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How to spot the next bust

One of my banking colleagues provided me with a major revelation yesterday.

He said: “if you want to spot the next country to be in distress, look for a skyscraper.”

“What?” I responded.

“Every time a capital city builds a major monolith, you know disaster looms”, he expounded.

I thought about it, and then thought: “yes, there might be some truth in this”.

The conversation began with a discussion about the issues in Dubai and hence, when we chatted in awe about the opening of the Burj Khalifah, the world’s tallest skyscraper, the comment arose that every time a city builds such a structure, you know trouble looms.

“The reason for this”, said my banking friend, “is that they start the planning of these structures in the boom times.” He gravely added, “and whenever there is a boom, you know a bust is coming. But the bust occurs just after they finish the building of these white elephants.”

So I thought about the world’s tallest buildings: the Sears Tower, the Empire State Building, our very own Canary Wharf and Malaysia’s Petronas Towers; and sure enough, you can date almost each of these with a bust.

Empire State Building, New York, USA

Completed: 1931

The Great Depression started 1929 but really kicked in in 1931.


Sears Tower, Chicago, USA

Completed: 1973

In 1973, one of the worst stock market crashes occurred since the Great Depression.


Canary Wharf, London, UK

Completed: 1991

Black Wednesday 1992, when the UK had to leave the European Economic & Monetary Union due to a crash in sterling prices. Meanwhile, the UK had moved into recession in 1991 with a property market bust, resulting in the builders of Canary Wharf having to declare bankruptcy.


Petronas Towers, Kuala Lumpur, Malaysia

Completed: 1998

Asian markets meltdown in 1997 and the KL Stock Exchange lost over half of its value during 1997-1998.


Burj Khalifa

Completed: 1st October 2009

Dubai World and Nakheel implode in $80 billion of debt on 26th November 2009.


Pictures sourced from: Our English, David MacDonald, Graphics Hunt, Trip Advisor and Trends Updates.  


About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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  • On that basis we should be very worried about London right now. Four separate skyscrapers going up at the moment – including the Shard, London Bridge. Due to be the UK’s tallest building, it will top out in 2012 – so bust 2013?

  • Mylo

    Don’t storks and births also have a correlation???

  • Ralp Goatblower

    How does this work with tunnels???

  • Chris Skinner

    @ Ralp
    Tunnels are the start of the end …
    @ Myla
    There’s also a correlation between blackouts and births, with a nine-month time lag of course.
    @ James
    Hmmmm … maybe it’s just a sign of the fact we have a crash every seven years or so.

  • Aggy

    I work in Belgium. No respectable skyscrapers in sight. You make me think that we are off the hook;-)

  • avin

    another example: India (mumbai) dont have any skyscapers yet, and they hardly got impacted of this global economic mealthdown..

  • Isn’t this a nice example of finding evidence to suit a theory, instead of finding a theory to suit the evidence?
    There are numerous beautiful buildings created, isn’t it very likely to have the construction of such a building finish at around the time of a bust?

  • Chris Skinner

    @Aggy you is lucky … and I haz cheese (see http://icanhascheezburger.com/)
    @avin one of many Cities to escape this meltdown
    @JamesR404 so, the theory fits, e.g. if town planners get over-zealous due to good times, there’s sure to be bad times a-coming 😉