TO HIM THAT HATH
by Bill Bonner
Behold, there it is - Waterloo Bridge.
Right outside our office window here at the MoneyWeek headquarters.
It is almost the same bridge depicted in a painting by Claude Monet that
became famous last week - a new one was put up after Monet left for
Giverny. While we get to see the real thing for nothing, the version
preserved on canvas sold at auction for an extraordinary amount, reported
as 17.9 million pounds by one source and 18.5 million by another - about
twice what experts had expected.
The sale of Monet's painting last week triggered a rush of reflections and
questions in us - on aesthetics, on real value, and on history's first
worldwide credit bubble.
Meanwhile, The Daily Telegraph rushed to succor the poor - not with bread,
but with art. It offered readers a glossy reproduction of said painting
for free. This gave rise to a question. We didn't know whether it was an
existential question...or a financial one...or a grammatical one, but it
haunted our sleep: What is the difference between a genuine work of art
and an ersatz copy? So deep and troubling were the resulting cogitations
that we spent all of last week in prayer, meditation and inebriation,
trying to make sense of it all.
We tossed; we turned. We stewed; we simmered. Finally, we saw a beggar on
Blackfriar's Bridge, and pointing up-river, we asked:
"What's the difference between a picture of that bridge up there given out
for free from the Telegraph...and painting of it that just sold for $35
million?"
"Ah...35 million dollars?" came the reply.
We rewarded the man with half a shilling and continued on our way. It was
true. Mr. Market has spoken. Who are we to question his judgment?
The big buyers in the art market come from the financial industry, we are
told. But what do they know about spending money? The typical hedge fund
manager knows all about making money; he is an expert at separating others
from it. But when he has made it, he is completely unprepared for getting
rid of it by himself. Instead, it weighs him down...like a heavy mink coat
on a rap star; it makes him look sweaty and ridiculous. What's a rich man
to do...but buy a Warhol or build a monstrosity in Greenwich?
When you make $1 billion per year, you can buy the most expensive house in
the world - every year - and still have $900 million in change. So, you
have to buy bigger and ever gaudier accouterments; until finally, your
yacht becomes so big it gets stuck in the East River and your friends
laugh at you. That's the problem with parting with big bucks to get
status; you're always in danger that it will backfire.
The hidden appeal of art, on the other hand, is that you can spend as much
money as you want without obviously looking like an upstart. Instead of
wearing a diamond-encrusted watch that chimes "nouveau riche," on the
hour, you buy a $100 million diamond-encrusted plaster skull, created by
Damien Hirst. It's not a silly prestige item, you tell yourself; it's art!
Buy one of these absurd concoctions...then buy another...and another. And
now you are an art collector! When you die, you can leave the whole foul
lot of it to a museum.
What is this art really worth? We calculated earlier this week that if you
wanted to look at Monet's painting of Waterloo Bridge you could get a
print for nothing. Or, you could pay $35 million for the real thing. From
a distance, you can barely tell the difference. You have to get up close.
The closer you get, the more you can appreciate the artist's genius. As
you approach the painting you see the texture...brush strokes...and subtle
colors. And there, at maybe a range of two feet, you can appreciate the
master's skill at rendering the view from our office window into a work of
genuine art. Maybe that's worth $35 million. Maybe it isn't.
This little analysis might have rested comfortably in our stomachs, had it
not been for an earlier art auction, in which a print by Andy Warhol was
deemed worth $71.5 million. And here we are getting a little queasy. For
Warhol never lifted a paintbrush at all. You can get as close as you want.
Stick your nose into the canvas. You won't find any greater detail. You
could print up a million copies. Each one could be as faithful to the
original, and as readily passed off for the real thing, as a dollar in
your wallet to the next crisp new bill to leave the U.S. Bureau of
Printing and Engraving.
"Green Car Burning" is not a painting at all - but a print; the "original"
is a reproduction of a newspaper photo. The only thing that might be
considered the faintest bit authentic or original about it is that Warhol
put a green cast over the image and broke up the picture a bit. So, if
authenticity, originality, or painterly talent were the only source of the
high prices, we cannot explain the Warhol phenomenon. The visual
difference between a print and a print of a print is almost undetectable.
Both give exactly the same satisfaction at any range. If the print of the
print has zero value, the print itself should have approximately the same.
Why then would anyone in his right mind pay so much for it?
"Because it will go up in value," you say? We can practically read your
lips.
"It's a good investment."
The previous record for a Warhol was set last November, when a portrait of
Mao, reproduced from a picture in Newsweek Magazine, sold for $17.4
million. In just six months, Warhol oeuvres increased in value by 100%.
But the increase in prices merely increases our puzzlement. The price of a
copy, established by the Telegraph at zero, is still zero. But the price
of an "original" Warhol has soared to $35 million. The elusive,
non-visual, almost undetectable difference between a copy and the real
thing is actually doubling every half a year. How to explain it?
It was here that we began our heaving fits. What are these strange objects
of contemporary art, we wondered? They have no real value. Are they
anything more than a way for very rich people to part with their money on
amicable terms? Are they not the perfect way to do it?
The answer came to us - yes. Like the dotcoms of the tech bubble era,
contemporary works of art are held down by so little down-to-earth real
value that their prices can go up straight to the moon.
Behold, there it is - Waterloo Bridge.
Right outside our office window here at the MoneyWeek headquarters.
It is almost the same bridge depicted in a painting by Claude Monet that
became famous last week - a new one was put up after Monet left for
Giverny. While we get to see the real thing for nothing, the version
preserved on canvas sold at auction for an extraordinary amount, reported
as 17.9 million pounds by one source and 18.5 million by another - about
twice what experts had expected.
The sale of Monet's painting last week triggered a rush of reflections and
questions in us - on aesthetics, on real value, and on history's first
worldwide credit bubble.
Meanwhile, The Daily Telegraph rushed to succor the poor - not with bread,
but with art. It offered readers a glossy reproduction of said painting
for free. This gave rise to a question. We didn't know whether it was an
existential question...or a financial one...or a grammatical one, but it
haunted our sleep: What is the difference between a genuine work of art
and an ersatz copy? So deep and troubling were the resulting cogitations
that we spent all of last week in prayer, meditation and inebriation,
trying to make sense of it all.
We tossed; we turned. We stewed; we simmered. Finally, we saw a beggar on
Blackfriar's Bridge, and pointing up-river, we asked:
"What's the difference between a picture of that bridge up there given out
for free from the Telegraph...and painting of it that just sold for $35
million?"
"Ah...35 million dollars?" came the reply.
We rewarded the man with half a shilling and continued on our way. It was
true. Mr. Market has spoken. Who are we to question his judgment?
The big buyers in the art market come from the financial industry, we are
told. But what do they know about spending money? The typical hedge fund
manager knows all about making money; he is an expert at separating others
from it. But when he has made it, he is completely unprepared for getting
rid of it by himself. Instead, it weighs him down...like a heavy mink coat
on a rap star; it makes him look sweaty and ridiculous. What's a rich man
to do...but buy a Warhol or build a monstrosity in Greenwich?
When you make $1 billion per year, you can buy the most expensive house in
the world - every year - and still have $900 million in change. So, you
have to buy bigger and ever gaudier accouterments; until finally, your
yacht becomes so big it gets stuck in the East River and your friends
laugh at you. That's the problem with parting with big bucks to get
status; you're always in danger that it will backfire.
The hidden appeal of art, on the other hand, is that you can spend as much
money as you want without obviously looking like an upstart. Instead of
wearing a diamond-encrusted watch that chimes "nouveau riche," on the
hour, you buy a $100 million diamond-encrusted plaster skull, created by
Damien Hirst. It's not a silly prestige item, you tell yourself; it's art!
Buy one of these absurd concoctions...then buy another...and another. And
now you are an art collector! When you die, you can leave the whole foul
lot of it to a museum.
What is this art really worth? We calculated earlier this week that if you
wanted to look at Monet's painting of Waterloo Bridge you could get a
print for nothing. Or, you could pay $35 million for the real thing. From
a distance, you can barely tell the difference. You have to get up close.
The closer you get, the more you can appreciate the artist's genius. As
you approach the painting you see the texture...brush strokes...and subtle
colors. And there, at maybe a range of two feet, you can appreciate the
master's skill at rendering the view from our office window into a work of
genuine art. Maybe that's worth $35 million. Maybe it isn't.
This little analysis might have rested comfortably in our stomachs, had it
not been for an earlier art auction, in which a print by Andy Warhol was
deemed worth $71.5 million. And here we are getting a little queasy. For
Warhol never lifted a paintbrush at all. You can get as close as you want.
Stick your nose into the canvas. You won't find any greater detail. You
could print up a million copies. Each one could be as faithful to the
original, and as readily passed off for the real thing, as a dollar in
your wallet to the next crisp new bill to leave the U.S. Bureau of
Printing and Engraving.
"Green Car Burning" is not a painting at all - but a print; the "original"
is a reproduction of a newspaper photo. The only thing that might be
considered the faintest bit authentic or original about it is that Warhol
put a green cast over the image and broke up the picture a bit. So, if
authenticity, originality, or painterly talent were the only source of the
high prices, we cannot explain the Warhol phenomenon. The visual
difference between a print and a print of a print is almost undetectable.
Both give exactly the same satisfaction at any range. If the print of the
print has zero value, the print itself should have approximately the same.
Why then would anyone in his right mind pay so much for it?
"Because it will go up in value," you say? We can practically read your
lips.
"It's a good investment."
The previous record for a Warhol was set last November, when a portrait of
Mao, reproduced from a picture in Newsweek Magazine, sold for $17.4
million. In just six months, Warhol oeuvres increased in value by 100%.
But the increase in prices merely increases our puzzlement. The price of a
copy, established by the Telegraph at zero, is still zero. But the price
of an "original" Warhol has soared to $35 million. The elusive,
non-visual, almost undetectable difference between a copy and the real
thing is actually doubling every half a year. How to explain it?
It was here that we began our heaving fits. What are these strange objects
of contemporary art, we wondered? They have no real value. Are they
anything more than a way for very rich people to part with their money on
amicable terms? Are they not the perfect way to do it?
The answer came to us - yes. Like the dotcoms of the tech bubble era,
contemporary works of art are held down by so little down-to-earth real
value that their prices can go up straight to the moon.
