As IF Times

link Paintings Worth Millions Stolen from Paris Museum – WSJ.com.

As if.  I think what they mean is, paintings insured for millions stolen.  As may be obvious to readers, I am skeptical of valuations placed on “priceless” works of art by long dead artists.  With assets worldwide going into the tank from real estate, to stock, to bonds, to perhaps even hard metals, the ability for anyone to sell and receive value for “priceless” works of art are few.  The better way to recoup value for these pieces is from the insurance companies.  That may be a cynical accusation on my part, but when you think of the logic of it, there’s more validity than insanity. 

If the pieces were stolen, then the thieves can only realize value in one of a few ways.  One, they can resell to a collector for some discounted price.  Presumably, this collector has the money and power to thumb their nose at laws against stealing such things and in fact, perhaps even hired the thieves in the first place.  Two, they can strike a deal with the insurance companies to return the pieces for a “small” reward.  Most likely, the thieves will try to capture value for the pieces right away, like Goldman Sachs doing an arb trade.  Presumably, lots of money was spent to set this up, to pay off people and for logistics.  That money has to be retrieved in order to offset these costs.  And there had to be costs involved.  Anyone who has seen the movie, The Thomas Crown Affair would have an idea of the planning that’s involved with a heist like this.  One doesn’t just hire some unibrow thugs to lift the pieces off the wall and saunter out of the museum with them under their arms. 

I’m sure the insurance companies have their crack sleuths on this right away. It’s not as if they didn’t know where to look.  How many people could have pulled this off anyway? Groups that would be in a position to move or receive hundreds of millions of dollars worth of art are likely a small fraternity. 

Here is my suggestion for catching or at least annoying the thieves.  If there is a ransom demand of some kind, try this approach:

Ring ring.  “Hello, Lloyd’s of London, how may I help you?”

” I’m calling about the recent art heist.  We’re willing to return the art for a reward”

“Hmm, yes, well about that, we’ve decided to just let it be.”

“Pardon me?”

“Yes, we’ve decided it’s more trouble than it’s worth to look for them, so we’ll just write it off and find something else to replace them”

“What!! You can’t do that!   These are timeless works by the great masters!  You have to get them back!”

“Actually, they weren’t that great anyway and they cost way too much to insure.  The premiums we received weren’t worth it.  We think we’ll go with some newer stuff, you can keep the pieces”

“But we don’t want them, we want money!”

“Sorry”

“We’ll give you a discount!”

“Again, sorry”

“We’ll throw in frames”

“Look, we really don’t care.  They really weren’t worth that much in the first place, we just used them to collect insurance premiums from the idiots who were willing to pay them.  Over the years, we’ve got our money out of them, Sotheby’s got their cut and now it’s time to move on”.

“Hey, that’s dishonest and not fair!”

“It’s just business”

“What are we supposed to do with these things then?!!”

“Try Ebay.  Have a nice day”

link Freud, Art Star Prices May Surge 30% This Year, Survey Says – Bloomberg.com

If I painted a portrait of some flowers in a vase, it would obviously give me some pleasure. Presumably, those of my friends with any taste would agree and compliment me on my artistic genius. The really nice ones might even deign to insult me by offering money for this masterpiece. Apart from my towering reputation in the art world, the price of the painting would be determined mainly by what value the buyer would ascribe to owning this piece of timeless genius.

Value and beauty is in the eye of the beholder as the old saying goes and so it’s difficult to peg a price for any piece of art. If we extrapolate this logic to works in the art world created by the well known masters such as Van Gogh, Cezanne, da Vinci etc etc, then the price of art should reflect the genuine desire of the purchaser to enjoy the particular piece of work. Since the artists named are long dead, scarcity comes into the calculation of price since Vinny can’t just whip off another Sunflowers by the weekend.

What has happened in the art world is that enjoyment of art is completely removed from the value and pricing of art. It’s highly doubtful that any purchaser can sit in a chair, gaze intently at Sunflowers by Van Gogh and derive $60 million dollars worth of pleasure from it. After 30 minutes or so, anyone would be tempted to see what’s happening in the football game on TV.

No, the value, or more correctly, the pricing of art is controlled by a small cabal of Dealers such as Sotheby’s, Christie’s and others who determine thus on behalf of clients with money to spend. So, think about this, not only do they set the price for art work, they also get a commission for selling them at auctions or galleries. That’s a nice gig. Imagine sending the husband out to get something to fill the wall in the east foyer and he comes back with a $25 million dollar Cezanne, which is a heck of a deal because the dealer assured him that the price will appreciate by 30 percent over the next 18 months or so. As discussed earlier, one can arguably justify the price based on scarcity value.

In most modern galleries however, it’s unlikely that original works of the great masters will be available for such purchase. More likely they will be the works of someone a little more pedestrian but whom the dealer assures shows great promise. In reality, the money changes hands not because the blue in the artwork happens to complement the periwinkle in the foyer, but because the dealer has blessed the piece as a good investment. The enjoyment factor has almost nothing to do with it. The job of the dealer is to describe the piece with eloquent prose in order to assuage the purchaser of his good judgement, but really, the art is only bought…to be sold, sometime down the road.

Post the Bernie Madoff ponzi scandal, it’s absolutely fascinating that money will bid up the price of ‘art’ solely based on the say so of a very small band of people on the inside. As the article opines, when a dealer says that prices will rise by 30 percent, it’s very believable because they are on both sides of the market. It’s the ultimate game of musical chairs.