Thursday, April 3, 2014

When the Luxuries Can Fail as Collateral's

It simply doesn't give a solvency to the finances of the project and it can be a volatile. The reasons on why financing a project with a luxury collateral is volatile, is simple; the luxuries rely essentially on image positioning, sell margins as exclusivity.

For people having such items is a sign of wealth but as well they can keep as a form of colateral investment in case they have financial wearies.

From several economical point of views, these forms of collateral are based on the prestige, and the prestige itself has a different set of prices. The idea of an adjective has a price, it is quite ridicule because we are replacing money itself with more of a contract towards the imagery of the product in essence with these forms of collateral we are devaluating our own coin by placing this products as an absolute value on the market.

Yes, devaluation has a wider broad spectrum and there are diverse factors that are putting our economy in jeopardy such as poor international relations, giving more money to the war industry, not placing education for all as well not giving more credit opportunities for small business to grow.

Other problem with these "kind of money" is that the money that is used, only focus on a very specific demographics, where it will never see the public or any other communal interest. What money that is destined in a repayment will see the public light,? specially where it's going to be destined into a bank or in another case an auction house.?

The money will be invested on the private interest, it's sad that the money won't circulate around and will help to improve the economy. There are so many debacles with the luxuries, do we really need them on that extreme.? Are we really loosing the meaning of the arts in order to put the money first.? No we don't need them on that extreme, art doesn't mean that the artist will starve but putting the meaning of art as a mass product is just wrong.

It's quite complex to place it on an economical context, because the meaning of art is self expression but at the same time it can be used as a way of earning a living. It involves prestige and how much the artist "mystique" will catch the peoples' imagery but then the problem goes when how much the work cost and will sell.

Not only on art but with other items such as limited editions memorabilia, but then again we are placing items whose value is more volatile than Wall Street as a form of currency, we are not in an time before the Hammurabi Code and pre-Mesopotamian civilizations but even then, fair trade wasn't a strange concept as it is today.

At the end, placing luxuries as collateral's is just as it was almost 9,000 years ago when people traded grains for cattle. It's not worth it without a regulation because it's just a form of cheating as there is no consensus to gain stability. 

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