"Unhealthy correlation" between skyscrapers and financial crashes

bit_pattern · 12th January 2012, 12:52 AM

Saw this today, thought it might generate some lively discussion

http://www.abc.net.au/news/2012-01-1...rashes/3768706

Quote:

An "unhealthy correlation" exists between the construction of skyscrapers and financial crashes, according to a new report from investment bank Barclays Capital.

The construction of the Empire State building in New York in 1930, along with towers in Kuala Lumpur in 1997 and Dubai in 2010, have all been followed by economic crises, the report noted.

"Often the world's tallest buildings are simply the edifice of a broader skyscraper building boom, reflecting a widespread misallocation of capital and an impending economic correction," it said.

"The completion of Petronas Towers in Kuala Lumpur in 1997 was followed by a region-wide economic crisis and the collapse of Asian currencies," it added.

Investors should pay special attention to China, the Skyscraper Index warns, as the "biggest bubble builder" is currently erecting 53 per cent of the 124 skyscrapers planned over the next six years.

China currently has 75 completed buildings above 240 metres in height.

India has just completed two new skyscrapers, with 14 more already under construction.

The Don · 12th January 2012, 12:57 AM

Well if economies are cyclical and skyscrapers take a long time to build it stands to reason that the largest skyscrapers are commissioned at the top of the largest peaks and hence are built as the cycle goes negative.

Stylesjl · 12th January 2012, 02:05 AM

Of course if we just prevented the construction of tall skyscrapers bubbles would be a thing of the past!

Gazpacho · 12th January 2012, 02:41 AM

I can confirm this anecdotally from somewhere near Bellevue, WA.

bit_pattern · 12th January 2012, 03:20 AM

Some good comments so far

Kid Eager · 12th January 2012, 03:49 AM

They've got it wrong - impending financial crashes create an urge to build skyscrapers, so that they've got something to show for the effort once the economy tanks.

Silly analysts.

rjh01 · 12th January 2012, 12:58 PM

I do not think you understand the study. Building skyscrapers does not produce recessions. Something else produces both events. I would not mind seeing some data. Like is it every time there is a record height of building opened then a crash happens? Is that before or after it happens? Or is the window so big that a crash of some sort will happen anyway?

geni · 12th January 2012, 01:12 PM

Originally Posted by rjh01

I do not think you understand the study. Building skyscrapers does not produce recessions. Something else produces both events. I would not mind seeing some data. Like is it every time there is a record height of building opened then a crash happens? Is that before or after it happens? Or is the window so big that a crash of some sort will happen anyway?

The idea isn't new:

http://en.wikipedia.org/wiki/Skyscraper_Index

The main counter is that you sometimes get booms without significant skyscraper construction.

Foolmewunz · 12th January 2012, 03:44 PM

As with that pseudo historian who was trying to prove the ancient Sumerian (or was it Babylonian) 700 year cycles - or whatever it was - you can always count whatever date you need to shoe-horn the building into your theory.

The example of Petronas vs Empire State will suffice for comparison.
The skyrscraper competition in Manhattan was started during the period right before the big crash, but the buildings opened well after the onset of the Depression. The Petronas building was built during the boom, but opened just before the global financial crisis hit. So which is it? The building of skyscrapers indicates the end of the boom cycle? Or the opening of skyscrapers?

The planning, ground-breaking and building phase can take several years, if not a decade. With recession/inflation/boom/bust/oil crisis/banking crisis/sub-prime crisis/dotcom bubble etc... there's always some up/down scenario around the corner. We don't go more than 7/10 years between crises over the past seventy-five years, so by including any phase of the construction, you can prove anything you like.

Using the broad range of dates (planning to opening), I think I could probably shoe-horn postdiction of any event of the 20th century into some form of a Skyrscraper Theory.

AvalonXQ · 12th January 2012, 03:52 PM

There's a very simple explanation.

God's just gotten a little more subtle.

geni · 12th January 2012, 08:47 PM

Originally Posted by Foolmewunz

Using the broad range of dates (planning to opening), I think I could probably shoe-horn postdiction of any event of the 20th century into some form of a Skyrscraper Theory.

It does appear that people don't generally start skyscrapers during economic downturns.

Foolmewunz · 12th January 2012, 09:46 PM

Originally Posted by geni

It does appear that people don't generally start skyscrapers during economic downturns.

Well, what do we mean by "start"? The planning, the financial arrangements for the property, the ground-breaking?

The Empire State Building excavation began in 1930. I think I read about a sort of "downturn" around that era.

geni · 12th January 2012, 10:05 PM

Originally Posted by Foolmewunz

Well, what do we mean by "start"? The planning, the financial arrangements for the property, the ground-breaking?

The Empire State Building excavation began in 1930. I think I read about a sort of "downturn" around that era.

Construction started at the start of 1930 where as the great depression didn't really kick in untill the end of the year. How many skyscrapers were started in 1933?

Foolmewunz · 13th January 2012, 04:48 AM

Originally Posted by geni

Construction started at the start of 1930 where as the great depression didn't really kick in untill the end of the year. How many skyscrapers were started in 1933?

Okay, first of all, I know about the Depression and when it started. I had misread the subject matter (more the bantering back and forth) and I was more interested in whether they were claiming it was the completion/opening of the buildings or the financing, planning - securing, and building.

As symptoms, there may be some validity to the theory. Barclay's claims that it bases it on completion, but then they go back and forth from discussing the precise fits (the Depression Manhattan 'scrapers, Kuala Lumpur, Dubai) to talking about near misses and maybes. (WTC, Willis Tower, Taipei 101).

They're also not really clear about just what it is we're to expect? Recession/Depression? A "financial crisis" - that's a fairly broad term?

On the whole, though? It makes sense. I wouldn't go selling short based on it, but since the symptoms of being ready for a correction or recession are the conditions that lead to construction booms, I can see some corelation. But with them discussing the building booms in China and Asia as indicators, they're ignoring the part that everyone latched onto - that the latest "tallest building in the world" heralds some sort of economic bad times ahead. Focusing on large scale building booms, to me, makes sense, to a degree.

12th January 2012, 12:52 AM	#1
bit_pattern Illuminator Join Date: Apr 2010 Posts: 4,349	"Unhealthy correlation" between skyscrapers and financial crashes Saw this today, thought it might generate some lively discussion http://www.abc.net.au/news/2012-01-1...rashes/3768706 Quote: An "unhealthy correlation" exists between the construction of skyscrapers and financial crashes, according to a new report from investment bank Barclays Capital. The construction of the Empire State building in New York in 1930, along with towers in Kuala Lumpur in 1997 and Dubai in 2010, have all been followed by economic crises, the report noted. "Often the world's tallest buildings are simply the edifice of a broader skyscraper building boom, reflecting a widespread misallocation of capital and an impending economic correction," it said. "The completion of Petronas Towers in Kuala Lumpur in 1997 was followed by a region-wide economic crisis and the collapse of Asian currencies," it added. Investors should pay special attention to China, the Skyscraper Index warns, as the "biggest bubble builder" is currently erecting 53 per cent of the 124 skyscrapers planned over the next six years. China currently has 75 completed buildings above 240 metres in height. India has just completed two new skyscrapers, with 14 more already under construction.
bit_pattern Illuminator Join Date: Apr 2010 Posts: 4,349	__________________ "You are the epitome of the 'pigeon playing chess'. No matter how good I am at chess, you are just going to knock the pieces over, **** on the board and strut around like you've won something" "In this political climate, all of science is vulnerable to ideological attack when reality disagrees with political beliefs."

12th January 2012, 02:41 AM	#4
Gazpacho Master Poster Join Date: Jan 2007 Location: Valley Lodge, USA Posts: 2,136	I can confirm this anecdotally from somewhere near Bellevue, WA.
	__________________ _{Google search help}

12th January 2012, 03:20 AM	#5
bit_pattern Illuminator Join Date: Apr 2010 Posts: 4,349	Some good comments so far
bit_pattern Illuminator Join Date: Apr 2010 Posts: 4,349	__________________ "You are the epitome of the 'pigeon playing chess'. No matter how good I am at chess, you are just going to knock the pieces over, **** on the board and strut around like you've won something" "In this political climate, all of science is vulnerable to ideological attack when reality disagrees with political beliefs."

12th January 2012, 03:49 AM	#6
Kid Eager Illuminator Join Date: Nov 2010 Location: Australia Posts: 3,462	They've got it wrong - impending financial crashes create an urge to build skyscrapers, so that they've got something to show for the effort once the economy tanks. Silly analysts.
	__________________ What do Narwhals, Magnets and Apollo 13 have in common? Think about it....

12th January 2012, 03:44 PM	#9
Foolmewunz Grammar Resistance Leader Join Date: Aug 2006 Location: Pattaya, Thailand Posts: 20,497	As with that pseudo historian who was trying to prove the ancient Sumerian (or was it Babylonian) 700 year cycles - or whatever it was - you can always count whatever date you need to shoe-horn the building into your theory. The example of Petronas vs Empire State will suffice for comparison. The skyrscraper competition in Manhattan was started during the period right before the big crash, but the buildings opened well after the onset of the Depression. The Petronas building was built during the boom, but opened just before the global financial crisis hit. So which is it? The building of skyscrapers indicates the end of the boom cycle? Or the opening of skyscrapers? The planning, ground-breaking and building phase can take several years, if not a decade. With recession/inflation/boom/bust/oil crisis/banking crisis/sub-prime crisis/dotcom bubble etc... there's always some up/down scenario around the corner. We don't go more than 7/10 years between crises over the past seventy-five years, so by including any phase of the construction, you can prove anything you like. Using the broad range of dates (planning to opening), I think I could probably shoe-horn postdiction of any event of the 20th century into some form of a Skyrscraper Theory.
	__________________ Ha! Foolmewunz has just been added to the list of people who aren't complete idiots. Hokulele Don't you wish someone had slapped baby Hitler really really hard? [i] Dr. Buzzo 02/13 [i]

12th January 2012, 12:57 AM	#2
The Don Philosopher Join Date: Nov 2002 Location: Cymru Posts: 8,220	Well if economies are cyclical and skyscrapers take a long time to build it stands to reason that the largest skyscrapers are commissioned at the top of the largest peaks and hence are built as the cycle goes negative.

12th January 2012, 02:05 AM	#3
Stylesjl Thinker Join Date: Jul 2010 Location: Sydney, Australia Posts: 183	Of course if we just prevented the construction of tall skyscrapers bubbles would be a thing of the past!

12th January 2012, 12:58 PM	#7
rjh01 Gentleman of leisure Tagger Join Date: May 2005 Location: Planet Earth Posts: 17,160	I do not think you understand the study. Building skyscrapers does not produce recessions. Something else produces both events. I would not mind seeing some data. Like is it every time there is a record height of building opened then a crash happens? Is that before or after it happens? Or is the window so big that a crash of some sort will happen anyway?

12th January 2012, 01:12 PM	#8
geni Anti-homeopathy illuminati member Join Date: Oct 2003 Location: UK Posts: 26,549	Originally Posted by rjh01 I do not think you understand the study. Building skyscrapers does not produce recessions. Something else produces both events. I would not mind seeing some data. Like is it every time there is a record height of building opened then a crash happens? Is that before or after it happens? Or is the window so big that a crash of some sort will happen anyway? The idea isn't new: http://en.wikipedia.org/wiki/Skyscraper_Index The main counter is that you sometimes get booms without significant skyscraper construction.

12th January 2012, 03:52 PM	#10
AvalonXQ Guest Join Date: Sep 2009 Posts: 11,853	There's a very simple explanation. God's just gotten a little more subtle.
AvalonXQ Guest Join Date: Sep 2009 Posts: 11,853

12th January 2012, 08:47 PM	#11
geni Anti-homeopathy illuminati member Join Date: Oct 2003 Location: UK Posts: 26,549	Originally Posted by Foolmewunz Using the broad range of dates (planning to opening), I think I could probably shoe-horn postdiction of any event of the 20th century into some form of a Skyrscraper Theory. It does appear that people don't generally start skyscrapers during economic downturns.

12th January 2012, 09:46 PM	#12
Foolmewunz Grammar Resistance Leader Join Date: Aug 2006 Location: Pattaya, Thailand Posts: 20,497	Originally Posted by geni It does appear that people don't generally start skyscrapers during economic downturns. Well, what do we mean by "start"? The planning, the financial arrangements for the property, the ground-breaking? The Empire State Building excavation began in 1930. I think I read about a sort of "downturn" around that era.
	__________________ Ha! Foolmewunz has just been added to the list of people who aren't complete idiots. Hokulele Don't you wish someone had slapped baby Hitler really really hard? [i] Dr. Buzzo 02/13 [i]

12th January 2012, 10:05 PM	#13
geni Anti-homeopathy illuminati member Join Date: Oct 2003 Location: UK Posts: 26,549	Originally Posted by Foolmewunz Well, what do we mean by "start"? The planning, the financial arrangements for the property, the ground-breaking? The Empire State Building excavation began in 1930. I think I read about a sort of "downturn" around that era. Construction started at the start of 1930 where as the great depression didn't really kick in untill the end of the year. How many skyscrapers were started in 1933?

13th January 2012, 04:48 AM	#14
Foolmewunz Grammar Resistance Leader Join Date: Aug 2006 Location: Pattaya, Thailand Posts: 20,497	Originally Posted by geni Construction started at the start of 1930 where as the great depression didn't really kick in untill the end of the year. How many skyscrapers were started in 1933? Okay, first of all, I know about the Depression and when it started. I had misread the subject matter (more the bantering back and forth) and I was more interested in whether they were claiming it was the completion/opening of the buildings or the financing, planning - securing, and building. As symptoms, there may be some validity to the theory. Barclay's claims that it bases it on completion, but then they go back and forth from discussing the precise fits (the Depression Manhattan 'scrapers, Kuala Lumpur, Dubai) to talking about near misses and maybes. (WTC, Willis Tower, Taipei 101). They're also not really clear about just what it is we're to expect? Recession/Depression? A "financial crisis" - that's a fairly broad term? On the whole, though? It makes sense. I wouldn't go selling short based on it, but since the symptoms of being ready for a correction or recession are the conditions that lead to construction booms, I can see some corelation. But with them discussing the building booms in China and Asia as indicators, they're ignoring the part that everyone latched onto - that the latest "tallest building in the world" heralds some sort of economic bad times ahead. Focusing on large scale building booms, to me, makes sense, to a degree.
	__________________ Ha! Foolmewunz has just been added to the list of people who aren't complete idiots. Hokulele Don't you wish someone had slapped baby Hitler really really hard? [i] Dr. Buzzo 02/13 [i]