I recently mentioned the "skyscraper index" to a colleague. He hadn't heard of it. I deduced he has better things to do than keep up with quirky economic indicators - what, I can't imagine.
Anyway, it occurred to me that, if he hadn't heard of it, others also might not have. So for those unaware of the index here is another to add to the pile of forewarnings of the current economic carnage.
The skyscraper index was developed in 1999 by Andrew Lawrence, then an economist at Dresdner Kleinwort Benson.
The basic point is that when people start talking about building the biggest skyscraper look out for a financial collapse heading your way.
The correlation is said to be (I can't say I have bothered to check) near perfect. And some economists have sought to find the theoretical basis for the relationship.
Clearly the rising confidence that comes from a period of economic growth, rising asset prices and rising land prices all must play a part. But for me the telling factor is the clear evidence of hubris.
I recall the late 1980s when the "masters of the universe" in the UK construction and property industries were dreaming up all manner of mad plans, such as a double decker M25 and a submerged tunnelled road under the Thames. Oh and the Canary Wharf tower.
As they say "pride comes before a fall".
So, while it would be nice to have the Shard...
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