ART WORLD TULIP BUBBLE ABOUT TO BURST?

by Gary John Gresl

We have seen this happen again and again in the history of cultures, and the great Tulip Craze of Holland in the 17th Century is oft cited. Prices for new strains of tulips reached exorbitant prices, with persons investing thousands of dollars in individual plants, expecting that there would be more interested and well pursed people to buy them in the future. (Have you heard of the “greater fool” theory?) Eventually everyone tried to sell their tulips and nobody was buying them. Supply and Demand! Heard that before? Maybe on other levels you remember Jim Beam bottles, Beanie Babies and the Dotcom bust?

At the highest levels of art culture record prices for the work of living and dead artists have been accumulating. Today we are all talking about the living English artist Damian Hirst’s platinum and diamond skull that cost him around 27 million dollars to create, and which recently was reported to sell for 100 million to a group of unnamed investors. Well, one of those investors was named, and that is Damien Hirst himself who, as was reported during the week of September 3rd, desires to retain some control over the eventual exhibit of the skull. Like the DeBeers monopoly on diamonds, Damien wants to control a market, this market being an ongoing exhibiting and promotional one. Show the skull in limited but the most important venues. Enhance its appeal. Build its myth. Protect its future.

By the way, Damien apparently has some sort of contract that permits him to make two more identical or similar skulls. Do you get that picture? Will those be 100 million apiece too… or will conditions enable him to ask even more?
What about other artists and their expensive work appearing in the news? It seems that Francis Bacon, another Brit, has been doing pretty well lately too, though he is deceased and not among those seeing his prices reaching these zenith heights. (But he did pretty well during his lifetime.)

And so it has been with other touchstone artists these past few years. Picasso. Pollack. Klimt. Gauguin. Warhol. At least these folks are deceased and there is some finite number of works available. Many dead artists have been doing very well indeed. Here is a quote from a New York Times article written by Carol Vogel on Nov. 9, 2006:

“It was certainly the most amazing sale I’ve ever taken,” said a dazed Christopher Burge, honorary chairman of Christie’s and the evening’s auctioneer, after the two-and-a-half hour sale. “The evening’s total. $491.4 million, was well over $200 million more than that for any previous auction, topping its high estimate of $427.8 million. (The previous record was $269 million at Christie’s in May 1990). Of the 84 lots up for sale last night, only 6 failed to sell.”

It might be said that these high prices and the public interest in them are good news for all of us artists and the values of our collections. Media reports bring attention to visual art and makes people take notice, perhaps even for our own regional artists in some “trickle down” theory way. Maybe that is a possibility, and let’s hope it is true. Maybe more regional collectors will emerge. Maybe higher regional prices will be gained. Maybe our regional artists will get more of their due.

Record art prices are always driven by the mega rich, by classes of people who essentially control such markets and stimulate the reporting on them. But what happens if and when the super wealthy decide to stop bidding? Beyond that what happens when they decide to sell their expensive art work? Will there be “greater fools” with mega wealth, or will prices level, perhaps going into decline due to a shrinking buyer base? What world conflicts, monetary and cultural drifts will take place to reduce the real value of these hugely expensive works of art?

Here’s a quote from the Bloomberg information and business report:
June 15 (Bloomberg) -- Alfred Taubman, Sotheby’s largest individual shareholder and owner of pictures by Mark Rothko, Jasper Johns and David Smith, said the art market is heading for a decline. “As a collector, prices seem high to me,” Taubman said in an interview in London yesterday. “The market has to come down to keep economic balance.”
There may not be a bust, as in a boom and bust cycle, but there sure must be some price adjusting. “Buy low! Sell high!” has been a method well known in our capitalist world, but lately people have been “buying high” and perhaps just crossing their fingers. Or hopefully there are some of these wealthy folk who are buying these art objects out of love and aesthetic appeal, and who say damn the money concerns and investment potential.

Yeah! Maybe there are some collectors and investors who will never run out of money, although all of these people will eventually run out of time. Their collections will again change hands, one way or another, and more news will be made to entertain us all.��