The State Of The Art Market

In my last column, I suggested prices might be nearing a peak, but even the suggestion that prices may not continue heading upwards forever prompted one of the biggest collectors in California to call. He patiently explained how “Goldilocks” (just right) the economy is, and that I must be some kind of village idiot to prognosticate a pullback during this, our very own fiscal art nirvana complete with an $11 million Peter Doig, a $16 million Basquiat, a $72 million Warhol, and a $73 million Rothko.

Well, either he was wearing the wrong glasses or thought he was reading Barron's, because I did not predict a pullback. I merely thought it was interesting to look back at past articles by reputable economic publications (like The Economist, for example, for those of you who missed it last month) to compare and contrast what's happening at this juncture vis-à-vis a different all-time top (May 1990.) And by the way, this isn't even a top; indexed, art still has another 20% to go to even approximate May 1990, but any of you have any money in NASDAQ in 2001? Remember “The New Economy?” Just curious.

Then there were the cards and letters from the 35-year-old Art Dealer All Stars importuning that there was never a market crash, and what in God’s name was I talking about because everyone knows the art market only goes one way, and that way is up.

Every meeting these days with anybody in the art business starts out with questions like: How long can this last? And, how on earth does one balance the need for maintaining appropriate inventory levels with the equal and competing need not to go bankrupt?

So, to delve deeper into the current state of the market, I arranged to meet two “experts” at the Beverly Hills Peninsula to talk art. While waiting, I thought I had finally convinced the Russian waitress with the 15-carat yellow-diamond engagement ring that I was an art dealer and not a hooker (and no, smarty-pants, they are not the same) my two dates arrived and the Russian with the diamond gave me an “I knew it!” look.

Liquidity, Inflation, & Exogenous Variables

Eventually, my art dealer friend started in with the liquidity conversation. If I hear one more art dealer throwing around the word liquidity, I will lose my lunch, and that would be sad indeed, especially at a nice place like the Peninsula with all those hookers and sashimi and the citron and the little Japanese berries all around it.

Liquidity. Money supply. Hyperinflation. Bank loans. Interest rates. All of these things are interconnected. And I don't care if you don't think they relate to art. They do.

Low interest rates weaken the dollar; that's a longer conversation, but take my word for it. The dollar becomes less valuable. Conversely, it makes our products (art, for example) cheaper for foreigners by encouraging buying from overseas' economies with stronger currencies, like euros at $1.36 (a 30% discount against the dollar,) or the British pound, now at its second all-time dollar high of $2. The last time the pound was at $2 was… you guessed it, 1990. But then you have to adjust for inflation over 17 years, so this $2 pound is different from 1990's $2 pound. It's worth less in today's dollars. Nonetheless, it's interesting.

Think there might be a little inflation around? How about those $7,000 Chanel jackets? Stocks (Dow 13,000)? Oil ($65 a barrel)? Gold ($670 per oz)? How about the fact that there are 400 billionaires in the United States?

Fact: Between 2000-2007 the Federal Reserve has doubled the U.S. money supply.

Now, suppose we have a new Democratic Administration. The Democrats are not known for a particular sensitivity to the .0001% of their art-buying constituents. Suppose they raise interest rates, contract the money supply (Mr. Mellon, your banks can now loan only three times their deposits,) and then the coup de grace, raise taxes. That will be quite a ride. And these are what you call “exogenous variables.” Don't think it could happen? You'd better get yourself a library card.

The Night Auctions

Sotheby’s set a world record for a contemporary picture during the most recent New York auctions: a 1960 Rothko (“White Center”) from the collection of David Rockefeller at $72.8 million. A Francis Bacon, “Study from Innocent X” (1962) doubled the record for the artist at auction, selling for $52.6 million. Dealers in the know say a picture like this would have sold for $10 million as recently as two years ago.

Tom Wesselman, long undervalued (he died two years ago), set a record for a shaped canvas from 1975, “Smoker No. 17,” at $5.8 million. A 1981 Jean- Michel Basquiat (another record sale) “Untitled,” doubled its high estimate of $8 million, to sell at $16 million. Can you believe I overheard someone saying that the greatest career move Basquiat ever made was dying? Now is that nice? Total sales for the auction also set a new record at $254.8 million, just shy of the high estimate of $265 million.

Six pictures were bought-in (went unsold,) including all three Jackson Pollocks and a horrible Gerhard Richter. Speculation as to why included too-aggressive estimates, history on the market, and horribleness. Still, given the delirium, these were a surprise to many dealers and collectors.

The next night at Christie's, an even more shocking auction sent diverticulitic spasms through the art world. A Warhol, “Green Car Crash” (1963), sold for $71.7 million. There were at least seven hysterical bidders for this picture before it hammered down. It was sold to a telephone bidder, probably from China.

Six bidders went after another Warhol, “Lemon Marilyn” (1962), before it closed out at $28M, the second highest price for a Warhol (the owner paid $200 for it in 1963). A fantastic Philip Guston, “Head and Bottle” (1975), a startling comment on his struggle with alcoholism, also broke all records, selling at $5.8M. Some unseated underbidder said that the person who bought it was an AA'er on a slip. These art people.

Donald Judd's sculpture, “Stack” (1977), with an estimate of $5-7M, broke another record when it sold for $9.8M. De Kooning's 1981 canvas, “Untitled I,” also defied expectations when it sold to a collector at $19M, the highest price ever for an ‘80s painting.

Overall, Christie's maintains its dominance over Sotheby's in the auction world, with aggregate sales of $384.6M, more than 20% above its high water mark of $305.5M.

The Day Auctions

While there was no dearth of incredulity at these night sales, most dealers were more interested in what the day sales would bring. The day sales are more indicative of the market's breadth and depth (with many more dealers able to bid).

At Sotheby's day sale, Sam Francis, Jean Dubuffet, and Anselm Keifer rebounded nicely from their 15-year hiatus. Robert Indiana (Christie's estimate $120-180,000) was exhumed from his pederast interment to bring a record $650,000, and parvenu Yoshitomo Nara's painting, (Sotheby's estimate $400,000-600,000) sold for almost double the high estimate at $1.1M.

Yes, they'll buy anything.

For example, a Warhol Toy painting (estimate $50-60,000) went for $312,000, and a 1955 De Kooning that a dealer has been flogging for two years for $850,000 was knocked down at $1.2M. I won’t recount every Richter, Gottlieb, Wesselman, and Stella auction (ahem) anomaly, but let's just say these sales blew the roof off the art world. Every dealer is beside him or herself about what to do for inventory.

I have some ideas. How about Japanese photographer Araki, from the people who brought you Sugimoto at $1.65M on Wednesday? Big time undervalued. Uninformed people believe Araki's editions are unlimited; that is wrong. Each image is limited to a total of 30. This is smaller than Sugimoto's editions, which are at least 40.

What about the likes of Robert Crumb? Crumb is supported by museum curators across the civilized world, from Robert Johnson of the Fine Arts Museum of San Francisco, to museums with currently traveling Crumb exhibits in Belgium, Britain, Denmark and France, among others. Go see the show at David Zwirner. I got into a big fight with a dealer at The Carlyle who told me Crumb was a filthy, vulgar, misogynist and that I was a tasteless, mercenary Philistine. Then, he got up and left. He said all I cared about was money.


Last time I looked I was running a business. Do you imagine Larry Gagosian thinks about making money? How about Jay Jopling? Damien Hirst? Jeff Koons? How about poor Andy Warhol?

Moving right along, go look at Eric Parker, who's doing these very cool Picasso psychedelic heads. Or Jacqueline Tarry, with her photographs of black oppression with silk over them. Sherrie Levine is also doing very good work.

See you next month; inflationary kisses until then.