I’m fascinated by the huge sums of money that rich people blow on fine art. It seems that when you are very rich (and you’ve bought all the sportscars, mansions, and expensive jewelry you need), there is one last “holy grail”-that is fine art.
Rare paintings have cachet-they are rare and desireable.
My question: when you see the prices paid for these works of art ascending to the stratosphere, is it a sign that the economy has peaked out? Or is it true that a explosive fine arts market means that the economy is in good shape?
What do most economists think?
I’m going to go out on a limb and guess C) neither.
How the economy is doing probably has little to do with whether somebody worth m(b)illions is willing to shell out some pocket change on a sculpture or painting.
But then again, I’m not an economist!
I don’t care how rich you are; $250,000,000is not fricking pocket change.
It’s an indicator of something. Beats the hell out of me what it is, though. Perhaps consumer confidence in the upper reaches of the plutosphere?
I have heard that a lot of the recent boom was from rich Chinese business people looking for a “portable” investment to hedge against inflation of the Renminbi. Apparently, saving accounts, and some investment accounts interest rates lag behind inflation there. Couple that with the fact that it’s hard to move money outside of China, and you get people buying art, wine, and other luxury goods/“investments” at high prices.
I’d say it’s a lagging indicator of income/wealth disparity, if anything.
Well, the thinking is the painting was bought by the royal family of Qatar for an astronomical sum (far more than the next most expensive piece), in order to cement their country’s place int he art world, and have the publicity and mystique of having the world’s most expensive painting.
I should also add that many of these paintings are not being bought by individuals, but by investment funds that are buying art the same way one might with stocks. I suppose you could argue that the rise of such funds means rich investors are looking for a for more (and different) investment opportunities for their giant pool of money.
This article suggests big-ticket art purchases are more about status than investment, and they’re an indicator only of how well the .001% is doing.
One thing’s for sure: the sale of art work by us artists in the more affordable range is very much tied to the economy.
Well, I don’t expect to be super rich, but if I found myself with a decent chunk of money that I didn’t know what to do with, I’d probably buy art before sportscars, mansions, or expensive jewelry.
Economically, what does it do? Is it just a transfer of money between rich individuals/groups (with a paltry percentage entering the economy in taxes, fees and overhead) or is the seller actually going to use the proceeds on consumer goods and services?
Interesting question for which I haven’t any idea. But I would object to the statement that they’re ‘blowing’ the money. I would find having it hugely rewarding, and it doesn’t wear out or lose it’s value, like a sports car or haute couture does.
For blowing money, consider building an indoor ski resort in Dubai.
My guess was going to be C) bubble.
It might not lose its artistic value but fine art certainly could lose most of its monetary value.
Which makes it different to any other investment how? Besides being a lot more rewarding to own than stocks.
Not at all different from any other investment. You’re the one who made the claim, not me.
???
what claim are you talking about.
You posted that fine art “doesn’t wear out or lose it’s value”. I was responding to this claim by pointing out that fine art, like any other investment, could lose most of its monetary value.
Well, actually I said ‘wear out or lose it’s value, like a sports car or haute couture does.’ Sports cars, if you drive them, and couture are guaranteed to lose their value. But thanks for pointing out the obvious.
Any straightforward reading of what you said before, outlierrn, would imply that you believed art does not lose value in the same way that cars and clothes do; which is of course not necessarily true on either count.
The right attitude would have been to say “Ah, what I meant to say was…”