Friday, September 21, 2007

The Art Market, The Bubble and My Point of View


Email Posts:

From: anonymous <anonymous@artcomments.com>



Hey Pete:

Did you ever see this article?
http://modernartobsession.blogs.com/modern_art_obsession/2007/08/eli-broad-predi.html

August 18, 2007
Eli Broad suggests difficult times ahead for the art
market!!



From: peter Duhon <peter.duhon@artcomments.com>
Date: Sep 20, 2007
Subject: The Art Market, The Bubble and My Point of View


I saw this months ago, and I sent everyone (Art Comments team) the article also or maybe not. Since the spring, I've seen the slowdown and predicted one, my thoughts are in line with Eli Broad. There will indeed be a slowdown, it is not a matter of if but when. I've seen a slowdown from the grassroots level, sometime early in 2008 there will be a slowdown that will become evident even in the auction houses. There have been many indicators supporting my stance: gallery closings, galleries reshuffling from Chelsea to the lower eastside, the abrupt firing of UBS CEO Peter Wuffli, the firing of a prominent official at the investment house Bear Stearns, the housing problem in America (prices receding) and the sub-prime loan crisis, the collapsing of several hedge-funds, the problems at the largest American mortgage company, CountryWide mortgage, which needed a $2 billion bailout from Bank of America (rumor has it that they need several more billion to survive - I thought lending them $2 billion was a big mistake in the first place), and even the current problems of the bank Northern Rock in the U.K give evidence of potentially long-standing problems. I could go on and on with examples.

The sub-prime loan issue is bigger than what the mass media (e.g. George Bush, CNBC) is telling the general public. The mere fact that Damien Hirst's $100 million skull didn't sell but that he actually bought the skull (should we call it art) back from Whitecube, is a symbol that the days of undisciplined and frivolous spending on art are over, at least for the foreseeable future. Damien Hirst's skull will forever symbolise the end of the bubble, however, this doesn't mean the end of great contemporary art.

Although the head of Sotheby's and George Bush feel that things will be fine. I'm curious as to who invented the phrase "pump and dump" which appears be the only reason why someone would forecast good things for the current economy in America. Maybe I'm wrong, but there does seem to be two opposing views, one that predicts a significant cooling of the economy, another one that purports that the economy is only experiencing a minor hiccup. It is not my propensity that I agree with the notion that a significant cooling has already begun and will affect all sectors of the economy, on the bottom and on the top. Although, at the high-end of the spectrum, hedge-fund individuals for example, will have a more tempered and restrained approach, which will affect prices but doesn't necessarily mean that all selling and buying of art will cease.

The people in the art market who will feel the burden of the downturn in the economy the most are those who have relied too heavily on slick gimmicks and hype. Just my humble opinion.

I'm optimistic however about the overall health of the contemporary art scene, and I'm referring to the art and not the prices.

Robert Shiller gave his honest thoughts on the US economy, here's a snippet from the finanical times:
"Robert Shiller, a Yale university economist, told a US congressional panel that he feared “the collapse of home prices might turn out to be the most severe since the Great Depression”.

Peter

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