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Undernews is the online report of the Progressive Review, edited by Sam Smith, who covered Washington during all or part of one quarter of America's presidencies and edited alternative journals since 1964. The Review has been on the web since 1995. See main page for full contents

August 29, 2009

SCIENTIFIC STUDY FIND JUST A FEW FUNDS, BANKS AND CORPORATIONS CONTROL FINANCIAL MARKETS

Lauren Schenkman, Inside Science News Service - A recent analysis of the 2007 financial markets of 48 countries has revealed that the world's finances are in the hands of just a few mutual funds, banks, and corporations. This is the first clear picture of the global concentration of financial power, and point out the worldwide financial system's vulnerability as it stood on the brink of the current economic crisis.

A pair of physicists at the Swiss Federal Institute of Technology in Zurich did a physics-based analysis of the world economy as it looked in early 2007. Stefano Battiston and James Glattfelder extracted the information from the tangled yarn that links 24,877 stocks and 106,141 shareholding entities in 48 countries, revealing what they called the "backbone" of each country's financial market. These backbones represented the owners of 80 percent of a country's market capital, yet consisted of remarkably few shareholders. . .

The most pared-down backbones exist in Anglo-Saxon countries, including the U.S., Australia, and the U.K. Paradoxically; these same countries are considered by economists to have the most widely-held stocks in the world, with ownership of companies tending to be spread out among many investors. But while each American company may link to many owners, Glattfelder and Battiston's analysis found that the owners varied little from stock to stock, meaning that comparatively few hands are holding the reins of the entire market.

“If you would look at this locally, it's always distributed,” Glattfelder said. “If you then look at who is at the end of these links, you find that it's the same guys, [which] is not something you'd expect from the local view.”

Based on their analysis, Glattfelder and Battiston identified the ten investment entities who are “big fish” in the most countries.

The results raise questions of where and when a company could choose to exert this influence, but Glattfelder and Battiston are reluctant to speculate.

"In this kind of science, complex systems, you're not aiming at making predictions [like] . . . where the tennis ball will be at given place in given time," Battiston said. “What you're trying to estimate is . . . the potential influence that [an investor] has."

Glattfelder added that the internationalism of these powerful companies makes it difficult to gauge their economic influence. "[With] new company structures which are so big and spanning the globe, it's hard to see what they're up to and what they're doing,” he said. Large, sparse networks dominated by a few major companies could also be more vulnerable, he said. "In network speak, if those nodes fail, that has a big effect on the network."

WALL STREET JOURNAL FINDS GOLDMAN SACHS GIVING TOP CLIENTS AND TRADERS DIFFERENT ADVICE THAN AVERAGE CUSTOMERS

BAD ADVICE AND THE CRASH

1 Comments:

Anonymous Anonymous said...

Unofficial Pollster Responses:

Discovery Institute (pure emotion, no intelligence) - What the heathen secular physicists have seen here is a small glimpse of something that we have known for years. That this 'backbone' envisioned is Scientific proof of God's Intelligent Monetary Design... for christians... only.

Conspiracy Advocate (coffee, red bull, some knowledge) - No wonder all the political and corporate leaders bow to the WTO and Bilderberger!

Dubya et al (no emotion, knowledge debatable) - Well, of course we gave them all the money, governance works lots better if my people have All the money and power. Huh... wait... I mean... heh heh...

Alan Greenspan and Ayn Rand Society Libertarians (feigned concern tempered with the knowledge that 'I already have mine so who gives a crap') - Well, I truly believe that Banking and Markets... if truly left to their own devices will find their own level. It's much better to take a 'hands-off' policy.

Cheech (true concern, pragmatic attitude) - Yaaa.... like man... just leave it alone man... you know what I mean man... like you're gonna get in trouble messin' with that man... Hey, lets go get a pizza man...

-DaTheorist

August 30, 2009 11:17 AM  

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