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Boom* and bufl*

The beauty of bubbles

Property bubbles have palnful consequences. They also havc useful ones

THE fireworks could be seen from space (allegedly), putting Ch.nas Olymplc displays to shame. Hollywood celebritics studded a guest-list of 2,500 poople. Kylie Minogue, a diminutiw Australian singer, cavorted In a gold and black corset designad by Jean-Paul Gaultier. Goests consumed an estimated 1.7 tonnes of lobster.

The launch party for the Atlantis hotel in Dubai on November 20th was a perfect, noisy finale to the world's latest age of excess. But its loudest echoes—the man-made tslands. the iconic Hotels, the overheated property market, the celebnties and the sun—are from another, morę distant Ume: South Florida in the 1920S.

The summer of 1925 was mania time in Miami. Speculators descended on the city, hungry to buy land in the hottest property market in America. Salesmen swarmed to meet them. *Bird dogs" (youngsters lookmg to make their way in the Industry) scanned the ncw arrivals at Miamrs tram station and steered the most promisłng prospects to their bosses' offices.

The heart of the boom was Flagler Street, clogged wlth traffic and tourists. Would-be buyers were put in the hands of "binder boys”, named for the binders in which sales were recorded. Transactions were swift and shoddy. Buyers had to put down only 10% of the por Chase price for the lot they were buymg to cłose a deal; further instalments were payabie when the sale was łegally recorded. Many new owners had no intention of waitmg that long. In another echo of modem-day Dubai, they wanted simpły to flip their property, which often had yet to be dredged from the ocean, on to the next man. Some btts of land were sold and resold several times during a single day.

Among the Principal beneficiaries of Florida's extraordinary land boom was Carl Graham Fisher, a serial entrepreneur who can take much of the credit for tuming Miami Beach from a swampy stnp of mangrove trees into the most talked-about resort in the country. As pnces soared, so did Fisher*s fortunę, at least on paper.

But he saw trouble ahead. Along wlth a handful of others, he had spent many years tuming his v»s»on of Miami Beach into reality. The qułck buck was not his goal. As sales grew morę and morę frenzied, he tned to dampen things down. In a letter to the Publisher of the Miami Daily News, whose pages were fattened with property advertisements, he gave warning that many of the development schemes were misleading and that prices had become wildly inflated: "Some of the property being sold m Flonda will not bnng as much money in 30 years as it ts selling for now.“ Fisher did morę than wnte letters. He instructed his own salesmen to raise the required down payment on land from 10% to 25%, and to entertatn bids only from buyers who planned to devetop the łots on offer.

Fishefs forebodlng was soon proved justified. Sawier tnvestors began to puli back from their interests In Florida. In the Winter of 1925-26 the number of vtsitors dropped. So did the tevel of property transactions. A capstzed shtp błocked entry to Miami harbour in earty 1926, slowing the pace of constructlon work. Banks that had lent money to property developers wobbied. As concem grew that the skin of Flonda*s bubbie was tearing, naturę provided a drawing-pin of its own. On September l8th 1926 a hurricane