Not to be missed in the ECB news fog: John Gapper’s account of an FT Davos lunch with Nouriel Roubini in which the formerly doom-saying NY Stern economist spelled out what polite and civilised society has always known but been keen to turn a blind eye to: the art market is actually a bit of a money laundering scam.
The key quotes not to be missed:
“Whether we like it or not, art is used for tax avoidance and evasion,” said Prof Roubini, himself an art collector. “It can be used for money laundering. You can buy something for half a million, not show a passport, and ship it. Plenty of people are using it for laundering.”
Prof Roubini argued that the art market had a series of characteristics that needed regulation. “While art looks as if it is all about beauty, as a business it is full of shady stuff,” he said. “We should correct it or it will be undermined over time.”
Art market metaphor du jour:
Sounding a rather surreal note, the evening began with a short modern dance performance by four members of the Paul Taylor Dance Company, on a small dance floor installed for the occasion next to the auctioneer’s rostrum, in front of the hundreds of bidders waiting to wave their paddles. The three men wore leotards; a female dancer wore a green dress… Gasps were heard as two of the dancers came close to an Yves Klein relief sculpture hanging near the rostrum, but the work was untouched. Read more
John Gapper has an excellent column on Thursday about art auctions, focusing on the degree to which they are fixed or obfuscated by insiders and long-standing established practices.
As he notes, the auction market is a duopoly geared towards protecting and serving vested interests through a system of guaranteed bids and sales incentives, which to some degree obscure public price discovery.
Herein lies the similarity with modern market structure more generally. By providing the means to disguise the hands of “informed” players, the duopoly of Sotheby’s and Christie’s behaves like a dark pool system within a wider market which has no public alternative to cross check prices against. Read more
Did you click? You were meant to, if only to focus on the fact that wing-nuttery and straight forward fabulous fabrication might be forcing its way into the mainstream news media like never before. Meeja needz clicks.
Or maybe this story is true. Read more
As we’ve reported, a classic car bubble is potentially in the making — something which has got us thinking (over three posts) about what really goes into determining the value of rare objects more generally.
From our vantage point — and it certainly is a lay vantage point when it comes to classic cars — there seem to be three core attributes associated with vintage automobiles.
The first is uniqueness.
Value related to uniqueness is understandable since it relates to how easily an object or item can be sourced, replicated or mass produced. For now, there is little chance that a classic Bentley will be perfectly replicated. Value applied on these grounds seems rational enough. Read more
The classic car market is bubbling, which has got FT Alphaville wondering about what really goes into determining the value of rare objects. More specifically why certain objects, despite their ability to be cheaply reproduced, retain value regardless.
In this post, we consider the roles of narrative and myth in value creation.
We’ll start with the argument that a powerful enough narrative or myth can turn even abundant commodities into stores of value in their own right. Read more
In Star Trek: the Next Generation there is an episode in which Fajo, a member of the Stasius Trade Guild, kidnaps and imprisons the Enterprise’s Lieutenant Commander Data, a sentient android, due to his complete uniqueness in the galaxy.
Fajo, it turns out, is an obsessive collector of all things one-of-a-kind. He values Data because there is only one of him in the universe. And unlike one-of-a-kind human beings, Data’s android status in Fajo’s mind allows him to objectify him and treat him as private property. Read more
There’s a post FT Alphaville has been trying to write about the art market for a while now. At least a year. Problem is, nobody will talk honestly about the angle we want to discuss.
That being: how much art is being “mined” purely to satisfy the demand for ‘safe-ish’ assets in a liquidity saturated world. Safe assets, which we should add, are often held in bonded warehouses in places like Geneva, outside of the reach of tax authorities, and which later become a type of bearer security in their own right as the depository receipts which allow redemption of the assets begin to circle amongst the wealthy as their own type of non-taxable currency. Read more