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eppur_se_muova

(36,227 posts)
Wed Jan 11, 2012, 03:37 PM Jan 2012

Skyscrapers 'linked with impending financial crashes' (BBC)

There is an "unhealthy correlation" between the building of skyscrapers and subsequent financial crashes, according to Barclays Capital.

Examples include the Empire State building, built as the Great Depression was under way, and the current world's tallest, the Burj Khalifa, built just before Dubai almost went bust.

China is currently the biggest builder of skyscrapers, the bank said.

India also has 14 skyscrapers under construction.

"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," Barclays Capital analysts said.
***
more: http://www.bbc.co.uk/news/business-16494013




Putting up a building that's taller than anyone else's is a "misallocation of capital" ? Who knew ?

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cthulu2016

(10,960 posts)
2. This is a classic fallacy
Wed Jan 11, 2012, 03:41 PM
Jan 2012

If we assume that depressions cause some builidng projects to be cancelled and others to be never conceived then of course big building projects will cluster around the peaks before the troughs.

There's no way around it!

This is like the "Sports Illustrated Curse." A lot of atheletes think it bad luck to be on the cover of sports illustrated because poor performance often follows that honor. It would, however, be truer to say that lousy performance never precedes that honor.

Sports Illusrated puts people on the cover for things like winning ten tournaments in a row. Of course performance drops off. It's reversion to the mean.

If Sports Illustrated covers tended to feature teams who have lost ten straight games then it would appear to be a predictor of future relative success. (This is not the gambler's fallacy of thinking that if you flip heads ten times that tails is likelier than usual on the next flip. The gambler's fallacy is thinking that previous flips affect the next flip, but you could phrase it this way: If you just flipped ten heads in a row then the odds are overwhelming that your next ten flips will contain more tails than your previous ten flips did, because we already know that the last ten flips were an unusual sequence. You are very likely to get "better" at flipping tails than you have been.)

Quantess

(27,630 posts)
3. There's some biblical story about Babel's tower or something, that warns of hubris.
Wed Jan 11, 2012, 03:42 PM
Jan 2012

But I'm not too knowledgeable about the bible, so I could have it all wrong.

jwirr

(39,215 posts)
9. Oh I think you may be very correct using that story. They were empire builders who wanted to
Wed Jan 11, 2012, 05:08 PM
Jan 2012

build their way up to God. Sounds very like today.

CrispyQ

(36,231 posts)
7. This is completely off topic, but this is one of the coolest photos I've ever seen.
Wed Jan 11, 2012, 04:10 PM
Jan 2012


I love how there's one little section to the left, where the cloud cover is thinner & you can see the earth below.

jwirr

(39,215 posts)
8. Especailly if it is true that most of them are setting empty. Building housing for people who cannot
Wed Jan 11, 2012, 05:06 PM
Jan 2012

afford it is really a losing proposition.

jwirr

(39,215 posts)
12. No but there was a story a while back on DU about them building highrise housing in order to keep
Wed Jan 11, 2012, 05:31 PM
Jan 2012

people employed that sat empty. Thought there might be a difference in definitions here.

 

JackRiddler

(24,979 posts)
13. The reason for the correlation is obvious.
Wed Jan 11, 2012, 06:11 PM
Jan 2012

Don't see anyone implying the skyscrapers directly cause the crash.

A big crash necessarily is preceded by a big bubble. A big bubble nowadays usually involves a big financial center (that would be a big city) with a lot of FIRE speculation. During the bubble the big dicks will be building themselves big buildings to show off and celebrate their magnificence, and of course in the hope of having them fully sold or leased prior to the big crash. So it's no shock that crashes often leave a lot of record-tall towers standing unfinished or mostly empty for a few years - as famously happened with the Empire State.

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