A Whole New Meaning to a "Bubbling" Economy
No End in Sight for Soaring Art Market
By ULA ILNYTZKY The Associated Press Tuesday, December 25, 2007; 7:01 PM
NEW YORK -- Art is hot. Despite turmoil in the financial markets, there are no signs that the art market is softening. The fall auction season in New York saw robust prices across most categories, with postwar and contemporary works in particular going through the roof. It seemed like a new record was being shattered every time an art auction was held.
. . . These buyers paid astronomical amounts for art. An Andy Warhol painting sold for more than $71 million in a May auction that brought in a total of nearly $385 million. A Matisse fetched more than $33.6 million in a November sale that also took in nearly $400 million. A limestone lion sculpture that measures 3 1/4 inches hauled in $57 million earlier this month.
. . . "What the market was saying was that the property being offered was very heavily estimated and the quality was not there to support this value," said Ian Peck, CEO of the art-finance firm Art Capital Group.
. . . But he was optimistic that the art market would ride out the crisis, and noted that his firm, which is essentially a private banker for art buyers, has seen a spike in loan applications to buy art. And people at auction houses aren't really seeing much of a downturn because of problems on Wall Street.
In the P.T. Barnum sense that another sucker is born every minute, a large and (so far) well heeled portion of the populace apparently thinks that paying $57 million for a Warhol is not a bubble.
Art Capital Group, a perched industry if there ever was one, needs only to find a way to turn dicey loans against dicey art into derivatives, then get the Chinese and Emirates into the deal. There's no supportable reason that real estate should be depended upon to bury the world economy all by itself.
It does make you wonder though, how the super-rich ever got to be that way by such sheep-like behavior.
Unless of course that's the real bubble within this bubbling economy. First dotcoms, then real estate, then art and finally, wealth itself. This ship is about to sail off the edge of the world . . . following . . . always following.