During the past year, everyone saw what happened when garbage loans on overvalued real estate were misrepresented and sold as triple-A-rated securities. The bubble eventually burst.

But not quite as many people are aware that the bubble has also burst in the art world -- to the point where a series of the most important recent art auctions were dubbed "New York's 'half-price art sale'."

The biggest loser? Contemporary art:

It's post-mortem time for contemporary art, the highest flying area of the art market. After several years of unprecedented growth, which have seen prices at auction increase by an average 25 per cent each year since 2002, it experienced a definitive setback in New York last week.

In spite of spirited bidding by some of America's top collectors, the keynote auctions at Sotheby's, Christie's and Phillips de Pury & Co drummed up just $331 million (£224.6 million), far short of the low estimate of $608 million that had been set in the months before the collapse of the banking system.

The total was almost one third of that mustered in the last New York auctions in May, and we have to go back to 2005 to find comparable sales figures. The clock for contemporary art has turned back further than for Impressionist and modern art, which has fallen back to 2006 levels, because its growth curve was much steeper.

The top end of the market looked particularly vulnerable as several of the highest-valued lots by Roy Lichtenstein ($15 million to $20 million) and Francis Bacon ($40 million to $60 million) failed to attract bids.

What is not being reported much is that some art still sells. That's because what sells is art that real people like, and not art that the critics say people should like.

According to artist Robert Williams (a personal favorite whose art is selling like hotcakes), the bottom line is that:

...we're manipulated by a priestly elite of cultural directors in the art world, that's telling us what is and isn't art.

This would have probably held up into the next century, except for the fact that the economy collapsed. So these incredible pieces of artwork that these people have made-- like two railroad ties chained together, named "Untitled #14", that were going for a quarter of a million dollars-- can't even get pennies on the dollar. They can't give some of this shit away that they paid a quarter of a million dollars for. This is what's happening. New York is almost completely collapsed on the art market. They're approaching losing half of their galleries now, the big ones. Okay, so I come to New York with thirty oil paintings for a sold out show. Do you understand what kind of an effect this would have on the art community in New York? Do you comprehend that?

David: No, I'm not quite sure what you are getting at.

Robert: The very stanch and conservative and entrenched art world has collapsed, financially on its ass. It's on its knees, waiting for the storm to blow by, so it can try to crawl back up. It's lost half it's galleries. So, I come in there, and sell out a show of thirty oil paintings, before the doors even open. The opening night there's 2000 people in there. The police had barricades on the street. I had a lot of very important gallery people from around SoHo at my opening, telling me, "you're only one of ten people in all of New York that's selling." One of ten, out of 100,000 people that call themselves fine artists, in the art capital of this planet. But I'm doing ugly cartoons with naked ladies with big titties. The feminists were throwing rocks at me. (laughter ) I'm doing everything wrong, but here I am with a sold out show, and standing room only crowds, continually coming in. The first Saturday there was a thousand people in attendance, and the show was held over.

David: And this isn't because somebody with a row of fancy prestigious degrees after their name is praising it. People just look at it and really enjoy it.

Robert: That's right. Because it's a basic language of things that you're interested in. But it's not because I am so brilliant that I create it, it's just that I am a symptom of the situation. I came up with the rest of my underground buddies, reading underground comics, Hot Rod magazine, surfing, and all this stuff that people are really interested in. We've cooked it like soup, brewed it into an essence, and made art out of the things you want to fucking see-- not what's intellectually proper.

I mean, imagine for a moment a system where the people with the money to buy something get to decide what it is worth -- not based on what "experts" say, but based on whether they like it, and whether they are willing to buy it.

I'm surprised the government doesn't intervene and put a stop to such rampant freedom heresy.