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Look Out Below: Why Skyscrapers are Classic Bubble Indicators


cavanami

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Interesting, looking at all the unfinished building around BKK.

 

Look Out Below: Why Skyscrapers are Classic Bubble Indicators

 

http://finance.yahoo.com/tech-ticker/look-out-below-why-skyscrapers-are-classic-bubble-indicators-536048.html?tickers=FXI,EEM,GLD,GDX,EWH,CHXX,CHII&sec=topStories&pos=9&asset=&ccode=

 

In China, five of the world’s ten largest buildings are now under construction. Look out below!, says Vikram Mansharamani, a financial services veteran and part-time academic who has developed a multidisciplinary framework for sniffing out bubbles.v

 

Mansharamani is author of a new book, BoomBustology: Spotting Financial Bubbles Before they Burst. The book is based in part on a course that Mansharamani, who has two master’s degrees and a Ph.D. from the Massachusetts Institute of Technology, has taught at Yale, his alma mater. While many analysts focus on a single causal factor (Fannie Mae caused the housing bubble! Snake-oil salesmen from Silicon Valley fomented the dotcom bubble!) Mansharamani takes a multidisciplinary approach. Borrowing from analysts in fields such as economics, psychology, and biology (bulls and bears, it turns out, act a lot like swarming ants), Mansharamani has developed a series of lenses through which to examine market behavior. Systematically examining outbursts of mania, from Dutch investors’ infatuation with Tulips in the 1630s to Florida real estate in the 1920, can help sniff out bubbles.

 

If you look through Mansharamani’s lenses, it’s clear to see there’s a bubble going on in China. Tall buildings aren’t just symbolic of reckless ambition. “Skyscrapers are manifestation of easy money, overconfidence, and hubris,†he says. And they are excellent indicators of a top. “In New York in 1929 there were three buildings competing to be the world’s tallest skyscraper,†he notes. In 1997, the massive Petronas Towers in Malaysia were completed just in time for the Asian financial crisis. The Burj Dubai rose in 2007 to snatch the title of world’s tallest building – just in time for the financial crisis to his the Persian Gulf...

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It’s an interesting theory, but I think it is really meaningless to say when skyscrapers are being built it is a sign of a bubble. As skyscrapers are extremely large construction projects, they take 5 to 6 years from start of design to completion. That is about how long most periods of economic expansion last. So any skyscraper that is started during a period of growth is likely to finish during a period of contraction of some degree.

TH

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  • 1 month later...

From the book "Traders, Guns & Money":

 

"If you arrive at a country and discover limousines waiting to transfer foreign investors and their investment bankers to five star hotels, then generally speaking it is time to sell. There is a second unfailing test. If you can't buy a good meal and a young, attractive woman for the night for less than $100, then it is time to get out."

 

Words to live by.

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From the book "Traders, Guns & Money":

 

"If you arrive at a country and discover limousines waiting to transfer foreign investors and their investment bankers to five star hotels, then generally speaking it is time to sell. There is a second unfailing test. If you can't buy a good meal and a young, attractive woman for the night for less than $100, then it is time to get out."

 

Words to live by.

If you are single (mainly because you have absolute freedom to do what you want, and when you want to) and have your own pad in the Brisbane CBD, you can pull a young Japanese or Korean girl for free, with 1 beer and a hamburger (about $10 AUD).

 

I have hit 50, aesthetically challenged and still, without fail, can pick up a young asian girl who will want to go the next step.

 

I am sure the word around these two countries are get to Australia, pick up a man, sleep with them, then get clothed and fed whilst studying English (and have a good time at the same time) :beer:

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