The Bag Lady Papers

Ever since the Madoff fraud broke in the news I have been having a nagging “can’t quite place it” feeling that only became clear after reading this series, called The Bag Lady Papers, written by successful author and no-so-successful Madoff investor Alexandra Penney.

Indeed, he did. More than a decade ago, when I was in my late 40s, I handed over my life savings to Madoff’s firm. It was money I’d been tucking away since I was 16 years old, when I began working summers in Lord & Taylor, earning about $65 a week. Not a penny was inherited. Not one cent was from my divorce. I earned all of it myself, through a long string of jobs that included working as a cashier at Rosedale fish market in New York City in my 20s, and later, writing bestselling sex books.

[From The Bag Lady Papers – The Daily Beast]

The media coverage on Madoff is more curiosity than outrage, and the images of him with that quirky smile only serve to reinforce a paternalistic facade, at least more so than a master criminal mind. There are no TV images of bilked investors or people crying over their worthless retirement account statements. In short, the media portrays these financial fraud victims with a lot less empathy than Enron or Worldcom investors because Madoff’s investors are “them” while Enron’s were “us”.

First let’s put this into perspective, Madoff’s fraud is repeatedly reported as “$50 billion” even though the base number is probably 10-20% of that. In other words, much of the fraud concerns fictional investment returns instead of actual cash. At any rate, let’s go with the $50 billion number…. Enron was once worth $50 billion. Worldcom’s collapse resulted in, if memory serves me correctly, $36 billion.

Back to The Bag Lady Papers because it was reading this series that led me to a conclusion that explains why there isn’t broad-based moral outrage gripping our society. Madoff’s investors were not Budweiser (btw, Bud American Ale is a good tasty beer) swilling Joes standing on the front porch of their trailer in a Hooters tee-shirt, they are wealthy and very wealthy investors not taken in by some carpetbagger who rode into town and smooth talked them into buying Pet Rock 2.0, these are wealthy investors who were essentially taken by one of their own.

It’s really quite a shame that there isn’t broader interest in this story because the ripples are spreading. I was on a conference call for the non profit board I am on and we talked about the Madoff fraud (I’m tempted to write scandal, but let’s call a spade a spade, it’s criminal fraud) and we agreed that canvassing our major donors to determine Madoff collateral damage would be prudent. Non-profits are already coming to grips with a very tough economic environment for raising money in, and now there is Madoff hanging over these organizations.

More on this topic (What's this?)
Kevin Bacon, Kyra Sedgwick among Madoff victims
Madoff scandal doesn’t justify clampdown
Suing The SEC Over Madoff
Funda-mental defense
Read more on Bernard Madoff at Wikinvest

About that Plane Crash into the Hudson

I was talking with someone a few months ago and we ended up talking about, of all things, airplane safety speeches. I made the point that the “in the event of a water landing” part of the speech was redundant because in the history of commercial aviation there had yet to be a successful water landing of a modern jet aircraft. Like a lot of things about modern day commercial air travel, there is a lot of theatre that is only there to make us feel better about the experience.

My friend pointed out the Ethiopian Airlines hijacking crash in 1996, however it is difficult to call that a successful water landing when in fact it crashed and cartwheeled which resulted in 2/3 of the passengers being killed.

As of yesterday the history books will include the only successful water landing of a commercial jet.

It appears to be the first time that a large commercial jet liner ever has made a successful controlled landing into a body of water.


On a related topic, yesterday’s crash failed, thankfully, to break a record year for safety in U.S. commercial aviation. It has been two years since a fatality occurred in a commercial aviation crash, making 2007-2008 one of the safest periods in 50 years.

Pepsi’s Partisan Marketing

When I saw this yesterday I was a little flabbergasted, it’s almost shameful that Pepsi would pander in this manner but it’s also really risky.

When you insert politics into business and take a side, you end up alienating half of your potential market. This is self-evident and Pepsi may have calculated that given the blue state reach of their business that this is a calculated risk but they would be wise to look at what happened to Oprah and her ratings over the last year.

The show has been drifting back to Earth, losing 7 percent of its audience nationwide this year alone. O Magazine saw a double-digit decline in circulation. Authors can no longer count on the “Oprah effect.” And her endorsement of Barack Obama may have turned off, literally, viewers who supported Hillary Clinton.

Given the fragile state of the economy I would speculate that Pepsi doesn’t need to be doing anything that really only has the potential to hurt them. As a shareholder I would prefer that they stick to making sugary drinks and salty snacks. Pepsi is a well run company, there is no need to stumble now with a speculate brand marketing initiative.

On a related note, I couldn’t help but notice that Pepsi is not taking a similarly progressive attitude toward the NY state tax on soda.

At any rate this is unlikely to affect my purchasing decisions one way or the other, I’m a Dr. Pepper drinker myself (Dublin Dr. Pepper, the Texas bottler that refused to convert to high fructose corn syrup).