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| "Triple Elivs (Ferus Type" by Andy Warhol |
“When a great painting comes into being it is as though the invisible curtain that separates the real from the ideal world is raised.” - Georg Wilhelm Friedrich Hegel
Hegel was talking about the aesthetic qualities of art and its ability to bridge the world of reality with the world of the ideal. However, in today's art market it seems that prices may have lost touch with reality. Over the past several years the art market has seen auction results reaching record highs. Since May 2013, Christie's has broken its own record four times in a row for post-war and contemporary auction sales. The auction house's latest record came on November 12 with $825 million worth of contemporary and post-war art being sold. (2)
The highlights of the auction was the sale of two Warhols. The late artist's “Triple Elvis (Ferus Type)" sold for $81.9 million after a bidding war which drove the price up significantly. Warhol's “Four Marlons” sold for $69.6 million. There were a total of 80 works of art for sale at the auction. Only five artworks did not find buyers. (2)
With the unprecedented prices in the art market many have been talking about a possible art market bubble forming. Many remember the art market crash of 2008-2009. The collapse of the art market correlated with the fall of Lehman Brothers and the so-called economic meltdown of the financial sector. However, it turns out that this may not be the last time the financial sector's rise and fall correlates with the art market (3).
Along with the record art market peaks reached over the last few years, the stock market has also repeatedly broken historical records. This makes sense since the financial elites and the top of the social ladder are the ones who would be able to make such large purchases of art. They also derive much of their wealth from equities and other financial assets. Therefore, a rise in stocks and other financial markets cause an increase in money available for art investments (1).
Along with the stock market, another economic measure which has historically shown correlation with the bust and boom of the art market is wealth inequality. The faster wealth inequality grows, the higher art prices rise. It seems that the financial markets and wealth inequality are key in predicting when the art market bubble will pop (1).
With the U.S. Federal Reserve's unprecedented Quantitative Easing program many economists have been worried that stock prices were being inflated to unrealistic levels, as if in the ideal world of a painting. Now with the Quantitative Easing program coming to an end, it will be interesting to watch whether this will cause stock prices to crash along with the art market back to down to reality.
Sources:
(1)http://www.nber.org/papers/w15502.pdf
(2)http://www.reuters.com/article/2014/11/13/us-art-auction-idUSKCN0IX09P20141113
(3) http://www.nytimes.com/2014/03/03/arts/international/03iht-Speculating-on-Trophy-Art.html?_r=0
Hegel was talking about the aesthetic qualities of art and its ability to bridge the world of reality with the world of the ideal. However, in today's art market it seems that prices may have lost touch with reality. Over the past several years the art market has seen auction results reaching record highs. Since May 2013, Christie's has broken its own record four times in a row for post-war and contemporary auction sales. The auction house's latest record came on November 12 with $825 million worth of contemporary and post-war art being sold. (2)
The highlights of the auction was the sale of two Warhols. The late artist's “Triple Elvis (Ferus Type)" sold for $81.9 million after a bidding war which drove the price up significantly. Warhol's “Four Marlons” sold for $69.6 million. There were a total of 80 works of art for sale at the auction. Only five artworks did not find buyers. (2)
With the unprecedented prices in the art market many have been talking about a possible art market bubble forming. Many remember the art market crash of 2008-2009. The collapse of the art market correlated with the fall of Lehman Brothers and the so-called economic meltdown of the financial sector. However, it turns out that this may not be the last time the financial sector's rise and fall correlates with the art market (3).
Along with the record art market peaks reached over the last few years, the stock market has also repeatedly broken historical records. This makes sense since the financial elites and the top of the social ladder are the ones who would be able to make such large purchases of art. They also derive much of their wealth from equities and other financial assets. Therefore, a rise in stocks and other financial markets cause an increase in money available for art investments (1).
Along with the stock market, another economic measure which has historically shown correlation with the bust and boom of the art market is wealth inequality. The faster wealth inequality grows, the higher art prices rise. It seems that the financial markets and wealth inequality are key in predicting when the art market bubble will pop (1).
With the U.S. Federal Reserve's unprecedented Quantitative Easing program many economists have been worried that stock prices were being inflated to unrealistic levels, as if in the ideal world of a painting. Now with the Quantitative Easing program coming to an end, it will be interesting to watch whether this will cause stock prices to crash along with the art market back to down to reality.
Sources:
(1)http://www.nber.org/papers/w15502.pdf
(2)http://www.reuters.com/article/2014/11/13/us-art-auction-idUSKCN0IX09P20141113
(3) http://www.nytimes.com/2014/03/03/arts/international/03iht-Speculating-on-Trophy-Art.html?_r=0
