Word: bonding
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Since U.S. borrowers draw from the same pool of global funds, the Japanese rate increase proved to be contagious. Rates on ten-year Treasury bonds have climbed from 7.84% to 8.4% during the past month. Money-market speculators sent rates higher because they know that the Japanese, who typically buy as much as 40% of U.S. long-term bond offerings, will be disinclined to invest in U.S. Treasury securities unless American bonds offer significantly higher yields than equivalent Japanese or West German paper...
...only two years ago that Sotheby's auctioned Irises to Australian plutocrat Alan Bond for a record $53.9 million. The timing was critical. Coming as it did one month after the 1987 stock-market crash, the sale allowed Sotheby's to claim that works of art held their value through financial crises. But last October it was revealed that to enable Bond to make the purchase, Sotheby's had lent him $27 million. "Whatever the arrangement, it helped to raise the inflationary value of that particular picture," asserts Christopher Burge, president of Sotheby's starchy rival, Christie's. Like most...
...Bond's worldwide brewing, real estate and communications empire is now $5.5 billion in debt, and he is trying to fight off his creditors in a Melbourne court. Against that backdrop, the mere millions that a resale of Irises might bring him is small beer. Nonetheless, the pressure on him to liquidate it is real, especially since he has not been able to keep up with the payments and Sotheby's has had to roll over its loan. Reportedly, Irises is not even in Bond's possession but has been stashed by Sotheby's in a vault somewhere, perhaps...
Whether the price of Irises will go up remains to be seen. By selling it so soon, if he sells it, Bond risks lowering its value, since it is in part the elusiveness of great masterpieces that gives them their cachet. "It's certainly a lovely picture," says Burge wistfully. "I hope we don't lose sight of that amidst all the money and the greed...
Former prosecutor William F. Weld '66 proposed stimulating economic growth to push revenues up as a solution to the crisis that has resulted in the lowest state bond rating in the nation and a $500 million budget deficit...