Dennis Hollingsworth

notes on the downturn

-For at least the past couple of years, I have heard people in our art world asking for an economic downturn to clean the streets of the corruption of art by filthy lucre. Well now we have one, people. A deep recession is here, and I hope they are all happy.

But the trouble is this: it seems that our art world needs an external force to compel an auto critique... we are apparently incapable of performing such an audit internally. The critical capacity of the art world is seemingly nonexistent, so dependent we are on it to get our critical house in order, something we have all known for some time.

Binge and purge, is this who we are? From Wikipedia: "Anorexia nervosa is deliberate and sustained weight loss driven by a fear of distorted body image." Does our art world have a distorted body image?

Worse still: we all seem to be complacent about such a condition.

-Many people I know have recently extended themselves into the risks that normally come with growth: I have recently doubled my studio space, several galleries here have moved to better, sometimes multiple locations, friends have moved into better houses, businesses have been started, everyone seems to have ratcheted up in new levels of enterprise. All this, into an economic downturn. Good luck everyone. May we all weather the storm well and bob out the other side with a harrowing smile.

-The root of the current malaise is singular: the nearly unanimous desire in our country to provide the American people with a chicken and a mortgage in every pot, the sole cause of the destructuring of the home loan industry. The problem isn't deregulation, the problem is broken regulation. Check out this Wikipedia entry on Community Reinvestment Act for a concise summary.

First the good intentions, then all hell breaks loose.

-The current malaise has two aspects: first, the broken regulatory structure of the mortgage industry, and second, the logrithmic tendency of "complex financial instruments" aka derviatives, aka hedge funds... see WikiP: "Derivatives allow risk about the value of the underlying asset to be transferred from one party to another." Yea, that's right, but for a price. Buyers of derivatives couldn't assess the true nature of the risk after they got scrambled up in multiple evolutions of these "complex financial instruments" (such jargon!), creepily resembling a shell game. Risk, like fire, is a natural part of life but after the mortgage industry had been tampered, risk became unreasonable, concealed, irrational, super-mega-nasty. We got burned badly. The financial instrument so defended by Alan Greenspan as a reasonable manager of risk became something like an accelerant to a fire when the nature of the risk became perverted.

-Recessions are normal, deep recessions are not. Our economy -worldwide- works soundly by and large. Sure, boom and bust cycles are an integral aspect of the market economy and economic bubbles are as natural to it as it is to champagne (or better, Catalan cava). This is a good moment to recall my favored description of Darwinism: survival of the fittest in times of scarcity and the proliferation of types in times of plentitude. Boom and bust, this too is the template of market economies. (This model has been tacitly accepted in our art world seemingly since the beginning of time.) Fine, let's celebrate it, but it is the size of the bubbles that is the problem here... and therefore the need for government to govern via prudent yet minimal regulation. The trouble is... our government seems to be incapable of the prudent-yet-minimal.

-The bailout seems to be a bailout solely for the politicians... of both parties. It is easy to concede that we need to catch the economy before it crashes, it is also untenable to have every ailing industry climb aboard this crude rescue apparatus. (Not to mention the pork and perks that abound along the way.) Creative destruction is as necessary as it is terrible, a sentiment usually accompanied by the saying: "better thee than me"... I just wonder if our government has the wisdom and the cojones (balls) to both apply it where needed and not apply it where it is not needed. Meanwhile companies such as American Express, the GM, and a few badly run states *cough*California*cough* bleat their case to crawl onto the safety net crafted by the seemingly bottomless taxpayer's pocket.