Curses: I Missed This One
I am working on a couple of articles about the Skyscraper Curse when a curious notion popped into my head: "Many of the South American economies are in great economic distress so I wonder if the Curse could be at work south of the border?"
The Skyscraper Curse is the eerie correlation between record-breaking skyscrapers and significant economic crisis. It is mostly based on world records, but it can also work on a continental and national levels. In this case, the continuing economic crisis in South America should be associated with a record-breaking skyscraper somewhere on the continent.
South American economies are in serious trouble because they are heavily dependent on exporting commodities like oil, beef, iron, copper and vegetables to the US, China, and elsewhere. When commodity prices were high they took on large amount of dollar-denominated debt. Now they face the specter of lower prices for their exports, higher prices for imports, rapidly depreciating currencies, and looming bankruptcies.
I checked a few data bases and sure enough I found the Gran Torre Santiago, or Grand Santiago Tower (Santiago, Chile) had recently set a new record height in South America. Construction on the Tower began in June of 2006. It was supposed to be completed in 2010 but construction was halted for most of 2009 because of the global financial crisis. In February of 2011 it reportedly surpassed the previous South American record-breaker to become the tallest building on the continent.
The Chilean stock market reached its record high in January 2011 with an index value of nearly 23,500. Today that market is trading at less than 15,000. That works out to a loss of 36%.
However, things are much worse for Chileans and other South Americans. The Chilean Peso in 2011 was considerably more valuable than it is today. If you convert the nominal change in the stock market with the lower value of the peso the real lost in the Chilean stock market swells to 55%!
It could get much worse. It took less than 500 pesos to pay down one dollar of US dollar denominated debt in 2011. Today it takes nearly 700 pesos to pay down one dollar of US dollar denominated debt. This creates financial hardship for businesses in Chile and throughout South America.
The Chilean stock market has remained relatively stable at the 15,000 level for the last two years, but that is no guarantee that it will remain so, or even move much lower. Certainly there will be a rebound in commodity prices someday, but that recovery is not evident.
One interesting footnote is that based on the Skyscraper Curse theory, there is a tendency for the record-breakers to open to the public near the depths of the economic collapse. The Grand Santiago Tower is yet to open because of a failure to obtain the necessary permits and to complete the necessary transportation upgrades. This means that the opening might not occur for a year or more.
Time will tell.