This is the Galerie St. Etienne’s third “state of the market” report since September 11, 2001. It is hard to believe that nearly three years have passed since the terrorist attacks on New York and Washington, D.C. The shadow of 9/11 hangs over us not so much because the wounds inflicted that day remain raw (though they of course do for some), as because of the lingering volatility and uncertainty, the uncanny mix of the familiar with the unfamiliar. Periods of paralyzing fear—in the last months of 2001 and the first half of 2003, just prior to and during the Iraq war—alternate with narcotizing excesses of consumption. Shopping—for home upgrades, meals at hip restaurants and, yes, art—is our drug of choice. Yet the fear remains. It is fitting that politicians and the news media long ago shortened the phrase “war on terrorism” to “war on terror.” Americans do not deal with the relentless, almost daily acts of terrorism found in countries like Israel, but rather with the far more nebulous presence of terror itself. Fear, as much as anything else, is responsible for the polarization that has beset American politics in these last three years. Fear prompts some people to believe desperately in the President’s righteousness, and others to feel bitterly betrayed by our government. The 2004 presidential election will pit these two types of terror against one another; it will be in part a referendum on fear.

The cycles of fear and consumption that have gripped America in the last three years have been alternately bad and good for the art market. When people feel vulnerable and financially insecure, art is regarded as a luxury that can be easily jettisoned. It has not helped that the center of America’s art market, New York, is both literally and figuratively the site of “ground zero” in the war on terrorism. When the atmosphere turns fearful, people stop coming to New York, and all local businesses, including purveyors of art, suffer accordingly. At the moment--a year after major combat operations in Iraq supposedly ended, several months after the capture of Saddam Hussein, and with the economy showing some signs of a genuine recovery--Americans feel relatively secure. But given the mounting American casualties and terrorist attacks in Iraq and elsewhere, we should all be aware of how quickly that apparent security can vanish.

While the New York art market has endured several periods of profound stagnation since September 2001, prices never collapsed. And some areas, especially blue-chip modern masters and cutting-edge contemporary art, have flourished. Art, like real estate, can be viewed simultaneously as an investment and as a source of personal comfort and enjoyment. Both the real estate and art markets have benefited from the impulse to turn inward, to “nest,” that followed the terrorist attacks. Historically low interest rates, too, have fueled each market. Regardless of whether one leverages one’s purchases (as some collectors do), during the last three or four years art has generally seemed a smarter place to invest than a bank or the stock market. Consequently, a great deal of attention and cash have been expended on so-called trophy material. Some people have naturally taken advantage of escalating prices to divest their holdings, but for others, rising prices actually provide a disincentive to sell. Collectors (especially those who own extraordinary works) fear that if they sell they will never again be able to acquire similar pieces at affordable prices. So a dwindling supply of choice items combines with red-hot demand to spur further price increases.

But the recent art boom has been lopsided. The focus on high-end material, often aided and abetted by auction-house p.r., conceals a vast and frequently foundering middle market. At the New York auctions this spring, the $104 million Picasso eclipsed a flurry of far more anemic results. For some years now, the Galerie St. Etienne’s annual state-of-the market report has chronicled this bifurcation of the art market: the increasingly massive differential between the values placed on supposed masterpieces and everything else, and the sometimes arbitrary factors that separate the two classes of art. However, although the two-tiered market has produced some disturbing and unjustifiable inequities in value, our lopsided market is also in part an organic outgrowth of pervasive, well-established demographic trends.

With far more wealth concentrated at the top of the economic pyramid, and successful baby-boomers at the peak of their earning power, there is simply more money now being directed at a relatively limited supply of prestige artworks. A willingness to pay an exceptional premium for status products that are only marginally better in quality—for example, the vodka in the frosted-glass rather than the clear bottle—has today become integral to American consumption patterns. What we are witnessing, in effect, is a comparable “branding” of art. A premium is being exacted for signature works by “name-brand” artists, be they established masters such as Picasso or hot newcomers like John Currin. We all know, however, that nothing is as fickle as taste, and the dustbin of art history is full of now unknown artists who were once hot. Even when dealing with a master such as Picasso, whose importance in art history is unlikely to change, one must wonder whether the artist’s “signature” works—those that are bold, bright and scream “Picasso” from across the room—are necessarily his best. Yes, some works become icons for valid reasons, but great art is not always pretty or easily recognized.

So one must ask oneself: does the aesthetic value of a work of art invariably determine its market value, or is it the market that today influences our assessment of a work’s aesthetic merit? Almost thirty years have elapsed since Tom Wolfe wrote The Painted Word, a send-up of the then seemingly all powerful art press. No critic today has the power of a Clement Greenberg or a Harold Rosenberg. Multiculturalism and contextualisation, while necessary correctives to the formalist biases of the Greenberg era, have caused academics to shy away from qualitative judgements. In our museums, the curator’s voice is often muffled by the need to mount crowd-pleasing blockbusters or to mollify corporate sponsors and wealthy trustees (most of whom have their own collecting agendas). For the moment at least, it does seem that the connoiseurship of the marketplace rules.

Despite the burst stock-market bubble of the late 1990s, Americans retain a simplistic faith in markets. Markets, it is said, are perfect, because they self-regulate. Markets do generally self-regulate, but only over the long term; on any given day, prices can be wildly off base. This is especially true of auction prices, the art market’s most public face. Whereas stock fluctuations can be tracked on a daily basis, major auctions take place only twice a year, in the spring and the fall. They are thus easily influenced by circumstances (positive or negative) peculiar to the specific sale date. Collectors are reassured by the hypothetical presence of an underbidder at auction, but sometimes there is no underbidder. When works sell at or below the low estimate, as they often do, the buyer has probably been bidding against the undisclosed reserve. Even when a lot soars above the high estimate, it usually comes down to a mere two bidders. Remove one of these, and the price would tumble back. The competitive excitement of an auction sale can stimulate irrational overbidding, but, for reasons no more rational, it can also happen that perfectly good works fail to inspire adequate competitive interest. Many works sold at auction in these past years have brought far less than they could and should have if sold privately, and those rare works sold for “trophy” prices may well not prove readily resalable at comparable levels. In most auctions, at least 10% to 20% of the lots fail to sell at all.

While the semi-annual auctions give a momentary read on the market, dealers, who are in the market year-round, are usually in a better position to price works fairly for both buyers and sellers. Time and in-depth experience are needed not only to value art accurately, but to promote it successfully. Dealers are often able to develop more focused expertise than auctioneers, who of necessity must cover relatively broad territories. The now-or-never aspect of auction sales works against subtle or difficult works, which require repeated viewing and contemplation to be fully appreciated. A department head at one of the major auction houses recently commented that he must generate $100 million in sales every six months in order to keep his job. With that kind of bottom-line pressure, auctioneers tend to concentrate most of their energies on multi-million-dollar lots. There is little incentive to pay much attention to works valued at less than several hundred-thousand dollars. At the same time, desperate to woo consignments from the dwindling pool of sellers, auctioneers inevitably overestimate some properties or bow to the demands of overly ambitious sellers. Sometimes the gamble pays off, and sometimes it doesn’t. Under these circumstances, it is easy to understand why the middle market is foundering.

It is impossible to predict how present market trends will ultimately play out. The occasionally wild price swings seen at auction make it difficult for all players—sellers, buyers, dealers and auctioneers—to coherently evaluate art, and this uncertainty could eventually erode confidence in the art market as a whole. When prices escalate as rapidly as some have in the past year, there is always the danger that a bubble has been created. To the extent that today’s boom is based on leveraged purchases, rising interest rates and a need to recoup investments quickly could spell trouble. On the other hand, if the economy does rebound, savvy collectors may recognize that there are bargains to be had in the presently under-valued middle market. Some of the market fluctuations we are witnessing today are the result of short-term trends: low interest rates, the aftermath of the dot-com bust and 9/11. Others seem to be based on more deeply entrenched changes in collector demographics and tastes. Nevertheless, insofar as today’s dominant collectors are ruled by momentary fashion, their impact on market values may prove equally fleeting. The Galerie St. Etienne’s market reports always lead to the same conclusion, because there really is only one conclusion when it comes to collecting: it takes time, knowledge and passion to collect successfully. If you follow those rules, you really can’t go wrong, because no matter what happens to the value of what you buy, you will have a great time.

The Galerie St. Etienne’s 2004 summer exhibition is given a slightly atypical slant by the forthcoming presidential election. An important component of the show is Sue Coe’s new series, Bully: Master of the Global Merry-Go-Round, an examination of the Bush administration. It will come as little surprise to followers of Coe’s career to learn that she is no admirer of George Bush (the “bully” in her title). Like the work of the Weimar-era artists George Grosz and John Heartfield (with which it is paired), Bully is an impassioned protest against the abrogation of democratic and human rights. In these meticulously wrought, finely detailed small drawings, Coe documents what she perceives as the Bush administration's manifold failings. Right-wing Christians, convinced that “God is on our side,” echo the motto that was inscribed on German soldiers’ belt buckles in World War I, and that Grosz lambasted in a series of that title. Expert marksmen, egged on by Rupert Murdoch (the owner of Fox News), take aim at the First Amendment in a carnival shooting gallery. Like Max Beckmann’s 1921 print cycle, The Annual Fair, many of the Bully images employ carnival or amusement-park metaphors. However, one of Coe’s most poignant drawings depicts the artist, a resident alien in this country, being fingerprinted by the U.S. Immigration Service. The capstone of the series, a miniature pastiche of Bruegel’s Triumph of Death, is a denunciation of all ideological or religious fundamentalism, and a plea for universal respect and empathy.

The remainder of the Recent Acquisitions exhibition follows our usual practice: recapping highlights of the season just past, while augmenting them with new inventory additions. Among the contemporary artists in our spring exhibition, Animals & Us, Frank Noelker (along with Sue Coe) is making a return appearance in the summer show. Several of Noelker’s Zoo Portraits (just published in book form) are augmented by works from his new series, Chimps. Our fall exhibition, Body & Soul: Expressionism and the Human Figure, enabled us to acquire some striking woodcuts, lithographs and watercolors by such masters as Erich Heckel, E. L. Kirchner, Otto Mueller, Hermann Max Pechstein and Karl Schmidt-Rottluff. These German works contrast markedly with the more realistic, delicate drawings of the Austrian Egon Schiele. The art of Käthe Kollwitz, another Galerie St. Etienne favorite, draws upon the tradition of expressive figuration developed in Germany prior to World War I, but links Expressionism to the sociopolitical concerns that came to dominate art during the Weimar era.

The Galerie St. Etienne’s other principal area of expertise, “outsider” art, has been consolidating over the last years. Originally, this field had something of a flea-market aspect: prices were low, quality extremely uneven, but there was always the lure of finding treasure amidst the dross. Today, much of that treasure has been culled, and such masters as Henry Darger are broadly acknowledged within the mainstream art world. Certainly our most successful exhibition of the past season was our Darger retrospective, the first ever to display his work in rough chronological sequence. With inventory in the Darger estate now dwindling, our summer exhibition may represent one of the last opportunities for collectors to see a wide selection of available works in one place.

Overall, there is a dearth of good new American “outsider” material entering the market, but the Galerie St. Etienne has found European self-taught art to be an area where exciting discoveries can still be made. Josef Karl Rädler, whom we introduced in 2001, remains among the most interesting self-taught artists to come on the scene recently. This year, we were extremely fortunate to bring the work of one of Serbia’s greatest self-taught painters, Ilija Bosilj, to the U.S. for the first time. Bosilj achieved major renown throughout Europe in the 1960s and ‘70s, but the Yugoslav civil war effectively kept his work from wider public view for the past decade. Michel Nedjar and the artists of Gugging, whom we have represented for a number of years, likewise demonstrate the exceptional strength of the self-taught work emerging from Europe. And, last but not least, our summer exhibition would not be complete without the paintings of Grandma Moses, who remains, figuratively, the mother of them all.

Another new wrinkle to the Galerie St. Etienne’s summer schedule is our participation in the Basel Art Fair, which takes place this year from June 16 to 22. Art fairs in and of themselves are nothing new; Art Basel, one of the largest and most prestigious of the European fairs, will be celebrating its 35th anniversary. However, the importance of such fairs has arguably increased in the post-9/11 world. Today, “mega-events” like Basel—with their plethora of high-caliber dealers, art and ancillary programming—offer a greater draw for collectors than the semi-annual auction weeks in New York and London. Moreover, globalization and a decline in air travel have made it more necessary for dealers to bring their wares to clients in other cities. Both the roster of significant collectors and the art they buy are becoming more and more international. As documented in Sue Coe’s Bully drawings, globalization has had many pernicious effects, including corporatized imperialism and an attendant rise in terrorism. But it must also be said that art represents the best aspects of globalization: tangible evidence of a shared humanity that transcends boundaries of nationality, ethnicity and religion.

Copies of Sue Coe’s Bully: Master of the Global Merry-Go-Round may be ordered from the gallery for $18.00 in paperback. Frank Noelker’s book Captive Beauty: Zoo Portraits is available for $50.00 in hardcover, or $25.00 in paperback. If you order by mail, please add $8.00 per book to cover shipping and handling; New York residents, also add sales tax. Checklist entries include catalogue raisonné numbers, where applicable. Unless otherwise indicated, image dimensions are given for the prints and full dimensions for all other works, including photographs.