Madoff Victims To Flood Art Market

Here’s a sign that you’ve suffered a near total wipeout:

WSJ: For sellers, 2009 may be a year of lower expectations. Sellers who have a choice will likely sit on the sidelines, experts say, leaving the market to those who must sell to settle an estate, a divorce or a debt. [Sotheby’s CEO Bill] Ruprecht says he has spoken with “lots” of collectors who had invested with Bernard L. Madoff Investment Securities, the New York firm that allegedly carried out a $50 billion Ponzi scheme. “I have clients for whom art is the sole liquid asset they own today,” he says.

The $50 billion “lost” through the Madoff Ponzi may actually the tip of the iceberg. When you factor in investor redemptions at other, clean hedge funds, the firesale prices on Palm Beach condos, the Jaffes selling their designer clothes to consignment shops, the liquidation of horses, and now a guaranteed fresh supply of art coming into an already weakened market, the actual economic loss looks pretty gigantic.

Given the market conditions, and the lack of auction house guarantees, Kathy Fuld has to feel pretty good about herself.

(HT: Art Market Monitor)


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