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The 'Skyscraper Curse' is worth watching in 2007

By TIMES WIRES
Published December 15, 2006

Hundreds of thousands of Taiwanese have been taking to the streets of Taipei in recent months to oust their president, prompting observers to wonder what gives.

Corruption is behind the protests, many will say. Prosecutors have been questioning President Chen Shui-bian over a series of scandals. Others point to his unsteady handling of relations with China, which considers Taiwan a renegade province. I'm wondering if it might make more sense to look at the skyline.

Standing out amidst the tangle of skyscrapers is the 1,671-foot Taipei 101, which is the world's tallest building. Its presence, coupled with a worsening political crisis that could trip up the economy, reminds one of the "Skyscraper Curse."

A bizarre suggestion, perhaps, and certainly an unscientific one. Yet history shows an uncanny correlation between tallest-building projects and financial crises. Be it in Kuala Lumpur in 1997, Chicago in 1974, New York in 1930 or the biblical Tower of Babel long ago, mankind's penchant for architectural overreach is a strangely reliable omen of troubles.

A coincidence? Perhaps, yet economists such as Mark Thornton, senior fellow at the Ludwig von Mises Institute in Auburn, Ala., argue that skyscrapers can speak volumes about a nation's wealth, technological prowess, ambition and, perhaps most important, hubris.

"It's these features that make skyscrapers, especially the construction of the world's tallest building, a salient marker of 20th century business cycle," Thornton argues.

For a time in the early 2000s, analyst Andrew Lawrence, then with Deutsche Bank Securities in Hong Kong, published a periodic "Skyscraper Index" for investors. As 2007 approaches, perhaps we need to start producing more building-project barometers.

Overinvestment and financial speculation led to each of the Skyscraper Curse episodes during the 20th century. Coincidence or not, history suggests such projects are often less about technological innovation than economic booms.

In 1908, for example, New York's 47-floor Singer Building opened, followed by the 50-story Metropolitan Life Building. Both were planned, financed and raised while the United States was in the midst of the Panic of 1907, a credit crunch that necessitated help from financier J.P. Morgan.

In 1929, the opening of 40 Wall Street and the Chrysler Building were harbingers of the worst U.S. meltdown, the Great Depression. A year later, the Empire State Building became the world's tallest building, presaging years of gloom.

The 1970s saw the completion of New York's World Trade Center and Chicago's Sears Tower. They opened amid stagflation in the U.S. economy, a fiscal crisis in New York and the breakdown of the Bretton Woods monetary system.

A smooth year would mean avoiding the Skyscraper Curse. History suggests that's a tall task.

[Last modified December 14, 2006, 22:36:37]