Billionaires Gone Wild: Why a Globalization-Fueled Art Bubble Spells Trouble For You and Me [View all]

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http://www.alternet.org/economy/globalization-and-art-bubble



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Bubble Trouble

You may say that big art sales are a good thing — artists have to pay their bills, and so do curators, gallery workers, museum professionals, and others involved in the show. But there are several signs that the art world is in a bubble that could burst not only in the faces of those folks, but the rest of us, too.

Felix Salmon of Reuters and others suggest that the art market is now reaching a dangerously speculative bubble stage, and you can tell because people are starting to flip out. Art-flippers like hedge-fund billionaire Steven A. Cohen (recently nailed for insider trading), appear to be in the process of unloading big works of art on the assumption that it’s time to get out of the market. That would make the current buyers feel like suckers if and when the bubble bursts, and it would wreak havoc on folks whose jobs depend on art sales.

But there’s something more. A couple of days ago, the legendary short seller Jim Chanos, who makes his money by spotting overvalued stocks, warned investors that they may need to be a little cautious right now — and if you have a pension or a 401(k) plan, this means you, too.

He points out that a sharp rise in the stock of Sotheby's has historic correlations to peaks in the stock market in general.

When there’s excess in the marketplace, he notes, Sotheby's stock often moves from about $10 to $50, then collapses. On Tuesday, November 19, Sotheby’s was trading on the New York Stock Exchange at $51.96, up substantially from $34, where it started in 2013.