Filthy Lucre and other things…

(Warning to our more squeamish readers – This post is not necessarily about Art and it may bore you to tears – so read on at your own choosing. We’ll have more on Romanticism shortly!)

The Art Circus has come to town and an endless parade of clowns are spilling out of an impossibly small car. I have mixed feelings about these things. The fairs are strictly about commerce, entertainment and mostly money, money, and more money. Every year at this time the very wealthy, the very glamorous, and the well connected show up to be feted beyond avarice by the toadying hoards holding buckets to catch the trickle down. This behavior, institutionalized in the pre-teens by the art economy, has changed little in the last few years of economic disaster, because for the most part, the market collapse in 2008 was mitigated for the wealthy shoppers by trillions of tax dollars pumped back into their deflated portfolios.

What was private equity’s key to survival during the financial crisis? A set of “get-out-of-jail-free cards,” Guy Hands, the chairman of Terra Firma Capital Partners, said Wednesday at the SuperReturn conference here. Those lifelines included the Troubled Asset Relief Program, the bailouts of the European banks and the liquidity pumped into the markets by central banks. “Because of all these three, our businesses and our portfolios look a lot better today than they did at the end of 2008. But, in truth, we ourselves didn’t have as much to do with this rebound as we sometimes tended to claim,” Mr. Hands said.”

But for many middle class Americans the money pumped back into those glamorous portfolios also helped mitigate the losses in their quotidian 401K retirement accounts. Part of the reason that the government HAD to involve themselves so extensively in the flattened market was because so much of the stock market is made up of the retirement accounts of middle class Americans. The market crashed just as we were beginning to feel the effects of the tsunami of retiring Boomers who will be relying on those accounts to live. The choice was simple. No TARP, a whole new class of elderly poor would suddenly manifest before our eyes. The 401K, filled with mutual funds that invest in packets of stocks and bonds, bound rank & file workers’ retirement accounts to the Private Equity lifestyle accounts of the equestrian classes. It’s almost like the 401k is PE’s hostage, er…hedge. They go down and 51 million American families bite the dust as well.

More Than 51 Million U.S. Households Owned Mutual Funds in 2010 Assets in U.S.-registered investment companies— mutual funds, exchange-traded funds (ETFs), closed- end funds, and unit investment trusts (UITs)—totaled $11.5 trillion as of mid-year 2010.”

In order to save the elderly middle class from standing in Bread Lines EVERY American’s “invisible” debt increased to about $176,000 according to the online Debt Clock. We are all in – up to our eye balls – just to continue the games that were played before the meltdown. And make no mistake about it, those are the same games that made us all believe that we were going to be millionaires through compounding interest, 8 percent returns and a sold out show to Saatchi. So, thanks to the intricate codependency of the top down American economy and trillions of tax dollars, Art Dealers can still line up to rent booths at these fairs for thousands and thousands of dollars per day. The magnificent Charlie Finch puts it all into perspective once again in his post entitled “Against Art Fairs“:

“What results is that galleries are thrust into a cut-throat capitalist confluence of product development and cost competition which leads to huge turnover in art fair participation. On the one hand, it must be admitted, the excess cash of the very rich is so substantial that this art factory system continues to thrive even when the rest of world capitalism is in the sewer.”

Ok, I’ve probably lost most of you at this point and that’s ok. Really, who gives a crap about ‘real world’ economics? We all, and by we I mean artists, have very hard, mixed feelings about this system, and it sounds so “2008” to be talking about it today. The art fairs exist because of the ‘real world’, and they employ and sell the work of a few of my artist friends whose livelihood depends on the trickle down. They don’t like this way of doing things very much, but that’s the reality – there are mouths to feed. None of us wants the people that we care about to suffer, but many of us also loath the corporatized institutional system that’s in place. It’s created a glut of art that is nothing more than product made for entertainment and/or investment purposes. This product appears in the galleries and press for a short period of time then disappears into the market to be monetized and traded among very wealthy collectors. Everyone who has an opinion about Art will tell you this. In the 21st Century the avant garde has nothing to do with style change or revolutionary aesthetics. It has much more to do with market capital and global enterprise. The tautologies involved in confronting these art products and this system are endless and frustrating especially for those of us with differing ideas of what art should be and do. The reality is that the market isn’t going to change; neither is the behavior of the galleries and the people that they serve. Robert Hughes had a great deal to say about this in his documentary the Mona Lisa Curse:

“The distressed debt investor Howard Marks warned that now is a time to be “cautious” in the market….The self-confessed worrier said the economy could be “shaky” for awhile as the government pulls back from purchasing securities — the so-called quantitative easing that has helped bolster the markets. It’s the second round by the United States, known as QE2. Without that source of demand, the price of Treasuries may drop and interest rates may rise.”

What will it take for actual change to happen? How will we see things differently? What will we value? The problem is that 2008’s near death experience for the Art Market Economy is now a half forgotten dream. The same players have re-emerged, the same style persists. And everyone continues to ignore the elephant in the room, er…in the larger stock market – there are STILL trillions of dollars of toxic debt conveniently unaccounted for by banks and corporations. The accounting standards were changed in 2009 to make it easier for distressed companies to suddenly become profitable. And this happened not soon after the crash and right at the beginning of TARP so that companies, especially banks, could basically ignore the fact of their toxic debt while billions of tax dollars were pumped into their balance sheets at ZERO percent interest. By March of 2009 exactly six months after nearly going tets up, Citibank was able to record a profit of 1.6 billion dollars. So much for regulation, ethics and transparency in the Stock Market. This current market bubble which strains one’s credulity has also re-inflated the Art Market, and all the balloon figures filled with hot air and old moldy ideas are once again bouncing around the Art Fair cubicles like the number balls in the NY Lotto machine. It’s amazing what a little accounting can do!

IS it any wonder that the Art that we make looks EXACTLY as it does? I really don’t know what will come from the market. Most Americans are bubble-aires anyway, and our fiscal worth is tied to the fortunes of Wall Street in ways that we never could have imagined. But the Art Market – well, that too depends on TARPs, QE2s, sliding accounting rules, ethically challenged trading policies, back room deals, chandelier bidding, buyer rings, and half a dozen other things that usually begin when there’s good coke, free liquor, hot bodies and ambitious minds. It makes one’s head spin. Ah, fuck it – The Art Fair has come to town – It’s time to Party – again!

10 thoughts on “Filthy Lucre and other things…

  1. The worst bets were all covered by the taxpayers, and in an even more mind-blowing development, bonuses were paid to the bettors. The legislation passed in the wake of 2008 put no restrictions whatsoever on derivatives, the principle source of losses.

    “No Hassle at the Castle” readers know that I like to bet on horses. If I bet longshots in every race and was allowed to keep the winnings, but was reimbursed for my losses and paid a bonus for placing the bets, it would be completely illogical for me change my behavior.

    It’s not a matter of when if it will happen again, but when. And even “when?” seems like the wrong question – more accurately, the question is “how soon?”

  2. What you’re describing is the same kind of thinking that’s propping up the current art market. The continuity of wealth relies heavily on the value of certain products retaining their values. After the art market crash in the early 90s the value of the collections of the new wealthy art investors went in the tank. Suddenly there was a glut of unwanted and discounted art work showing up on the auction block as collectors’ portfolios deflated overnight. This in turn pulled the rug out from under a number of high profile artists whose prices and reputations shrank up like spring tulips on a frosty morning. Most never recovered, many of the Europeans Artist slumming in NYC went back home to show and sell, and we discovered that the art world had a phalanx of desperate art professionals applying for jobs with the very institutions that dumped them into the art economy to ply their trade in the first place. IN other words there was a glut of labor with no possibilities for work or sales. It was a lesson learned by both the collectors and the institutions. Today, we have artists that are too big to fail. Reputations are guarded at auctions, institutions provide stylistic continuity and uniform professional codes, and the art market itself remains quietly “regulated” by its own economic self interest. The truth is Paul, I hope for change, but I don’t see it happening anytime soon. The Fed is already talking about QE3, in other words, printing more money to stuff into the portfolios of the VERY rich and the S&P 500’s coffers while selling the debt to the Chinese and Indian governments. Once again the American people will be footing this bill. The art market will just get bigger buckets for the trickle down while adding a few more diamonds to the skull.

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