THE P/E ???????

The price earnings ratio, or the P/E ratio, is widely quoted by the investment community. It is also sometimes known as “earnings multiple” or “price multiple”.

Simplistically, it is arrived at by dividing the price of a share by the earnings per share, or EPS. For example, a Rs 200 share price divided by EPS of Rs 20 represents a PE ratio of 10. Theoretically, this means that if we were to buy this company today it would take 10 years to earn back our investment.

The P/E ratio tells us how much the market is willing to pay for a company’s earnings. A higher P/E ratio means that the market is more willing to pay for the earnings of the company and has high hopes for the future of the share. Conversely, a lower P/E ratio indicates that the market does not have much confidence in the future of the share.

There are plenty of issues with the PE ratio. One is that it does not account for any type of growth or the lack of it. Also, companies with major debt issues are obviously higher risk investments, but the P in the P/E ratio only considers the equity price and not the debt that the company has incurred.

Karl Siegling, portfolio manager at Cadence Capital, mentioned in Morningstar Australia some of the problems he associates with the P/E ratio. They are reproduced below.

1) The biggest and, by far, the most dangerous component of the P/E ratio is that the earnings are the accounting earnings as defined by the accounting standards for a particular country. These earnings are not the cash earnings of the business. In fact, many companies listed on the stock exchange earn no cash despite reporting profits.

2) A problem with the P/E assumption is that future earnings will be at least what they are currently. In the case of a company trading on a 10 times P/E ratio, we as investors are taking a chance that earnings will be at least what they are today for the next 10 years!

Working as an investor in the industry, it is quite clear that estimating the earnings of a company listed on the stock exchange for a year or two into the future is extremely difficult, let alone 10 years into the future.

3) Another problem with the P/E ratio is the idea that 10 times earnings is cheaper than 15 times earnings. The assumption that a company will earn its current earnings for the next 10 years and an investor will get their money back is, of course, theoretical.

A company's earnings may well go up significantly or down significantly over the next 10 years. It would follow that we as investors should prefer to own a company whose earnings go up significantly over the next 10 years rather down significantly. The P/E ratio has no way of telling us what will happen!

4) The P/E ratio tells the investor nothing about a company's balance sheet. It may be that a company trading on a 2 times P/E multiple is actually incredibly expensive since the company has a very large amount of current debt that it has no way of paying, and as a consequence, the company will be declared bankrupt in the current financial year.

We need only look back to the recent global financial crisis to find many examples of companies in exactly that situation.

5) The P/E ratio tells us nothing about the quality of a company's earnings. We may look at one company trading on 8 times earnings and declare it cheaper than a company trading on 16 times earnings.

We often hear conversations along these lines. However, upon closer inspection we discover that the company trading on 8 times earnings has just had a one-off profit never to be repeated and that the company on 16 times earnings has displayed 20% per annum earnings growth for the past 15 years.

It may well be that once these factors are taken into account, the company on a 16 times P/E multiple is actually a better investment than the company on 8 times.

The P/E ratio still has a place in valuing stocks, but investors need to use it in combination with other valuation methods, never as the sole reason for investing in a company.

Value Investor

Simple examples can be made to make this understandable .

Charles Brandes, a closely followed value investor, is the chairman of Brandes Investment Partners. He started his career in 1968 as a broker trainee.

In the late 60s and early 70s, growth investing in the U.S. was the rage. But Brandes was not impressed with the Nifty-Fifty mania or the Go-Go era. Nifty Fifty refers to 50 popular blue-chip stocks that were listed on the New York Stock Exchange and widely regarded as solid growth stocks which investors paid extraordinarily high prices for. The Go-Go era refers to the meteoric rise of growth stocks in the 1960s. The "go-go" stocks plunged in the devastating market crashes that followed in the 1970s.

During that period, a chance yet inspiring meeting occurred with Benjamin Graham who visited his office. After meeting the father of value investing and talking with him personally, Brandes decided that it was time to start his own business based upon the value principles of Benjamin Graham and David Dodd. In 1974, he founded Brandes Investment Partners in San Diego. He encapsulates smart investing by these words: "A stock price can fluctuate a lot more than the actual value of the business it represents. That's why it's just smart investing to take advantage of the stock market's inconsistencies to buy businesses at very big discounts to the their intrinsic value."

Rudy Luukko with Morningstar Canada caught up with Charles Brandes. An excerpt from the interaction is reproduced below.

Earnings growth is what ultimately drives stock prices. So, it's interesting that you would opt for value especially at that time with growth being en vogue. So, why is that? What are the merits of value investing?

The merits are that it actually works better over a long period of time than growth investing. It has a lot to do with the behavioural aspects of the stock market and being able to take advantage of the stock market during various times [when] prices get much cheaper than the actual underlying value of the business that you actually own.

At the same time there are pitfalls associated with value investing. Can you tell us about some of the things that you need to be cautious about in being a value investor?

Yes, and it sounds simple, it sounds like all you need to do is look at a company and decide what it’s worth. Then when it's trading in a public stock market cheaper than that [you buy it]—Benjamin Graham has talked about two-thirds discount from the intrinsic value of the business—and that’s all you do. Well, it becomes very difficult in some ways; one of the ways is that you have to be very patient because when you're buying companies that are out of favour, they're not necessarily going to come into favour right away. So you have to have an unhuman tendency to be very patient with what you're investing in. And you also have to be aware that you cannot predict the future. You don't know in every single case how these companies are actually going to perform earnings wise in the future.

But if you have a good diversified portfolio, and you've bought these companies at a big discount, then the odds are in your favour that your portfolio over a long period of time will work out. You could have some things that go against you and human tendency is to be very disappointed about that on the short-term. And you can't do that and you have to think differently than everybody else and you have to be assured that you at least have the odds in your favour.

There are lot of big picture things that can happen that can effect stocks and there are some managers that spend a lot of time looking into these macroeconomic factors: inflation, GDP growth, and political changes. And that’s never been a key part of your approach has it?

No, it hasn’t. However, you have to take those things into consideration. We start off with the company itself. We take a look at the basic economic fundamentals of that company and then [determine] if we can see it at a discount. It doesn't really matter at the beginning exactly what country or what industry or what region that company is in. But then when we are determining what we really think that company is worth we have to look at those macro factors. So, we do that secondarily and not primarily.

Your approach, your various mandates, they embrace all of the major equity categories. Does bottom-up value investing work better in some markets and countries, than others?

Work better? I don't think so because it's so fundamental and basic. The way I look at things and the way we do it at Brandes Investment Partners is that it doesn't matter where the location is; it matters [about] the nature of the business and the nature of the industry. So we found over the last 40 years that there has been—outside North America—some better opportunities because there is not quite as much detailed research being done. So, anywhere outside of North America we found that to be true. I can even go into a long explanation of why even in Europe it’s true compared to the Far East; it's true in emerging markets, but to make a long answer short basically it's the same.

Some value managers tend to be more concentrated in their picks than others. What's your approach?

We've been holding between 50 to 75 different companies depending on what opportunities we can find at the moment, which in the institutional world is considered fairly concentrated. In the mutual fund world also, you are going to see portfolios of 100 or 200 and being deep value our portfolios are more concentrated.

Value style is a patient style of investing and that's been your style. If you're buying out of favour unloved stocks they might stay like that for quite a while. The question is, how long do you have to wait?

Anywhere from six months to one year to 10 years.

If you take the active route, as against passive, and you put together a portfolio that’s a lot different from the market, you are either going to do one of two things: outperform the market, which is good, or lag the market, which is not so good. So, there is market risk. 

If you really want to do well you can't be doing what everybody else is doing. There's only one other thing to do well and that is to be fundamental. Because there is so much that goes on in the investment world that is not fundamental [such as] short-term oriented trading, derivatives, all sorts of things that are not really fundamental to what builds new wealth. And so you can stick to things that are fundamental, buy companies that build new wealth and get them at reasonable prices and over a period of time you are going to do very well.

system

Historical Underpinnings

Evolution

Features

Amendments

Significant Provisions

Basic Structure

Comparison With Other Countries

Presidential System vs Parliamentary System

1. We opted for parliamentary system because of a very important reason. 
   1. The leaders of the INM were in a hurry to ensure quick social transformation and rapid economic development of the whole country and society which had suffered for long at the hand of the British. 
   2. And they thought that the cabinet system of government which is responsible to the elected legislature and holds a majority there. So when we want quick legislations passed like say land reforms, the executive can get the bills quickly passed as they possess a majority in the legislature.
   3. America didn't want a strong executive, they wanted checks and balance. They had seen the tyranny of a parliamentary form of government and so wanted to secure individual liberty. So they wanted a weak government.
2. The demand for the change is based on the wrong reason. The problem is some of the parliamentary practices, not the parliamentary system itself. It is not the parliamentary system which is weak, our parliamentary system has become weak. 
   1. Rules are not followed. We have borrowed certain rules only in letter, not in spirit. Inconvenient conventions and rules have simply not been borrowed.
   2. Titular head: This is a necessary requirement of the parliamentary system. Look at governors in India. 

Due Process of Law (Art 21)

1. Due process includes equality, justice, good conscience. 
2. We nearly adopted it but then ditched it. In US, in their enthusiasm for preserving individual liberty from majority tyranny, this has virtually given judiciary supremacy. The judiciary has over the time interpreted it to accord themselves primacy in determining the fate of any and every law. So judiciary has become very powerful there. "The US constitution is what the supreme court says what it is." Thus it has surrendered the system to a minority tyranny of judges.

Q. Distortion to British Parliamentary practices has led to the poor state of Indian politics today?

Q. Is a multi party system incompatible with the parliamentary form of government?

1. India follows first past the post system. So a person getting even a minority votes can win and then he will represent the entire constituency. This problem is definitely aggravated in a multi party system - the more the number of parties, the less the number of votes the winner is likely to need to win. Thus even the most crucial decisions in India have been taken by a minority. No government in India has been elected by a majority of popular vote. But this can be overcome by a 2 stage voting.

Q. Utility of Rajya Sabha in comparison to Britain

1. Britain has higher number of nominated members from specialized fields. 

Parliament and State Legislatures

Structure

Functioning

Conduct of Business

Powers and Privileges

Constitutional Bodies

CAG Independence Though he is appointed by president, he can be removed only by parliament (like judges) on grounds of - (a) proven misbehavior, and (b) incapacity. His salary is charged on CFI and is statutory (can't be voted by parliament adversely during his tenure). He can't hold any public office post his retirement (but can join a political party). He submits resignation to president. Duties Apart from auditing government accounts of states and center, he also audits accounts for any institution substantially funded by public funds. Thus it includes PSUs. His job is to check if all expenditures are as per laid down by the law. This means its his duty to check for corruption in expenditure of public funds. Similarly all taxes have been collected as per law. CAG's Jurisdiction Art 149 of © states that CAG "shall perform such duties and exercise such powers in relation to the accounts ... as may be prescribed under law."  Parliament made a law CAG (Duties, Powers & Control) Act wherein it stated that CAG's duty is to 'audit' all expenditure from the CFI and states.  But the word 'audit' has not been defined anywhere. When audit is viewed as a partner in good governance, allegations of trespass into the executive territory lose their relevance. Another way is to look at international experience and conventions. CAG has a responsibility to evaluate whether the collection and allocation of revenue was optimized or if the 'rules and procedures' fail to secure an effective check on the collection and allocation of the revenue. To this extent it can subject the policy to scrutiny but can't make recommendations on its efficacy or implementation. So it can merely highlight the collection and allocation inefficiencies in its report to the parliament (which is exactly what CAG has done i.e. the delays in implementing a competitive bidding has led to a potential loss). CAG can't question policy matters. But if in the making of the policy its financial implications were not considered at all or faulty assumptions were used, there is no record of a considered policy decision, or if the policy benefits some groups or individuals to the exclusion of public, or the implementation of the policy defeats the policy itself then CAG has a mandate to report it under the performance audit.  Shortcoming in CAG Appointment Process The present selection process for the CAG is entirely internal to the Government machinery; no one outside has any knowledge of what criteria are applied, how names are shortlisted and how a final selection is made.  In most of the other countries there is no scope for the head of the Supreme Audit Institution to be chosen at the discretion of the Government.  Another related issue is that of the appointment of IAS officers as the CAG. This has had a demoralising effect on the IAAS cadre.  ICAI Code of Ethics states that an auditor’s independence has two aspects- independence in fact and independence in appearance. The appointment of former secretaries as CAG may compromise the independence of this institution because of apparent/perceived conflict of interest. Issues With CAG Issues with the audit process CAG’s reports are not timely because there is substantial time gap between occurrence of an irregularity and its audit. It reviews programmes after these have run for a few years.   Audit findings are based exclusively on documents and files. The situation on the ground is quite different from what is reflected in the papers. There is practically no verification to validate the audit findings.  CAG reports tend to be unduly negative and their focus is on irregularities and faultfinding. They do not recognize the practical constraints under which the departments function.  They do not give due credit for good performance. They do not discriminate between errors arising out of bonafide/malafide intentions. Audit as such could act as a dampener against new initiatives and risk taking. They do not delve into the root causes of the problems and how to address them. Reporting each year a large number of problems which are already known does not add value. Audit must therefore identify systemic problems. The relationship between the auditor and auditee is not always harmonious. Generally interaction is confined mainly to the lower levels. Audit is viewed as a policing. There is poor response to external audit which seriously reduces the effectiveness of audit.  There is inadequate coordination between external audit and internal audit.  Issues with post audit process There is hardly any accountability for not taking timely action on audit observations. Thousands of reports containing a huge number of observations are lying unattended in the departments. Audit Committees comprising representatives of audit and government agencies have been set up to review the departmental action taken on inspection reports but their functioning is not satisfactory.  Detailed examination of paras included in the Audit Reports by PAC is barely about 15-20 against the total number of 1000 - 1500 paras in the CAG reports.  The Ministries take only those audit paras seriously which come up for discussions in the PAC. PAC and CoPU must form sub-committees and consider more paras this way. Other paras should be assigned to the respective Departmental Standing Committees.  Ministries are supposed to submit Action Taken Notes on the paras not discussed. But such Action taken Notes are largely formal rather than substantive. In the State Legislatures, there is a huge pendency of Audit Paras to be examined by State PACs. Some of the pending paras are 10 to 20 years old.

National Backward Classes Commission It has been given the mandate of examining requests for inclusion of any class of citizens as a backward class and hear complaints of over-inclusion or under-inclusion in such lists and tender advice to the Government. National Commission for Scheduled Castes Mandate To monitor the safeguards provided for the SCs and to evaluate the working of such safeguards. To inquire into specific complaints. To advise on the planning process for SC development and to evaluate the progress of their development. Powers While investigating into matters, it has the powers of a civil court trying a suit. Such powers include: Summoning and enforcing the attendance and examine him under oath. Requiring the discovery and production of any documents. Receiving evidence on affidavits. The Commission has offices in 12 States/UTs, which enables it to have a wide perspective.  The Commission is organized around four wings which look after administration, safeguards, atrocities and rights violations, and economic and social development respectively.  National Commission for Scheduled Tribes The NCST functions through units which look after administration, coordination, socio-economic development, safeguards and atrocities. It has six regional offices which provide it with a regional perspective.

Election Commission

Powers

1. Its powers are plenary i.e. uncontrolled by the executive. But EC's powers apply only where © and laws are silent. EC can't override any law already made.
2. Its actions are subject to judicial review.

Composition

1. The number of ECs may be varied by president from time to time as per the law made by parliament. Currently the limit is CEC + ≤ 4 ECs.
2. CEC and ECs are appointed by the president and while appointing them the president just consults the CoM.
3. CEC and ECs are appointed for ≤ 6 years or 65 years of age. ECs if promoted to CEC can hold office only till there combined tenure as EC + CEC is ≤ 6 years. EC can't be reappointed as EC and CEC can't be reappointed as CEC.
4. ECs can be removed by president only on the recommendation of CEC and the president is not bound by such a recommendation. CEC cannot be removed except in a manner like SC judge.

Reforms suggested by EC

1. While appointing CEC and ECs, the president should consult a high level panel comprising of PM + law minister + leader of opposition in HoP. Such recommendation shall be binding.
2. ECs should be removed only in a manner like SC judge. Upon retirement the CEC and ECs shouldn't be allowed to hold any office of profit under the state (currently they are allowed to) neither be allowed to join any political party for ≥ 10 years from retirement.
3. While appointing CEC seniority principle should be followed.

Regional Election Commissioner

1. He is appointed by the president on recommendation of EC on the eve of an election to HoP or Legass or Legco to assist the EC in discharging its duties. So far none have been appointed and his functions have largely been taken care of by chief electoral officer who is a permanent officer.

Representation of People's Act

Salient Features

Issues in Political Reforms

Funding Reforms Attempts

1. Dinesh Goswami Committee in 1990 and later Indrajit Gupta Committee recommended limited support in kind while simultaneously recommending a ban on company donations. 
2. Subsequent developments include parties being forced to file tax returns. 
3. SC decision in 1996 clubbed expenditure by third party(s) as well as by the political party under the expenditure ceiling limits prescribed under the Representation of People Act. 
4. Election and Other Related Laws (Amendment) Act
   1. Full tax exemption to individuals and corporates on all contributions to political parties.
   2. Repeal of Explanation I under Section 77 of the RPA. Expenditure by third parties and political parties now comes under ceiling limits, and only travel expenditure of leaders of parties is exempt.
   3. Disclosure of party finances and contributions over Rs. 20,000.
   4. Equitable sharing of time by the recognized political parties on the cable television network and other electronic media.
5. The 2002 amendment to RPA stipulates that every elected candidate shall, within ninety days file the details of his/her assets/liabilities.

Tightening of Anti-Defection law

1. The Election Commission has recommended that the question of disqualification of members on the ground of defection should also be decided by the President/Governor on the advice of the Election Commission. Such an amendment to the law seems to be necessary in the light of the long delays seen in some recent cases of obvious defection.

Disqualification

1. In cases of persons facing grave criminal / corruption charges framed by a trial court after a preliminary enquiry, disallowing them to represent the people in legislatures until they are cleared of charges seems to be a fair and prudent course. As a precaution against motivated cases, it may be provided that only cases filed six months before an election would lead to such disqualification. 

False Declarations

1. The Election Commission has recommended that all false declarations before the Election Commission should be made an electoral offence. Government is opposing it in court!

Publication of Accounts by Political Parties:

1. Political parties have a responsibility to maintain proper accounts of their income and expenditure and get them audited annually. The Election Commission has reiterated this proposal. This needs to be acted upon early. The audited accounts should be available for information of the public.

Expediting Disposal of Election Petitions

1. Election petitions in India are at present to be filed in the High Court. Under the Representation of the People Act, such petitions should be disposed of within a period of 6 months. In actual practice however, such petitions remain pending for years. 
2. Special election benches should be constituted in the High Courts earmarked exclusively for the disposal of election petitions.
3. Special Election Tribunals should be constituted. Each Tribunal should comprise a High Court Judge and a senior civil servant. Its mandate should be to ensure that all election petitions are decided within a period of six months. 

Grounds of Disqualification for Membership

1. Article 102 provides for disqualification for membership of either House of Parliament under certain specific circumstances, which are as follows:
   1. If he holds any office of profit.
   2. If he is of unsound mind declared by a competent court.
   3. If he is an undischarged insolvent.
   4. If he is not a citizen of India.
   5. If he is so disqualified by or under any law made by Parliament. So far, no such law has been enacted.

ALLEN GINSBERG HOWL

I saw the best minds of my generation destroyed by madness, starving hysterical naked,

dragging themselves through the negro streets at dawn looking for an angry fix,

angelheaded hipsters burning for the ancient heavenly connection to the starry dynamo in the machinery of night,

who poverty and tatters and hollow-eyed and high sat up smoking in the supernatural darkness of cold-water flats floating across the tops of cities contemplating jazz,

who bared their brains to Heaven under the El and saw Mohammedan angels staggering on tenement roofs illuminated,

who passed through universities with radiant cool eyes hallucinating Arkansas and Blake-light tragedy among the scholars of war,

who were expelled from the academies for crazy & publishing obscene odes on the windows of the skull,

who cowered in unshaven rooms in underwear, burning their money in wastebaskets and listening to the Terror through the wall,

who got busted in their pubic beards returning through Laredo with a belt of marijuana for New York,

who ate fire in paint hotels or drank turpentine in Paradise Alley, death, or purgatoried their torsos night after night

with dreams, with drugs, with waking nightmares, alcohol and cock and endless balls,

incomparable blind streets of shuddering cloud and lightning in the mind leaping toward poles of Canada & Paterson, illuminating all the motionless world of Time between,

Peyote solidities of halls, backyard green tree cemetery dawns, wine drunkenness over the rooftops, storefront boroughs of teahead joyride neon blinking traffic light, sun and moon and tree vibrations in the roaring winter dusks of Brooklyn, ashcan rantings and kind king light of mind,

who chained themselves to subways for the endless ride from Battery to holy Bronx on benzedrine until the noise of wheels and children brought them down shuddering mouth-wracked and battered bleak of brain all drained of brilliance in the drear light of Zoo,

who sank all night in submarine light of Bickford’s floated out and sat through the stale beer afternoon in desolate Fugazzi’s, listening to the crack of doom on the hydrogen jukebox,

who talked continuously seventy hours from park to pad to bar to Bellevue to museum to the Brooklyn Bridge,

a lost battalion of platonic conversationalists jumping down the stoops off fire escapes off windowsills off Empire State out of the moon,

yacketayakking screaming vomiting whispering facts and memories and anecdotes and eyeball kicks and shocks of hospitals and jails and wars,

whole intellects disgorged in total recall for seven days and nights with brilliant eyes, meat for the Synagogue cast on the pavement,

who vanished into nowhere Zen New Jersey leaving a trail of ambiguous picture postcards of Atlantic City Hall,

suffering Eastern sweats and Tangerian bone-grindings and migraines of China under junk-withdrawal in Newark’s bleak furnished room,   

who wandered around and around at midnight in the railroad yard wondering where to go, and went, leaving no broken hearts,

who lit cigarettes in boxcars boxcars boxcars racketing through snow toward lonesome farms in grandfather night,

who studied Plotinus Poe St. John of the Cross telepathy and bop kabbalah because the cosmos instinctively vibrated at their feet in Kansas,   

who loned it through the streets of Idaho seeking visionary indian angels who were visionary indian angels,

who thought they were only mad when Baltimore gleamed in supernatural ecstasy,

who jumped in limousines with the Chinaman of Oklahoma on the impulse of winter midnight streetlight smalltown rain,

who lounged hungry and lonesome through Houston seeking jazz or sex or soup, and followed the brilliant Spaniard to converse about America and Eternity, a hopeless task, and so took ship to Africa,

who disappeared into the volcanoes of Mexico leaving behind nothing but the shadow of dungarees and the lava and ash of poetry scattered in fireplace Chicago,

who reappeared on the West Coast investigating the FBI in beards and shorts with big pacifist eyes sexy in their dark skin passing out incomprehensible leaflets,

who burned cigarette holes in their arms protesting the narcotic tobacco haze of Capitalism,

who distributed Supercommunist pamphlets in Union Square weeping and undressing while the sirens of Los Alamos wailed them down, and wailed down Wall, and the Staten Island ferry also wailed,

who broke down crying in white gymnasiums naked and trembling before the machinery of other skeletons,

who bit detectives in the neck and shrieked with delight in policecars for committing no crime but their own wild cooking pederasty and intoxication,

who howled on their knees in the subway and were dragged off the roof waving genitals and manuscripts,

who let themselves be fucked in the ass by saintly motorcyclists, and screamed with joy,

who blew and were blown by those human seraphim, the sailors, caresses of Atlantic and Caribbean love,

who balled in the morning in the evenings in rosegardens and the grass of public parks and cemeteries scattering their semen freely to whomever come who may,

who hiccuped endlessly trying to giggle but wound up with a sob behind a partition in a Turkish Bath when the blond & naked angel came to pierce them with a sword,

who lost their loveboys to the three old shrews of fate the one eyed shrew of the heterosexual dollar the one eyed shrew that winks out of the womb and the one eyed shrew that does nothing but sit on her ass and snip the intellectual golden threads of the craftsman’s loom,

who copulated ecstatic and insatiate with a bottle of beer a sweetheart a package of cigarettes a candle and fell off the bed, and continued along the floor and down the hall and ended fainting on the wall with a vision of ultimate cunt and come eluding the last gyzym of consciousness,

who sweetened the snatches of a million girls trembling in the sunset, and were red eyed in the morning but prepared to sweeten the snatch of the sunrise, flashing buttocks under barns and naked in the lake,

who went out whoring through Colorado in myriad stolen night-cars, N.C., secret hero of these poems, cocksman and Adonis of Denver—joy to the memory of his innumerable lays of girls in empty lots & diner backyards, moviehouses’ rickety rows, on mountaintops in caves or with gaunt waitresses in familiar roadside lonely petticoat upliftings & especially secret gas-station solipsisms of johns, & hometown alleys too,

who faded out in vast sordid movies, were shifted in dreams, woke on a sudden Manhattan, and picked themselves up out of basements hung-over with heartless Tokay and horrors of Third Avenue iron dreams & stumbled to unemployment offices,

who walked all night with their shoes full of blood on the snowbank docks waiting for a door in the East River to open to a room full of steam-heat and opium,

who created great suicidal dramas on the apartment cliff-banks of the Hudson under the wartime blur floodlight of the moon & their heads shall be crowned with laurel in oblivion,

who ate the lamb stew of the imagination or digested the crab at the muddy bottom of the rivers of Bowery,

who wept at the romance of the streets with their pushcarts full of onions and bad music,

who sat in boxes breathing in the darkness under the bridge, and rose up to build harpsichords in their lofts,

who coughed on the sixth floor of Harlem crowned with flame under the tubercular sky surrounded by orange crates of theology,

who scribbled all night rocking and rolling over lofty incantations which in the yellow morning were stanzas of gibberish,

who cooked rotten animals lung heart feet tail borsht & tortillas dreaming of the pure vegetable kingdom,

who plunged themselves under meat trucks looking for an egg,

who threw their watches off the roof to cast their ballot for Eternity outside of Time, & alarm clocks fell on their heads every day for the next decade,

who cut their wrists three times successively unsuccessfully, gave up and were forced to open antique stores where they thought they were growing old and cried,

who were burned alive in their innocent flannel suits on Madison Avenue amid blasts of leaden verse & the tanked-up clatter of the iron regiments of fashion & the nitroglycerine shrieks of the fairies of advertising & the mustard gas of sinister intelligent editors, or were run down by the drunken taxicabs of Absolute Reality,

who jumped off the Brooklyn Bridge this actually happened and walked away unknown and forgotten into the ghostly daze of Chinatown soup alleyways & firetrucks, not even one free beer,

who sang out of their windows in despair, fell out of the subway window, jumped in the filthy Passaic, leaped on negroes, cried all over the street, danced on broken wineglasses barefoot smashed phonograph records of nostalgic European 1930s German jazz finished the whiskey and threw up groaning into the bloody toilet, moans in their ears and the blast of colossal steamwhistles,

who barreled down the highways of the past journeying to each other’s hotrod-Golgotha jail-solitude watch or Birmingham jazz incarnation,

who drove crosscountry seventytwo hours to find out if I had a vision or you had a vision or he had a vision to find out Eternity,

who journeyed to Denver, who died in Denver, who came back to Denver & waited in vain, who watched over Denver & brooded & loned in Denver and finally went away to find out the Time, & now Denver is lonesome for her heroes,

who fell on their knees in hopeless cathedrals praying for each other’s salvation and light and breasts, until the soul illuminated its hair for a second,

who crashed through their minds in jail waiting for impossible criminals with golden heads and the charm of reality in their hearts who sang sweet blues to Alcatraz,

who retired to Mexico to cultivate a habit, or Rocky Mount to tender Buddha or Tangiers to boys or Southern Pacific to the black locomotive or Harvard to Narcissus to Woodlawn to the daisychain or grave,

who demanded sanity trials accusing the radio of hypnotism & were left with their insanity & their hands & a hung jury,

who threw potato salad at CCNY lecturers on Dadaism and subsequently presented themselves on the granite steps of the madhouse with shaven heads and harlequin speech of suicide, demanding instantaneous lobotomy,

and who were given instead the concrete void of insulin Metrazol electricity hydrotherapy psychotherapy occupational therapy pingpong & amnesia,

who in humorless protest overturned only one symbolic pingpong table, resting briefly in catatonia,

returning years later truly bald except for a wig of blood, and tears and fingers, to the visible madman doom of the wards of the madtowns of the East,

Pilgrim State’s Rockland’s and Greystone’s foetid halls, bickering with the echoes of the soul, rocking and rolling in the midnight solitude-bench dolmen-realms of love, dream of life a nightmare, bodies turned to stone as heavy as the moon,

with mother finally ******, and the last fantastic book flung out of the tenement window, and the last door closed at 4 A.M. and the last telephone slammed at the wall in reply and the last furnished room emptied down to the last piece of mental furniture, a yellow paper rose twisted on a wire hanger in the closet, and even that imaginary, nothing but a hopeful little bit of hallucination—

ah, Carl, while you are not safe I am not safe, and now you’re really in the total animal soup of time—

and who therefore ran through the icy streets obsessed with a sudden flash of the alchemy of the use of the ellipsis catalogue a variable measure and the vibrating plane,

who dreamt and made incarnate gaps in Time & Space through images juxtaposed, and trapped the archangel of the soul between 2 visual images and joined the elemental verbs and set the noun and dash of consciousness together jumping with sensation of Pater Omnipotens Aeterna Deus

to recreate the syntax and measure of poor human prose and stand before you speechless and intelligent and shaking with shame, rejected yet confessing out the soul to conform to the rhythm of thought in his naked and endless head,

the madman bum and angel beat in Time, unknown, yet putting down here what might be left to say in time come after death,

and rose reincarnate in the ghostly clothes of jazz in the goldhorn shadow of the band and blew the suffering of America’s naked mind for love into an eli eli lamma lamma sabacthani saxophone cry that shivered the cities down to the last radio

with the absolute heart of the poem of life butchered out of their own bodies good to eat a thousand years.

II

What sphinx of cement and aluminum bashed open their skulls and ate up their brains and imagination?

Moloch! Solitude! Filth! Ugliness! Ashcans and unobtainable dollars! Children screaming under the stairways! Boys sobbing in armies! Old men weeping in the parks!

Moloch! Moloch! Nightmare of Moloch! Moloch the loveless! Mental Moloch! Moloch the heavy judger of men!

Moloch the incomprehensible prison! Moloch the crossbone soulless jailhouse and Congress of sorrows! Moloch whose buildings are judgment! Moloch the vast stone of war! Moloch the stunned governments!

Moloch whose mind is pure machinery! Moloch whose blood is running money! Moloch whose fingers are ten armies! Moloch whose breast is a cannibal dynamo! Moloch whose ear is a smoking tomb!

Moloch whose eyes are a thousand blind windows! Moloch whose skyscrapers stand in the long streets like endless Jehovahs! Moloch whose factories dream and croak in the fog! Moloch whose smoke-stacks and antennae crown the cities!

Moloch whose love is endless oil and stone! Moloch whose soul is electricity and banks! Moloch whose poverty is the specter of genius! Moloch whose fate is a cloud of sexless hydrogen! Moloch whose name is the Mind!

Moloch in whom I sit lonely! Moloch in whom I dream Angels! Crazy in Moloch! Cocksucker in Moloch! Lacklove and manless in Moloch!

Moloch who entered my soul early! Moloch in whom I am a consciousness without a body! Moloch who frightened me out of my natural ecstasy! Moloch whom I abandon! Wake up in Moloch! Light streaming out of the sky!

Moloch! Moloch! Robot apartments! invisible suburbs! skeleton treasuries! blind capitals! demonic industries! spectral nations! invincible madhouses! granite cocks! monstrous bombs!

They broke their backs lifting Moloch to Heaven! Pavements, trees, radios, tons! lifting the city to Heaven which exists and is everywhere about us!

Visions! omens! hallucinations! miracles! ecstasies! gone down the American river!

Dreams! adorations! illuminations! religions! the whole boatload of sensitive bullshit!

Breakthroughs! over the river! flips and crucifixions! gone down the flood! Highs! Epiphanies! Despairs! Ten years’ animal screams and suicides! Minds! New loves! Mad generation! down on the rocks of Time!

Real holy laughter in the river! They saw it all! the wild eyes! the holy yells! They bade farewell! They jumped off the roof! to solitude! waving! carrying flowers! Down to the river! into the street!

III

Carl Solomon! I’m with you in Rockland

   where you’re madder than I am

I’m with you in Rockland

   where you must feel very strange

I’m with you in Rockland

   where you imitate the shade of my mother

I’m with you in Rockland

   where you’ve murdered your twelve secretaries

I’m with you in Rockland

   where you laugh at this invisible humor

I’m with you in Rockland

   where we are great writers on the same dreadful typewriter

I’m with you in Rockland

   where your condition has become serious and is reported on the radio

I’m with you in Rockland

   where the faculties of the skull no longer admit the worms of the senses

I'm with you in Rockland

   where you drink the tea of the breasts of the spinsters of Utica

I’m with you in Rockland

   where you pun on the bodies of your nurses the harpies of the Bronx

I’m with you in Rockland

   where you scream in a straightjacket that you’re losing the game of the actual pingpong of the abyss

I’m with you in Rockland

   where you bang on the catatonic piano the soul is innocent and immortal it should never die ungodly in an armed madhouse

I’m with you in Rockland

   where fifty more shocks will never return your soul to its body again from its pilgrimage to a cross in the void

I’m with you in Rockland

   where you accuse your doctors of insanity and plot the Hebrew socialist revolution against the fascist national Golgotha

I’m with you in Rockland

   where you will split the heavens of Long Island and resurrect your living human Jesus from the superhuman tomb

I’m with you in Rockland

   where there are twentyfive thousand mad comrades all together singing the final stanzas of the Internationale

I’m with you in Rockland

   where we hug and kiss the United States under our bedsheets the United States that coughs all night and won’t let us sleep

I’m with you in Rockland

   where we wake up electrified out of the coma by our own souls’ airplanes roaring over the roof they’ve come to drop angelic bombs the hospital illuminates itself    imaginary walls collapse    O skinny legions run outside    O starry-spangled shock of mercy the eternal war is here    O victory forget your underwear we’re free

I’m with you in Rockland

   in my dreams you walk dripping from a sea-journey on the highway across America in tears to the door of my cottage in the Western night