Saturday, May 05, 2007




David Rockefeller is 91 years old. Next week a precious purple and white Rothko which he bought for $10,000 45 years ago goes up for auction.

It should probably meet the hammer at, conservatively, $90 million. I remember Rothko, because he committed suicide on the same day that my beloved grandmother, Mary Finch, died of esophageal cancer in 1970. Their obituaries ran next to each other in the New York Times. David Rockefeller’s brother Nelson, Governor of New York and Vice-President, died in the arms of his alleged lover Megan Marshack in 1979, after hosting a party with Henry Kissinger that night at my alma mater, the Buckley School.

Now that Carol Vogel, my fellow Yale alumnus, has parsed the putative significance of next week’s Rothko/Rockefeller sale in the New York Times, how can we deconstruct its mighty dollar estimate for the weakness that it really represents?

Let us begin with Rothko bleeding in the bathtub: even the sensual spirituality of a Manhattan sunset leaking through the shaded windows which inspired his breakthrough canvases could not save him. Can the $90 million at auction save the buyer next week?

And what of the socially connected hedger who will be next week’s buyer? Let’s quote from the Economist, which last week presented the first comprehensible explanation of the hedgers’ slicing and dicing the dance of debt: "Imagine a geared hedge fund owing the riskiest tranches of CDOS exposed to subprime debt. Lombard Street Research reckons that the combined gearing could reach 54 fold, implying that a 2 percent drop could wipe out the entire portfolio.

What that means, dear readers, is that, as the norm, every hedge fund purchase in the art market represents a multiple of 54 on its intrinsic value.

So every time the auction houses quote you a number, to comprehend the true market value of the piece, divide it by 54. . . that is what its resale price would be in a market undivided by the distortions of debt products and their discontents.


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