Art Capital -- Pawnshop for the Well-Heeled

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machinehead's picture
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Art Capital -- Pawnshop for the Well-Heeled

How do celebrities handle a cash squeeze? The Guardian explains what to do --

[Celebrity photographer Annie Leibovitz] has turned to a company called Art Capital that
specialises in lending money with fine art as the collateral. The New
York Times disclosed yesterday that Leibovitz has borrowed about $15m
(£10m) from the firm in two tranches.

Records show she secured
the loan partly against property, but also by putting up as collateral
the copyright, negatives and contract rights to every photograph she
has ever taken or will take in future until the loans are paid off.

Such an exceptional step, involving in essence the pawning of
her entire life's work,
may in Leibovitz's case be explained by the
tumultuous few years she has been through. Her long-time friend Susan
Sontag died in 2004, and she has been in costly litigation over the
renovation of some of her properties.

Before you start snickering with schadenfraude about the rich and
talented 'pawning their entire life's work,' recognize that our
national government asserts an unlimited claim on our lifetime income
(marginal tax rates have been as high as 90 percent in the past) and
given current indebtedness, is quite likely to invoke it. In a neat
substitution, chattel slavery for some was replaced by collective
slavery for all. 'Broadening the tax base,' as 'progressives' would
call it. Our life's work has already been pawned, thank you very much.

Later, the article outlines the business model --

Fine Art Finance, deals with clients who can put up art and antiques
valued at a minimum of $2m. It lends up to $100m for up to 20 years.

like ArtLoan and Art Capital typically lend out 40% of the value of the
art works they take in, making most of their profit by charging
interest of 6% to 18%.

Peck said only about one in 10 of the
deals end in default. "Our aim is to avoid defaulting at all costs.
Given the trouble involved in a default, it's better karma and business
not to."

Lending only 40 percent of valuation -- harsh, dude! Ditech they
aren't. Given my proclivities, I'd rather start 'Car Capital.' You hand
your Ferrari Testarossa or Bugatti Atalante S57C, and I'll spot you a
few hundred K until things get better. Vroom, vroom!  Me drive fast, me win Le Mans ...

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