Monday, August 6, 2012

Kinks -- "Shangri-La" (1969)

The gas bills and the water rates
And payments on the car 
Too scared to think about 
How insecure you are 
Life ain't so happy in your little Shangri-La 

Only three months until election day.  (It'll be here before you know it!)

With the American economy in the toilet, President Obama's campaign is beginning to emphasize social issues -- abortion, gay marriage, immigration, etc. -- because the polls show that the President has an edge over his opponent on such issues.

The polls also show that 35% of voters say that jobs is the top issue, while 23% say the budget deficit is number one.  Only 5% say immigration is the most important issue to them, while only 4% rank gay marriage as their number one concern.

Many Americans are feeling like Arthur, the middle-aged and middle-class British man who is the title character of the album on which this song appears.

Arthur has purchased a modest house in the suburbs, not to mention a car and a TV set.  But to be able to buy his "Shangri-La," he had to go into more debt that he really feels comfortable with. 

The little man who gets the train 
Got a mortgage hanging over his head 
But he's too scared to complain 

A few years ago, many Americans were taking advantage of low interest rates to buy houses they really couldn't afford.  Lenders became more liberal in their lending policies because they assumed that the price of houses would continue to rise, providing them with sufficient security even if some borrowers were unable to pay their mortgages.

But when interest rates started to go up and housing prices started to drop in 2006-2007, defaults and foreclosures started to increase.  The bubble burst, the house of cards came tumbling down, the chickens came home to roost -- feel free to use the cliché of your choice.

Mr. Micawber
Remember what Mr. Micawber said in David Copperfield?

Annual income twenty pounds, annual expenditures nineteen [pounds], nineteen [shillings], and six [pence], result happiness.  Annual income twenty pounds, annual expenditures twenty [pounds], ought [shillings], and six [pence], result misery.

For those of you who never mastered old-style English currency, let me help you out.  There were 20 shillings to the pound, and 12 pence to the shilling.  So according to Micawber, the difference between happiness and misery is the difference between spending half a shilling (six pence) less than your 20-pound income, or spending half a shilling more than your 20-pound income.

Half a shilling is 1/800 as much as 20 pounds -- that's not much.  But what matters is whether you're running a surplus or running a deficit.  When you have money in the bank -- that is, the bank owes you -- all is well.  But when you owe the bank, watch out.

Micawber didn't have the advantage of advanced instruction in economics, so he didn't understand how debt allows you to leverage profits, how it's a good thing when governments operate at a deficit, and so on.  He was operating on the very old-fashioned principle that you should live within your means, and avoid becoming a debtor at all costs.  That's soooooo passé!

The biggest asset of Americans as a whole is home equity -- the value of their homes less mortgage debt.  At the beginning of 2006, total home equity was valued at $14.9 trillion.  By the end of 2010, it had fallen to $6.3 trillion.  Almost a quarter of American homeowners are underwater on their mortgages -- that is, they owe more to the bank than their houses are worth.

If I was one of those people, I would have only one issue on my mind when I went into the voting booth on November 6 -- and it wouldn't be immigration, or gay marriage, or the war in Afghanistan, or any of the other serious issues facing our country.

I was fortunate enough to make the final payment on my mortgage earlier this year.  We bought our first home in 1984 (I was 32 years old) with the help of a 30-year mortgage.  When we moved five years later, we signed up for another 30-year loan.  But when we moved to our current house in 1997, I was wise enough to switch to a 15-year fixed-rate mortgage.  Low interest rates made that decision feasible, and I didn't want to be paying off a mortgage when I was 75 years old -- which would have been the case if we had opted for a new 30-year loan at that time.

Those of you who own your home free and clear probably agree that not having a mortgage hanging over your head is very comforting.  Even if worse comes to worst, you'll always have a place to lay your head at night if you've paid off your mortgage.  (Assuming you can handle the taxes, of course.)

Given how low mortgage rates are right now, it's tempting to refinance a house and take out cash to spend or invest elsewhere.  That may be a very wise strategy.  

But I don't care.  I like having my house all paid off.  I can't imagine what would make me change my mind and go into debt every again.  

(Actually, I can think of one thing.  I have 25-year-old twin daughters.  Both seem to enjoy the company of men.  It's probably only a matter of time until I have two weddings to pay for.)

"Shangri-La" is one of those rare rock songs that was written for mature adults, not teenagers.  I know at least a thousand songs that are about how much it hurts to be in love (or in lust, as the case may be), but I know of no other song which has as its subject the angst of the middle-aged suburban homeowner.  (I personally think it's the best song the Kinks ever recorded, and that's saying something.)

Calling Arthur's modest suburban home "Shangri-La" -- the name given to the fictional Himalayan utopia in James Hilton's 1933 novel, Lost Horizon (which Frank Capra turned into a movie) -- is pouring the irony on pretty thick, of course, but this is a song that is essentially sympathetic with the concerns of what used to be called the silent majority.

It doesn't trash the middle class for worrying more about the next mortgage payment than about poverty in third-world countries, or global warming, or animal rights, or all the other causes that some so zealously advance.

Instead, "Shangri-La" says "There, there -- life's not so bad.  At least you've got indoor plumbing -- more than your ol' granddad could say, eh?"

A London suburb
Living on a street where "all the houses . . . look the same" and spending your time washing the car, watching the telly, or simply sitting by the fire in your slippers after dinner may not sound like heaven on earth.  But for many of us, that's the highest "reward for working so hard" that we will attain.  

So "sit back in your old rocking chair."  You've "reached your top and you just can't get any higher."  It may not seem like much, but it's "your paradise," "your kingdom to command." 

Feel better now?  No?

Me neither.

Here's "Shangri-La":

And here's Ray Davies of the Kinks singing the song with the Crouch End Festival Chorus:

Click here if you'd like to buy Arthur from Amazon.  It's a remarkable album:

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