Who controls the world's finance markets?
According a new study of the 2007 financial markets of 48 countries, the world's finances are in the hands of just a few mutual funds, banks, and corporations.
We can thank a couple of physicists for this revealing information. Stefano Battiston and James Glattfelder of the Swiss Federal Institute of Technology in Zurich put in the work to make sense of the information they extracted from 24,877 stocks and 106,141 shareholding entities in 48 countries.
What emerged is what the two physicists call the 'backbone' of each county's financial markets. These backbones represented the owners of 80 percent of a country's market capital, yet consisted of only a few shareholders.
The common misconception, promoted by the corporate media, is that shares are widely held by the general public, particularly in countries like Great Britain, the United States Australia - and New Zealand. This has given rise to nonsense about the 'shareholding democracy'.
However this is a myth. Glattfelder and Battiston's analysis found that while each company may link to many owners , the owners varied little from stock to stock. This means that comparatively few hands are controlling the entire financial market of each country.
“If you would look at this locally, it's always distributed,” Glattfelder told the media last week. “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 biggest fish was the Capital Group Companies, with major stakes in 36 of the 48 countries studied.
Glattfelder added that the globalisation of these gigantic 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.
The results will be published in an upcoming issue of the journal Physical Review E.