Comment: What the $10,000 hamburger says about world wealth
An Indian businessman paid $10,000 for a McDonalds burger in a charity auction this week. It is liquidity from the east that will keep charities, auction houses and luxury goods firms afloat
The Economist famously uses the price of a McDonalds Big Mac hamburger to gauge the comparative value of currencies around the world. Its Big Mac index shows the local price of two-beef-patties-in-a-sesame-seed bun in different countries, compared to what the dollar exchange rate tells you the price should be.
The $10,000 Indian burger, bought at the opening of a restaurant in Chenai, may not say anything about the relative value of the rupee, but it says a lot about world wealth.
For all the talk of the rich being cacooned from the credit crisis in the US and Europe, it is the emerging wealthy of Asia Pacific and Russia who are the ones best-placed to see out the storm.
Luxury goods firms have been at pains to stress they expect demand from Asia to make up for any fall-off in consumption from the US and Europe.
Equally, in the art market, Russian and Middle Eastern investors are stepping in to sustain demand. It may not be at the giddy heights of last year, but nor is it falling off a cliff in the manner of the early 1990s, when the withdrawal of Japanese art buyers saw sale values plummet.
US-focused sales may suffer. The Barrett Jackson classic car auction in January saw a 20% drop in sale values and an 8% fall in the number of cars sold, according to Ledbury Research.
Next month's sale of classic Ferraris in Maranelo by RM Auctions and Sotheby's will offer an interesting bellwether for the more cosmopolitan European auction scene, having last year raised in excess of €30m in sales.
It is the European charity auctions that may see the most immediate pain. The City financiers will be feeling chastened if not poor and lacking the bravado to bid up lots.
The iconic hedge fund managers' ball in aid of the Absolute Return for Kids charity has been postponed this year from its usual April/May slot.
Last year the auction raised a record £18m. This year's result might be the best indicator yet of the severity of the credit crunch.
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