NEW YORK—The subprime mortgage crunch, which began with individual homeowners and spread throughout the financial sector—extending to Asia, Europe and Australia—is indeed expected to impact the art market, but not in a severe way, say several financial watchdogs. "There has been a rapid run-up in prices" in the art market, says Robert H. Frank, professor of economics at Cornell University. "The credit problem will slow that down, but only for a relatively small period of time."

Other economists agree. "This is a relatively short-run financial dislocation," says Michael Moses, a retired economics professor at New York University and currently a financial advisor to art investors. Diane Swonk, chief economist for the Chicago-based financial services firm Mesirow Financial, notes that "we’ll see a rebound in the equity markets. There will still be people willing and able to pay top dollar for art; they just may not be the same people."

Swonk and Frank both say that since artwork is not as easily or quickly turned into cash, investors are less likely to flood the auction houses with material and do so at bargain-basement prices. "I think it will be harder to sell art, because money is currently more scarce," Frank says, adding "the main effect of all this will be on the demand side," meaning fewer buyers bidding.

Hedge fund managers have become the major buyers of high-end art, having quickly risen to the ranks of the super wealthy. On average, they earn 2 percent of the money they manage and 20 percent of any gains made. These managers have been on the radar of the art trade, because of their desire for "trophy assets," such as real estate and art, says Philip Hoffman, chief executive of The Fine Art Fund, an art hedge fund based in London. "We’ve estimated 8,000 hedge funds out there, and one-third of those managers buy art. They’ve been pumping a lot of money into art." Of those, he postulates that 1,000 "will have had a rough time and probably will stop buying art, but the others will continue." The majority of their buying has been in the contemporary art realm, leaving most other categories unaffected. (If there is a drop-off, it will most likely affect this category, rather than all art-market sectors.) He adds that the market for art has become "so vast, with new collectors coming in from the Middle East, Russia, China and India," whose wealth is primarily based on oil, trade or manufacturing and not nearly as dependent on hedge funds or equities, "that the long-term outlook for the art market is quite good."

The financial situation brightened considerably when, in mid-August, the Federal Reserve and central banks throughout Europe, Asia and Australia reduced interest rates and made available more than $136 billion in cash for commercial banks to meet their obligations. They had feared a deflationary spiral in which banks around the world would call in their old loans and be reluctant to make new ones, therefore hobbling businesses in need of credit and furthering a downturn—not unlike the stark scenario that brought on the Great Depression of the 1930s.