We always have the local news on the TV when we’re eating breakfast and getting ready to go down to the galleries. This was part of our morning routine in London and we’ve continued to do this in San Francisco- unreliable weather and public transport are two features that both cities have in common and make watching at least portions of the local AM news imperative.

This morning, what caught my eye was an advert for a home consignment store, with the camera panning across a swimming pool to the facade of a modern design house with lots of windows to interrupt the bare concrete walls. The next shot, inside the house, pictured a woman surrounded by disparate decorative items- a Noguchi-esque fabric covered standard lamp next to a vaguely Italian rococo armchair, upon which was seated an attractive 40 or 50 something woman who invoked, in diffident tones ‘I can afford to shop wherever I like…I choose to shop at Consignment Warehouse.’ Presumably the viewer, too, could avail themselves of the opportunity to buy this sort of cack and become thereby that diffident, ostensibly affluent, woman. What astonishes me is the strongly implied message that good living can be accomplished by anyone who wants to waste their money on junk that looks vaguely like but clearly isn’t the real thing. What a crock, and what poor suckers they are who troop down to these sorts of outlets to buy this kind of merchandise.

Unfortunately, this sort of approach, capitalizing on the ‘wannabe’ mentality, has crept into the fringes of the antiques trade with a number of websites that are the electronic answer to the low end antiques malls that occupy so many failed storefronts. Mind you, we formerly stopped at these if we passed them, but ceased doing so because we rarely found anything that was worthwhile. The antiques malls have moved online with a number of sites- we are bombarded with their spam daily. Just the other day, I typed in the search term ‘Regency’ on one of the sites that shall remain nameless. I got 5 pages with about 30 images per page showing the stock in trade of a number of participating dealers. Let’s define our terms first. Strictly speaking, the Regency was an historical period in England extending from 1811 to 1820 wherein, due to the physical incapacity of George III, his eldest son, the Prince of Wales, was granted by Parliament leave to become head of state in the king’s stead- to act as regent, in other words. By logical extension, the decorative arts of this period are termed ‘Regency’. The Prince Regent, the Prince of Wales that was, was himself a prolific patron of the fine and decorative arts, and was notably adventuresome, witness the onion domes and spires of his Brighton Pavilion, in his taste. The Prince Regent’s fanciful taste aside, the fanciful descriptions and date and style attributions I saw on the online website would certainly leave the Regent himself in the dust.  For the life of me, I couldn’t find a single item, and this amongst 150 items illustrated, that was anymore than vaguely accurate in its description, with most of them- well, I can’t imagine where the term came from. No- I’m wrong. One item was described correctly- a mahogany and rosewood crossbanded breakfast table that we had sold to another dealer. They had reprised our correct description- verbatim, I might add.

What galls me about all this is that the punter goes online and browses and comes up with something that, either out of the guile of the dealer in the collective, or more likely out of their ignorance, inveigles the poor browser to make a purchase. Recourse? The buyer has none. Have you tried to return a purchase for money back or even credit for a purchase you’ve made online?

A couple of months ago, California Homes Magazine asked me to write a brief introduction to the antiques section of their semi-annual designers’ resource guide. What I suggested for both collectors and interior designers was to begin their search by attending a vetted antiques show- where every item in every dealer’s booth in the show was looked at by a panel of experts to make certain it was accurately described- and fairly priced for what it was.  Since the next West Coast vetted show following publication of the resource guide was the Los Angeles Antiques, I recommended that as the show to attend. I still do. Even if you don’t make a purchase there, what a great opportunity to find out what to buy- and what to expect to pay. Online sites- if the merchandise seems cheaper but you didn’t get what you paid for, what kind of value is that?

So, yesterday TEFAF Maastricht and today the online ‘antiques’ collectives. I guess that’s what we could call a study in extremes.

Although arguably the best of the fine art and antiques fairs, TEFAF Maastricht is in many ways a bellwether in the fine art and antiques trade. The fair concluded this past March 19th, with attendance of 71,000- a considerable number of punters, albeit a few fewer than last year’s gate. Maastricht is not exactly cutting edge in terms of the material offered- most offerings are well inside the accepted canons of art and design history. However, without question, nearly everything is of museum quality, and a number of institutional sales are racked up every year.

What was most interesting, and a new feature of this year’s Maastricht was the participation of both Christie’s and Sotheby’s as stall holders. Sotheby’s, of course, as they purchased the well-established fine art dealer Robert Noortman, one of the fair’s founders, but turnabouts fair play, Christie’s demanded equal opportunity, which was given them. Dealing not as Sotheby’s but as Robert Noortman, Christie’s then was required to adopt a nom de guerre, King Street Fine Art. Silly, but whatever the rules are…

Although many of my colleagues have bitterly complained about the inclusion of the auction houses, under any guise, within the precincts of a fine art and antiques fair, I find it interesting that the sales rooms themselves find it necessary. Indeed, with their marketing budgets vastly outstripping any dealer that I know of, why do they then feel the need?

A couple of reasons. First, they need to make money. That may seem obvious, but let me stress- they really need to make money. The amount of overhead in an auction house is tremendous. I can’t even estimate what just the occupancy cost of either Christie’s or Sotheby’s is in London alone, to say nothing of New York and Paris. Second, they have inventory to sell that they really need to sell. Presumably we all know that the major auction houses compete with each other to obtain the consignment of the best goods. David Rockefeller’s Rothko that will highlight Sotheby’s upcoming 20th century art sale in New York has been rumored to be guaranteed by Sotheby’s for $40m- that’s 4 with 7 zeros behind it. If it doesn’t sell, Sotheby’s will still write a check to Mr. Rockefeller for $40,000,000. In this case, Sotheby’s has made a safe, albeit high stakes, bet, but not every guaranteed lot sells. And if it doesn’t? They own it. And since it didn’t sell, it was either over priced or flawed. And, everyone in the art world- dealers and collectors- know that it didn’t sell at auction and that the auction house needs to get as much of their money back as soon as they can. Ripe for the picking, wouldn’t you say? Yes, and the auction houses know it, but there isn’t much they can do about this.

So, the auction houses need not only to attract consignments but to have a retail outlet for their misjudgments. And in this respect, their competitors at the art fairs, particularly Maastricht, certainly have the better of them. Dealers like Wildenstein and French and Company have been in business for well over a century, know where the best pieces are- often because they had handled them at some time in the last 100 years, and, consequently, repeatedly offer pictures and decorative pieces that are fresh to the market and always of the finest quality. Indeed, it is the best dealers’ connoisseurship that is a significant part of their stock in trade, and what many collectors, both private and institutional, are happy to pay for.

And the art fair patron? More money than time a lot of them, and browsing an art and antiques fair provides the opportunity to see a variety of pieces in a short amount of time. Maastricht, for instance, had 219 exhibitors. That’s a lot of merchandise, equivalent to waiting years to see the same number, to say nothing of the same level of quality, come under the hammer at the auction houses. And, the patron can transact their business privately. And, if they don’t like the piece in a year- they can take it back and have the dealer resell it- gratis! What auction house is even willing to provide the same service? And, on top of everything else, the patron may just possibly, or even probably, pay the dealer less than what the same piece might cost them if purchased at auction. Mind you, the consignor may be able to negotiate favorable sales terms- the buyer, considerably less often.

April our focus becomes almost entirely the Los Angeles Antiques Show. This is a big event for us, as its the premier West Coast art and antiques show. As well, its a fun show to do, because, not surprising, there are plenty of celebrities who annually come to see us. Barbra Streisand, Jack Nicholson, Jennifer Aniston, Martin Sheen, and Steven Spielberg are always there, and, bless them, buy something, sometimes many things.

This year, a considerable effort has been made to sex up the look of the show with redesigned graphics and new life has been given to the show, as well, with the work of the benefit charity, PS Arts. This is a dynamic organization well supported by the 30 and 40 somethings with a mission to support arts instruction in public schools where it exists, and bring it back into those schools where, tragically, it has vanished. Good luck to them, and good luck in their efforts to make the gala preview on April 25 a success. The venue is Barker Hanger at the Santa Monica Airport, easily accessible from either the Santa Monica or the San Diego freeways. This year, the show runs from Thursday, April 26 through Sunday, April 29, a day longer than it has in the past.

With what the world financial markets have done over the course of the last few weeks, how could I possibly resist revisiting my last blog entry? My question is- Eric Knowles, are you still interested in buying stocks in preference to antiques? Frankly, we haven’t been re-pricing our inventory downward in any sort of response to the volatility of the world’s financial markets. We still have the large George III chest on chest that I’ve used to illustrate- what? four of my blog entries in the last few months. It still represents a lot of wood for the money, and, as established as it is in the canon of the decorative arts, will never really be out of fashion. Also- it is functional. Those drawers? Imagine how many pairs of underwear and socks they can hold.

In the last week or so, our domestic markets have been affected by the debacle of the so-called ‘sub-prime’ lenders, coupled with ex-Fed chairman Greenspan’s continued predictions of a recession, something he’s continually hinted at with no supporting rationale. Although he’s not said so until the last week, he now thinks that defaulting sub-prime mortgages and the failure of the lenders that had originated and warehoused these mortgages will be the leading cause of a recession.

Let’s get some facts straight. A sub-prime mortgage loan, in spite of what sounds to be a perjorative term, is not an inherently bad loan. In simple terms, these are loans that cannot be remarketed by the originating lender into the secondary mortgage market. The growth of sub-prime mortgages has been in direct response to the escalation of home values, particularly in the major metropolitan markets, over the course of the last 10 years- and to accommodate the complex income streams of the people who purchase those homes. The mortgage markets have traditionally been targeted to home buyers whose single or double incomes can be verified with W-2’s, allowing then for some simple ratio analysis to determine if the buyer can afford the mortgage payments. This, supported by good credit history, and the down payment for the house, is all that it took. These standard, income verification mortgages are the basic product that can then be resold into the secondary mortgage market.

Have you noticed the huge bonuses paid out to people in the financial services industry the past few years? These people- all of them- are holders of so-called sub-prime mortgages. Why? Because the complexity of the income stream for most highly paid people is far beyond what can be readily analyzed by a traditional mortgage lender. The performance bonuses that compose most of the income for many of the senior officers of banks and brokerage houses have complicated triggers and benchmarks that, while at the end of the year may result in bonuses many times that of their basic salaries, would be impossible for traditional mortgage loan underwriting to understand. As well, the complexities of the income stream are matched by the complexities of the tax planning utilized by most high income individuals. Consequently, what’s developed are so-called ‘no qualifying loans’ and ‘stated income’ loans- loans that require a significant down payment but require minimal supporting data from the mortgage borrower.

So, the irony is that sub-prime mortgages are oftentimes those granted to what one would assume are the most credit worthy borrowers. The problem is, the growth of the sub-prime mortgage market, responding to the dramatic appreciation of the best housing in the best residential markets, has outstripped the ability of the so-called sub-prime lenders to re-market this type of loan. Sub-prime lenders, then, are obliged to keep these types of loans in their own portfolios, or sell them to others with recourse. If the mortgage holder defaults- or even pays late a time or two- the originating lender may have to buy the loan back. What has happened, with all the media concern about the so-called real estate bubble, is that the limited sources for re-selling these mortgages have dried up, and caused some sub-prime lenders to become illiquid. This is exactly what happened to a number of savings and loans in the early 1980’s. How have we all fared since the so-called savings and loan crisis? Did the bottom fall out of the residential housing market? Let me put it like this- if any of my readers would like to sell their home for what it was worth in 1985, please be sure to get in touch with me!

Even in the art world, considerations of so-called brown furniture are not much more than a tempest in a teapot. Brown furniture, loosely defined as European and American 18th and 19th century furniture of typical form- chests on chests, dining tables, low boys, sideboards, bureaus and bookcases- used to be the main stock in trade of the middle rank antiques dealers. As the fashion for brown furniture has waned so have the fortunes, and the numbers, of middle rank dealers. A favorite tourist pastime used to be visiting the Cotswolds, that range of low hills dotted with medieval villages about an hour’s drive west of London, and browsing the antiques dealers in places like Moreton-in-Marsh and Stow-on-the-Wold. Now you better plan on just a cream tea or lunch in a gastro-pub- the antiques dealers are becoming a thing of the past.

With all that, 18th century brown furniture, while not yet on the cutting edge, is at least not as unfashionable as it has been. The Antiques Collectors Club maintains a furniture index, using as bench marks the standard pieces of the types I mentioned, and their figures show even pegging for 2006, following a 7 per cent drop in 2005. A simple comparison between standard brown furniture and the stock market makes investment in brown furniture, at first glance, appear a questionable proposition. A week ago, The Times of London headlined an interview with antiques expert Eric Knowles in their Sunday ‘Money’ section ‘Antiques? You’d be better off with shares…’. In fact, Knowles did say something like that, but went on to say ‘Antiques are only a good investment if you are buying the best.’

I guess this is the point of all this- a body gets what one pays for. As our business comes on its fifth anniversary, what we’ve found during our tenure is that you can’t go wrong with a confluence of quality, condition, and rarity- even if it is brown furniture.