Tuesday, September 30, 2008

supply, demand, soup

Goodbye $1 Billion Salary, Hello Campbell Soup
Posted Sep 30, 2008 01:42pm EDT by Henry Blodget in Investing, Newsmakers, Recession, Banking
Related: ^dji, ^gspc, ^ixic, cpb

Campbell Soup Co. was the only stock in the S&P 500 that escaped yesterday's historic sell-off. That’s right: 499 fell, and just one rose.

Could there be a clearer metaphor for Americans refocusing on the basics after a decade of greed and excess?

related news and lifted from the blog of brad troemel (http://bradtroemel.blogspot.com)

Collecting Contemporary by Adam Lindemann - Marc Glimcher
Marc Glimcher
is the president of PaceWildenstein Gallery, which was founded in 1960 by his father Arne Glimcher. The gallery is recognized as one of the oldest and most established in the city because of its longevity, and its representation of several major estates like those of Donald Judd, Jean Debuffet, and Louise Nevelson, as well as Alexander Calder and Agnes Martin. The gallery is also associated with several artists of monumental stature including Robert Rauschenberg, Chuck Close, Robert Ryman, Claes Oldenburg, John Chamberlain and Lucas Samaras. Marc had studied bio-chemistry before dedicating the past twenty years to being an art dealer. His responsibilities include managing three gallery spaces in Manhattan as well as creating a program of younger artists like Tara Donovan, Tim Eitel and James Siena who will help keep the Pace program relevant and dynamic.

..on market characteristics

"Actually the art market is not really a market; it's too small to qualify as one. Furthermore, if it is a market, it's a market of uniques. Therefore, there is no true comparability between prices. Finally, it's a market of Geffen goods which is what gives it some strange characteristics. Geffen was a 19th century economist who said there are certain goods that will disobey the basic law of supply and demand, that when the price drops to a certain level, instead of demand rising, demand will suddenly begin to drop. As the price drops, demand will drop further, so there is a cliff in the supply and demand curve at some critical price level.
Interestingly, if you have a very small market of unique objects that have this characteristic, you would expect that market to be incredibly erratic and volatile, and yet it isn't, it's very predictable. The art market does very well, then levels off, goes a little down then continues to go up with some small dips and plateaus. Many economists try to get into the nitty-gritty of pricing auctions when, in reality, any good economist will tell you that this market is driven by basic economic prosperity. It can only be significantly influenced by extrinsic factors ... Don't tell anyone this, it's a big secret - when is the art market going to crash? When the stock market crashes, when the real estate market crashes, that's when the art market is going to crash.
Art is less a market than it is a basic by product of human consciousness; it's linked to the general prosperity of the community or society or civilization as a whole."

...on the value of art

"Art is an object with no utility, as economists would say. The utility of a painting is zero. It has spiritual value, but no utility, like an orange, for instance, which gives you calories. So when you buy a painting, you are saying, "I am going to trade my hard work and the sweat off my brow for something that is completely ephemeral and has no physical value at all." Now when we trade each other, we're assuming that we, as a group, can determine the value of something that has no value - it is purely an agreement between conscious entities. That has to be the highest expression of human economics, in a sense, and therefore it makes sense that art is the most expensive thing in the world. If we can come to some agreement that these things have a certain value, then that object deserves to be of higher value than anything because it has escaped the bonds of the physical world. It's a way to touch something beyond us."

...How do you feel about clients buying work from you and selling them at auction?

"I feel sorry for them if they ever plan on buying anything else from me ... but seriously, when they buy a work from me they're buying a work from the artist. And if they then take piece of art from the artist and stick it in the auction house, that is an abuse of the relationship created through the purchase ... the artist-collector relationship, which, by the way, is the central relationship in the history of art.
Someone bought a painting from Tim Eitel two years ago for $2000, it's nine inches square. They sold it at auction - those paintings are not $2000 anymore they're $9000 - they sold it for $120000. That's vile. That's not art collecting. If you bought it two years ago, what happened? Are you broke now? No, that person is not starving. Did they turn to the artist's gallery and say: "would you like a chance to place this in the right collection (because mine is obviously not)" or whatever? What happens is you breed a class of people like Charles Saatchi whose only interest, in my estimation, is to raise himself above the artists and take pleasure from destroying their lives. They attempt to corner the market by buying dozens or hundreds of works and then, when the moment is right, dump them in auction; they capture the upside and then the market falls away. The first artist Saatchi famously did this to was Sandro Chia, whose market never recovered. For what pleasure did he do this? To destroy Sandro Chia's life? What happened to his insistence that his devotion to the artists was the reason the dealer should sell him work after work? What about his friend Damien Hirst whom he exhorted millions out of by threatening to dump a dozen major works at auction? The booming market and the auction system breeds this parasitic behavior which to me is a little reminiscent of the Romans entertaining themselves by throwing the Christians to the lions. So I guess you might say, I'm not a big fan."


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