Oh Dear! Jeff Koons "Art" Judged A Little Closer To It's Real Value

No, no healthcare here-- just a fancy Richard Prince picture

Steve, my realtor-- and former Senior Vice President of Promotion-- told me today that one of the banks he's helping unload foreclosed properties for will not entertain anything below their asking price... at least this week. They're doing their little part, he told me, to hold up California's collapsing property values. I suspect that it only will be this week.

I've been helping my friend Roland look for a house. He's a school teacher in Compton and... well, he's not looking for deals in Beverly Hills or Malibu. We are getting to brush up on our Spanish though. One house we technically bought-- or almost bought-- was an approved short sale owned by T. and his wife and their 4 children, one of whom was born while we were in the process of buying the house. We were in escrow and suddenly T., who speaks no English, decided he couldn't afford to sell. There was no place his family of 6 could go. Theoretically Roland could start legal proceedings against them and force them to vacate. He doesn't want to do that. But T. will soon be evicted by the bank. That's because he bought the house for $509,000, put down $10,000 and his mortgage payments went into outer space.

He hasn't made his mortgage payments for several months and he hasn't paid his property taxes. We offered him more than he asked for the house (which was about half what he paid originally). The bank was so delighted not to have to take possession that they OK-ed the short sale in a couple days, a process that until recently usually took at least 4 months, sometimes double that.

T. doesn't read the NY Times or the Wall Street Journal and I feel certain no one he hangs out with will mention that the wild days on Wall Street that have wrecked the U.S. economy for people like him are over. Nor will they mention a story by Carol Vogel in this morning's edition of the Times about how dreary the contemporary art sale at Sotheby's was last night. They barely managed to sell $125.1 million worth of the stuff, "well below the low estimate of $202.4 million." Almost a third of the lots failed to sell at all! Unlike houses in L.A., which seem to sell at 1992 levels, Sotheby's claims contemporary art is selling at 2006 levels. I suspect they have a long way to go before the market bottoms out.

Lucky Mr. Broad gets his bargain basement Koons, Wishing Well

“It was a half-price sale,” said Mr. [Eli] Broad, who went on his first shopping spree in several years. In less than 90 minutes, he dropped more than $8 million (including Sotheby’s fees) on works by Ed Ruscha, Jeff Koons, Robert Rauschenberg and Donald Judd.

...Philip Guston’s “Beggar’s Joys,” for instance, went on the block with a big guarantee, an undisclosed sum promised the seller, in this case Donald L. Bryant Jr., a New York collector.

Mr. Bryant, watching the auction in a skybox above the salesroom, looked intent when his work came up for sale. Executed in 1954-55, the abstract canvas of lush reds and pinks attracted only one bidder, Mary Zlot, a San Francisco art adviser. Prices have soared since 1996, when Mr. Bryant paid a record $1.7 million for the work at Christie’s in New York. Sotheby’s experts estimated it would bring around $15 million. So confident were they that it is said they gave Mr. Bryant a guarantee of around $18 million. In the end, Ms. Zlot paid $9 million, or $10.1 million with fees.

Another big-ticket item, and the cover image of the sale’s catalog, was “Half Face With Collar,” a comic-strip painting from 1963 by Roy Lichtenstein, but it was one of the evening’s many casualties. Gian Enzo Sperone, an Italian dealer, was the seller. Estimated at $15 million to $20 million, it had no takers. Sotheby’s is thought to have guaranteed it for about $15 million.

...Buyers were clearly careful about parting with their cash, wondering if better bargains were around the corner. “I don’t think we’ve reached the bottom yet,” Mr. Broad said as he was leaving Sotheby’s after the sale. “We may be close.”

I think he's wrong. Yesterday's Bob Herbert column, Beyond The Fat Cats was written before the Sotheby's misfortune. In it Herbert explains why Obama and his political party need to bring back a sense of fairness and equity to the economy. And he doesn't mean everyone should be able to buy the bargain basement Koons that Mr. Broad got last night. "Fat cats," he writes, "who placed the entire economy at risk with their greed and manic irresponsibility are trying to lay claim to every last dime in the national Treasury. Meanwhile, we’re nowhere close to an economic recovery program that will help the people who are hurting most." You think anyone had that in mind when they were reaching for their smelling salts as a Richard Prince nurse painting that had been estimated to go for between $4 and 6 million, sold for a mere $3 million (well... $3.4 with fees)?

Back in September, with the credit markets frozen and the stock markets panicking, the treasury secretary, Henry Paulson, was telling anyone who would listen that his $700 billion bailout package had to be passed with lightning speed-- no time to look at it too closely, no time for dissent.

The package was modified, but hurriedly. Now we learn that while all eyes were focused on this enormous new burden for American taxpayers, Mr. Paulson’s department was also engineering-- separate and apart from the bailout-- what the Washington Post described as “a quiet windfall for U.S. banks.”

With virtually no public attention, and without the input of Congress, Treasury made a change in an obscure tax provision that benefited banks to the tune of well over $100 billion. Was this good policy? In the absence of proper scrutiny, how is it possible to know?

We’ve also learned that the government bailout of the giant insurer, the American International Group-- already more than $100 billion-- is apparently insufficient. Tens of billions more are needed.

When the Champagne and caviar crowd is in trouble, there is no conceivable limit to the amount of taxpayer money that can be found, and found quickly.

But when it comes to ordinary citizens in dire situations-- those being thrown out of work or forced from their homes by foreclosure or driven into bankruptcy because of illness and a lack of adequate health insurance-- well, then we have to start pinching pennies. That’s when it’s time to become fiscally conservative. President Bush even vetoed a bill that would have expanded health insurance coverage for children.

We can find trillions for a foolish war and for pompous, self-righteous high-rollers who wrecked their companies and the economy. But what about the working poor and the young people who are being clobbered in this downturn, battered so badly that they’re all but destitute? Can we find any way to help them?

I would bet Rahm Emanuel wasn't at the Sotheby's auction; he's probably too busy trying to figure out a strategy for bailing out the people who were. After all, in the last cycle Mr Broad donated $35,000 to the DCCC, another $10,000 to the DSCC and tens of thousands more to a wide array of business-friendly Democrats from Mark Warner and Max Baucus to... well, Rahm Emanuel, of course. Nothing to scary actual socialist Bernie Sanders, of course. Of course not; as we pointed out Monday, he means business-- and not the Rahm Emanuel kind either.