Dirty old river, must you keep rolling
Flowing into the night?
People so busy, makes me feel dizzy.
Taxi light shines so bright.
But I don't need no friends.
As long as I gaze on Waterloo sunset
I am in paradise.
Every day I look at the world from my window.
But chilly, chilly is evening time.
Waterloo sunset's fine.
Terry meets Julie, Waterloo Station
Every Friday night.
But I am so lazy, don't want to wander.
I stay at home at night.
But I don't feel afraid.
Millions of people swarming like flies 'round
But Terry and Julie cross over the river
Where they feel safe and sound.
And they don't need no friends.
As long as they gaze on Waterloo sunset
They are in paradise.
Waterloo sunset's fine...
Save for the ending, which mimics Strawberry Fields Forever, I wouldn't have thought of Waterloo Sunset as a psychedelic song. After all, by this time in their career, Ray Davies didn't write as a hipster anymore; his songs tended to be nostalgic for an earlier era rather than celebrating uncharted territory. But the question is why would Davies tag the line Waterloo sunset's fine with a psychedelic sound? Surely, like Paul Simon in Fakin' It, Davies knew by now psychedelia was not his bag?
The answer may be in the truly psychedelic song See My Friends, which uses much of the same imagery: the singer peering out from his isolation, thoughts of friends, and the metaphor of "crossing the river". The difference between the songs is that in See My Friends, the friends are across the river, and thus unreachable. In Waterloo Sunset, the singer doesn't feel he needs friends, nor does the departing woman, who in this case hasn't died, but is meeting her lover instead. I note here too some more details: separation from the crowd (swarming like flies) is seen as a good thing, not a loneliness, as in See My Friends. And there's that little touch in the last verse, where millions of people are crossing the river underground, while the departing woman and her lover have crossed over the river by way of a ferry or a bridge. Perhaps this signifies the passing through stages of personal development either through a sort of death between "lives" by passing underground or transitioning simply by taking a bridge to change. Maybe this is why the singer seems more secure in his relationship with the departing woman than in See My Friends; she will be able to return.
But this doesn't explain the psychedelic Waterloo sunset. I think the answer is that Davies wanted to evoke a spiritual crossing, and found droning raga-like music evocative of that state, not because it had been successful in selling records, but because he had experienced an authentic spirituality with sitar music, which he could approximate on guitar, as reflected in See My Friends. Sitar music suggests the rays of the sun on water, especially at sunrise or sunset. Granted the psychedelic sound is not used throughout Waterloo Sunset and is therefore not essential to the song's structure; nevertheless I believe the attached droning chant was the product of an aesthetic judgment informed by the sitar, and more than just an additional effect to sound current.