nisiprius wrote:I honestly do believe in the "edifice complex"--that it's often a sign of hubris at the top when a corporation erects a monumental new headquarters building. But it wouldn't be an indicator of something about the bond market, it would be an indicator of something about PIMCO.
indeed. And when the founders sold out to Allianz, usually calls the top on asset manager firms' performance. Asset managers turn out to be remarkably good at forecasting their own future degree of outperformance.
There is a very neat correlation between stock market levels and height of office buildings. The Chrysler Building in New York and 1929 (and I think the Empire State had actually begun). In fact there is a book 'Form follows Finance' about the architecture of skyscrapers. The ?Biraj? in Dubai peaked out just when the financial crash hit.
This has a logical basis. When assets are in a bubble, there's an on paper gain for building the highest office building in the city most affected-- New York in the 1920s, Dubai in the 00s, Petronas Tower in Kuala Lumpur in 1998, etc. Since these things take 4-5 years to build, by the time it is finished, the bubble has blown.
London's Shard (100 storeys, not yet fully let) is perhaps the interesting counterexample but *London* is doing well, even if the country is not. Like the Empire State, I suspect it is iconic (it is certainly the most visibly structure in London) but will struggle to be financially viable.
Stories of the Tower of Babel and Icarus are both proof that this human tendency is long and old. No doubt the Romans finished their most impressive amphitheatres just before the Empire began its long decline of civil war and barbarian invasion.
Certainly the gothic cathedrals were started at the peak of the Middle Ages, around 1300, and the collapse on the 1340s and onwards so bad that some were never finished, or not finished until the late 1400s.
There's a whole literature of Systems Dynamics modelling which explains this phenomenon. Originally Jay Forrester at MIT.
http://www.amazon.co.uk/Thinking-System ... 1844077268
Donella Meadows book is the best introduction I know, also an MBA exercise called 'The Beer Game'.