Category Archives: Economy

#PabloPicasso’s Sublime Art And #Inflation

Art, Debt, Economy, Inflation

Picasso’s “Les femmes d’Alger” in French, “The women of Algiers” in English, and “Women of Aljeers” [sic] in CNN “English,” is a sublime piece of art. But as heavenly as this painting is, there is more to the price it fetched this month in auction than the power of Picasso at his best (although I still adore the master’s blue period. See “Blue Nude, 1902 by Pablo Picasso” below). It’s what happens when lots of money chases a one-of-a-kind asset, against the backdrop of low to no interest rates …

The Babbling Brooke (BB), aka Brooke Baldwin of CNN, did a frivolous segment on the work of art that commanded “a cool $179 million.” For information, BB turned to Manhattan art dealer Richard Pleitgen, who has been “in the art business for 57 years.”

The transcription, however, appears inexact. I heard live the explanation given by Pleitgen for the painting’s price. He explained that interest rates were such (so low) that unfathomably wealthy individuals needed to park their money some place.

True to type, Babbling Brooke giggled during what I thought was a lesson—Pleitgen’s—on inflation. Here she was doing a “fun” segment on a Picasso masterpiece and her guest was talking low- to no interest rates (as set by the Fed).

Pleitgen was on the money. If anyone can locate the TV segment, please send it along.

[11:45:06] BALDWIN: Could you be interested in owning an incomparable piece of art? I’m certainly a Picasso fan. I don’t know if I could shell out a cool $179 million, though. This painting by the iconic artist sold for a record-breaking amount at an auction here in New York City. Pablo Picasso’s 1955 canvas, “Women of Aljeers,” part of the series. It was snapped up by an anonymous buyer and was the centerpiece of the event. Last time at auction, it sold for a merely $31.9 million, that was in 1997.

Let me bring in Manhattan art dealer, Richard Pleitgen.

Richard, you were telling me you have been in the art business for 57 years. RICHARD PLEITGEN, MANHATTAN ART DEALER: Yes.

BALDWIN: You were there.

PLEITGEN: Yes.

BALDWIN: Five people were ultimately, over the phone, fighting over this beautiful art, going up incrementally, going up by a million, starting at $120 million. Take me in the room and tell me what it was like.

PLEITGEN: You sort of get hardened to these numbers.

BALDWIN: Did you blink at that amount of money?

PLEITGEN: I didn’t expect to bring that much, but I didn’t blink at it. I was this also when it sold for $32 million in 1997.

BALDWIN: Who was buying — listen, I studied Spanish, loved Picasso, cubism. The idea of spending that kind of money — who has that kind of money? Are we talking actors, celebrities, investment bankers, Warren Buffetts of the world?

PLEITGEN: Well, you know, frankly, to spend that kind of money, $179 million on a painting — imagine what kind of wealth you’ve got to have. A billion dollars would never do it. You’re not going to spend 17 percent of your wealth on a painting. You’re talking about really vast narns are prepared to spend that kind of money. I don’t even know who would spend $105 million on an important on central park that you’re never going to live in. The kind of money that exists out there is prodigious.

BALDWIN: If you were there when it went for $30 million something in the late ’90s and it’s $179 million today, in 50 years, is what will it be worth? He laughs at me. He laughs. He scoffs. Make a guess. Let’s be crazy. Make a wild guess.

PLEITGEN: I don’t know because, you know, if interest rates rise, so people have an alternate place to put money, some of these prices may drop —

BALDWIN: You could get a sale on a Picasso. I was kidding. I was kidding. OK. We’ll see, so in 50 years, if any of us are around to potentially bid on it.

Richard, thank you very much. I appreciate it.

Manhattan art dealer on the Picasso that went for just about $180 million.

Thank you, sir. I appreciate it.

PLEITGEN: You’re welcome.

[SNIP]
Again, I believe the transcript is inexact here.


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UPDATED: Kill #Amtrak For It Will Kill AGAIN

Business, Economy, Labor, The State

Amtrak is a government-run entity. As such, it answers not to the consumer but to politicians and union bosses. Nor does the National Railroad Passenger Corporation respond to the laws of economics. Despite running at an annual loss—is it more than half a billion dollars annually?—it never “fails” or goes belly up, for the taxpayer is forced to fund it.

Whether you use it or not; approve of it or not—government takes from you to give to the Amtrak financial and operational train wreck. In fact, the worse it does—the more people it kills—the greater its rewards: the louder the calls for Amtrak’s funding. Whereas a business that squanders lives and money would go under; a state enterprise will only grow under the same conditions. Let me put it this way: Try and withhold your fungible tax dollars, and you’ll be staring down the barrel of a gun.

In state-run entities liability is socialized and limited by the power of legislation—isn’t it great to be able to legislate yourself a Get Out of Jail Free card? Socialized liability means that the costs of any criminal or tort action will be borne by government, which is funded by YOU, its victim; the taxpayer.

These are just some of the inverted incentives that make Amtrak go off the rails, again and again.

Amtrak can no more be reformed than the Soviet Union’s communistic economy could be. It can only be liquidated, wrote Gregory Bresiger.

The latest on the “catastrophic train derailment near Philadelphia this week that killed at least eight passengers and injured more than 200 others,” via the New York Times.

UPDATE: It is true that the Dutch, for example, have tremendous pride in their infrastructure. So do the Germans. But this too will pass once European sense of nationhood is dissolved beyond repair by the supra-state, the EU.


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‘Minimum Wage, Maximum Folly’ In The Ivy League

Economy, Labor

“Economic malpractice” in the Ivy League is nothing new. In promoting minimum wage laws, hundreds of so-called top economists have defied the “law known as the first fundamental law of demand.”

The law states that the higher the price of something the less people will take of it and vice versa.

Alas, members of “the brie, tofu, and champagne circuit” regularly pretend that this natural law, “to which there are no known real-world exceptions,” is unaffected by minimum wage legislation.

Now comes news that a California city is to raise its minimum wage to $16.00. This unemployment-causing folly is a good opportunity to revisit WALTER E. WILLIAMS’ magnificent, ongoing efforts to “embarrass the economists” who lie about the costs of raising the price of unskilled labor:

… Some people suggest that if the price of something is raised, buyers will take more or the same amount. That’s silly because there’d be no limit to the price that sellers would charge. For example, if a grocer knew he would sell more — or the same amount of — milk at $8 a gallon than at $4 a gallon, why in the world would he sell it at $4? Then the question becomes: Why would he sell it at $8 if people would buy the same amount at a higher price?

There are economists, most notably Nobel Prize-winning economist Paul Krugman, who suggest that the law of demand applies to everything except labor prices (wages) of low-skilled workers.

Krugman says that paying fast-food workers $15 an hour wouldn’t cause big companies such as McDonald’s to cut jobs. In other words, Krugman argues that raising the minimum wage doesn’t change employer behavior.

Before we address Krugman’s fallacious argument, think about this: One of Galileo’s laws says the influence of gravity on a falling body in a vacuum is to cause it to accelerate at a rate of 32 feet per second per second. That applies to a falling rock, steel ball or feather. What would you think of the reasoning capacity of a Nobel Prize-winning physicist who’d argue that because human beings are not rocks, steel balls or feathers, Galileo’s law of falling bodies doesn’t apply to them? …

MORE.


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Spain And Portugal Pumped With Funny Money

Debt, Economy, EU, Europe

“The ingenuity, industry and activity of the ancient Greeks have nothing in common with the stupidity and indolence of the present inhabitants of those regions.” So said philosopher David Hume about modern-day Creeks.

The “land of moussaka, moochers and looters” and their Marxist leaders refuse to cease living on money borrowed from the more productive EU countries (Germany) .

“Greece,” marvels the Wall Street Journal, “has largely based its brinkmanship on an assumption that the eurozone will ultimately capitulate to its demands to prevent chaos spreading across the currency bloc.”

“Both Spain and Portugal are at risk from a Greek eurozone exit, but they have confidence their economies can withstand the shock.”

Yes, pumping funny money into the money markets has a way of inflating confidences.


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Hillary’s Trust Issue

Economy, Ethics, Hillary Clinton, Politics, Taxation

Not content with acquiring wealth through the dishonest, predatory process of politics (to contrast with the honest, productive, economic means of earning a living)—Hillary Clinton and husband have protected their ill-gotten gains from the taxman through trusts. These are “common among multimillionaires, and help shield some of their estate from the [inheritance] tax that now tops out at 40 percent of assets upon death.” BloombergBusiness:

Among the tax advantages of such trusts is that any appreciation in the [asset’s] value can happen outside their taxable estate. The move could save the Clintons hundreds of thousands of dollars in estate taxes …

The height of Hillary’s hypocrisy, however, is that, while she “shields her own wealth from it,” she recommended, during her last campaign, that estate taxes be further raised on Americans who’ve managed to amass more than $3.5 million.

… Clinton supported making wealthier people pay more estate tax by capping the per-person exemption at $3.5 million and setting the top rate at 45 percent, a policy Obama still supports. Congress decided to go in the other direction and Obama went along as part of a broader compromise. The per-person exemption is now $5.34 million..

Clinton has referred to estate tax as a “wealth tax.”

To say that she has a trust issue is to minimize how repulsive these people truly are.


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Rereading An Article In The Age Of The Idiot

Economy, Intelligence, Political Philosophy, Race, Racism, Reason

The concept of “racism” has been treated, over these pixelated pages, as a political construct in the postmodern tradition—a tradition that uses semantics, often unmoored from objective reality, to create a politically desired reality and achieve political ends. A mouthful, I know. But what has just been said is nothing compared to “Against ‘Racisms’: An Invidious Concept Under Fire” by my pal Jack Kerwick.

Jack uses the formal methods of (analytical and ethical?) philosophy to deconstruct the bogus construct that is racism. I will have to read the piece at least twice to better assimilate the argument and see how it sits with me. So far I like its impetus a LOT.

A word about rereading material, which I do a great deal. Readers complained about having to reread my “Libertarian Anarchism’s ‘Justice’ Problem,” to better understand it. Jack Kerwick joked with me, at the time, about the indignity and hostility expressed by today’s “readers” when required to grapple with challenging material by reading and rereading it.

I’ve always become apologetic when so accused, having never given thought to the point Jack was making: Don’t he and I reread things all the time? Don’t we look up words we don’t know in the (online) dictionary, as well? Don’t we enjoy learning new things; like a challenge? Are we threatened by a writer or a piece of writing that requires extra-concentration? Yes, yes, yes, and of course not.

So why should we expect anything else from our readers?

Go to it.


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