A $180 Million Picasso: What’s Making the Art Market Sizzle

A $180 Million Picasso: What’s Making the Art Market Sizzle

By Ciro Scotti

The art market is hotter than a hoisted Rembrandt.

Last night at Christie’s in New York, Picasso’s “Les Femmes d’Alger (Version O)” sold for almost $180 million – the highest price ever paid at auction for a piece of art. There were said to be five bidders, and the winner remains anonymous.

At the same sale, a Giacometti sculpture, “L’homme au doigt,” went for a total of more than $141 million.

On May 5, at the first major auction of the spring selling season, Sotheby’s pulled in $368 million. It was the second-highest sale of Impressionist and modern art in the history of the auction house, according to The New York Times. The top seller was van Gogh’s “L’allée Des Alyscamps,” which fetched $66.3 million.

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The haul represented a 67 percent increase over Sotheby’s spring sale a year earlier, according to Bloomberg, which noted that many of the buyers were Asian.

The May 5 auction was only the second-highest because Sotheby’s held a sale last November that took in $422 million.

And tonight at a Sotheby’s auction of contemporary art, a painting entitled “The Ring (Engagement)” by the Pop artist Roy Lichtenstein could sell for as much as $50 million, the Times said.

What’s behind all those staggering numbers?

About a year and a half ago, the columnist Felix Salmon (then at Reuters, now at Fusion) ruminated about whether there was a bubble, which he defined as often driven by FOMO (fear of missing out), or a speculative bubble, one fueled by flippers, in the art market. His conclusion: the art market bubble was definitely not speculative.

“The people spending millions of dollars on trophy art aren’t buying to flip…,” he wrote.

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Still, Salmon said he was seeing signs that the market could be turning speculative. But they may have been false signals.

Recently, The Wall Street Journal wrote: “Spurred by the momentum of several successful sale seasons and an influx of newly wealthy global bidders, the major auction houses…say demand for status art is at historic levels and shows no signs of tapering off.”

But why?

In an April 17 article, the global news website Worldcrunch asked Financial Times journalist Georgina Adam, who wrote the 2014 book Big Bucks—The Explosion of the Art Market in the 21st Century, why so much money is rolling around the art market and driving up prices.  

“Rich people used to be rich in terms of estate or assets, but not so much in terms of cash, like they are today,” she said.

“This growing billionaire population from developed or developing economies has money to spend and invest,” said the Worldcrunch article by Catherine Cochard. “For many of them, art — in the same way as luxury cars or prêt-à-porter — is an entry pass to a globalized way of life accessible through their wealth.”

That is a development that the keen eyes at the auction houses haven’t missed.

Deficit Hits $738.6 Billion in First 8 Months of Fiscal Year

A sign marks the U.S Treasury Department in Washington
Brian Snyder
By The Fiscal Times Staff

The U.S. budget deficit grew to $738.6 billion in the first eight months of the current fiscal year – an increase of $206 billion, or 38.8%, over the deficit recorded during the same period a year earlier. Bloomberg’s Sarah McGregor notes that the big increase occurred despite a jump in tariff revenues, which have nearly doubled to $44.9 billion so far this fiscal year. But that increase, which contributed to an overall increase in revenues of 2.3%, was not enough to make up for the reduced revenues from the Republican tax cuts and a 9.3% increase in government spending.

Tweet of the Day: Revenues or Spending?

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By The Fiscal Times Staff

Rep. Kevin Brady (R-TX), ranking member of the House Ways and Means Committee and one of the authors of the 2017 Republican tax overhaul, told The Washington Post’s Heather Long Tuesday that the budget deficit is driven by excess spending, not a shortfall in revenues in the wake of the tax cuts. The Wall Street Journal’s Kate Davidson provided some inconvenient facts for Brady’s claim in a tweet, pointing out that government revenues as a share of GDP have fallen significantly since 2015, while spending has remained more or less constant.

Chart of the Day: The Decline in IRS Audits

Reuters/The Fiscal Times
By The Fiscal Times Staff

Reviewing the recent annual report on tax statistics from the IRS, Robert Weinberger of the Tax Policy Center says it “tells a story of shrinking staff, fewer audits, and less customer service.” The agency had 22% fewer personnel in 2018 than it did in 2010, and its enforcement budget has fallen by nearly $1 billion, Weinberger writes. One obvious effect of the budget cuts has been a sharp reduction in the number of audits the agency has performed annually, which you can see in the chart below. 

Number of the Day: $102 Million

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By The Fiscal Times Staff

President Trump’s golf playing has cost taxpayers $102 million in extra travel and security expenses, according to an analysis by the left-leaning HuffPost news site.

“The $102 million total to date spent on Trump’s presidential golfing represents 255 times the annual presidential salary he volunteered not to take. It is more than three times the cost of special counsel Robert Mueller’s investigation that Trump continually complains about. It would fund for six years the Special Olympics program that Trump’s proposed budget had originally cut to save money,” HuffPost’s S.V. Date writes.

Date says the White House did not respond to HuffPost’s requests for comment.

Americans See Tax-Paying as a Duty

iStockphoto/The Fiscal Times
By The Fiscal Times Staff

The IRS may not be conducting audits like it used to, but according to the agency’s Data Book for 2018, most Americans still believe it’s not acceptable to cheat on your taxes. About 67% of respondents to an IRS opinion survey “completely agree” that it’s a civic duty to pay “a fair share of taxes,” and another 26% “mostly agree,” bringing the total in agreement to over 90%. Accounting Today says that attitude has been pretty consistent over the last decade.