For the past year, I have been predicting (wrongly) that the art market will correct. It defied the financial odds in part because the crisis hadn’t reached the super-rich and because a fresh wave of oligarchs and Middle Eastern sheiks hoisted their bidding paddles to save the day.

Now, art may be imitating life in the collector’s market, yet another sign that spending by the super-rich is suffering. Read more »

Last week, Damien Hirst sold more than $200 million of pickled animals and splatter paintings in London. A unnamed buyer recently paid $28.5 million for a vintage Ferrari 250 GTO in a private sale, according to knowledgeable chatter on FerrariChat. A single bottle of Domaine de la Romanée-Conti, Romanée Conti 1962 fetched $13,310 (against an auction estimate of $6,000 to $9,000) at a Sotheby’s wine auction in September.

Meltdown? What meltdown?

1963 Ferrari 250 GTO

The easy explanation for these big-ticket blow-outs is that the super-rich simply aren’t effected by what they might politely call “the troubles.” But a second, even more absurd, explanation has also emerged. Paintings, cars, bottles of wine and other collectibles are being touted as safer and higher-yielding investments than financials. Read more »

There has been a heated debate over suspending mark-to-market accounting rules that require a bank to report financial instruments on its balance sheet at the price they would fetch on an open market. But is the whole debate just a waste of time?

Critics of the rules say that they cause banks to undervalue assets that have a real value based on fire-sale prices in a frozen market. “A vast majority of mortgages, corporate bonds, and structured debts are still performing. But because the market is frozen, the prices of these assets have fallen below their true value. Firms that are otherwise solvent must price assets to fire-sale values. Not only does this make them ripe for forced liquidation, but it chases away capital and leads to a further decline in asset values,” wrote Brian Wesbury of First Trust Portfolios L.P. on the Journal’s editorial pages.

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The Obama campaign has a new answer for the wealthy who complain about the candidate’s plans to raise their taxes. Barack Obama isn’t going to do it for income redistribution or to play populist politics or even to fund the increasingly gaping hole in government financials, according to the new tack. Instead, he is doing it for “patriotism.”

Under the economic plan proposed by Sen. Obama, people earning more than $250,000 a year would pay more in taxes than they do now, while those earning less?the majority of American taxpayers?would receive a tax reduction.

In an advertisement released today, Sen. Joe Biden, running to be Mr. Obama’s vice president, says the wealthy should pay higher taxes because it is the right thing to do for their country. “It’s time to be patriotic,” he says in the ad, “…time to jump in, time to be part of the deal, time to help get America out of the rut.”

I can see the argument that the wealthy–government data show that the top 10% of earners reaped the greatest share of the economic benefits in the past decade–should give back more to the country at a time when the middle-class is struggling. It is about fairness. The U.S. economy hasn’t been fair to most Americans, so the argument goes, but the Obama tax plan would restore the country?s tradition of fairness. Read more »

From Reuters:

Shanghai police will post photos and videos of jaywalkers in newspapers and on TV in a bid to shame them out of breaking traffic rules, local media reported on Thursday.

Offending pedestrians, moped riders and cyclists would be snapped at selected intersections and their images put in regular columns and on special television programmes set up by police, the Shanghai Daily said.

The scheme had come under fire from lawyers who said public humiliation was too steep a punishment for jaywalking and warned of defamation lawsuits against police.

“It’s a principle of law that a penalty should match the seriousness of the crime,” Liu Chunquan, a local lawyer, told the paper.What? Are they really going to post pictures of offenders in the papers and on TV and forget about the Internet? Really, they might as well go all the way…

Addendum: The idea of shaming jaywalkers is indeed not all that new in Shanghai.

There has been plenty of foreign direct investment (FDI) into China over the years, and it is continuing strongly (with the help of the RMB) despite lots of laws, regulations and rising costs, many of which have been reported on this blog.

The last time we mentioned big FDI, it was in relation to China’s new anti-trust (anti-monopoly) law , now it is the turn of Coke to shake things up – with their US$2.4 billion bid for Huiyuan Juice Group. MarketWatch reports:

“The deal would value the firm at about three times its market value, and would mark the U.S. beverage maker’s largest acquisition in China by value to date. …The Chinse firm is reportedly the country’s largest maker of pure fruit juice. Coca-Cola said three of the Huiyuan’s biggest shareholders have given “irrevocable undertakings” in support of the deal.”

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