The great art laundromat?

11 05 2010

If you have ever stopped to wonder why it is that such extraordinary sums of money pass through the fine art market, consider this: what other market in material goods is essentially unregulated, and allows tens, or even hundreds of millions of dollars to be exchanged without scrutiny? Participants in art market transactions are protected by the cast-iron wall of secrecy that shields exchanges from public and official view. There is no mechanism in place that allows regulators to determine when suspicious transactions may be taking place.

The dearth of laws or regulations moderating the buying and selling of art would be very appealing to big investors who have reason to channel large sums of money from one source to another, then back again. Also aiding those who desire to clean up their cash by passing it through a nice, sudsy art market bath, is the perception that works of art, being unique, are difficult to value. So an apparently inexplicably high or low price for an artwork at auction can be justified by saying that it was under- or overvalued prior to the sale, and that the level of demand was under- or overestimated.

Mmm. Sudsy.

(Image via: svn.skullsecurity.org)

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