Views From the Top of the Skyscraper Index

On a warm Friday Los Angeles morning in spring of 2016, we found ourselves standing at the busy corner of Wilshire Boulevard and South Figueroa Street.  We were walking back to our office following a client wire brushing for events beyond our control.  But we had other thoughts on our mind.

 

Iron workers (the non-distraught variety) atop the 10 ton spire of the Wilshire Grand Center in Lost Angeles. This image is vaguely disconcerting… we can’t help thinking that an unexpected gust of wind  could have proven quite disruptive to this show of nonchalant equanimity. [PT]

Photo credit: Gary Leonard

 

Standing amid a mob of pedestrians, we gazed up at the skeleton frame of what would become the Wilshire Grand Center.  For the first time in several years the buzz and hum of diligent building activity was replaced by an eery silence.  In fact, construction work was shut down for the day.

Sadly, less than 24 hours earlier a distraught electrician had taken a swan dive off the 53rd floor.  The man’s death prompted an immediate work stoppage and evacuation of the tower.  “It sounded like a bag of cement fell off the edge of the building,” one observer remarked.

Naturally, the sound of impact was far too grim for us to contemplate.  Instead, we wondered how time must have simultaneously slowed down and sped up for the jumper as he descended toward the ground.  Did he want a redo before it was game over?

We have a hunch that over the next couple of years, vast numbers of people are going to experience the rush that comes when time simultaneously slows down and speeds up.  Not because they have performed a base jump off a skyscraper – though some will.

Rather, it will occur at the precise moment they come to the rude realization that they’re broker than broke. We will have more on this in just a moment.  But first some context is in order…

 

A Grand Ego Stroke

Several weeks ago the Wilshire Grand Center officially opened.  The building is claimed to be the new tallest building in Los Angeles, and the tallest building west of the Mississippi.  But we have some reservations.

Because the top of the Wilshire Grand Center is actually about 18 feet shorter than the U.S. Bank Tower that’s several blocks away.  However, there’s a bizarre looking 100-foot spire at the building’s peak.  Apparently, this spire has a very definite purpose.

Per the Council of Tall Buildings and Urban Habitat – if you can believe there is such a thing – a spire is considered an architectural feature and is, thus, counted when measuring the building’s 1,100 foot height.  Tall buildings arbiters’ aside, we ain’t buying it.  But our opinion on the matter doesn’t matter.

 

Installation of the spire that apparently makes all the difference to the record books… [PT]

Photo credit: Gary Leonard

 

Korean Air / Hanjin Group financed construction of the Wilshire Grand Center.  The claim that this is the new tallest building west of the Mississippi, regardless of spire gimmickry, offers Korean Air Chairman Yang Ho Cho a grand ego stroke.  We recommend that he enjoys it now before he rues it.

You see, the construction of marque skyscrapers has an uncanny track record of coinciding with the late stages of an artificial, cheap credit induced building boom.  If this holds true, the Wilshire Grand Center will forever be a monument to ZIRP, NIRP, and QE.  What’s more, there are several other new skyscrapers monuments that will be opening their doors real soon.  This can only mean one thing…

 

Views from a Top of the Skyscraper Index

The skyscraper index was first elaborated by Andrew Lawrence in January 1999.  The idea is simple enough.  The world’s tallest buildings are often completed on or around the onset of economic downturns.

What the skyscraper index does is it accounts for the long lead time that massive ego stroke projects like the construction of the tallest building in the world take to come to fruition.  By the time these mega edifices are complete, the free flowing credit that bubbled up their construction, and other bubbles throughout the economy, has nearly exhausted itself.  This is about the time the boom turns to bust and the economy slips into recession.

For example, the Burj Khalifa in Dubai, which is the tallest building in the world at 2,126 feet, was completed in 2008.  If you recall, this was shortly after the onset of the Great Recession.  The cheap credit that pumped up the Burj Khalifa was the same cheap credit that pumped up the U.S. residential real estate bubble.

At the moment, several other tallest building records that dwarf the Wilshire Grand Center are nearing completion.  The first being the Central Park Tower in New York, which upon opening its doors in 2019 will be the new tallest building in the United States at 1,550 feet.  The second being the Jeddah Tower in Saudi Arabia, which will be completed in 2020 and will be the new tallest building in the world at an insane height of 3,281 feet.

 

Nearer my Lord, to thee… the competition to construct ever higher buildings over the past 120 years. See also “Soaring to Bankruptcy in Jeddah” for an earlier comment on the Jeddah Tower. This particular construction decision turned out to be a major warning signal for the oil boom – click to enlarge.

 

Based on the open date of the Central Park Tower and the Jeddah Tower, the Wilshire Grand Center may be an early indicator of the approaching panic.  The timing is hard to precisely pin down.

But what is clear is where the credit has come from to pump up these grand ego strokes.  It has come from precisely the same place where the credit that has boosted world stock indexes to record heights has come from.  Mass central bank balance sheet expansion and zero to negative interest rates.

 

The current crop of the world’s tallest buildings. There are already plans to surpass the insanity in Jeddah – “The Bride”, which is supposed to be erected in Basra in Iraq, would be 152 meters taller (roughly 499 feet). A number of architects are already talking about a “mile high tower” that may get built by 2025, simply because it is theoretically doable. We discussed the “Bride” and a few other buildings relevant to the Skyscraper Index last year in “Skyscraper Mania Goes Global”. What is especially interesting is that the number of “super-tall buildings” either finished or under construction worldwide has doubled since 2010. In terms of the Skyscraper Index this indicates that we are living in the final stretch of the greatest credit bubble in all of history, which appears indeed to be the case. The supply of money and credit (particularly in the world’s largest currency areas) has grown at breathtaking rates since 2008 and the same has happened to the number and height of super-tall structures – click to enlarge.

 

These asset price inflation puffers are always fleeting.  Views from a top of the skyscraper index show a coming day when time simultaneously slows down and speeds up in a great manic panic.  This is the day the debt edifice crumbles.  Why wait to get your financial house in order?

 

Image captions by PT

 

MN Gordon is President and Founder of Direct Expressions LLC, an independent publishing company. He is the Editorial Director and Publisher of the Economic Prism – an E-Newsletter that tries to bring clarity to the muddy waters of economic policy and discusses interesting investment opportunities.

 

 
 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke

   
 

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • Canada: Risks of a Parliamentary Democracy
      A Vulnerable System Parliamentary democracy is vulnerable to the extremely dangerous possibility that someone with very little voter support can rise to the top layer of government. All one apparently has to do is to be enough of a populist to get elected by ghetto dwellers.   Economist and philosopher Hans-Hermann Hoppe dissects democracy in his book Democracy, the God that Failed, which shines a light on the system's grave deficiencies with respect to guarding liberty. As...
  • Federal Reserve President Kashkari’s Masterful Distractions
      The True Believer How is it that seemingly intelligent people, of apparent sound mind and rational thought, can stray so far off the beam?  How come there are certain professions that reward their practitioners for their failures? The central banking and monetary policy vocation rings the bell on both accounts.  Today we offer a brief case study in this regard.   Minneapolis Fed president Neel Kashkari attacking a block of wood with great zeal. [PT] Photo credit: Linda Davidson...
  • Thoughtful Disagreement with Ted Butler
      Too Big to Fail?   Dear Mr. Butler, in your article of 2 October, entitled Thoughtful Disagreement, you say:   “Someone will come up with the thoughtful disagreement that makes the body of my premise invalid or the price of silver will validate the premise by exploding.”   Ted Butler – we first became aware of Mr. Butler in 1998, and as far as we know, he has been making the bullish case for silver ever since. Back in the late 90s this was actually a...
  • On the Marc Faber Controversy
      Il n'y a rien à défendre - by Vidocq   Dr. Marc Faber, author of the Gloom, Boom and Doom Report Photo credit: Michael Wildi / RDB     Il n'y a rien à défendre - There is nothing to defend Personne n'a lu ce qui a été écrit. - Nobody read what was written. Personne n'a pensé avant d'agir, comme la plupart des gens de nos jours. - No one thought before acting, like most people nowadays. L'homme que tu pends est l'homme que tu as fait, pas l'homme que...
  • Donald Trump: Warmonger-in-Chief
      Cryptic Pronouncements If a world conflagration, God forbid, should break out during the Trump Administration, its genesis will not be too hard to discover: the thin-skinned, immature, shallow, doofus who currently resides in the Oval Office!   The commander-in-chief - a potential source of radiation?   This past week, the Donald has continued his bellicose talk with both veiled and explicit threats against purported American adversaries throughout the world.  In...
  • The Donald Can’t Stop It
      Divine Powers The Dow’s march onward and upward toward 30,000 continues without a pause.  New all-time highs are notched practically every day.  Despite Thursday’s 31-point pullback, the Dow is up over 15.5 percent year-to-date.  What a remarkable time to be alive.   The DJIA keeps surging... but it is running on fumes (US money supply growth is disappearing rapidly). The president loves this and has decided to “own” the market by gushing about its record run. During...
  • Precious Metals Supply and Demand Report
      Fat-Boy Waves The prices of the metals dropped $17 and $0.35, and the gold-silver ratio rose to 77.  A look at the chart of either metal shows that a downtrend in prices (i.e. uptrend in the dollar) that began in mid-April reversed in mid-July. Then the prices began rising (i.e. dollar began falling). But that move ended September 8.   Stars of the most popular global market sitcoms, widely suspected of being “gold wave-makers”. From left to right: Auntie Janet...
  • 1987, 1997, 2007... Just How Crash-Prone are Years Ending in 7?
      Bad Reputation Years ending in 7, such as the current year 2017, have a bad reputation among stock market participants. Large price declines tend to occur quite frequently in these years.   Sliding down the steep slope of the cursed year. [PT]   Just think of 1987, the year in which the largest one-day decline in the US stock market in history took place:  the Dow Jones Industrial Average plunged by 22.61 percent in a single trading day. Or recall the year 2007,...
  • Stocks Up and Yields Down – Precious Metals Supply & Demand
      Where the Good Things Go Many gold bugs make an implicit assumption. Gold is good, therefore it will go up. This is tempting but wrong (ignoring that gold does not go anywhere, it’s the dollar that goes down). One error is in thinking that now you have discovered a truth, everyone else will see it quickly. And there is a subtler error. The error is to think good things must go up. Sometimes they do, but why?   Since putting in a secular low at the turn of the millennium,...
  • Tales From a Late Stage Bull Market
      Pro-Growth Occurrences An endearing quality of a late stage bull market is that it expands the universe of what’s possible.  Somehow, rising stock prices make the impossible, possible.  They also push the limits of the normal into the paranormal.   This happens almost every time Bigfoot is in front of a camera. [PT] Cartoon by Gary Larson   Last week, for instance, there was a Bigfoot sighting near Avocado Lake in Fresno County, California.  But it wasn’t just...
  • The 2017 Incrementum Gold Chart Book
      A Big Reference Chart Collection Our friends at Incrementum have created a special treat for gold aficionados, based on the 2017 “In Gold We Trust Report”. Not everybody has the time to read a 160 page report, even if it would be quite worthwhile to do so. As we always mention when it is published, it is a highly useful reference work, even if one doesn't get around to reading all of it (and selective reading is always possible, aided by the table of contents at the...
  • The Falling Productivity of Debt
      Discounting the Present Value of Future Income Last week, we discussed the ongoing fall of dividend, and especially earnings, yields. This Report is not a stock letter, and we make no stock market predictions. We talk about this phenomenon to make a different point. The discount rate has fallen to a very low level indeed.   We add this chart to provide a slightly different perspective to the discussion that follows below (and the question raised at the end of the article)....

Support Acting Man

Top10BestPro
j9TJzzN

Austrian Theory and Investment

Archive

350x200

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com