Tuesday, September 16, 2008

What is the nature of the current economic crisis and how does it relate to the art market?

When I was a child, at various festivals, we set off fire-crackers as part of the celebrations. Some of these fire-crack
rockets, volcanoes, some were sparklers, some were like bombs or single detonations, but some were strings of bombs, one setting off the other after an interval, as the initial explosion lit the fuse to the next bomb which exploded an indeterminate number of seconds later.

Well, the current crisis is not like a volcano, and certainly not like a sparkler. It is certainly not like a bomb either. It is most like a string of bombs, with one crisis sparking another.

The only difference is that, between the explosions, we have the huge global flock of money still trying to find safe places on which to land while the issue for the global economy is how to "squeeze excess liquidity out of the system" - that is, how to reduce the floks of money and restore money to something like its true value.

The initial problem of over-valuation started with real estate, then spread to commodities (including oil), and then to certain currencies such as the remnimbi and the euro.

I am therefore interested to see that while the financial towers tremble and some of them even tumble, the bubble in art prices still continues to inflate, as testified by the following story.

Golden calf helps Hirst auction hit £70m
Sep 16 2008 02:32
An experimental sale of new works by Damien Hirst surpasses expectations with the top lot, the 600kg bullock 'The Golden Calf', selling for £10.3m, writes Peter Aspden

Watch out: the higher the prices rise, the more they are going to fall. Sphere: Related Content

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