The Bag Lady Papers (Alexandra Penney lost her life savings in the Madoff debacle.)

Some of this has already happened to us. We were diversified.

In early September the plans we had made in July were finalized and all but one small IRA were shifted to fixed income. That took time because we had money managers, were invested in trust accounts and it cost us money because there were paper losses that became real. The fixed income funds contained toxic bonds and lost capital. In November, we went to all cash. The small IRA we had left in equities because *the market can shift suddenly and there is only a 5-7 day window to regain capital” had lost over 50%. All told, the losses were over $50k. We had $15k in short term savings in a credit union that have not been touched.

We had no mortgage. We have one small car loan with 2 1/2 years to go. No second home. We have land. We have a small amount of physical gold, good 18kt-24kt jewelry, and a collection of antique glass that had doubled in value over 10 years. Gold declined. Jewelry is a glut on the market and the glass is not only not selling at the moment, every collector has simply stopped selling because when it does sell it is going for 1/3 less even on eBay, where the discounts are usually 1/3-1/2 off book value.

We have two small businesses, one service, one hand manufacturing. They are surviving, but both are down, 20%-30% Y/Y, an improvement over October when the decline was closer to 40%-50% Y/Y. Last April, we slashed our budget by over 20%. We stopped hiring any maintenance work. My husband cut and split and stacked a winter’s worth of wood. We increased our stores of food in anticipation of periods ahead without cash flow or capital growth. My husband got his hunting license and put two does in the freezer. I increased the garden and froze or dried the produce. We found ways to cut our electricity usage. We have cut out all discretionary spending, shop only sales and have been watching for falling prices on some tools we need.

We are seniors. Because I am still working, my SS is penalized. But we will probably get an income tax refund this year and my net will fall below the SS penalty threshold. That will cover the 1/3 increase in our property taxes.

Yes, we whined, but we permit ourselves 10 minutes a day or less because it just saps energy. Everyone we know is in some variation of this situation. We have no alternative but to simply put one foot in front of the other and carry on.

However, as an artist, I am amazed at Ms. Penney’s penchant for fresh white shirts! I ruin my work clothes and therefore, for work, I wear Goodwill or Walmart clothing until it falls apart. I have never known an artist who worked in clean, white freshly ironed clothing. Never in over 45 years.

I doubt there is a chance for us to write a book without all the contacts this woman seems to have. She still has her treasures. She can sell the NYC apartment and go live in the *cottage* or sell both and live in son’s *back house*. Writers and artists can work anywhere. If we are forced to sell before values rebound, we will go live in my son’s tiny town in South Dakota. we can both still work, even there.

I can understand her feelings, but she is actually in a fairly good position and will survive just fine. As will most of us.

Dianna, I agree with you that this piece is not written in an elevated way. I too was not pleased by the way she wrote about Yolanda, who is going to face bigger problems than Ms. Penney.

Penney is a professional writer and editor. She was writing to a particular audience, people like her, rather than ordinary Americans. She knows what will bring the matter home for them.

Depending on how much she owes on her real estate, she may realize little or nothing from the sales in today’s market. Selling her bibelots at a time when there’s a glut on the market isn’t likely to gain her enough to live on for very long at all. If she were financially comfortable, she wouldn’t be writing about the possibility of facing real poverty in her old age.

What I saw underneath the complaints about having to iron her own shirts was a terror of real privation. She knows what it’s like to stand on her feet chopping fish in cold weather all day and I can’t blame her for not wanting to go back to that.

I heard the statements and 1099’s Madoff sent to his clients were Hand written. How is that “formal”? Should have set off some bells.

I don't believe this is true. I don't think that the big international banks, hedge funds, charities, and foundations would have been satisfied for years with handwritten statements. They must have looked very darn authentic to persuade big banks like Credit Suisse.

...have to sell the cottage in West Palm Beach immediately. I’d need to lay off Yolanda. I could cancel the newspaper subscriptions and read everything online. I only needed a cell phone. I’d have to stop taking taxis. And who could highlight my hair for almost no money? And how hard was it to give yourself a really good pedicure? Then there is my jewelry. I’ve always collected nice watches and pearls...

she has to suddenly face being poor in her late sixties,

Doesn't fit my definition of "poor" somehow. I've been poor, and pedicures and highlighting my hair just didn't seem to be major concerns. I didn't have a 'cottage in West Palm Beach' to sell to get me through the day either, not to mention a cache of jewels. But maybe editing "Self Magazine" does alter one's point of view. Sounds like she was perfect for the job.

Maybe this Madoff fellow was God's way of telling people they need to re-assess their priorities.

There appeared to be a secret society of Madoff investors. A friend who was older, wealthier, and more established somehow got me in.

And there you have it. An elite New Yorker invests in a fund because it's exclusive. I'm not fooled either, she knew to diversify and didn't.

And nobody should kid themselves, she surely inherited money from her Harvard trained father and royal Greek mother and gets royalties from her books.

It’s still all somehow Bush’s fault!!

Even though Madoff began his scam long ago, and clear warning bells were sounded to the SEC at least by 1999 (by that guy in Boston), just watch, the Mediascum will soon find it convenient to weave a narrative that blames this all on the Bush SEC and “de-regulation” etc.

I think there’s plenty of blame to go around here, but it certainly would have happened about the same way whether Bush or Gore or Kerry had been POTUS. Why didn’t the Clinton/Gore SEC stop Bernie Madoff??????

Now that I’ve had more time to think about it, I realize that you’re right.

Now that I’ve had more time to think about it, I realize that you’re right.

Well, thanks. I'd like to think that someone who is "only" losing luxuries could be a little grateful for the things she still has. That would have been an inspiring story. This is new to her. Maybe she'll get there with some time to think about it.

No one can know where Ms. Penney will go with her new education, and her new still-fresh wounds. I can only suspect that with her self-made know-how and creative can-do attitude, she will indeed resurrect herself. In so doing, she will show us all examples of how we can regain our footing and confidence as well. I further suspect that she will share some of her wealth with organizations that lend a hand-up to those less fortunate—those women in particular who lack the “back-up” assets that Ms. Penney fairly admits will buy her some valuable time.

Curiously, I can’t stop thinking about her last name. Ms. Penney isn’t Penniless literally. This self-made woman would never be penniless, due to her creativity, work ethic, sense of humor, and some luck. Yet you do remember that old, still true saying about luck meeting tons of preparation don’t you? So, while a lot of her money is gone, no one can steal Ms. Penney’s mind. (I’m not Jewish, and I know and respect that.)

Not that you asked for my advice, yet if you have not yet “made it” to the extent that Ms. Penney has, curb the urge and save the time it would take you to write jealous remarks, and reread the part where she outlines her working three jobs, etc.,. Only in America, right? Refocus any veiled contempt and busy yourself writing the last chapters of your own success. Yes, you are on the road, and you CAN finish big, but never by quitting.

We are all richer for Alexandra Penney (and anyone) telling her truth, and for a country which allows us to do so, and finally for an internet to give us both the instant and far-reaching platform in which to share.

Let’s create and embody solutions. Let’s continue to offer a shoulder to anyone who is suffering, much like the inscription on the pedestal of our proud lady, the Statue of Liberty: “Give me your tired, your poor, your huddled masses yearning to breath free”. Let’s not excoriate people who say they feel down-trodden, especially when they flat out exclaim they don’t want our pity.

I’ve got more info here on my blog — http://www.msmorrisonspeaks.com