Soaring to Bankruptcy in Jeddah

Submitted by Pater Tenebrarum  –  The Acting Man Blog

The Skyscraper Indicator Strikes in Saudi Arabia

In the recently published book “Austrian School for Investors”, one chapter inter alia discusses Dr. Mark Thornton’s “Skyscraper Indicator” in great detail. To this it should be mentioned that at the time the original German version of the book was written, crude oil was still trading above the $100 mark.

The erection of skyscrapers, specifically the construction of the “tallest building in the world” (somewhere in the world, there almost always seems to be someone busy with putting up the tallest building ever lately) is of great interest both from the perspective of Austrian business cycle theory and Socionomics (a theory of mass psychology and how it influences trends in asset prices and economic fundamentals).

 

kingdom towerWhat the Jeddah Tower is going to look like from above

(provided those funding it can remain solvent long enough).

Image credit: Jeddah Economic Company / Adrian Smith and Gordon Gill Architecture

 

To briefly explain the difference in approaches: we regard Socionomics as a “theory of contingent circumstances” – this is to say, it is a psychological and thymological discipline rather than an economic theory. It would therefore not be sensible to compare it to economic theory or to assert that it represents a competing economic theory.

Similar to history, Socionomics involves what Mises called “understanding”. It is advantageous to use it inconjunction with sound economic theory, it should be clear though that its task is definitely not to reinvent economic laws. It is by the way no surprise that the people who have come up with it (Robert Prechter and his colleagues) are speculators and financial market observers – people who Mises referred to as being akin to “historians of the future”.

A recent report on the “Interesting Engineering” web site brings us an awestruck reminder of the major engineering feat currently underway in the land of moderate head-choppers, which is leading the “tallest building in the world” sweepstakes at the moment.

 

Saudi Arabia is currently on the way to building the world’s tallest building which would rival Dubai’s Burj Khalifa, currently the tallest building in the world. It is to be called Jeddah Tower and is currently already under construction. Costing at least $1.23 billion, it will also be a part of a $120 billion proposed development known as Jeddah Economic City.Interestingly, it is being designed by Adrian Smith, the same American architect who designed Burj khalifa. It will also become the first structure to reach the 1 kilometer high mark.

The Jeddah tower which would resemble a desert plant shooting into the sky as a symbol of Saudi Arabia’s growth and fortune, has a triangular footprint and a sloped exterior design to reduce wind load. It also has a high surface area which would make it ideal for residential units. Though no official floor count has been given, the architect Adrian Smith stated in an interview thatit would be about 50 floors more than Burj Khalifa. This leads us to believe that it would have more than 200 floors. The building would have a total of 59 elevators including double deck elevators and 12 escalators, it would also boast the world’s highest observation deck to which high speed elevator’s would travel up to 33 feet per second in both directions (slightly over 35km/hr). Jeddah tower would have 3 sky lobbies where elevator transfers can be made.

[…]

The Creator [sic, ed.] and leader of the project, Saudi Prince Al-Waleed bin Talal, intends for it to bring significant change in terms of  development and tourism to the city of Jeddah. It is estimated that the construction will take five years and 3 months to complete. Although other experts believe it might take significantly longer considering the duration of the construction of Burj Khalifa.

 

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One Lost Decade Or Three?

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

Over the weekend, Charles Schwab issued a “tool” for investment advisors to help them “feel good” about what is expected for 2016. With investors increasingly talking about risk, and stock market risk at that, there is a counter-rush to reassure. Some of that is expected in places like this, but increasingly the disparity between the form of that encouragement and the wider awakening ends up on different planets.

Jeffrey Kleintop, chief global investment strategist and senior vice president at Charles Schwab, believes that there are good reasons to be positive about the future: Global economic data is generally exceeding expectations, and most forecasters expect 2016 to post the best global economic growth in years. He believes stock market investors can achieve positive rates of return and lower their downside risk, but they may be unlikely to act unless they can renew a sense of optimism and HOPE.

It is an exceedingly odd paragraph all around; contradictory in how it frames the global economy, touched with rainbows and unicorns about how you can “achieve positive results and lower…downside risk.” The second part obviously suggests what Schwab is seeing from its retail client business, as, again, investor uncertainty is starting to be unusual in a radical departure from the prior few QE-strewn years. However, the first part, “best global economic growth in years” is a touch disingenuous since the same was said about 2015 in late 2014 (and about 2014 in late 2015, etc.). Continue reading

Russia Gold “Buying Spree” Continues – Buy 22 Tons In November

Submitted by Mark O’Byrne  –  GoldCore

– Russia adds another 700,000 ounces (22 tonnes) to gold reserves in November
– Russian ally Kazakhstan increased gold reserves for 38th month – 7 Mil ounces
– Russia has added 197.1 tonnes in 2015 – Compared with 172 tonnes in all 2014
– November gold buying is Russia’s ninth straight month of increase
– Russia now has sixth largest gold reserves in the world
– Central bank buys all Russian gold production
– Other Russian gold demand imported
– Russia views gold bullion as “100% guarantee from legal and political risks”

RussiaReservesst20151219

Russia continues to add to its gold reserves and added another 700,000 ounces in November or another 22 metric tonnes, and analysts believe this buying will continue and may intensify in the coming months.

Russian ally Kazakhstan increased its gold reserves for a 38th month to 7.03 million ounces in November from 6.96 million ounces a month earlier.

The latest large increase in Russia’s gold reserves – a “buying spree” as reported onReuters Africa has again gone largely unnoticed by most analysts. Indeed, the important monetary and geopolitical ramifications continue to be largely ignored in western media. Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

• Global Investors Are More Exposed To Interest-Rate Hikes Than Ever (BBG)
• The Keynesian Recovery Meme Is About To Get Mugged, Part 1 (Stockman)
• Brent Oil Hits 11-Year Low As Global Supply Balloons (Reuters)
• US Gas Prices Fall Below $2 – In Some Places Under $1.60 (MarketWatch)
• The Real “Death Cross” Of Oil Markets (ZH)
• Risk Of Insolvency Hangs Over UK High Street Retailers (Guardian)
• UK Economy Concerns As Household Debt Balloons To £40 Billion (PA)
• The Bank of Japan’s $2.5 Billion Plan to Buy Non-Existent ETFs (BBG)
• China ‘Suspends’ Another Unofficial PMI Data Set For A ‘Major Adjustment’ (ZH)
• Zimbabwe To Make Chinese Yuan Legal Currency After Beijing Cancels Debts (AFP)
• Russia, EU Trade Talks Fail, Kiev Set To Face Retaliation (Reuters)
• Political Uprising In Spain Shatters Illusion Of Eurozone Recovery (AEP)
• Portugal Taxpayers Face €3 Billion Loss After 2nd Bank Bailout In 2 Years (ZH)
• Christmas Present (Jim Kunstler)
• Et Tu, Brute? – How Empires Die (Thomas)
• Do We Need The Fed? (Ron Paul)
• Apple Says UK Surveillance Law Would Endanger All Customers (BBG)
• Half of World’s Coal Must Go Unmined to Meet Paris Climate Target (BBG)
• It’s ‘Almost Too Late’ To Stop A Global Superbug Crisis (PA)