today's increasingly skewed distribution of hope does not portend well.

Will the Federal Courts Pave the Way for Single-Payer National Health Insurance?

The score over the constitutionality of last year's federal health insurance reform is 2 - 2. Two federal courts have ruled it's constitutional and two more have decided that at least part of it isn't. The feature on which disapproving judges focused is the requirement beginning in 2014 that the uninsured buy individual coverage. The government contends that this requirement is permitted by the Constitution's Commerce Clause (which allows Congress to regulate matters affecting interstate commerce). Opponents assert that the law purports to regulate inaction--being uninsured--and that inaction isn't commerce.

Proponents respond that life is more complicated than that. As a society, we don't toss the uninsured in the gutter, to die slow, painful, lingering deaths. Instead, they are treated, and if they can't pay cash (which is very often the case), the cost of their care is borne by the rest of us in the forms of higher hospital charges, larger co-pays and deductibles, and steeper health insurance premiums. This imposition of costs on paying patients has interstate impact, and consequently allows federal health insurance reform under the Commerce Clause, proponents contend.

The final word on constitutionality rests with the U.S. Supreme Court. Given the split among lower courts, the Supremes will almost surely take the issue. Predicting the weather is easier than figuring out how the Supremes will rule.

It's interesting to consider that, if the Big Court gives the new law a thumbs down, it may well pave the way for a single-payer national health insurance system. Even if a federal requirement for an individual to buy health insurance goes beyond Congress' constitutional authority, a taxpayer funded single-payer, comprehensive national health insurance program would surely be constitutional. We already have such a system for Americans 65 and older (it's called Medicare), and another such system for many with low incomes (called Medicaid).

Today's Republican controlled House would strenuously resist a single-payer system. But the naysayers have no serious alternative. The baseline problem for Republicans (and those Democrats who voted against last year's health insurance reform) is that no one, not conservatives, moderates or liberals, want the system we had before last year's reform. That "system," with its hodge-podge, hit-or-miss, luck of the draw "coverage," left tens of millions uninsured, tens of millions more underinsured, and numerous Americans going without treatment until their problems became severe enough for an emergency room visit, where others (i.e., the insured) would pick up the high costs of the uninsureds' care. If last year's reform is tossed out by the courts, there will be enormous political pressure for an alternative. The Republicans, who have been singularly feckless in improving the health insurance system, will find themselves losing favor with an electorate struggling for coverage. This is one issue where the party of No will have to rethink its message. Reality is that we'll have health insurance reform one way or another, if not now, then pretty soon.

Last year's health insurance reform was a rather complex political compromise designed to make Americans face a simple fact of health insurance: it's fairest and most sensible when everyone contributes to the cost. (That's why state laws require all motor vehicles to be insured.) If last year's reform doesn't survive judicial review, a single-payer national health insurance system may be the one alternative sure to withstand constitutional challenge. Other alternatives would be much more complex, and therefore exposed to legal challenge (when it comes to the law, complexity begats litigation and simplicity tends to avoid it).

Many taxpayers may not like a comprehensive, single-payer system because of fears of rising costs. But those rising costs are already smacking those of us who are insured, through our premiums, co-pays and deductibles. The rising costs are less a function of the insurance system we have than of expensive advances in medical technology and the extensive care sometimes given the very elderly. Dealing with these issues involves difficult ethical questions, but leaving people uninsured won't solve these problems.

A ruling against last year's reform will likely limit Congress' options for the structure of a replacement program. It won't persuade voters to accept a return to the Dickensian grimness of the status quo ante. If last year's reform is struck down, the single-payer national program may well rise up from last year's ashes. This probably wouldn't be what the federal judges ruling against the reform intend, but we often get what we don't intend.

The Federal Reserve's Failure to Supervise

Sometimes, the way to solve a problem is to question your assumptions. That's a lesson the Federal Reserve should take from the Financial Crisis Inquiry Commission's Final Report. There's an interesting tidbit on p. 54, which quotes a former senior Fed staff member as writing, "Supervisors understood that forceful and proactive supervision, especially early intervention before management weaknesses were reflected in poor financial performance, might be viewed as i) overly-intrusive, burdensome, and heavy-handed, ii) an undesirable constraint on credit availability, or iii) inconsistent with the Fed's public posture." In other words, when a bank was making profits, especially lots of profits, regulatory staff were supposed to hold back.

This is exactly wrong. Undergraduate level economics teaches that any high degree of profitability should be ironed out by competitive forces in the market. Thus, the existence of high profitability may be a sign that something less than entirely desirable may be happening. The bank might be taking a lot of risk (remember that risk comes with reward), such as by underwriting mortgage loans to people whose documented ability to repay is skimpy or nonexistent. Or the bank may be doing something illegal. Fraud, manipulation and other illegal conduct can be immensely profitable. That's why there are so many financial shenanigans. High profitability is a yellow flag, indicating that increased regulatory scrutiny is warranted.

Requiring staff members to hold back until a bank's financial performance has nosedived, as the Fed apparently did, is tantamount to fiddling until disasters burst forth and wreak a full measure of havoc and collateral damage. No glory is attained when the cavalry charges over the hill after the wagon train has been massacred.

The FCIC final report also notes, on p. xvii, that in 1980, the financial sector earned 15% of total corporate profits in America. This figure grew to 27% by 2006. This sustained rise in profitability is another yellow flag. It could indicate a sustained increase in risk levels (uh, duh). Or it could be a sign of illegal behavior. Either way, a sustained rise in profitability should have been seen as a reason for greater regulatory alertness.

Sustained elevated profitability might also indicate cartelization, with large, powerful banks extracting outsized profits by dominating markets. This is also undesirable, as greater oligopoly power would reduce the benefits of competition. Regulators should be vigilant against a shift toward concentration in market power.

The Fed appears to have viewed bank profitability as desirable. Better financial performers would presumably be more stable and less likely to collapse, which would reduce the Fed's worries. But we now know that the sustained increase in bank profitability resulted from high risk and sometimes illegal conduct that exacerbated the instability of the financial sector, ultimately leading to the crisis of 2007-08.

It may be counter-intuitive for regulators to scrutinize their regulatees more closely when the latter are reporting rosier financial performance. But greater profitability is a yellow flag, and perhaps a red flag, for serious problems. Regulators are not supposed to be cheerleaders for management, nor are they supposed to relax when the regulated industry is prosperous. They must apply unrelenting skepticism, 24/7. The history of financial crises preceding the creation of the Federal Reserve well-document that markets are not invariably self-correcting or self-regulating. That's why the Fed was created. One of the root causes of financial bubbles is too much credulity. The civil servants charged with preventing these disasters should never add to the credulity.

Champion Cellists on the Move

This past week, Davos chattered as Egypt burned. Stock markets shuddered, and high ranking government officials worldwide issued statements and proclamations that were promptly ignored in the streets of Cairo. Hedge funds shorting oil were clobbered when petroleum prices surged, and the dollar rose as it took on its customary role as a refuge in times of crisis. The Euro, too close to the restiveness, fell back. None of this was entertaining.

More entertaining are the live performances by some champion cellists. They don't merely play notes. They squiggle, squirm, grin, frown, look around, roll their eyes and hug the instrument. Here are four of the finest, each playing the rousing third movement of Haydn's Cello Concerto No. 1.

Yo Yo Ma seems to scan the balconies for good-looking women. He must have seen some, because he delivers an inspired performance. http://www.youtube.com/watch?v=-S8pW74t2QQ&feature=related.

Han Na Chang, a Korean prodigy who has blossomed into one of the world's best cellists, bounces, frowns, purses her lips, puffs up her cheeks, and grins from coast to coast. She is one happy cellist. http://www.youtube.com/watch?v=-aoUxKfHS9I&feature=related.

Julian Lloyd Webber, brother of impressario Andrew Lloyd Webber, is one of the doyennes of Britain's cellist community. Here he is, in vaguely Medieval costume, playing brilliantly while flicking some lint off his left hand and occasionally flashing the whites of his eyes. http://www.youtube.com/watch?v=13GHrPNJzNQ&feature=related.

Mstislav Rostropovich demonstrates, however, that one need not squiggle all over the stage to play masterfully. He simply hugs the instrument, juts his jaw, and delivers a performance worthy of a maestro. http://www.youtube.com/watch?v=Vo113j8sQRE&feature=related.

Artistry at the Piano

The Financial Crisis Inquiry Commission issued its solemn report today, excoriating some, castigating others, and ascribing blame from sea to shining sea. Four dissenters expounded on their frustrations with the majority, leaving their fellow commissioners well-scolded. If you've been paying attention to the recent financial crisis, you've pretty read everything the commission has to say. Its report is likely to leave the debates unresolved. Which is typically what commissions in Washington, D.C. accomplish.

Onto more important things. Today's classical pianists tend to be technically precise, overly expressive of their very strongly felt emotions, scared shirtless of even a minor deviation from stylistic norms, theatrical in a conformist way, and just about impossible to distinguish from one another. Conservatories produce performers, and rather predictable ones. However, within living memory, great concert halls were graced with the presence of artists. The well-known artists--think of names like Rubenstein and Horowitz--serve as the templates for today's conservatory graduates. There were others who were distinctive, singular, unique. To fully appreciate the breadth and depth of classical music, one must leave well-marked trails and explore. Here are a few starting points.

Claudio Arrau. One of the most underappreciated pianists of the 20th Century, Chilean-born Claudio Arrau played with a self-possessed, deliberate style, seeming to hesitate before striking a note as if to think through the sound he wanted to produce. Always keeping the tempo under control however passionate the piece, Arrau added elegance to even the most tempestuous passages. Sometimes described as a romantic, Arrau maintained fidelity to the score and was never more romantic than the composer (a fault common among today's performers). Listen to Arrau play a passage from Beethoven's Appassionata piano sonata, a technically difficult piece through which Arrau movingly explores the depths of Beethoven's greatness. http://www.youtube.com/watch?v=w7GftdLYSsI&feature=related.

Glenn Gould. Known for his percussive interpretations of Bach, Canadian-born Glenn Gould was less contrapuntal than faithful to the score. Bach didn't write for the piano, an instrument that didn't exist in his day. Pianists playing Bach today are usually performing his pieces for harpsichord, a contrapuntal instrument incapable of modulating its tone or changing its volume. Although Gould is famed for largely eschewing Romantic music, he played pieces written for the piano sweetly and passionately with an understated touch that gently highlighted the emotion infused by the composer. Allow him to lead you through a passage from Beethoven's Piano Sonata No. 31. http://www.youtube.com/watch?v=rTfNSMcH2TY&feature=related.

Alicia de Larrocha. Spanish-born Alicia de Larrocha was not even five feet tall, yet she managed to wrap her small hands around the masterpieces of the piano repertoire. With verve and a perfect sense of tempo, de Larrocha painted magical musical landscapes, staying within the confines of the score and eliciting the emotions embodied in the composition. Here she is, gliding through Bach's French Suite No. 6. http://www.youtube.com/watch?v=Fiokjl-_gtA&feature=related.

Friedrich Gulda. Austrian Friedrich Gulda was the bad boy of Europe's classical music scene, once faking his own death just for laughs. He was theatrical, in a deviant sort of way that poked convention in the eye. (In the video attached below, Gulda performs wearing a turtle neck shirt and a hat that seems vaguely Turkish.) Although unorthodox and unrestrained, Gulda was a rarity: he had fun on stage. And while doing so brought unvarnished joy to his performances. Here's Gulda playing the first movement of Mozart's Piano Concerto No. 20, while also conducting the orchestra that accompanies him. http://www.youtube.com/watch?v=VtTqpqGIIYU.

None of this is to detract from the greatness of the well-known masters. For the finest performance this writer has ever heard of Chopin's Polonaise N0. 53 (the "Heroic," which for many serves as Poland's de facto national anthem), see this video of Polish-born Artur Rubenstein performing in Moscow. He must have been inspired by the venue to stick it to Poland's oppressors by reaching the heights of lyricism and grandeur. http://www.youtube.com/watch?v=nsl7XDTBaJo.

Hope For the Financially Lost

Financial plans can be blown up because of job loss, illness, elderly parents who need support, or bad investments. Some people simply can't save. Whatever the situation, there remains hope for the financially lost to have at least a decent retirement.

Boost your benefits. Work as long as possible to build up Social Security and, if available, pension benefits. This is especially important for those that can't save. Even if you aren't working, delay taking Social Security benefits as long as you can (unless you're 70 or older). Delaying Social Security increases benefits. For more, see http://blogger.uncleleosden.com/2007/05/mysteries-of-social-security-retirement_02.html.

Stay together. Couples generally are better off than singles, because they can pool their resources. Even if their only resources are Social Security benefits, a couple are usually better off together than individually. Of course, togetherness isn't always possible. When it is, there are financial, as well as other, benefits. For more, see http://blogger.uncleleosden.com/2007/05/mysteries-of-social-security-retirement_03.html.

Get a job with a pension. Government, law enforcement, military and educational jobs usually offer a pension or other retirement plan. Although pension benefits in many state and municipal jobs are being adjusted to meet fiscal realities, they will still be better than nothing. Not everyone is cut out for these lines of work. If you find a private sector job with a pension, then try to stay there long enough to accrue meaningful benefits. For those who can't save, a pension is golden. You just have to work long enough to vest; saving isn't necessary. If you need assistance figuring out if the amount of pension benefits your employer promises is correct, contact the American Academy of Actuaries at http://www.actuary.org/palprogram.asp. They'll give you up to four hours of free help. If you think your benefits are too low, contact a regional pension counseling project for free assistance. http://www.pensionrights.org/counseling-projects.

Buy a house and pay off the mortgage. Buy a house, pay off the mortgage, and don't borrow against the house until you retire. This strategy will build equity in a piece of real estate that you can add to your Social Security benefits (and pension benefits, if any). Even though strategic defaults have become fashionable, the unfashionable may have an advantage in the long run.

None of these strategies will finance a yacht. Remember that it's never too late to save, even if you're living on just Social Security. Cash is sublime when times are tough.