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What The Market Hath Wrought

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The real tragedy today isn’t that the Federal Reserve is suddenly cool with inflation, that hedge funds are being forced to churn out “Sorry about that” letters on an hourly basis, or that there’s a 39 percent chance that Countrywide Financial will be forced to hold a fire sale. It’s not even that John Devaney will soon be helicopter-less. You want to know what the real crisis that’s unfolding before our very eyes is? What’s the cause of this pandemic of fear? What you should be losing sleep over? What billionaire Eli Broad *is* losing sleep over? It’s this:

Due to the major losses hitting hedge fund managers and other insanely rich people with their money invested in hedge funds, many hideous and grossly overpriced pieces of what individuals who lack the cognitive ability to parse “art” from “crap” call “art,” will go unsold. Or, if not unsold, sold at a vastly undervalued price. According to Mr. Broad, who seized the opportunity being offered by Goldman to give its failing Global Equity Opportunities Fund a bunch of money, ``Many of the buyers of contemporary art have been hedge-fund managers and other investors who obviously are having a difficult time and have lost lots of money…The art market will soften, and an adjustment in values will take place.”
Take the infamous diamond-encrusted skull, “For the Love of God,” by Damien Hirst. So far, nobody has agreed to its asking price of $100 million. Last month, nearly 40% of the pieces in an Old Masters auction failed to sell. And we imagine that if Stevie Cohen hadn’t already purchased Hirst’s dead shark in a tank of formaldehyde, it would remain unsold, too, though that would’ve been on account of an Intervention of Taste, and not the subprime mortgage market collapse. (And also, because let’s be honest, though no one can say for sure, Secret Steven probably hasn’t been hit too hard, if at all).
Goldman Backer Broad Says Hedge-Fund Woes Infect Art [Bloomberg]