Poor Mouth

There's a great John Kenneth Galbraith bon mot on the conservative approach to the economy:

The poor aren't working because they have too much money, and the wealthy aren't spending because they don't have enough.

I thought of this a couple of weeks ago when I saw an article in the Wall Street Journal on Lehman chairman and CEO Dick Fuld and his wife's decision to unload some of his art collection. If you're interested, and have, say $2.8 M for an Arshile Gorky drawing, there's a Christie's auction coming up this November. (Note on link: it may require a paid subscription to view this content.)

The Gorky drawing is part of a group of 16 postwar drawings owned by the Fulds that were quietly put up for sale by Christie's last month, according to people familiar with the situation. The sketches were consigned in early August following a competitive bidding process between Christie's and Sotheby's. Christie's wouldn't confirm the identity of the seller but says the total presale estimate of the works is between $15 million and $20 million. The auction house also confirmed the deal included a guarantee, an undisclosed sum promised to the seller whether or not the works sell.

It's no wonder that the Fulds are feeling a bit strapped these days. A year and a half ago, Fuld's stake in Lehman was worth nearly a billion. Today, that stakeen has shriveled to less than $4M as of the date of the article - it may be worth even less now. (Please save some of those crocodile tears for those who had a lesser stake to begin with. Some Lehman peon who used to "own" $1M worth of Lehman, is now looking at a nest egg worth less than $4,000.  Not exactly enough to pay tuition or live out your Cialis-ad style retirement years in dual claw-foot bathtubs on an ocean bluff.)

Mr. Fuld was, of course, canny enough to have taking a bit of walking around money out over the way - just some folding green for the wallet: $139.3 M in the last few years. Maybe he gave it to his wife to buy some of the art work they're now selling.

The Fulds are still hanging on to much of their art collection, as well as their homes in Connecticut (that's the one with indoor squash court); NYC (Park Avenue co-op); Vermont; Sun Valley (there's skiing, and then there's skiing); and Jupiter Florida  - a $13.75M home that he had to rebuild. That was so 2004! These days, you can actually get something reasonable livable for $13.75M.

Fuld isn't the only Lehman poor soul: apparently, former president Joe Gregory shed his commuter helicopter, and has his $32.5M Hamptons home up for sale.

While the Fulds will make some money on their upcoming Christie's sale, apparently the sorts of works that they've specialized in aren't the sorts of "trophy paintings" that the nouveau riche Euro and Asia buyers are after. Their collection has more appeal to a "close-knit group of American drawings collectors."

The good news for the Fulds: their collection hasn't been over-inflated, since the trophy painting money isn't chasing it.

The bad news? The American collectors who are the most likely buyers don't have quite the purchasing power they used to.

In any case, it's hard to feel too badly for the Fulds.

But you do have to wonder why they're selling now, given that they still must have a fairly comfortable amount of money in the bank. (Hope it's not in WaMu.) Is it that, once you've been a paper billionaire, anything short of that is going to make you feel like a pauper?

Or do they know something we don't know about where this is all heading?

Now there's a scary thought.