Ihope visibility had improved for yesterday's scheduled opening of the Burj Dubai, the world's tallest building. Last week, when I passed through the emirate, you could barely make out the shard-like 800-metre tall tower - as high as Hong Kong's new International Commerce Centre with the Bank of China building sitting on top - through the thick haze of dust hanging over the Gulf city. But a glimpse of the new skyscraper's shadowy outline piercing the sky above Dubai just one month after the near default of the city's leading investment company sent shockwaves through world markets called to mind the work of Christofer Rathke on the economics of tall buildings. Back in 1994, Rathke, then working as a financial analyst in Tokyo, was inspired by thestart of building work on Malaysia's Petronas Twin Towers to investigate the correlation between skyscraper construction and equity market performance. The results astonished him. 'Competing projects to build the world's tallest building are a sure-fire sign of imminent financial collapse,' says Rathke, who now runs a renewable energy fund in Singapore. 'As a rule of thumb, a bout of tallest building mania is followed by a 70 per cent stock market crash.' There are plenty of historical examples. The skyscraper frenzy of the early 1900s, which saw the construction of New York's Singer Building and Metropolitan Life Insurance Company Tower, was closely followed by the 'Bankers' Panic' of 1907 in which the Dow Jones Industrial Average plunged more than 50 per cent. The roaring 1920s saw another rash of skyscraper construction in New York with work starting on the Bank of Manhattan Trust Building, the Chrysler Building and the Empire State Building. Before they were finished, the party came to an abrupt end with the 1929 Wall Street Crash. By the time the last of the three projects took the world's tallest building crown in 1931, the American economy was in depths of the Depression and the new tower was popularly dubbed 'the Empty State Building'. Fast forward to the late 1960s and there was another building boom in the US. Construction began on both the World Trade Centre in New York and the Sears Tower in Chicago. True to form, the twin towers were finished just in time for the 1973 oil crisis and the 80 per cent inflation-adjusted collapse of the US stock market that followed. Towards the end of the 20th century, Asia caught the tall building bug. First there were Malaysia's twin towers, whose completion coincided with the Asian financial crisis of 1998. Then came Taiwan's Taipei 101, finished in 2004 just as Taiwan's equity market slumped 25 per cent. And finally we had the most recent bout of skyscraper building, which saw ground broken on New York's Freedom Tower, to be built on the site of the old World Trade Centre, as well as the construction of the Shanghai World Financial Centre - better known as the Shanghai bottle opener - Hong Kong's very own ICC and the record-shattering Burj Dubai. You would think that investors would have learned the lesson of the previous 100 years. Even so, the majority were still taken by surprise by the 2007 credit crunch and the subsequent market crash, which at its depths saw the US market fall 58 per cent, Hong Kong plunge 67 per cent and Dubai's main index plummet a gut-wrenching 77 per cent. The reason for Rathke's correlation between tall building construction and stock market crashes is simple enough. Tall buildings are very expensive, so erecting them needs loose credit conditions. As a result, competing vanity projects to build ever-taller towers are a clear sign of an unsustainable credit bubble, whose imminent bursting must inevitably trigger a stock market crash. 'Analysts can manipulate the numbers as much as they like to try and justify excess,' Rathke says. 'But skyscraper construction is one obvious indicator you cannot ignore. The warnings signs are visible for everyone to see.' Conversely, the failure of new projects to get off the ground is a signal that market prospects are relatively healthy. Rathke cites repeated unsuccessful attempts by US developer Donald Trump to raise financing for grandiose new skyscrapers in the 1990s as an indication that credit conditions had not yet got out of hand and that the stock market outlook remained bullish. In that sense, it could be argued that the recent cancellation of a sweep of skyscraper projects including the Chicago Spire, the proposed Mile-High Tower in Saudi Arabia and the planned 1,400-metre Nakheel Tower in Dubai can be interpreted as a positive sign for markets. Rathke is doubtful though, arguing that the sort of 'skyscraper boom and stock bust' the world has just witnessed happens at most two or three times in a lifetime. Typically, each episode is followed by a lengthy bear market. 'I believe we are in a bear market that will last for at least 10 years,' he says. Unfortunately, memories are short and human hubris is boundless, so by the time the next bubble develops, it is likely investors will have forgotten Rathke's lesson all over again. That's why we should hope for clear skies over Dubai, so that the Burj stands out clearly against the desert sky; a towering monument to financial folly for all the world to see years into the future.