CHART OF THE DAY: The Skyscraper Index

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Building booms, especially the construction of the tallest buildings in the world, coincide with economic crises according to the Barclays Skyscraper Index. And the height of the buildings also reflect the extent of the crisis. 

For instance, the construction of three record breaking buildings, 40 Wall Street, the Chrysler building and the Empire State building coincided with the Great Depression. Most recently, the construction of the Burj Khalifa coincided with the current global recession. 

Judging by the Skyscraper Index, investors may want to be wary of the construction boom in China and India. China is expected to complete about 65 of its 124 skyscrapers under construction over the next six years. Meanwhile, India is planning to complete 14 skyscrapers over the next five years, including the Tower of India, which would be the second tallest building in the world.

This is because the construction of skyscraper booms indicate a widespread misallocation of capital and eventually, an economic correction.

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chart, skyscraper booms vs. economic crises, jan 11 2012

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