Buildings go up, economies head down.... "Skyscraper Curse"

There's an uncanny correlation between attempts to construct the world's tallest building and financial crises. Be it New York in 1930, Chicago in 1974, Kuala Lumpur in 1997, China in 2008 or the biblical Tower of Babel long before that, efforts to erect mankind's next architectural monstrosity have proved a reliable indicator of economic meltdowns.

In the late 1920s, the completion of the Chrysler and Empire State buildings coincided with the Great Depression. The 1970s saw the erection of the 1,368-foot World Trade Center and Chicago's 1,450-foot Sears Tower amid stagflation, a fiscal crisis in New York and the breakdown of the Bretton Woods monetary system. The completion of Kuala Lumpur's Petronas Towers in 1997 coincided with the collapse of Asia's economies. Year 2008 saw the collapse of the world's financial markets with the completion of Shanghai World Financial Center, China.

What's the connection between the skyscraper's and the crises? Over-Investment, speculation.

The desire to erect the tallest building seems to have much to do with sudden capital inflows that pump up credit creation and confidence. It's often periods of over-investment and financial speculation, fueled by excessive monetary expansion, that drive developers and politicians to architectural one-upmanship.

What all this means for economies and markets is highly debatable. Still, history shows skyscrapers may provide more information than meets the eye. Building trends may just prove to be one of the very few economic barometers with real foundation.

Note: Excerpts as taken from http://goliath.ecnext.com/coms2/gi_0199-2120898/Buildings-go-up-economies-head.html