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If the breakup left McCarty bitter, at least she wasn't at a loss over what to do next. Some five months before Glass Eye fell apart, she'd gotten record company go-ahead to start work on a project she'd had in mind for almost a decade: an entire album of McCarty singing her interpretations of Daniel Johnston's songs. She started the yearlong project the day after her band broke up.
McCarty met Johnston -- Austin's resident manic-depressive songwriter naive -- in Glass Eye's early days, when the prolific but unstable Johnston handed McCarty one of his homemade tapes and begged a chance to open a show for the band. And like most everyone who had a chance to hear Johnston's work, McCarty was struck hard by the naked emotion, un-self-conscious directness and pop craftsmanship of the songs. But what Johnston had, and has, in talent, he lacks in accessibility. Most of his otherwise gorgeous tunes rest on a bed of clunky guitar strums or tinkling piano accompaniment, and his voice trembles with a stage-fright quiver at the best of times. His early cassettes were recorded, obviously enough, with a tape recorder. McCarty loved the songs, but saw an opportunity to let them be heard outside of the tiny community of indie-rock fans and admirers who were willing to meet Johnston halfway.
"When I started the record, Daniel was in the state hospital [the result of a delusional episode in which Johnston reportedly attacked his manager] and it was looking like he would never make a record again, and that was another reason I wanted to make this record, because I thought people need to hear these songs, goddamnit." McCarty recorded her album with friends, including producer and fellow Glass Eye alumnus Brian Beattie, on a DAT machine in a friend's bedroom with her own money, "because I'm a jaded old fuck and I don't like record companies telling me what to do." She named the disc Dead Dog's Eyeball, after a phrase from Johnston's personal lexicon.
"When Daniel was 13 or 14, around the time of his first breakdown," McCarty explains, "he was listening to the Beatles, 'I Am the Walrus,' and he heard this line 'yellow matter custard, dripping from a dead dog's eye,' and it blew his mind, just like in the '60s, he couldn't believe it, and he walked out of his house and there was a dead dog with pus coming out of its eye lying on his front lawn. It was this amazing coincidence. And so from that day on, whenever an amazing coincidence happens to Daniel, he says 'dead dog's eyeball.' It's an expression. And when we were all hanging around with Daniel we picked up on it. And when I was making the record I said something like, 'Oh my God, Daniel's record is going to come the same time as mine. Dead dog's eyeball,' you know? And I thought it would be a great name for a record."