The "AIG effect" is still affecting the luxury resort industry.

Indeed, businesses started toning down lavish corporate events after American International Group, the insurance giant, was widely criticized for holding a conference at a luxury resort days after it received a cash infusion from Congress in 2008.

Many resorts that have a heavy dependence on group business are still struggling. The latest victim is Amelia Island Plantation. Last week, the 1,350-acre luxury enclave overlooking the Atlantic Ocean in northeast Florida filed a voluntary petition for Chapter 11 bankruptcy protection.

The resort is very dependent on its group business, which has dropped precipitously over the past year, according to Richard Goldman, its chief marketing officer. "More than half of our business is from corporate groups that hold conferences here," says Goldman. "The AIG effect has basically scared off folks -- even businesses that could afford to have meetings -- who are afraid to hold conferences at resorts."

The company will operate as "business as usual" during the reorganization and an investor group, comprised of Amelia Island Plantation residents and club members, has already collected to aid the resort.

Amelia Island Plantation isn't the only hospitality company struggling during the recession. In Scottsdale, Ariz., the W Hotel recently staved off foreclosure and the InterContinental Montelucia Resort, also in Scottsdale, faced possible foreclosure earlier in the year. The Tropicana Las Vegas casino and the Ritz-Carlton Lake Las Vegas emerged from bankruptcy this year.

And this week, Citigroup reached a tentative agreement to sell the very same resort that started the whole mess in the first place. The St. Regis Monarch Beach resort in Dana Point, Ca., made headlines last year when it hosted a group of AIG executives at a retreat just days after the government bailout of the company. Citigroup seized the St. Regis from its owners last summer, after they failed to make payments on the bank's $70 million loan on the property.

In a recent article in the Telegraph rap star 50 Cent spoke out about the recession. To 50 Cent economy apparently means selling his "old diamonds" before buying something new. Not to criticize his strategy, clearly 50 Cent has more money than I do, but it seems that selling off old diamonds to buy new pieces is one of the most financially foolhardy ideas around. Resale on diamonds (large rare high carat stones excepted) is notoriously low. Even if he is essentially trading in his pieces with the same jeweler it is likely a losing game. He may be able to resell some pieces at a decent price because of his name but quickly turning over jewelry and constantly getting new pieces is not a way to accrue wealth.

He went on to say that anyone who didn't lose money in this recession "didn't have enough to start off with." He shrugged off his losses and believes he is still a savvy businessman who could even advise President Obama should he need it. Big words from a man who is still in the process of trying to sell one of the great white elephant pieces of Connecticut real estate, Mike Tyson's former mansion in Farmington, Connecticut. Tyson's mansion has been nothing but a headache for Fiddy. He bought the home for $4.1 million (Tyson's ex originally wanted $25 million) and spent $6 million renovating it. He has been trying to sell the home since 2007 when he wanted $18.5 million for the property and it is now listed at $10.9 million.

There's a gap in the upscale travel market right now. The companies that plan these limited-access excursions aren't selling as much as they used to, and once-upon-a-time buyers still have a thirst for the experiences not available to the general public – but not at the prices they paid before the recession. A new website, Jetsetter, is planning to help luxury travel planners and buyers meet in the middle.

Jetsetter, now in beta, bills itself as a "flash-sale website" for the up-market. This Gilt Groupe enterprise is invitation-only. So, the opportunities provided are not subject to the mass competition of the entire travel market. Nonetheless, inventory is likely to move quickly, and the window within which to act is not wide. "International trip curators" roam the world to conduct primary research – including on-site visits. These experts, including veteran travel writers and industry experts, then compile their findings on Jetsetter's site, with editorial accounts and photographs used to help would-be travelers make informed decisions.

Members of the online community will receive e-mail alerts every evening announcing the coming sales. Once that e-mail goes out – at 8 PM – the clock starts to tick.

Destinations available through Jetsetter include The Cotton House on Mustique, Negresco in Nice, the Paws Up resort in Montana (an amazing space) and Encantado in New Mexico.

What a difference a year makes!

Buyers brought their wallets to the Sotheby's auction in Hong Kong Monday, shelling out plenty of cash for pieces by Chinese masters. Sanyu's "Lotus et Poissons Rouge" fetched $4.7 million – beating the presale estimate soundly. But, the price was still considered low for Sanyu. In fact, the success of the auction is tainted by the fact that estimates aren't reflective of past sales levels. A painting by abstract artist Zao Wou-ki pulled in $2 million for the house.

Of course, there was plenty of optimism, fostered by both the performance relative to estimates and a burning desire to be out of the art market slump. Hua Yuzhou, who owns a gallery in Shanghai, says in Bloomberg News, "Give it a few months and these pieces may run beyond our reach again."

Now that she's staring down a $24 million lawsuit, Annie Leibovitz is running out of choices. With Art Capital Group claiming the rights to her photo archive, real estate and other assets posted as collateral, some experts say bankruptcy would buy her some time to find a new plan. But, it would come at the cost of privacy, as the photographers finances would be thrust into the public eye.

Neither Leibovitz's attorneys nor financial advisers returned Bloomberg News' calls for comment, but experts suggest that desperate times call for desperate measures. Filing for protection would push litigation into the future and secure the artist a bit of leverage. Hell, maybe it would buy her some time to see if Miley Cyrus wants to get naked again. I don't know if that would be worth $24 million, but I'm sure it would help Leibovitz to chip away at the debt.

Industry insiders seem to call Art Capital Group a capital source of last resort, though that's probably a bit unfair. If you're pledging collateral or are otherwise transacting in an illiquid market, common sense is necessary. And, let's face it, if traditional banks played in this space, Leibovitz may not have been hit with such tough terms. But, it's hard to believe she didn't know the rules of the game.

Mum's the word for now on Leibovitz's future. One thing is certain, however: she didn't spend the money on makeup.

[Thanks, Jason, for the makeup crack]

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High fashion has taken another hit this week. Following fast on the bankruptcy of the Christian Lacroix brand, as reported by my colleague Jared Paul Stern, Belgian designer Veronique Branquinho has announced she will shutter her eponymous label for economic reasons. Branquinho's business relied on wholesalers which have been doing less buying during the recession. Vogue UK says that Branquinho's company, James NV has begun a court-appointed liquidation period and will clear out residual stock from the label's only standalone store in Antwerp. Branquinho still has plenty to keep her busy, she is the new artistic director of Belgian leather goods brand Delvaux and a professor at the University of Applied Arts in Vienna.

Christie's International offered 38 lots at its Asian auction in Hong Kong, and 34 of them sold. Bidders battled for prime pieces, and the auction house came ahead $23.4 million. Almost a quarter of the result came from one painting, "Cats and Birds," by deceased Chinese artist Sanyu. The piece ultimately sold for $5.4 million, setting a new record at auction for this artist.

This sale kicked off what will be a four-day auction run with 1,600 lots going under the gavel, including artwork, gems and antiques. In all, Christie's expects to move close to $97 million by the time the final gavel strikes.

While reaching presale estimates has become a measure of success in this market, don't forget that these targets are much lower than last year's. In May 2008, Christie's offered 2,400 lots over six days in Hong Kong, estimated $219 million and took in a record $310 million. Nonetheless, a stream of disappointment that stretches back to mid-September may be coming to a close.

The success in Hong Kong follows a robust contemporary art auction for Christie's in New York, in which it outperformed competitor Sotheby's by 2:1.

Maybe, society has had enough. In Spokane, Washington, even non-smokers came to the defense of the cigar community when public golf courses tried to implement a ban. Other places are relying on creativity, such as tobacconist De La Concha's cigar dinners. In New Hampshire, the legislature is getting involved – a bill may legalize the sale of liquor in cigar bars.

In most places, it's tough to find a social setting where you can enjoy a cocktail and a cigar at the same time. The "live free or die" folks are looking to change that. If tobacconists are able to receive liquor licenses, the resulting store traffic could offset much of the damage being done by the financial crisis.

For Two Guys Smoke Shop in Salem, New Hampshire – where I used to go when I lived in northern Massachusetts – sales have fallen since the state banned smoking in restaurants two years ago, with particular effect in the winter. The ability to sell drinks would make the venue more enticing to customers, keep them in seats longer and likely result in an increase in sales.

There aren't many cigar venues left in New England or elsewhere in the country where you can smoke and drink at the same time. In Manhattan, we have a few spots, and Boston has Cigar Masters. Many cities have their hidden gems, but you have to find them. For the cigar smokers of New Hampshire, however, this could change. And, if you believe that Dixville Notch chooses the president every four years, expect to see similar laws pop up in other states.

Christie's fought the trend and walked away with close to $94 million. Naysayers stand shocked (I'll admit it; I'm among them). This is still far from the record-setting years leading up to the current financial crisis, but only the truly stubborn would not recognize the accomplishment of coming close to the upper end of the auction house's estimate, particularly a day after competitor Sotheby's turned in such a dismal performance.

The initial estimate for Christie's Post-War and Contemporary Evening Sale was $71.5 million to $104.5 million. Forty-nine of the 54 available lots were sold – a sales rate of 91 percent by lot and 94 percent by value. This easily tops the 81 percent by lot that Sotheby's hit (en route to a paltry $47 million). Thirty of the lots sold for more than $1 million each, and nine raked in more than $3 million a piece.

If you want to be negative, though, you still have plenty of ammo. Back in November, Christie's achieved a $113.6 million take with a sale rate of only 68 percent (by lot). A year ago, the auction house pulled in $331.4 million at a sale rate of 95 percent.

But, last May doesn't count. That was a last hurrah, of sorts, and most in the art community realized it, even if they wouldn't concede the obvious.

We're gripped by an unusually strong bear right now. He's squeezing financial markets viciously. And, it comes as no surprise that charitable giving is suffering. Nonetheless, philanthropy is staying ahead of investment hits. Even with stock market calamity, we're still able to find the occasional heart of gold out there.

Don't get me wrong, the situation's grim for the nonprofit sector. Craig M. Joseph of InQuest International, a full-service philanthropic consultancy, observes that the USA Giving Index – calculated by the Center of Philanthropy at Indiana University – is down 35 percent from its 2007 peak. That year, $306 billion in charitable gifts were made. With the steep decline over the past two years, though, a lot of organizations won't get the funding they need.

Of course, it could be worse. If philanthropy followed the Dow, gifts would have fallen more than 40 percent to less than $184 billion – rather than the estimated February 2009 level of $199 billion. With numbers this large, $15 billion may not seem like a lot, but in the hands of an efficient charitable organization, it can change a lot of lives.

For now, the news is "less negative," but there is still a lot of pain that still has to be pushed through the markets, as much of the Wall Street calamity likely has yet to be visited upon consumers. Let's just hope that we still find some room in our wallets to support our favorite charities.

At last night's contemporary art auction, Sotheby's brought in a meager $47 million – down 87 percent from last year's record of $315 million. The auction house wasn't even able to reach its low estimate for this year of $51.8million. Need some perspective? Last year's Francis Bacon triptych sold for 84 percent more (at $86.3 million) than all the lots purchased at last night's event.

The top sale last night was a blue and pink egg by Jeff Koons, measuring seven feet in width. At $5.5 million, it didn't even reach its estimate, which ranged from $6 million to $8 million. Last June, his pink "Balloon Flower (Magenta)" went for $25.7 million at a Christie's auction in London. Interestingly, art dealer Larry Gagosian was the buyer, though it's unclear if he bought it for himself or a client. Gagosian sold the egg back in 2004.

In general, buyers were in short supply, with most bidders choosing to remain on the sidelines. But, there is a sense that good works sold at fair prices ... unless you were one of the sellers, I imagine. Art market analysts, dealers and critics sought to find a silver lining, calling successes what would have been failures in previous years (such as the Koons egg price).

The shrinking pool of buyers reflected the artwork available. The number of lots offered at Sotheby's last night was down 42 percent, from 48 to 83. Only 81 percent – 39 – were sold.

Tonight, it's Christie's turn. Fifty-four contemporary pieces are set to come under the gavel, with total estimates ranging from $71.5 million to $104.5 million (not including commissions).

The only fingers not crossed, most likely, belong to bargain-hunters.

Last week, I sat down with representatives from American Express Publishing and Harrison Group to see a presentation and discuss a question which is on many of our minds: How are the wealthy reacting to the recession?

Well, to start with, more than half (53%) are worried they could run out of money. Dr. Jim Taylor, vice chairman of Harrison Group, and Cara David, senior vice president of corporate marketing and integrated media of American Express Publishing spent approximately an hour display charts that showed the results of countless hours spent crunching the first-quarter responses of 1,300 Americans with discretionary incomes over $100,000 (that means income after tax, mortgage, home maintenance, and child education costs are subtracted).

This year there are 120,000 fewer households that fit in that range.

Of the 1,300 moderately-to-very wealthy Americans surveyed, 70% believe that the recession will last longer than a year, and 35% think this could be a long term depression. 78% report that the crisis has affected their sense of financial security.

So how does the spending look? "Luxury is not dead, there's simply a filter on risk," says Taylor. 77% said they are buying fewer "big ticket items" this year -- so it's a safe bet that they're buying brands they trust. There seems to be a trend among the wealthy of pride in their willingness to not buy things. This goes beyond the usual chatter of talking about great bargains you got; people are actually feeling an increase in their self-esteem related to their ability to take control of their own lives. Believe it or not, spending less is making people happier. People checking the "Very Happy" box went from 58% last year to 66% this year -- women up 10%, men up 4%.

Art auction houses are looking to protect themselves. Lacking a local "enforcer" to find once eager collectors and shake them down for every last dollar, the likes of Sotheby's and Christie's will spend the coming fortnight managing expectations while trying to eke out a living. Atop the agenda this season is the notion of protecting price levels for Impressionist, modern and contemporary pieces.

Reality has struck.

Sotheby's has revealed a sales target of $179 million to $256 million for the spring. Last fall, the auction house hit $411 million – which is paltry compared to the $742 million take at this time last year. The showpiece now is "Baroque Egg with Bow," a sculpture by Jeff Koons, which carries a Sotheby's estimate of $6 million. While this sounds rich for today's market, the house almost quadrupled that amount with a sculpture from the same artist in 2007.

For those who haven't been keeping score, 2007 for the art world was like 1999 for technology people.

By reinforcing concern through modest estimates and carefully selected lots, the major (and smaller auction houses) are subtly positioning themselves for any unexpected support. A strong spring auction – as measured by current economic conditions – could cause global art market confidence to rebound. A turn for the worse, however, would be exacerbated by already depressed hopes.

Metaphorically related to the name behind the "Crazy Hours" watch pictured above, times are crazy at Swiss Franck Muller, which this month is beginning a round of layoffs designed to help maintain survival for this luxury watchmaker. The company has been quiet the last couple of years, but for a while in the early 2000s, was one of the most popular luxury watch makers with their flamboyant good looks. Now, the 550-person company is feeling the sting of the economy and is letting go at least 92 people, a large chunk of their work force. The good news at least is that the people being escorted out will have a nice severance package to enjoy, based on their seniority in the company, and dependents. The truth is that European companies are loathe to engage in mass layoffs given the often personal relationships they enjoy with their employees. Only grave times call for such action, and the parties affected are often always taken care of to the best of the company's abilities. This is in stark contrast to the US, where layoffs are often complimented with just 2 weeks pay, no pension, and a friendly "get the hell out of here."

In addition to the friendly treatment the ex Franck Muller employees are getting, Franck Muller is also hiring a professional "career repositioning firm" whose goal it is to help the laid-off employees find new jobs! Wow. The problems at Franck Muller are not unique, as vastly decreased luxury watch sales are common across the board these days.

Ariel Adams publishes the popular watch review site aBlogtoRead.com.

Art addictions are wearing off, thanks in large part to the brutal discipline enforced by the global financial crisis. Only 79 sales generated bids north of $1 million in the first quarter of the year – only half the number that crossed this threshold for the same period in 2008.

The proportion of lots with estimates below $5,000 – pretty much the lowest point at which art can be considered "investment grade" – was 77 percent, 10 percent higher than in 2008. Pieces offered for more than $50,000 represent only 3 percent of the lots coming on the block so far this year. It was 6 percent for the first quarter of 2008.

ArtPrice puts the contraction of the global fine art market at 10 percent since the beginning of 2009. It shrunk 30 percent in 2008, after showing fantastic growth of 18 percent in 2007 – when the market peaked.

At the beginning of 2008, artists, dealers and auction houses braced themselves for a difficult year, and if nothing else, they were rewarded for their preparation with the ultimate delivery of bad news. Conditions are continuing this year. For those with the resources (and the storage space), now could be a great time to pick up some old masters or maybe make a speculative play in the emerging market space.

Just be prepared to buy and hold ... for a while.

[Photo of "El Picador" by Julio Aguilera]