1 00:00:11,360 --> 00:00:15,520 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:15,680 --> 00:00:20,280 Speaker 1: I'm Joe Wisenthal and I'm Tracy Alliwhite. Tracy, did you 3 00:00:20,320 --> 00:00:22,800 Speaker 1: know we just had something in New York that's apparently 4 00:00:22,840 --> 00:00:25,400 Speaker 1: called Gig a Week. See now, I don't know how 5 00:00:25,440 --> 00:00:28,640 Speaker 1: to answer this question because we're sort of talking about 6 00:00:28,640 --> 00:00:31,840 Speaker 1: it a few minutes before we started recording. I am 7 00:00:31,880 --> 00:00:35,520 Speaker 1: aware that there was a big, big art auction. I 8 00:00:35,560 --> 00:00:39,080 Speaker 1: was unaware that it's actually called gig a Week. Yeah, 9 00:00:39,120 --> 00:00:42,280 Speaker 1: I didn't realize that either. Like I guess, every once 10 00:00:42,320 --> 00:00:46,360 Speaker 1: in a while, auctions, big weeks of art auctions are 11 00:00:46,440 --> 00:00:49,080 Speaker 1: kind of like Mardi Gras New Orleans or something. They 12 00:00:49,120 --> 00:00:51,240 Speaker 1: just suddenly just pop up and your feet just gets 13 00:00:51,520 --> 00:00:54,560 Speaker 1: dominated by people who are at this event, and you're like, oh, yeah, 14 00:00:54,600 --> 00:00:58,080 Speaker 1: this is happening again. So obviously in New York recently, 15 00:00:58,120 --> 00:01:02,400 Speaker 1: we just had a series of gigantic art auctions, and 16 00:01:02,600 --> 00:01:06,240 Speaker 1: apparently because of how much money the art sells for 17 00:01:06,640 --> 00:01:08,960 Speaker 1: during the course of the week, they called gig a 18 00:01:09,000 --> 00:01:12,959 Speaker 1: Week because over a billion dollars of art gets sold. Okay, 19 00:01:13,040 --> 00:01:16,199 Speaker 1: so lots of money, uh flowing through those auctions. And 20 00:01:16,480 --> 00:01:19,360 Speaker 1: there was one point of interest in particular because I 21 00:01:19,360 --> 00:01:22,880 Speaker 1: remember you actually tweeting about it. But the father of 22 00:01:22,920 --> 00:01:28,200 Speaker 1: Treasury Secretary Steve Manuchin, he bought a pretty large how 23 00:01:28,240 --> 00:01:31,600 Speaker 1: do I describe it? A sculpture that resembles like a 24 00:01:31,680 --> 00:01:34,880 Speaker 1: balloon bunny. Yeah, and I don't even think it was 25 00:01:35,040 --> 00:01:37,440 Speaker 1: at large, although we can get into it. But yeah, 26 00:01:37,520 --> 00:01:40,000 Speaker 1: so a balloon bunny sold for a ton of money. 27 00:01:40,040 --> 00:01:42,679 Speaker 1: I forget how much. It sold for a crazy amount. 28 00:01:42,959 --> 00:01:45,839 Speaker 1: And the guy who bought it at the auction, although 29 00:01:45,840 --> 00:01:47,559 Speaker 1: I guess he was just a dealer, so he bought 30 00:01:47,560 --> 00:01:51,600 Speaker 1: on behalf of someone else was the Treasury secretary his dad. 31 00:01:51,640 --> 00:01:53,880 Speaker 1: But it was sort of like this perfect, you know, 32 00:01:54,040 --> 00:01:57,600 Speaker 1: zeitgeist other moment thing, an insane amount of money for 33 00:01:57,640 --> 00:02:01,520 Speaker 1: a sculpture of the Treasury secretary's dad. So it seems 34 00:02:01,560 --> 00:02:04,520 Speaker 1: like a good time to talk about the art world 35 00:02:04,520 --> 00:02:07,800 Speaker 1: and the financialization of the art world and where it's 36 00:02:07,800 --> 00:02:09,400 Speaker 1: all going and what it says about the state of 37 00:02:09,400 --> 00:02:12,600 Speaker 1: the economy. Oh, I feel so cultured. This will be 38 00:02:12,639 --> 00:02:16,280 Speaker 1: the most cultured episode of add thoughts. That's probably true 39 00:02:16,280 --> 00:02:19,240 Speaker 1: because I don't think we've talked about this before. So 40 00:02:19,440 --> 00:02:23,200 Speaker 1: without further ado, I wanted to bring in our guests 41 00:02:23,400 --> 00:02:25,919 Speaker 1: and It was actually from a tweet by our guests 42 00:02:25,960 --> 00:02:27,760 Speaker 1: that I the first time I saw the whole thing 43 00:02:27,800 --> 00:02:32,960 Speaker 1: about Manuchan's dad and making the big purchase. So Margaret Carrigan, 44 00:02:33,080 --> 00:02:36,480 Speaker 1: she's the deputy art market editor at the Art Newspapers, 45 00:02:36,560 --> 00:02:40,000 Speaker 1: from her tweet that I saw about the Coon's Bunny sale, 46 00:02:40,360 --> 00:02:42,120 Speaker 1: thank you very much for joining us, Thank you so 47 00:02:42,200 --> 00:02:45,320 Speaker 1: much for having me. So what was that like being 48 00:02:45,320 --> 00:02:48,000 Speaker 1: in the room when the Coon's Bunny sold? And how 49 00:02:48,080 --> 00:02:50,120 Speaker 1: much was it? And sort of tell us what that 50 00:02:50,200 --> 00:02:52,920 Speaker 1: was all about. Well, being in the room, I have 51 00:02:53,040 --> 00:02:55,680 Speaker 1: to say, was pretty much business as usual. This has 52 00:02:55,720 --> 00:02:58,360 Speaker 1: become very de regret to be selling art for that 53 00:02:58,480 --> 00:03:01,480 Speaker 1: much money. Now. Of course I say that rather fliquently 54 00:03:01,520 --> 00:03:03,440 Speaker 1: because I have to cover these all the all the time. 55 00:03:03,520 --> 00:03:05,680 Speaker 1: But you know, it wound up soling for just over 56 00:03:05,840 --> 00:03:09,640 Speaker 1: ninety million, and that's that's nothing to you know, looked 57 00:03:09,639 --> 00:03:12,959 Speaker 1: down your nose at the Coon's Bunny. Work was actually 58 00:03:12,960 --> 00:03:17,240 Speaker 1: really interesting because it sold for eighty million dollars and 59 00:03:17,280 --> 00:03:20,320 Speaker 1: with fees that came out to about million. It was 60 00:03:20,360 --> 00:03:22,920 Speaker 1: sold without a guarantee. Now that's kind of like a 61 00:03:22,919 --> 00:03:25,720 Speaker 1: big deal for a piece that has that much worth 62 00:03:25,800 --> 00:03:29,000 Speaker 1: behind it. More and more frequently, we're seeing the use 63 00:03:29,120 --> 00:03:33,119 Speaker 1: of third party guarantees by auction houses to basically offset 64 00:03:33,160 --> 00:03:35,440 Speaker 1: the risk of selling these high value works of art. 65 00:03:36,000 --> 00:03:37,640 Speaker 1: And this one, they were just kind of let fly 66 00:03:38,160 --> 00:03:40,720 Speaker 1: by the seat of its pants to see how it did. 67 00:03:41,320 --> 00:03:44,440 Speaker 1: Before we get into the question of guarantees and how 68 00:03:44,560 --> 00:03:47,280 Speaker 1: all that works, I just want to talk about the 69 00:03:47,320 --> 00:03:50,280 Speaker 1: bunny a little bit more. And when I saw that 70 00:03:50,400 --> 00:03:52,800 Speaker 1: it was sold for million dollars, I assumed it was 71 00:03:52,800 --> 00:03:54,960 Speaker 1: one of these gigantic sculptures that's as big as an 72 00:03:55,040 --> 00:03:56,680 Speaker 1: entire room where you need to add a wing to 73 00:03:56,720 --> 00:03:59,800 Speaker 1: your house. But it's not really even that big right now, 74 00:04:00,040 --> 00:04:02,880 Speaker 1: only about three and a half feet. That's crazy. If 75 00:04:02,880 --> 00:04:05,720 Speaker 1: it's appropriate, I'd love to give people a visual of 76 00:04:05,760 --> 00:04:09,440 Speaker 1: this bunny. Is looks like a balloon animal and this 77 00:04:09,480 --> 00:04:11,160 Speaker 1: is kind of something that the artist of Coons is 78 00:04:11,200 --> 00:04:14,000 Speaker 1: famous for. It's one of his most iconic works. It 79 00:04:14,040 --> 00:04:16,400 Speaker 1: was one of only four ever made, so in that 80 00:04:16,440 --> 00:04:19,160 Speaker 1: way that because there's a limited amount of these bunny 81 00:04:19,160 --> 00:04:21,640 Speaker 1: sculptures out there, it had a lot of cash a 82 00:04:22,360 --> 00:04:24,560 Speaker 1: but yeah, when you look at it, it looks like 83 00:04:24,720 --> 00:04:29,400 Speaker 1: a silver toy. So let's get back to the guarantees, then, 84 00:04:29,480 --> 00:04:32,480 Speaker 1: can you walk us through what those are exactly? And 85 00:04:32,560 --> 00:04:35,279 Speaker 1: you know you mentioned that it was unusual that the 86 00:04:35,320 --> 00:04:39,240 Speaker 1: coon's bunny or rabbit didn't come with a guarantee given 87 00:04:39,640 --> 00:04:42,599 Speaker 1: the price tag attached to it. How how much of 88 00:04:42,600 --> 00:04:46,440 Speaker 1: the art market currently does come with a guarantee. Well, 89 00:04:46,600 --> 00:04:49,680 Speaker 1: within the last gig a week um earlier in May, 90 00:04:49,720 --> 00:04:54,320 Speaker 1: about all lots were guaranteed, and that could be either 91 00:04:54,400 --> 00:04:57,960 Speaker 1: by an in house guarantee or a third party guarantee. So, 92 00:04:58,120 --> 00:05:00,720 Speaker 1: just to back it up a little bit, in their 93 00:05:00,760 --> 00:05:03,560 Speaker 1: simplest form of guarantee is like, it's just an agreement 94 00:05:03,600 --> 00:05:05,640 Speaker 1: between a seller who wants to consign their work with 95 00:05:05,680 --> 00:05:08,520 Speaker 1: an auction house and the auction house that no matter 96 00:05:08,560 --> 00:05:10,800 Speaker 1: what the outcome of the sale, that seller is going 97 00:05:10,800 --> 00:05:13,240 Speaker 1: to get their money's worth. So the terms and the 98 00:05:13,279 --> 00:05:17,039 Speaker 1: conditions of these agreements can really vary, and they're always 99 00:05:17,120 --> 00:05:19,400 Speaker 1: very secretive, so we don't really know that what goes 100 00:05:19,440 --> 00:05:23,960 Speaker 1: into outlining all of these bare bones guarantees. But whatever 101 00:05:24,120 --> 00:05:27,600 Speaker 1: terms the auction auction house decides to offer is a 102 00:05:27,640 --> 00:05:30,280 Speaker 1: big incentive for that seller to consign with them, So 103 00:05:30,320 --> 00:05:34,000 Speaker 1: it's definitely within the best interests of the auction house 104 00:05:34,080 --> 00:05:36,200 Speaker 1: to minimize the risk for the consigner as much as 105 00:05:36,240 --> 00:05:39,320 Speaker 1: possible if they're trying to get these like high value 106 00:05:39,480 --> 00:05:42,599 Speaker 1: trophy works of art like a coon's rabbit sculpture, because 107 00:05:42,600 --> 00:05:44,280 Speaker 1: they think that will help push it forward on the 108 00:05:44,320 --> 00:05:48,240 Speaker 1: auction block. So just break this down a little bit further. 109 00:05:48,600 --> 00:05:52,120 Speaker 1: Let's say I have a Coon's bunny in my collection 110 00:05:52,320 --> 00:05:55,039 Speaker 1: or some other piece of art that I want to sell, 111 00:05:55,120 --> 00:05:56,560 Speaker 1: and I know it's going to be a big hit 112 00:05:56,680 --> 00:05:59,960 Speaker 1: and multiple how many like big auction houses are there 113 00:06:00,400 --> 00:06:04,160 Speaker 1: in the US. There's three predominant ones, the Christie's, Southeby's, 114 00:06:04,160 --> 00:06:06,839 Speaker 1: and Phillips, and so in theory, what they say is 115 00:06:07,200 --> 00:06:10,360 Speaker 1: list with us or sell it through us, and will 116 00:06:10,480 --> 00:06:15,360 Speaker 1: provide you some guaranteed minimum set right exactly and where 117 00:06:15,360 --> 00:06:18,160 Speaker 1: does that come from? Then there's a third party entity 118 00:06:18,240 --> 00:06:20,800 Speaker 1: that promises to do the bidding. Explain how that all 119 00:06:20,839 --> 00:06:24,080 Speaker 1: works in the traditional just guarantee model with like the 120 00:06:24,120 --> 00:06:25,760 Speaker 1: in house guarantee. And I feel like this is important 121 00:06:25,800 --> 00:06:27,600 Speaker 1: to set up a ut why third party guarantees are 122 00:06:27,640 --> 00:06:30,040 Speaker 1: kind of on the rise right now. Basically the auction 123 00:06:30,040 --> 00:06:32,880 Speaker 1: houses started doing this a lot to attract these bigger 124 00:06:32,880 --> 00:06:35,560 Speaker 1: collections and these bigger works of art, and it can 125 00:06:35,560 --> 00:06:38,200 Speaker 1: play out in one of three ways. In one way, 126 00:06:38,720 --> 00:06:42,440 Speaker 1: the lot fails to sell, and in that case it's 127 00:06:42,560 --> 00:06:44,919 Speaker 1: what's called bought in by the auction house. So the 128 00:06:44,920 --> 00:06:47,080 Speaker 1: auction house then owns that work of art and pays 129 00:06:47,120 --> 00:06:51,240 Speaker 1: the consigner whatever they're you know, lowest bit was. And 130 00:06:51,279 --> 00:06:54,680 Speaker 1: then the problem with that is when and when a 131 00:06:54,760 --> 00:06:58,040 Speaker 1: work is bought in, it's called what's burnt and people 132 00:06:58,240 --> 00:07:00,560 Speaker 1: like act like it was no good for the art, 133 00:07:00,600 --> 00:07:02,560 Speaker 1: and so it actually lowers the value of that work 134 00:07:02,600 --> 00:07:06,080 Speaker 1: of art. Now, if it actually goes for its guaranteed price, 135 00:07:06,120 --> 00:07:09,240 Speaker 1: then everybody wins, you know, the seller gets the money 136 00:07:09,320 --> 00:07:11,760 Speaker 1: they were hoping to get for the work, the auction 137 00:07:11,760 --> 00:07:13,760 Speaker 1: house gets a little off the top. It's all good. 138 00:07:14,280 --> 00:07:16,800 Speaker 1: And then best case scenario is it's going to sell 139 00:07:17,200 --> 00:07:20,200 Speaker 1: for more than it's guaranteed price, and then the auction 140 00:07:20,200 --> 00:07:23,320 Speaker 1: house nets that profit and everyone's a little bit happier. 141 00:07:23,360 --> 00:07:25,040 Speaker 1: It's a little bit cookid. Now that's where the third 142 00:07:25,040 --> 00:07:27,840 Speaker 1: party guarantee really gets going, because they realize that they 143 00:07:27,840 --> 00:07:30,640 Speaker 1: can bring in the auction houses realize that they can 144 00:07:30,680 --> 00:07:35,200 Speaker 1: bring in another person to offset the risk for them 145 00:07:35,280 --> 00:07:37,760 Speaker 1: and that person gets paid out and makes a little 146 00:07:37,800 --> 00:07:40,040 Speaker 1: money off the top, and so does the auction house. 147 00:07:40,640 --> 00:07:42,640 Speaker 1: That's really where it's at right now. With the third 148 00:07:42,640 --> 00:07:44,680 Speaker 1: party guarantee. We've seen the rise of them over the 149 00:07:44,760 --> 00:07:47,840 Speaker 1: last couple of years exponentially, and these are also known 150 00:07:47,880 --> 00:07:51,600 Speaker 1: as irrevocable bids. And what that means is basically that 151 00:07:51,760 --> 00:07:55,120 Speaker 1: third party guaranteer is saying, I put a bit on 152 00:07:55,120 --> 00:07:58,239 Speaker 1: this work no matter what, for this amount. That amount 153 00:07:58,320 --> 00:08:01,640 Speaker 1: is secret, No one knows what that is, and that's 154 00:08:01,680 --> 00:08:05,440 Speaker 1: just negotiated between the auction house and the consigner and 155 00:08:05,920 --> 00:08:10,440 Speaker 1: the third party guarantee before the auction happens. It's probably 156 00:08:11,200 --> 00:08:14,000 Speaker 1: near the low estimate for the work, so that's what 157 00:08:14,160 --> 00:08:16,640 Speaker 1: the usual benchmark, but it could be more, it could 158 00:08:16,640 --> 00:08:19,920 Speaker 1: be less. So it means that when that when that 159 00:08:20,000 --> 00:08:22,880 Speaker 1: third party guaranteer comes in with that work, it's basically 160 00:08:23,000 --> 00:08:25,840 Speaker 1: establishing a market value for that work right then and 161 00:08:25,880 --> 00:08:29,040 Speaker 1: there that no one else knows about. H that's really 162 00:08:29,080 --> 00:08:32,200 Speaker 1: interesting that it's done sort of off of the public market, 163 00:08:32,280 --> 00:08:35,680 Speaker 1: I guess. So walk us through who these third party 164 00:08:35,920 --> 00:08:39,280 Speaker 1: guaranteurs are. And just to be clear, if if the 165 00:08:39,400 --> 00:08:43,120 Speaker 1: art doesn't sell for more than the minimum guaranteed price, 166 00:08:43,480 --> 00:08:47,080 Speaker 1: do they take delivery of that art? Yeah, that's the thing. 167 00:08:47,720 --> 00:08:52,400 Speaker 1: For the most part, these guaranteers used to be dealers 168 00:08:52,520 --> 00:08:57,000 Speaker 1: or collectors that had the capital or the expertise to 169 00:08:57,080 --> 00:08:59,160 Speaker 1: kind of be like, yes, I will front this money 170 00:08:59,200 --> 00:09:04,800 Speaker 1: for this piece. Now that is not necessarily the case anymore. 171 00:09:04,840 --> 00:09:07,120 Speaker 1: We're seeing a lot more people wanting to get in 172 00:09:07,120 --> 00:09:09,280 Speaker 1: on this because they've heard that they're good returns on these. 173 00:09:09,320 --> 00:09:11,319 Speaker 1: So we're seeing a little influx of people that are 174 00:09:11,320 --> 00:09:15,320 Speaker 1: just interested in getting the work, but they will take 175 00:09:15,360 --> 00:09:18,559 Speaker 1: possession of the work if it doesn't sell to somebody 176 00:09:18,679 --> 00:09:21,840 Speaker 1: to a higher bidder. Let's talk about those returns that 177 00:09:21,880 --> 00:09:24,080 Speaker 1: they expect, and let's just sort of go through the math. 178 00:09:24,240 --> 00:09:27,440 Speaker 1: So let's say that there is a piece and maybe 179 00:09:27,440 --> 00:09:29,640 Speaker 1: at the high end they think it could fetch twenty 180 00:09:29,679 --> 00:09:33,000 Speaker 1: million dollars and I'm just talking hypothetically, and maybe the 181 00:09:33,120 --> 00:09:35,640 Speaker 1: ranges tend to twenty and I'm one of these third 182 00:09:35,679 --> 00:09:38,960 Speaker 1: party guaranteurs, and I say, Okay, I'm gonna guarantee that 183 00:09:39,000 --> 00:09:41,920 Speaker 1: I'll bid ten million dollars on it. And then let's 184 00:09:41,920 --> 00:09:45,000 Speaker 1: say it's a blockbuster auction, it goes to twenty million 185 00:09:45,040 --> 00:09:48,360 Speaker 1: dollars and I don't have to. I don't lose any money. 186 00:09:48,360 --> 00:09:50,880 Speaker 1: I didn't buy the piece. What do I get paid 187 00:09:51,320 --> 00:09:56,760 Speaker 1: for having offered that ten million dollar guarantee? Well, the 188 00:09:56,800 --> 00:09:58,960 Speaker 1: math is where it gets tricky. The easiest way to 189 00:09:58,960 --> 00:10:01,360 Speaker 1: look at that is that if you guarantee that work 190 00:10:01,400 --> 00:10:04,280 Speaker 1: for ten million dollars and it went for twenty then 191 00:10:04,360 --> 00:10:06,640 Speaker 1: you are getting a share of that extra ten million 192 00:10:06,679 --> 00:10:09,600 Speaker 1: that it went for. I see, But that breakdown is 193 00:10:09,600 --> 00:10:12,920 Speaker 1: not necessarily clear. That's something that's negotiated between the guaranteer 194 00:10:12,920 --> 00:10:15,760 Speaker 1: and the auction house. But that payout is based somewhere 195 00:10:16,400 --> 00:10:19,600 Speaker 1: on the spread between what I had offered as my 196 00:10:19,679 --> 00:10:23,840 Speaker 1: guarantee and the ultimate price. But in theory, that could 197 00:10:23,880 --> 00:10:27,000 Speaker 1: be a very fast, huge return for me if it 198 00:10:27,080 --> 00:10:30,040 Speaker 1: turns out that the final price is much higher than 199 00:10:30,040 --> 00:10:33,079 Speaker 1: what I had Yes. Absolutely, And in fact, we're seeing 200 00:10:33,160 --> 00:10:35,600 Speaker 1: guarantees being made up until like ten minutes before an 201 00:10:35,640 --> 00:10:37,839 Speaker 1: auction starts. Now it is very new. It used to 202 00:10:37,920 --> 00:10:40,680 Speaker 1: be these were secured more in advance, and they would 203 00:10:40,679 --> 00:10:43,600 Speaker 1: be notated in the catalogs that you would pick up 204 00:10:43,600 --> 00:10:45,280 Speaker 1: at the beginning of an auction, and that are distributed 205 00:10:45,320 --> 00:10:48,920 Speaker 1: the week before the auction. Now, however, there is usually 206 00:10:48,960 --> 00:10:51,680 Speaker 1: like a running tally that the auctioneer will give off 207 00:10:51,760 --> 00:10:54,800 Speaker 1: and the beginning. Some are marked in the catalog, but 208 00:10:54,880 --> 00:10:58,920 Speaker 1: some are made literally as they're walking up into the podium. 209 00:10:58,960 --> 00:11:03,240 Speaker 1: If the auction house is are incentivized to offer minimum 210 00:11:03,240 --> 00:11:06,679 Speaker 1: guarantees in order to get you know, interesting art consigned 211 00:11:06,720 --> 00:11:10,880 Speaker 1: to them from perspective sellers, and if the third party 212 00:11:10,920 --> 00:11:15,920 Speaker 1: guaranteurs are sort of incentivized to provide a floor of 213 00:11:16,360 --> 00:11:20,160 Speaker 1: some store, is is that dynamic? Is that one of 214 00:11:20,200 --> 00:11:23,800 Speaker 1: the reasons why art prices seem to be getting higher 215 00:11:23,800 --> 00:11:26,000 Speaker 1: and higher, at least for certain pieces. Does it add 216 00:11:26,080 --> 00:11:28,960 Speaker 1: upwards pressure on the price of art? So this is 217 00:11:28,960 --> 00:11:31,240 Speaker 1: such an interesting question, and it really gets to the 218 00:11:31,640 --> 00:11:34,000 Speaker 1: heart of the art market in general and why it's 219 00:11:34,040 --> 00:11:37,560 Speaker 1: just so shadowy and weird. So far, there has not 220 00:11:37,720 --> 00:11:40,920 Speaker 1: been of a huge correlation between the use of third 221 00:11:40,920 --> 00:11:45,079 Speaker 1: party guarantees and the upward prices of art in general. 222 00:11:45,480 --> 00:11:48,679 Speaker 1: That seems to just being dueled by general you know, 223 00:11:49,280 --> 00:11:52,439 Speaker 1: wealth in the world today that's driving those prices forward. 224 00:11:52,720 --> 00:11:54,640 Speaker 1: But this a lot of these studies that have been 225 00:11:54,679 --> 00:11:58,640 Speaker 1: done about the correlation between third party guarantees and the 226 00:11:58,679 --> 00:12:01,840 Speaker 1: price of a work of art came out several years ago, 227 00:12:02,040 --> 00:12:05,160 Speaker 1: and this has changed just within that time. To backchecked 228 00:12:05,200 --> 00:12:07,440 Speaker 1: just a little bit, the use of these irrevocable bit 229 00:12:07,600 --> 00:12:12,080 Speaker 1: bids became increasingly popular after the two eight financial crisis 230 00:12:12,120 --> 00:12:14,760 Speaker 1: when the major auction houses had to pay out some 231 00:12:14,840 --> 00:12:17,840 Speaker 1: big sums to consigners for works that they had guaranteed 232 00:12:17,840 --> 00:12:20,840 Speaker 1: in house when those failed to sell. And I think 233 00:12:20,840 --> 00:12:23,840 Speaker 1: between Christy's and Sotheby's two million was paid out for 234 00:12:23,880 --> 00:12:26,640 Speaker 1: these consigners that guaranteed work with them and they couldn't 235 00:12:26,840 --> 00:12:29,640 Speaker 1: sell it. So that's when they we really started to 236 00:12:29,679 --> 00:12:33,240 Speaker 1: see people bringing in the third party guaranteers, and again 237 00:12:33,280 --> 00:12:37,240 Speaker 1: those were significant usually significant collectors like the Mods and 238 00:12:37,360 --> 00:12:39,959 Speaker 1: mcgrat families like those people were the ones fronting the 239 00:12:40,000 --> 00:12:43,360 Speaker 1: money for these things. Also, big name um dealers like 240 00:12:43,400 --> 00:12:47,240 Speaker 1: a Gosion Pace Jasmin, they'd come in and also front 241 00:12:47,280 --> 00:12:49,160 Speaker 1: the money for it because they'd be looking to, you know, 242 00:12:49,480 --> 00:12:53,800 Speaker 1: kind of back their own artists markets. So this third 243 00:12:53,880 --> 00:12:57,280 Speaker 1: party model actually started to increase the liquidity of the 244 00:12:57,360 --> 00:13:00,120 Speaker 1: art market, which is the notorious problem because it's at 245 00:13:00,160 --> 00:13:03,000 Speaker 1: attempting people to buy and sell work when they didn't 246 00:13:03,040 --> 00:13:05,839 Speaker 1: necessarily need to by offering the promise of some kind 247 00:13:05,840 --> 00:13:08,440 Speaker 1: of return on it, and it started to morph into 248 00:13:08,440 --> 00:13:11,559 Speaker 1: the speculative tool then and now there are just a 249 00:13:11,559 --> 00:13:13,400 Speaker 1: lot more people that are wanting to get into this. 250 00:13:13,480 --> 00:13:15,920 Speaker 1: And then I think according to a recent report that 251 00:13:15,960 --> 00:13:19,280 Speaker 1: was published in the Wall Street Journal, before the recession, 252 00:13:20,040 --> 00:13:22,880 Speaker 1: there was a handful of people doing third party guarantees 253 00:13:23,000 --> 00:13:27,720 Speaker 1: and they you know, the overage and half the buyer's 254 00:13:27,720 --> 00:13:31,319 Speaker 1: premier in exchange for staking these works. And today guaranteers 255 00:13:31,320 --> 00:13:34,000 Speaker 1: say that they're expanding ranks, have already started whittling the 256 00:13:34,040 --> 00:13:36,960 Speaker 1: returns on this, and they're only getting about fifteen of 257 00:13:37,000 --> 00:13:40,520 Speaker 1: that overage. So it's kind of an interesting dynamic where 258 00:13:40,559 --> 00:13:43,120 Speaker 1: there's not a lot of like concrete numbers to back 259 00:13:43,200 --> 00:14:00,120 Speaker 1: up why this is financially feasible for some people. So 260 00:14:00,160 --> 00:14:03,000 Speaker 1: it's interesting thinking about these kind of returns. And you 261 00:14:03,040 --> 00:14:06,559 Speaker 1: mentioned that a lot of the third party guaranteurs were 262 00:14:06,600 --> 00:14:10,559 Speaker 1: these famous collectors of art, and they had lots of them. 263 00:14:10,760 --> 00:14:13,680 Speaker 1: But essentially you could, I mean, is it getting to 264 00:14:13,720 --> 00:14:17,440 Speaker 1: the point where people are who have zero interest in 265 00:14:17,640 --> 00:14:21,120 Speaker 1: art or the art world are backing funds they just 266 00:14:21,160 --> 00:14:23,320 Speaker 1: do nothing. But you know, you have one guy's like 267 00:14:23,360 --> 00:14:26,440 Speaker 1: I'm really good at price and guarantees back me. Give me, 268 00:14:26,520 --> 00:14:28,720 Speaker 1: you know, I'll raise a hundred million and we'll do 269 00:14:28,760 --> 00:14:30,760 Speaker 1: all these and you don't have to care about art 270 00:14:30,800 --> 00:14:33,200 Speaker 1: at all, but makes some money for you. Yeah, there 271 00:14:33,240 --> 00:14:35,520 Speaker 1: has been a huge woman like a boutique industry of 272 00:14:35,560 --> 00:14:40,480 Speaker 1: businesses that are actually tailored to backing guarantees essentially. I 273 00:14:40,520 --> 00:14:42,160 Speaker 1: mean they do other work as well. And this is 274 00:14:42,280 --> 00:14:44,800 Speaker 1: it's kind of a big function of what is called 275 00:14:45,520 --> 00:14:48,640 Speaker 1: art secured lending at this point, where people are leveraging 276 00:14:48,960 --> 00:14:51,040 Speaker 1: specific works of art arty and their collection or the 277 00:14:51,160 --> 00:14:54,840 Speaker 1: entirety of their collections get money upfront to guarantee other works. 278 00:14:55,200 --> 00:14:57,800 Speaker 1: So it's this kind of like circular loop here and 279 00:14:57,840 --> 00:15:02,240 Speaker 1: then but beyond that, we've seen a lot of guarantees 280 00:15:02,280 --> 00:15:06,160 Speaker 1: at Southeby's and Christie's mainly, but also Phillips and I 281 00:15:06,200 --> 00:15:11,160 Speaker 1: think last year around one point three billion combined was 282 00:15:11,480 --> 00:15:14,400 Speaker 1: guaranteed in sales across those auction houses all year long. 283 00:15:14,560 --> 00:15:17,360 Speaker 1: That's according to a report by arch Tactic, which is 284 00:15:17,400 --> 00:15:20,640 Speaker 1: an auction tracking firm, and all of these are counted 285 00:15:20,680 --> 00:15:23,680 Speaker 1: about fifty of the value of the houses, evening sales 286 00:15:24,080 --> 00:15:26,200 Speaker 1: of like postwar contemporary which is like the big money 287 00:15:26,200 --> 00:15:28,840 Speaker 1: maker sales that you see all the headlines about. That's 288 00:15:28,920 --> 00:15:32,000 Speaker 1: up thirty from recently, I think two thousand and sixteen. 289 00:15:32,880 --> 00:15:36,400 Speaker 1: And what's really interesting about that is that a lot 290 00:15:36,480 --> 00:15:40,000 Speaker 1: of these art financing companies are offering loans to investors 291 00:15:40,040 --> 00:15:42,480 Speaker 1: that they expect will guarantee works. There's one called Athena 292 00:15:42,520 --> 00:15:45,360 Speaker 1: that publishes lists of auction offerings that will look like 293 00:15:45,440 --> 00:15:49,160 Speaker 1: safe bets going into the major auction rounds. Other companies 294 00:15:49,240 --> 00:15:52,560 Speaker 1: also offer these art back loans to guaranteers that are, 295 00:15:52,680 --> 00:15:54,760 Speaker 1: you know, just so that they can buy out the 296 00:15:54,800 --> 00:15:57,240 Speaker 1: work that they stake that ended up not selling that 297 00:15:57,280 --> 00:15:59,520 Speaker 1: they thought would. And then, like I said last night, 298 00:15:59,520 --> 00:16:01,480 Speaker 1: guarantee are kind of feeling as well because there's a 299 00:16:01,520 --> 00:16:04,120 Speaker 1: sense that, like you, the markets shifting at any given time. 300 00:16:04,680 --> 00:16:07,080 Speaker 1: There's a new firm called pi X I think started 301 00:16:07,120 --> 00:16:09,280 Speaker 1: within the last couple of years. They are trying to 302 00:16:09,320 --> 00:16:12,440 Speaker 1: turn the guarantee into a sort of like derivative, with 303 00:16:12,560 --> 00:16:15,280 Speaker 1: shares of risk being parceled out to like a dozen 304 00:16:15,280 --> 00:16:18,000 Speaker 1: investors in any given time who don't know one another 305 00:16:18,080 --> 00:16:19,880 Speaker 1: and don't share the same taste in art, and maybe 306 00:16:19,920 --> 00:16:22,400 Speaker 1: don't even like art, and it's kind of aimed at 307 00:16:22,400 --> 00:16:26,240 Speaker 1: bringing an institutional investors, and they're offering these contract on 308 00:16:26,320 --> 00:16:29,880 Speaker 1: future sales and treating it like a futures contract and 309 00:16:29,920 --> 00:16:33,960 Speaker 1: therefore it's tradeable. So it's the first product like that too, 310 00:16:34,040 --> 00:16:37,120 Speaker 1: also to be authorized by the UK's Financial Conduct Authority. 311 00:16:37,240 --> 00:16:38,760 Speaker 1: We haven't have the same kind of ruling on it 312 00:16:38,760 --> 00:16:41,960 Speaker 1: in America. But actually, which is interesting because the US 313 00:16:42,040 --> 00:16:43,840 Speaker 1: market is the largest art market in the world and 314 00:16:43,840 --> 00:16:47,280 Speaker 1: it's also where most of these guarantees are happening. Wow. Okay, 315 00:16:47,400 --> 00:16:49,840 Speaker 1: so it sounds like there's quite a lot going on. 316 00:16:50,320 --> 00:16:51,960 Speaker 1: I suppose if you put all of this under the 317 00:16:52,040 --> 00:16:55,520 Speaker 1: umbrella term like the financialization of the art market, I'm 318 00:16:55,520 --> 00:16:59,960 Speaker 1: wondering is is that financialization is part of it reflect 319 00:17:00,000 --> 00:17:04,360 Speaker 1: active of the nature of the art market itself at 320 00:17:04,400 --> 00:17:06,320 Speaker 1: the moment. And what I mean by that is you 321 00:17:06,359 --> 00:17:08,840 Speaker 1: have a bunch of people who are sort of interested 322 00:17:08,880 --> 00:17:11,800 Speaker 1: in it, maybe because they have newfound wealth, um. But 323 00:17:12,160 --> 00:17:15,000 Speaker 1: at the same time, you have a lot of new artists, 324 00:17:15,400 --> 00:17:19,199 Speaker 1: modern artists, who are you know, contributing new pieces, and 325 00:17:19,320 --> 00:17:22,119 Speaker 1: it feels to me like for a lot of that 326 00:17:22,280 --> 00:17:26,560 Speaker 1: modern art it's much harder to attach a firm price 327 00:17:26,640 --> 00:17:28,440 Speaker 1: tag to it right, because you don't really know what's 328 00:17:28,440 --> 00:17:30,720 Speaker 1: going to happen with the artist. You don't really know 329 00:17:30,800 --> 00:17:33,160 Speaker 1: what the scarcity value of that art is going to be. 330 00:17:33,280 --> 00:17:35,680 Speaker 1: You know, if if Jeff Coon's wakes up and decides 331 00:17:35,720 --> 00:17:39,359 Speaker 1: to do another like five hundred bunny statues, does that 332 00:17:39,440 --> 00:17:43,560 Speaker 1: diminish the value of the one that Robert Manuchin just bought? 333 00:17:44,200 --> 00:17:46,720 Speaker 1: Is that part of the problem when it comes to financialization. 334 00:17:46,760 --> 00:17:50,200 Speaker 1: Are people trying to solve that issue through all these 335 00:17:50,240 --> 00:17:55,119 Speaker 1: different financings, Yes, although I'm hesitant to say solved because 336 00:17:55,119 --> 00:17:59,800 Speaker 1: there's a huge tension here between the finance industries approached 337 00:18:00,080 --> 00:18:02,159 Speaker 1: art and the art world's approach to art, which has 338 00:18:02,200 --> 00:18:05,200 Speaker 1: been really interesting to see this because the issue is 339 00:18:05,200 --> 00:18:09,240 Speaker 1: is that institutional investment has always kind of shied away 340 00:18:09,240 --> 00:18:11,119 Speaker 1: from the art market because it is just so i 341 00:18:11,200 --> 00:18:15,280 Speaker 1: liquid and so unregulated and shadowy. There's an adage that's 342 00:18:15,400 --> 00:18:18,439 Speaker 1: like the art world is the most unregulated market behind 343 00:18:19,160 --> 00:18:22,960 Speaker 1: guns and drugs, and I don't really know if that's true, 344 00:18:23,000 --> 00:18:26,199 Speaker 1: but it's certainly like take something rather nerdy and sexes 345 00:18:26,240 --> 00:18:30,000 Speaker 1: it up. But the opacity and the volatility of the 346 00:18:30,040 --> 00:18:35,320 Speaker 1: market for especially contemporary art, because supply is so unregulated. 347 00:18:35,359 --> 00:18:38,400 Speaker 1: These artists are still alive and working and creating art 348 00:18:38,520 --> 00:18:41,600 Speaker 1: for the most part, makes it a really bad investment prospect. 349 00:18:41,760 --> 00:18:43,399 Speaker 1: So there hasn't been a lot of things like that 350 00:18:43,920 --> 00:18:47,040 Speaker 1: going on until the last couple of years. That being said, 351 00:18:47,119 --> 00:18:49,399 Speaker 1: I do want to like offer because I feel like 352 00:18:49,440 --> 00:18:52,240 Speaker 1: there's a lot of media hype around what's happening with 353 00:18:52,280 --> 00:18:54,800 Speaker 1: the art market right now. It does command a lot 354 00:18:54,800 --> 00:18:57,000 Speaker 1: of attention, and it does futch these big numbers which 355 00:18:57,040 --> 00:18:58,760 Speaker 1: drawing people and be like, oh wow, this has never 356 00:18:58,760 --> 00:19:01,240 Speaker 1: been seen before. I will say, I think that there 357 00:19:01,280 --> 00:19:03,960 Speaker 1: has been a lot of speculation on the art market 358 00:19:04,280 --> 00:19:08,480 Speaker 1: in smaller, more delegitimized fashion for a really long time. 359 00:19:08,800 --> 00:19:10,680 Speaker 1: Something I always like to bring up actually is that 360 00:19:10,920 --> 00:19:13,080 Speaker 1: in the early twentieth century, there is actually this French 361 00:19:13,600 --> 00:19:16,960 Speaker 1: financier named Andre Lavelle who kind of started out what 362 00:19:17,000 --> 00:19:19,600 Speaker 1: we would turn the first art investment fund when he 363 00:19:19,680 --> 00:19:22,080 Speaker 1: pulled together money from I think like a dozen people 364 00:19:22,520 --> 00:19:28,520 Speaker 1: and created this scheme called the Delure excuse my terrible French, 365 00:19:28,520 --> 00:19:30,960 Speaker 1: which it means the skin of the bear um and 366 00:19:31,080 --> 00:19:33,080 Speaker 1: this pool of money was used to invest in around 367 00:19:33,080 --> 00:19:35,320 Speaker 1: a hundred works of art at the time by up 368 00:19:35,359 --> 00:19:38,920 Speaker 1: and coming artists that were performing well, selling well. That 369 00:19:39,040 --> 00:19:43,560 Speaker 1: included then oh I remember this, Yeah, I concluded people 370 00:19:43,560 --> 00:19:45,239 Speaker 1: like Bablo Becaza at the time, like he was an 371 00:19:45,240 --> 00:19:48,680 Speaker 1: emerging artist doing well. And um, the collection was liquidated 372 00:19:48,680 --> 00:19:52,120 Speaker 1: in nineteen fourteen and everyone, you know, profits were shared 373 00:19:52,160 --> 00:19:54,120 Speaker 1: out to everyone that invested, and by then the works 374 00:19:54,119 --> 00:19:56,120 Speaker 1: had about like quadrupled in price. It was a tidy 375 00:19:56,160 --> 00:19:58,760 Speaker 1: little something that they got. When was this this century? 376 00:19:58,800 --> 00:20:01,439 Speaker 1: It was in the early twentieth century. Yeah, so this 377 00:20:01,520 --> 00:20:04,600 Speaker 1: isn't exactly like a new idea per se. And like 378 00:20:04,680 --> 00:20:07,600 Speaker 1: by the fifties and sixties then New York Times is 379 00:20:07,600 --> 00:20:10,440 Speaker 1: already publishing articles about using art as an investment tool, 380 00:20:10,720 --> 00:20:13,600 Speaker 1: but it was just happening on such a smaller level. Now, 381 00:20:13,840 --> 00:20:16,560 Speaker 1: like you said, Jacy, like the art market is just grown, 382 00:20:16,720 --> 00:20:18,760 Speaker 1: it's just bigger now. That's like you said, there's just 383 00:20:18,760 --> 00:20:20,919 Speaker 1: more people with money and they want somewhere to spend it. 384 00:20:21,480 --> 00:20:25,200 Speaker 1: And then according to the annual Ubs and Art Art 385 00:20:25,240 --> 00:20:28,560 Speaker 1: BOSL Art Market Report, which is published every year, last 386 00:20:28,640 --> 00:20:33,800 Speaker 1: year's dales amounted to sixties seven billion worldwide. Most of 387 00:20:33,840 --> 00:20:35,879 Speaker 1: that was in the US, but that is also trailed 388 00:20:35,880 --> 00:20:38,159 Speaker 1: by UK and China. But yeah, I want to go 389 00:20:38,200 --> 00:20:41,280 Speaker 1: back to something you said very early on that I 390 00:20:41,600 --> 00:20:43,880 Speaker 1: meant to follow up on that, which, as you said, 391 00:20:45,240 --> 00:20:48,959 Speaker 1: when the auction house had its own in house guarantee 392 00:20:49,440 --> 00:20:52,679 Speaker 1: and had to take inventory, and that was called the 393 00:20:52,800 --> 00:20:55,600 Speaker 1: art being burnt in Is that what you said? But 394 00:20:55,640 --> 00:20:57,400 Speaker 1: if it's botten, it was burnt, and so then there 395 00:20:57,440 --> 00:21:00,280 Speaker 1: was a stigma to attach to that art forever. Is 396 00:21:00,320 --> 00:21:05,040 Speaker 1: there a stigma the same way attached to pieces of 397 00:21:05,160 --> 00:21:07,760 Speaker 1: art that had to be acquired by a third party guaranteur? 398 00:21:08,600 --> 00:21:13,159 Speaker 1: So not really, that's yeah, Okay, this gets into the 399 00:21:13,760 --> 00:21:16,000 Speaker 1: thing I mentioned earlier where there is kind of a 400 00:21:16,080 --> 00:21:18,960 Speaker 1: moral issue at state between the art world and the 401 00:21:19,000 --> 00:21:22,560 Speaker 1: way the art world conceives of itself attributing value to 402 00:21:22,600 --> 00:21:26,040 Speaker 1: a work of art, and the financial world way of 403 00:21:26,080 --> 00:21:29,800 Speaker 1: attributing value to a work which is purely monetary. The 404 00:21:29,920 --> 00:21:34,000 Speaker 1: issue with the art world's approach to this and and 405 00:21:34,000 --> 00:21:36,199 Speaker 1: and the use of third party guarantees and something like 406 00:21:36,240 --> 00:21:40,080 Speaker 1: that is because it does increase the frothiness of the 407 00:21:40,160 --> 00:21:44,280 Speaker 1: market and gets people participating in it that wouldn't otherwise. 408 00:21:44,800 --> 00:21:48,280 Speaker 1: They're worried that the actual like um intangible good of 409 00:21:48,480 --> 00:21:53,679 Speaker 1: cultural value will be lost in art. That is obviously 410 00:21:53,800 --> 00:21:56,760 Speaker 1: a really great like pr campaign. This is also just 411 00:21:56,800 --> 00:22:00,200 Speaker 1: an issue of like controlling the marketplace to um when 412 00:22:00,200 --> 00:22:02,000 Speaker 1: it comes down to the fare punk they want people 413 00:22:02,240 --> 00:22:05,440 Speaker 1: that have this insider knowledge working and like establishing the price. 414 00:22:05,480 --> 00:22:09,080 Speaker 1: They don't want people coming in and essentially backing an artist, 415 00:22:09,200 --> 00:22:11,720 Speaker 1: like you know, completely inflating its market and making it 416 00:22:11,800 --> 00:22:16,040 Speaker 1: unsustainable for the next twenty years. So, just going back 417 00:22:16,040 --> 00:22:18,560 Speaker 1: to that fund that you mentioned in the early nineteen hundreds, 418 00:22:18,800 --> 00:22:22,080 Speaker 1: I remember a sort of similar instance of a certain 419 00:22:22,200 --> 00:22:26,520 Speaker 1: art dealer who started collecting a bunch of avant garde 420 00:22:26,600 --> 00:22:30,080 Speaker 1: artists at the time, like you know, Picasso and Van Gogh, 421 00:22:30,680 --> 00:22:33,520 Speaker 1: and he ended up like investing a lot of money 422 00:22:33,600 --> 00:22:37,240 Speaker 1: in those artists sort of supporting them, and by doing 423 00:22:37,280 --> 00:22:41,639 Speaker 1: that he managed to you know, almost start the market 424 00:22:41,960 --> 00:22:44,600 Speaker 1: for that art. So I guess my question is when 425 00:22:44,600 --> 00:22:48,320 Speaker 1: it comes to the third party guaranteurs, how much power 426 00:22:48,440 --> 00:22:50,800 Speaker 1: are they actually wielding in the art market when it 427 00:22:50,840 --> 00:22:53,600 Speaker 1: comes to deciding, you know, this artist is going to 428 00:22:53,680 --> 00:22:57,240 Speaker 1: be cool or valuable, Uh, you know this one, maybe 429 00:22:57,320 --> 00:23:01,720 Speaker 1: not so much. Are they the arbiters of future art prices? 430 00:23:03,040 --> 00:23:05,000 Speaker 1: That's kind of the question that's at stake right now, 431 00:23:05,040 --> 00:23:08,720 Speaker 1: and why the art world is really confused about how 432 00:23:08,920 --> 00:23:12,840 Speaker 1: third party guarantees will shake out long term. There's just 433 00:23:12,960 --> 00:23:16,280 Speaker 1: not a lot of data to indicate that they're doing 434 00:23:16,359 --> 00:23:20,439 Speaker 1: much more than essentially falsely propping up the market for 435 00:23:20,480 --> 00:23:22,879 Speaker 1: some artists work and maybe the market in general. The 436 00:23:22,920 --> 00:23:26,200 Speaker 1: biggest concern about it is that they're just falsely establishing 437 00:23:26,200 --> 00:23:29,200 Speaker 1: prices based on whatever they're willing to pay behind closed doors. 438 00:23:29,760 --> 00:23:32,119 Speaker 1: I don't know if that's like actually that new of 439 00:23:32,119 --> 00:23:35,320 Speaker 1: an issue, because most auction houses are making a lot 440 00:23:35,359 --> 00:23:38,639 Speaker 1: of revenue through private sales anyway, So it might just 441 00:23:38,720 --> 00:23:40,960 Speaker 1: be making visible something that's been going on for a 442 00:23:41,000 --> 00:23:43,600 Speaker 1: really long time, and that might just make the art 443 00:23:43,600 --> 00:23:46,480 Speaker 1: world uncomfortable because it's been so opaque for so long. 444 00:23:47,040 --> 00:23:49,600 Speaker 1: And again, like I said, it is increasing the liquidity 445 00:23:49,600 --> 00:23:51,639 Speaker 1: of art, which has always been a real issue in 446 00:23:51,680 --> 00:23:55,520 Speaker 1: it as an asset class. So the question you pose 447 00:23:55,760 --> 00:23:58,920 Speaker 1: is the question that we're still trying to figure out. 448 00:23:59,000 --> 00:24:00,320 Speaker 1: And I just think that there needs to be a 449 00:24:00,359 --> 00:24:04,159 Speaker 1: lot more analysis these auctions that separate out guaranteed works 450 00:24:04,160 --> 00:24:07,199 Speaker 1: and the results for those versus non guaranteed works, and 451 00:24:07,320 --> 00:24:09,320 Speaker 1: so far there hasn't been a lot of that that's 452 00:24:09,359 --> 00:24:14,000 Speaker 1: come forward. Margaret Kerrigan, this is a fascinating conversation. I 453 00:24:14,040 --> 00:24:16,960 Speaker 1: love how in depth had got really appreciate you coming 454 00:24:17,000 --> 00:24:20,280 Speaker 1: on and to your last point. It'll be interesting to 455 00:24:20,320 --> 00:24:23,800 Speaker 1: see what that analysis wanted eventually happens actually before to 456 00:24:23,800 --> 00:24:26,159 Speaker 1: seeing what comes with it. Sounds good. Thank you for 457 00:24:26,240 --> 00:24:28,399 Speaker 1: joining us, Thank you for having me. Thanks Margaret. That 458 00:24:28,440 --> 00:24:51,080 Speaker 1: was great, Tracy. I really enjoyed that conversation the whole 459 00:24:51,160 --> 00:24:54,639 Speaker 1: time I was thinking about it. And that last point 460 00:24:55,119 --> 00:24:59,520 Speaker 1: that Margaret made about the introduction of liquidity to the market. 461 00:25:00,119 --> 00:25:02,480 Speaker 1: It seems like we're seeing this all over the place, 462 00:25:02,600 --> 00:25:05,880 Speaker 1: which is people trying to conceive of ways to bring 463 00:25:05,960 --> 00:25:11,080 Speaker 1: liquidity to traditionally illiquid assets. So you see it obviously 464 00:25:11,119 --> 00:25:14,080 Speaker 1: with art, people try to do it with wine. You 465 00:25:14,160 --> 00:25:17,879 Speaker 1: see I get ads on Instagram for invest in classic cars. 466 00:25:18,400 --> 00:25:20,640 Speaker 1: And another thing that we're seeing a lot, and it's 467 00:25:20,640 --> 00:25:23,640 Speaker 1: actually much bigger deal is um houses and the rise 468 00:25:23,680 --> 00:25:26,919 Speaker 1: of eye buying and you upload some photos and specs 469 00:25:26,920 --> 00:25:29,240 Speaker 1: of your house to website and it spits out an offer. 470 00:25:29,720 --> 00:25:32,479 Speaker 1: It feels like we're sort of in this era of 471 00:25:32,520 --> 00:25:35,960 Speaker 1: everyone trying to figure out how they can make uh, 472 00:25:36,240 --> 00:25:41,800 Speaker 1: sort of traditional ill liquid assets trade more like liquid assets. Yeah. 473 00:25:41,880 --> 00:25:43,439 Speaker 1: And I mean, on the one hand, a lot of 474 00:25:43,480 --> 00:25:46,320 Speaker 1: that would make sense, right because as you sort of 475 00:25:46,359 --> 00:25:50,320 Speaker 1: get technological platforms that are able and capable of doing that, 476 00:25:50,440 --> 00:25:52,880 Speaker 1: then you could see why a lot of people would 477 00:25:52,920 --> 00:25:54,639 Speaker 1: try to do it. But I gotta say, I know 478 00:25:54,720 --> 00:25:58,399 Speaker 1: you mentioned traditional assets then, but the conversation reminded me 479 00:25:58,440 --> 00:26:02,719 Speaker 1: of something else, which is cryptocurrencies, right, and the notion 480 00:26:02,800 --> 00:26:06,600 Speaker 1: that you have all these different cryptocurrencies and a giant 481 00:26:06,640 --> 00:26:11,119 Speaker 1: market trying to attach a value to them based pretty 482 00:26:11,200 --> 00:26:16,240 Speaker 1: much on adoption and maybe a little bit of underlying technology. 483 00:26:16,320 --> 00:26:19,399 Speaker 1: Maybe it just it reminds me of the art market, right, Like, 484 00:26:19,400 --> 00:26:21,760 Speaker 1: how do you go to an art market and say 485 00:26:22,040 --> 00:26:26,280 Speaker 1: this painting is inherently better or more valuable than this 486 00:26:26,359 --> 00:26:29,880 Speaker 1: other painting. Yeah. I think about this a lot too, 487 00:26:30,040 --> 00:26:33,120 Speaker 1: even with like sometimes when I'm walking through Central Park 488 00:26:33,160 --> 00:26:36,879 Speaker 1: and I look at those gigantic, really skinny skyscrapers, or 489 00:26:37,000 --> 00:26:40,280 Speaker 1: people pay insane amount of money for a condo that 490 00:26:40,359 --> 00:26:43,280 Speaker 1: they might not even live in, and it does feel 491 00:26:43,359 --> 00:26:46,880 Speaker 1: like we are in an age in which a lot 492 00:26:46,920 --> 00:26:50,480 Speaker 1: of money is paid out to things and the main 493 00:26:50,600 --> 00:26:52,679 Speaker 1: value that those things have is that they're worth a 494 00:26:52,680 --> 00:26:55,040 Speaker 1: lot of money, Like there's a recursiveness to it, so 495 00:26:55,560 --> 00:27:00,120 Speaker 1: the price itself sort of abused value in it. I 496 00:27:00,119 --> 00:27:02,719 Speaker 1: I always make this joke when I see really expensive 497 00:27:03,760 --> 00:27:06,960 Speaker 1: art sales, like the one million dollar Coon's Bunny, where 498 00:27:06,960 --> 00:27:10,119 Speaker 1: it's like a million dollars, it's a steal of a price, 499 00:27:10,200 --> 00:27:13,280 Speaker 1: but att million dollars it would have been, Uh, it 500 00:27:13,280 --> 00:27:15,400 Speaker 1: would have been a rip off where it's like suddenly 501 00:27:15,440 --> 00:27:19,000 Speaker 1: the fact that something gets more expensive suddenly make makes 502 00:27:19,040 --> 00:27:22,000 Speaker 1: it a better value. See. I'm wondering how many expensive 503 00:27:22,080 --> 00:27:24,679 Speaker 1: art auctions you're going to uh that you need to 504 00:27:24,720 --> 00:27:28,680 Speaker 1: have set piece jokes for each one of them. After 505 00:27:28,720 --> 00:27:31,480 Speaker 1: we have these conversations, I do feel like an indescribable 506 00:27:31,560 --> 00:27:34,359 Speaker 1: urge to log onto the Christie's website and start looking 507 00:27:34,359 --> 00:27:38,720 Speaker 1: at art, which I'm sure would be a terrible, terrible idea. Yeah, 508 00:27:38,840 --> 00:27:40,639 Speaker 1: I think that would be a bad idea. But you know, 509 00:27:41,080 --> 00:27:43,200 Speaker 1: maybe like we can find some up and coming artists, 510 00:27:43,200 --> 00:27:45,280 Speaker 1: maybe we can find the next Picasso and sort of 511 00:27:45,320 --> 00:27:48,160 Speaker 1: make them a thing. Yes, please donate to the Odd 512 00:27:48,200 --> 00:27:51,840 Speaker 1: Thoughts Art Fund so we can start providing minimum guarantees 513 00:27:51,840 --> 00:27:57,040 Speaker 1: for artwork worth what maybe two other things that I 514 00:27:57,160 --> 00:27:59,720 Speaker 1: thought of real quickly is like one is in the end, 515 00:27:59,760 --> 00:28:05,400 Speaker 1: like there are outside returns in art guarantees. It's only 516 00:28:05,440 --> 00:28:09,240 Speaker 1: a matter of time before institutions drive those returns to 517 00:28:09,400 --> 00:28:11,959 Speaker 1: where they aren't any better than anything else. So you 518 00:28:12,119 --> 00:28:13,800 Speaker 1: sort of think, like if you just have like a 519 00:28:13,800 --> 00:28:17,840 Speaker 1: few families offering guaranteed returns, by the time it gets 520 00:28:17,840 --> 00:28:20,360 Speaker 1: to the point where anyone with some money can go 521 00:28:20,400 --> 00:28:23,119 Speaker 1: into an art guarantee fund like you could, you have 522 00:28:23,200 --> 00:28:28,000 Speaker 1: to imagine that the juicy returns can't last too long, right, 523 00:28:28,160 --> 00:28:31,320 Speaker 1: Like the liquidity currently being hoarded in the art market 524 00:28:31,359 --> 00:28:33,959 Speaker 1: eventually is going to lead to all the sort of 525 00:28:34,240 --> 00:28:39,560 Speaker 1: price arbitrage possibilities being arbitraged out, I guess. And in 526 00:28:39,600 --> 00:28:43,040 Speaker 1: the end, any attempt to sort of via financial alchemy 527 00:28:43,120 --> 00:28:47,240 Speaker 1: turn a sort of naturally a liquid, non commodified market 528 00:28:47,600 --> 00:28:51,480 Speaker 1: like art into a liquid tradeable asset, like it's probably 529 00:28:51,520 --> 00:28:54,080 Speaker 1: gonna end to some people taking huge losses when there 530 00:28:54,440 --> 00:28:56,560 Speaker 1: have a budget inventory on their books and it goes 531 00:28:56,600 --> 00:28:59,160 Speaker 1: out of style or there's a financial crisis or something 532 00:28:59,200 --> 00:29:01,880 Speaker 1: like that. Like in the end, someone's going to lose 533 00:29:01,920 --> 00:29:04,440 Speaker 1: big time on this stuff. Well, I guess we'll find 534 00:29:04,440 --> 00:29:07,720 Speaker 1: out won't we. I guess we will, all right. This 535 00:29:07,800 --> 00:29:10,880 Speaker 1: has been another edition of the Odd Thoughts Podcast. I'm 536 00:29:10,920 --> 00:29:14,240 Speaker 1: Tracy Alloway. You can follow me on Twitter at Tracy Alloway, 537 00:29:14,760 --> 00:29:17,680 Speaker 1: and I'm Joe Wisenthal. You can follow me on Twitter 538 00:29:17,920 --> 00:29:21,120 Speaker 1: at the Stalwart. And you should follow our guest on Twitter, 539 00:29:21,160 --> 00:29:25,080 Speaker 1: Margaret Carrigan. She's at Real Life Maggie, and be sure 540 00:29:25,120 --> 00:29:29,240 Speaker 1: to follow our producer Laura Carlson. She's at Laura M. Carlson, 541 00:29:29,560 --> 00:29:32,760 Speaker 1: as well as the Bloomberg head of podcast, Francesca Levie 542 00:29:33,240 --> 00:29:35,680 Speaker 1: at Francesca Today. Thanks for listening.