THE ART WORLD
Just when we thought it couldn’t get crazier… The most egregious example of speculative excess in the art world… $18,000 for ‘air and spirit’… Signing up to get nothing in the financial realm… Ignorance is not a valid excuse… We’re living in the ‘Age of the Emperor’.
For the past year and a half, collectors have been paying outrageous prices for some truly weird works… first, a banana duct-taped to a wall sold for $120,000 in Miami back in December 2019. Then, this past March, an artist known as “Beeple” sold a non-fungible token (“NFT”) of his work – a digital-only collage of 5,000 images – for $69 million at auction. The latest example occurred last month in Milan, Italy… Auction house Art-Rite sold a piece of work by Italian artist Salvatore Garau titled Io sono (Italian for “I am“) for $18,000. With Beeple’s NFT going for $69 million, how does a mere $18,000 sale qualify as egregious excess? The answer is simple… because Io sono doesn’t actually exist. It’s “invisible art.” It’s not there. The buyer got a whole lot of nothing for his $18,000. Instead, Garau issued a certificate of authenticity to the buyer (like the banana-and-duct-tape piece). The artist – and his piece of paper “verifying” it – said Io sono is a sculpture that consists of a 25-square-foot space and that light and climate control are optional.
You can’t sell a certificate of authenticity for something that doesn’t exist without concocting a fantastic story… Garau put together a great one. As he told one Spanish news outlet… You don’t see it, but it exists. It is made of air and spirit.
THE FINANCIAL WORLD – Information from Stansberry Research Digest – Largest USA independent financial research organisation.
Art is the flag of culture. And its excesses are frequently preceded by those in the financial realm, given as it is to stoke the fires of greed.
‘Nothing’ has been on sale in the financial markets for much of the past decade…
The most obvious example is negative-yielding sovereign debt. According to Bloomberg, $13.3 trillion of this debt is circulating around the world these days. Roughly $10 trillion of the total is the sovereign debt of countries like Japan, Germany, Switzerland, and France. (Nearly all the rest is corporate debt.) This is supposed to be the second-safest debt in the world, behind only the debt of the U.S. government. When you buy a bond trading at a negative yield, it means you’re guaranteed to get less in principal and interest at maturity than you paid for it in the first place. In other words, you’re guaranteed to lose money. You’re signing up to get nothing.
Bonds are supposed to be the “smart money”… It’s where savvy investors go to get a much safer return than the stock market. And for a $13 trillion swath of the bond market, that supposedly safer return is a little less than zero today… Nothing. Nada. Zip.
The Securities Industry and Financial Markets Association’s 2020 Fact Book puts the value of the global bond market at $105.9 trillion. So negative-yielding debt – a guarantee to receive a little less than nothing for putting capital at risk – accounts for 12.5% of a massive global market.
And it’s not just bonds, either. The rational expectation for stocks is a negative average return over the next 10 to 12 years. That’s according to the work of often quoted economist John Hussman, Hussman’s return model suggests the S&P 500 is currently priced to return a 7% loss per year, on average, for the next decade. However, reality is that the market doesn’t simply tick down 7% each year for a decade. It falls 50% or more in a great washout that generally lasts somewhere between six months and two years.
Moreover, many would suggest that a great washout is about to occur or put another way the financial bubble is about to burst. In a Bloomberg interview, GMO’s Jeremy Grantham talked about his asset-management firm’s study of 330 bubbles across all asset classes. As Grantham succinctly put it… the last 12 months have been a classic finale to an 11-year bull market. And he cited plenty of data to make his point during the interview, ultimately concluding… The great bubbles by scale and significance… all accelerated late in the game and had psychological measures that could not be missed by ordinary investors. (Economists are a different matter.)
The data, like today, is always clear, just uncommercial and inconvenient for the investment industry and often psychologically impossible to see for many individuals. In other words, all of us “ordinary investors” ought to be like the child in “The Emperor’s New Clothes” who innocently blurts out that the emperor is naked. That emboldened others to say so… eventually making it impossible for the emperor himself to avoid admitting the truth.
We can all see the truth. Our only remaining task is to acknowledge it and act accordingly. But the great herd of investors just can’t do it. The herd is like the courtiers and other sycophantic hangers-on around the emperor. They’re all scared of his ire and eager to gain his favour , prompting them to proclaim the surpassing beauty of his non-existent clothes.
They’re too vested in continuing the charade to notice that doing so is an unsustainable state of affairs.
The greatest charade perhaps of all is in the cryptocurrency called Dogecoin. Dogecoin was created as a joke to make fun of cryptocurrencies being worthless, and not only has it taken off, but it’s such a success that second-level joke cryptocurrencies making fun of Dogecoin have gone to multibillion-dollar valuations. An unabashed ode to the culture of nothingness has wound up with a massive valuation… Dogecoin’s market cap peaked on May 7 at $88 billion and still sits above $32 billion today. Its value has crashed over the past six weeks. But even so, that’s still a whole lotta nothin’.
There’s no fraud going on in these instances at all. Folks are saying, “Hey, sign me up. I want nothing and I’ll pay real money for it!” Nothing is the new something.
Any sane person can see that this cannot end well. In fact, it will get so crazy that the world will be crying out for a Saviour, the scene is set for the entry of the Antichrist on to the world scene. His appearance is the most significant prophesied “end times” sign. As I have said many times before there are far more prophecies about Jesus second coming than there were of His first coming. Are you aware of these prophecies? Are you prepared for what is ahead? For Christians it is a time of intense persecution. We are already seeing the “end times” prophesied falling away in the church from the truth of God’s Word and His moral values. Wake up church, God is purifying His church. Sadly, much of the church is like the church at Laodicea which will be left behind to face God’s wrath.
“I know your works: you are neither cold nor hot. Would that you were either cold or hot! So, because you are lukewarm, and neither hot nor cold, I will spit you out of my mouth. For you say, I am rich, I have prospered, and I need nothing, not realizing that you are wretched, pitiable, poor, blind, and naked.” Revelation 3:15-17
It is the Church at Philadelphia that represents the church that is raptured prior to God’s wrath being poured out with the Trumpet and Bowl Judgements.
“Because you have kept my word about patient endurance, I will keep you from the hour of trial that is coming on the whole world, to try those who dwell on the earth. I am coming soon. Hold fast what you have, so that no one may seize your crown.” Revelation 3:10-11