Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Are Apple, Tesla, and Bitcoin Entering Market Technical Excess Top Phase? - 18th May 21
Gold Watch Out as Price May Be Staging New Momentum Base In Preparation For A Big Move Upwards - 18th May 21
Why the Demand for US Real Estate Licenses May Soon Fall into a Sinkhole - 18th May 21
Semiconductor Equipment Maker ASML Is at the Center of the Global Chip Shortage - 18th May 21
Could This Be The Hottest Investment Sector For 2021? - 18th May 21
TESLA Tech Stock Bubble BURSTS! Stock Price Heading for CRASH to below $400 - 18th May 21
The Most Exciting Biotech Stock Of The Year? - 17th May 21
Gold Mining Stocks Fundamentals - 17th May 21
Junior Gold Miners Should be Rallying – What’s Holding Them Back? - 17th May 21
Stock Market - Should You Be In Cash Right Now? - 17th May 21
Learning the Financial Markets - 17th May 21
Is Stock Market Selling Madness About Over? - 16th May 21
Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
Budgies Birds of Paradise Indoor Grape Vine Singing, Chirping and Flying Parakeets Fun 3D VR180 UK - 16th May 21
Wall Street Roiled by Hot Inflation Data: Is This REALLY “Transitory”? - 16th May 21
Inflation Going Stag - 16th May 21
CHIA Coins After 1st Week of Plotting 140 Plot 14tb Farm. Crunching the Numbers How to Win - 15th May 21
Tips to Create the Best Cross-Functional Teams - 15th May 21
Gold: Lose a Battle to Win the War - 14th May 21
Are You Invested in America’s “Two-Hour Boom” Fast Shipping Stocks? - 14th May 21
Gold to Benefit from Mounting US Debt Pile - 14th May 21
6 Solid Signs You Should Have Your Smart Device Repaired Right Away - 14th May 21
Ways to Finance Your Business Growth - 14th May 21
Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
How Much CHIA Coins Profit from 100 Plot 10tb Farm? Hard Drive Space Mining - 13th May 21
Stock Market Bulls Getting Caught in the Whirlwind - 13th May 21
Legoland Windsor Mini land and Sky Train Virtual Tour in VR 360 - UK London Holidays 2021 - 13th May 21
Peak Growth and Inflation - 13th May 21
Where’s The Fed? Watch Precious Metals For Signs Of Inflation Panic - 13th May 21
Coronavius Covid-19 in Italy in August 2019! - 13th May 21
India Covid Apocalypse Heralds Catastrophe for Pakistan and Bangladesh - 13th May 21
TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
Gold Price During Hyperinflation - 12th May 21
Stock Market Extending Phase Two? - 12th May 21
Crypto 101 for new traders – ETH or BTC? - 12th May 21
Stock Market Enters Early Summer Correction Trend Forecast Time Window - 11th May 21
GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
Cathy Wood Bubble Bursts as ARK Funds CRASH! Enter into a Severe Bear Market - 11th May 21
Apply This Technique to Stop Rushing into Trades - 10th May 21
Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
CHIA Getting Started SSD Crypto Mining by Plotting and Farming on Your Hard Drives Guide - 9th May 21
Yaheetech Mesh Best Cheap Computer /. Gaming Chairs on Amazon Review - 9th May 21
Breaking US Trade Embargo with Cuba - Build 7 Computers in 14 Hours Before Ship Sales Challenge - 9th May 21
Dripcoin Applies New Technology That Provides Faster Order Execution - 9th May 21
Capital Gains Tax Hike News: Was It REALLY to Blame for Sell-off? - 7th May 21
Stock Market Transportation Index Continues To Grind Higher - 7th May 21
SPX Stock Market Correction Arriving or Not? - 7th May 21
How to Invest in an Online Casino? - 7th May 21
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

New York's Skyscraper Curse Signaling Economic Crisis

Economics / Economic Theory Nov 17, 2013 - 02:38 PM GMT

By: Mark_Thornton


It is now official! New York City has won the title of having the nation’s tallest structure. The heated controversy between New York and Chicago was settled recently when the Council of Tall Buildings and Urban Habitat (based in Chicago) decided that the 408-foot spire sitting atop the One World Trade Center could be included in the total height of the building.

The revised height of 1,776 feet makes One World Trade Center the tallest structure in the US. We are told that One WTC is more than a building. It is a monument both to those murdered on 9/11 and it honors our Declaration of Independence. Not to disrespect those who died, but this “record” is a sham because the useable, productive height of the building is only 1,368 feet. The remaining 400-odd foot difference is just window dressing.

This dubious record should nonetheless be a warning to us that the "Skyscraper Curse," the forerunner of economic crisis, is lurking near.

The Curse originated during the Panic of 1907. Two skyscrapers were under construction during this time, the Singer Building opened in 1908 and the Metropolitan Life Building opened in 1909, and each would become the world’s tallest. In 1929, America’s Great Depression was ushered in with the opening of the 40 Wall Street Building (currently the Trump Building), then came the Chrysler Building in 1930, and the Empire State Building in 1931. The booming 1960s was followed by the stagflation of the 1970s and saw more record-setting skyscrapers being built with inflated money, among them World Trade Towers 1 & 2 and the Sears Building which all opened in the early 1970s.

The Willis Tower, formerly the Sears Tower, is 1,451 feet not counting any spire or other gimmicks that architects and builders use to inflate the heights of their projects. The Sears Tower, begun in 1970 and completed in 1973, was constructed while the US was still on the gold standard, setting a new world’s record for the tallest skyscraper, and, all of its 108 stories represented habitable office space.

The Curse is not just an American phenomenon. The Petronas Towers in Kuala Lumpur, Indonesia, opened in 1997 and was a signal of the “Asian Contagion” of the late 1990s. Taiwan began construction on Taipei 101 as the tech bubble of the late 1990s was imploding. The Burj Khalifa Tower in Dubai, begun in 2004, set a new record when it opened in the summer of 2010, just in time to catch the end of the housing bubble. The building opened, bankrupt, in the midst of a world economic crisis.

More recently the Shard Building, in London, broke ground in 2009 and was completed in 2012, becoming the tallest building in Europe. This was a clear signal of the European economic crisis, the PIIIGS fiscal disasters, and grave and ongoing concerns over the viability of the Euro currency. Just recently Japan joined the fraternity with the Tokyo Skytree in 2012, the tallest structure in Japan. Not to be outdone, China set a new national skyscraper record with the Shanghai Tower which will open in 2014. China also broke ground, but suspended construction on Sky City, which would have set a new world record.

Is there a real connection between skyscraper records and economic crisis, or is this just coincidence? The connection begins with interest rates that are artificially and temporally too low; a phenomenon brought about by out-of-control central banks, such as the Federal Reserve. I explain this in detail in my 2005 article "Skyscrapers and Business Cycles" (2005).

Artificially low interest rates drive up profits temporarily as they drive down the costs of production which then increases spending in the economy. Higher profit margins encourage new investments in bigger, longer-term capital projects boosting profit expectations even higher. Naturally, stock market levels are driven ever higher under these times. Normally, record-setting skyscrapers are difficult and costly ventures, but history has shown that they proliferate in this easy-money environment.

As the effects of the artificial stimulus from central banks takes hold in the economy the costs of production rise unexpectedly, markets grow surprisingly more competitive driving down prices, and projects which once seemed highly profitable (such as record setting skyscrapers) open up in bankruptcy at ribbon-cutting time.

World-record-setting skyscrapers are a signal of economic crisis. Like world-record-setting art prices (such as the $142 million selling price of a painting by Francis Bacon of his friend Lucian Freud at Christie’s in New York) such records are signs of economic excess. Just remember that that “excess”can only occur in market’s manipulated by central banks, like the Federal Reserve.

Mark Thornton is a senior resident fellow at the Ludwig von Mises Institute in Auburn, Alabama, and is the Book Review Editor for the Quarterly Journal of Austrian Economics. He is the author of The Economics of Prohibition and co-author of Tariffs, Blockades, and Inflation: The Economics of the Civil War. Send him mail. See Mark Thornton's article archives. Comment on the blog.

© 2013 Copyright Ludwig von Mises - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in