Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21
Why Tether USDT, Stable Scam Coins Could COLLAPSE the Crypto Markets - Black Swan 2021 - 6th Jun 21
Stock Market: 4 Tips for Investing in Gold - 6th Jun 21
Apple (AAPL) Summer Correction Stock Trend Analysis - 5th Jun 21
Stock Market Sentiment Speaks: I 'Believe' We Rally Into A June Swoon - 5th Jun 21
Stock Market Russell 2000 After Reaching A Trend Channel High Flags Out - 5th Jun 21
Money Is Cheap, Own Gold - 5th Jun 21
Bitcoin and Ravencoin Cryptos CRASH Bear Market Buying Levels Price Targets - 4th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

From London to China - Where is Today's Skyscraper Curse?

Economics / Economic Theory Feb 25, 2015 - 12:10 PM GMT

By: Mark_Thornton

Economics

Super tall buildings, or skyscrapers, are being built at an astonishing rate. Ninety-seven buildings that exceed 200 meters (656 feet) high were constructed in 2014, setting a new record. The previous record was eighty-one buildings completed in 2011. The total number of skyscrapers in existence now is 935, a whopping 350 percent increase since the year 2000.


Another record set in 2014 was the completion of eleven super-tall skyscrapers of over 300 meters or nearly 1,000 feet. That is the distance in height of over three football fields. The tallest skyscraper completed in 2014 was One World Trade Center in New York City. It is the third tallest skyscraper in the world, and the tallest in the western hemisphere, but only if you count the antenna/spire in the building’s height.

The tallest skyscraper in the world is the Burj Khalifa in Dubai, United Arab Emirates. On July 21, 2007 it surpassed the height of the then-reigning record holder Taipei 101.

The Shanghai Tower, which is the tallest skyscraper in China, opens for business in mid-2015. The third tallest is the Makkah Royal Clock Tower in Saudi Arabia.

What is the Skyscraper Curse?

The reason all of this is important is the “skyscraper curse.” The curse is based on the correlation between the setting of new record heights in skyscrapers and the onset of economic crisis over the last century, or longer.

The last clear global signal of the curse was the Burj Khalifa, which saw the ruler of Dubai unable to repay the loans for all his elaborate real estate development projects. However, the Shard building in London set a new European record and ushered in the European economic and debt crisis.

Skyscraper Curse watchers have recently returned their attention to the Middle East. According to the Wall Street Journal Dubai’s real estate moguls have embarked on another “Go-Go Era” of boom and bust:

Dubai has slowly but surely clawed its way out of the hole it dug for itself in 2009 when a series of government-linked companies, including several under the direct control of ruler Sheikh Mohammed bin Rashid Al Maktoum, were unable to pay lenders on time and called for a standstill on repayments. The move signaled the death knell for an economic boom that had been fueled by real estate for almost a decade.

Dubai has again succeeded in convincing lenders — both international titans like HSBC and Standard Chartered and dozens of local banks — to support its government-linked real-estate developers. Investors, analysts and the emirate’s new crop of leaders all say this time is different to the previous boom running up to 2009.

Not only is the world teeming with real estate speculation and skyscraper building from China, to New York, to London, and the Middle East, there is a new world record setting skyscraper being constructed in Jeddah, Saudi Arabia. The Kingdom Tower is designed to be over one kilometer in height, or more than eleven football fields. It is to be completed in late 2016 or 2017. As designed, the Kingdom Tower will exceed the height of the Burj Khalifa by more than 500 feet. If events proceed as the skyscraper curse predicts, the beginning of construction of the Kingdom Tower signals a crisis alert (when a new record setter has begun) and will change to a crisis signal (when a new record is set) between now and the end of 2016.

Record-Setting Skyscrapers are Symptoms, Not Causes

Of course, the building of record-setting skyscrapers does not cause world economic crisis. The records are merely symptoms of the underlying cause of world economic bubbles: sustained artificially low interest rates by central banks. I explain the process and the theoretical connections between record-setting skyscrapers and world economic crises here in the Quarterly Journal of Austrian Economics.

The skyscrapers can sometimes tell us about the geography of world economic bubbles. The last bubble occurred in the oil rich Middle East and the next one would also seem to be in the Middle East. Both bubbles began when oil prices exceeded $100 a barrel.

It is interesting to note that Prince Alwaleed, the owner of the Kingdom Tower project recently and unexpectedly sold most of his large stake of stock in News Corp, Rupert Murdoch’s media conglomerate, to raise nearly $200 million. The move was said to have been part of an overall review and rebalancing of the Prince’s $20 billion portfolio. This is probably a smart move given the collapse of oil prices and the hefty price tag of $1.25 billion for the Prince’s Kingdom Tower.

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.

© 2015 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 http://www.MarketOracle.co.uk - 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