If you read the news there are more worrying reports coming forward about the hedge fund industry. Yeah sure it's made a few people extremely wealthy - a couple of artists among them - but for the most part the wealth of these hedge funds is based on the illusion of prosperity peddled to the middle classes, and fueled by the bogus housing loan market. It's the very same market that has driven home prices in NYC and the rest of the US through the sky and has fueled the government's claims of a bristling economy. A hedge fund used to be defined by its aversion to risk. You were hedging your more riskier bets - so to speak - in case things didn't work out quite as planned. Hedge funds were developed using extremely conservative, tried and true, guaranteed not to flop stocks - the catchword was SAFE. Today most hedge funds are as speculative as any other kind of fund - if not more so, and look an awful lot like the junk bonds that fueled the 1980s. "Bear Stearns averted a meltdown this time, but if delinquencies and defaults on subprime loans surge, Wall Street firms, hedge funds and pension funds could be left holding billions of dollars in bonds and securities backed by loans that are quickly losing their value." Right now all those loans with no down payments and offset interest rates are flipping over into what they really are - evil bullshit. And because of it so many folks who thought they could own that 4 bedroom home by the shore or that view-delicious apartment in the sky are looking at ballooning mortgage payments that are breaking their financial backs. Middle America is choking on these payment increases and defaulting left and right. Hedge funds were buying up these loans from the banks thinking that property in the portfolio would still provide value even if defaults happened - ie. real estate is a safe bet. The problem is that this logic only works if there's a line of folks with money waiting to snap up the delinquent property. The banks had been loaning money to the last line of consumers (those that have no money) - there's no one waiting behind them - the loan officers have run out of customers to sell their snake oil to. Loans go tets up, the banks are stuck with property they can't sell, and the hedge fund stock begins to deflate like a two day old party balloon.

SO what has this got to with painting? Nothing and everything. The prices you're seeing at auctions, fairs and in the galleries are directly related to this market. Christ, I think I just read that Hirst had actually sold his diamond skull to a hedgefunder for an ungodly amount of money (whether or not he got the 100 mil I don't know). This "ungodly amount" of expendable income that these folks throw around has created an inflated market for a certain type of art, which in turn creates an incentive for artists to think in terms of the market etc etc. Art is made for the market, academies rule, certain galleries rule, certain artists rule, we look a certain way, we play a certain way, we react a certain way - we are predictable, usable, available - in other words extremely BORING. But beyond these isues this hyper market has shut the door on the ability of new generations to bring whole new ideas and whole new visual excitements into the city. Take for instance the Lower East Side - which at one time was the last refuge in the city for struggling artists. When I first lived there in the early 90s - it was edgy, perverse and had flavor - its character began to dissapate with each new bar and restaurant that opened. Then development really happened in the early nils and today it's Disney land for the college experience. No flavor, no day-to-day life only the endless parade of wannabes and hipsters in a corporate styled development that is fueling the pocketbooks of real estate speculators who have bought up large portfolios of tenement buildings. Lots of these old buildings are now being demolished with new condos replacing them (studios starting at 1.5 million). What kid (or for that matter - what adult?) just starting out can afford a studio apartment that rents at 1900 bucks a month or sells for 1.5 mil? I know a couple of independently wealthy artists that live worry free, but for the most part my friends came from the other side of town and work jobs to live. Artists are being expelled from the city because we can't afford it. And with this expulsion, creativity must find other venues - The NYC art world may be becoming cash rich, but it is innovation poor - hell it is destitute.

I do admire Hirst's chutzpah. He is right when he says that artists shouldn't have to wait to get paid. But do we have to give up our edge in order to achieve this? Must we give up the quest to really be creative in order to be business men and corporate drones? The answer is staring us right in the diamond encrusted face I suppose. So as the hedge funds reveal themselves and the real estate developers try to recoup their losses, what will become of the collections and the art that was propped up by this money? I won't speculate. I hope you've been wise and saved a bit. I hope you've been careful about your choices and I hope you've hedged your bets better than the markets have. The art world is an unforgiving place especially when the bottom falls out.