- The Washington Times - Friday, February 26, 2010

BAG LADY PAPERS: THE PRICELESS EXPERIENCE OF LOSING IT ALL

By Alexandra Penney

Voice, $23.99, 240 pages

REVIEWED BY CLAIRE HOPLEY

As financial institutions cascaded into scandal and collapse at the end of 2008, words like “shock” and “horror” and “outrage” became the commonplace terms that described our reactions. And it’s true we felt these emotions. But most of us also felt bewildered. How had all this happened? Expert answers were often as incomprehensible as the situation they sought to explain.

So it was a relief when the Bernie Madoff story broke because it was easy to understand what he had done. He had run a Ponzi scheme, taking millions from the wealthy and apparently investing it for them - a claim he backed up by monthly statements and enticing 10 percent dividends. In fact, he made no investments: He paid the dividends from incoming funds, and his scheme foundered when he could not recruit enough new investors to pay out all the old ones.

Unlike the mystifying details about derivatives and arbitrage, here was something we could get our teeth into. Magazine pages and TV screens were filled with sad-eyed people who had lost their life savings. There were tales of mass sales of Florida real estate, of boats and planes and jewels. We learned that people had to be invited to give Bernie Madoff their money, and they had sought such invitations because he produced such high returns.

The stories of his perfidy and his victims’ losses evoked a mixture of responses. Condemnation could be coupled with the perverse admiration often elicited by clever criminals; sympathy for his victims was sometimes tied to the envious thought that for at least part of their lives they had had riches few of us can enjoy. Some people simply hardened their hearts, suggesting that the woes of the wealthy were the least of our worries in this time of economic meltdown.

Alexandra Penney was one of those wealthy people who lost all to Bernie Madoff, and in “Bag Lady Papers,” she emphasizes that anybody who suffers a sudden catastrophic loss is traumatized by it. She had always feared that she might end her life as a bag lady, hence the title of her book. Driven by this fear, she had worked hard and earned big salaries as a New York magazine editor. Then, ironically, the psychologist who helped her overcome her bag- lady fears offered practical help in the form of the necessary introduction to Bernie Madoff - thus inadvertently leading her toward the very financial disaster she dreaded.

She lost every penny she had saved since she had begun work at Lord & Taylor at 16. Immediately, she called the U.S. Treasury, and next day went to the offices of both her attorney and Bernie Madoff. No one had reassuring news, so she contacted her agent and agreed to write a blog about her situation for the Daily Beast, a Web site. “One thing I know for sure is that I need work. Work and activity keep me sane and will prevent me from wallowing in self-pity and fear. … I think of all the jobs I have had over the years, all the money I made that has vaporized in just one day. Oh, my God, how will I ever earn enough money now?” she writes.

Her readiness to work hard is one of the themes of Ms. Penney’s book. After spells on magazines, serious money had come her way when she wrote the best-selling “How to Make Love to a Man.” Follow-up volumes and seven well-salaried years as editor-in-chief of Self magazine generated the funds swallowed by Madoff. How much, she doesn’t say, but reputedly at least $1 million was required to get onto his books. After losing it, she was panicky, but taking “activity alleviates anxiety” as her mantra, she kept busy writing her blog, doing interviews and putting her Florida and Long Island cottages on the market.

Ms. Penney’s work ethic ties her book back through Horatio Alger to Benjamin Franklin. But she also has a Marie Antoinette side. She tells us about covering her lacquered pear-wood table with Baccarat crystal, antique English china, and silver vases filled with out-of-season white freesias and tulips. She exults over the generous clothing allowance and the car provided by Self.

She lists the enjoyable things that money can buy. “I admit that I love beautiful things - high-thread-count sheets, old china, watches, jewelry, Hermes purses, Louboutin red-lipstick-soled shoes. I like expensive French milled soaps, good wines and white truffles.” She luxuriates in the benefits of friendship, such as a Palm Beach Christmas lunch prepared by her friends’ personal chef “in the airy, casually elegant house with endless emerald-green close-cropped lawns; a cobalt-blue-tiled pool, and tall, slim, swaying royal palm trees.”

Such reminders of opulence provoked some nasty epithets from readers of her blog, and not surprisingly. So why does she so often pause the description of her hard-working life to draw attention to its luxuries?

Her book is carefully crafted so the seemingly discordant contrast is no mistake. Indeed, its well-orchestrated effect is to titillate with the material delights of wealth while also eliciting sympathy for its loss. Other emotions are also brought into play, no doubt varying from reader to reader, but likely including envy, irritation, sympathy, admiration and plain old nosiness.

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