[QWNPdpr5]

So I guess these two physicists should be labled as "conspiracists" and tin foil hat wearing crackpots...

WASHINGTON -- 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.

"You start off with these huge national networks that are really big, quite dense," Glattfelder said. “From that you're able to ... unveil the important structure in this original big network. You then realize most of the network isn't at all important."

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.”

Matthew Jackson, an economist from Stanford University in Calif. who studies social and economic networks, said that Glattfelder and Battiston's approach could be used to answer more pointed questions about corporate control and how companies interact.

"It's clear, looking at financial contagion and recent crises, that understanding interrelations between companies and holdings is very important in the future,” he said. "Certainly people have some understanding of how large some of these financial institutions in the world are, there's some feeling of how intertwined they are, but there's a big difference between having an impression and actually having ... more explicit numbers to put behind it."

Research - ISNS

[SpyRemo]

The world's stock markets are controlled by Prince Charles and his secret lover in a trailer park in northern Mississippi. (There was a SNL skit based on this 30 years ago and it was true that's why it was never repeated.) Rush Limbaugh has knows about this also but the girl in the trailer park pays him off with Percocet and a bouquet of white roses every day.

[QWNPdpr5]

The world's stock markets are controlled by Prince Charles and his secret lover in a trailer park in northern Mississippi. (There was a SNL skit based on this 30 years ago and it was true that's why it was never repeated.) Rush Limbaugh has knows about this also but the girl in the trailer park pays him off with Percocet and a bouquet of white roses every day.

Thank you for your inane insight....

[inve.tment]

haha, the 13 familes of the illuminati and their 112 BFFs, I suppose... ??? I totally believe.

[Wheegiabe]

Physicists are now explaining economics. For our next trick, economists will explain planetary motion, and we'll put them in charge of NASA.

[RicyReetred]

Physicists are now explaining economics. For our next trick, economists will explain planetary motion, and we'll put them in charge of NASA.

Economists cannot reach a conclusion let alone get to Mars. Never work.

[SpyRemo]

Thank you for your inane insight....

No problemo..

[QWNPdpr5]

Economists cannot reach a conclusion let alone get to Mars. Never work.

This is true to an extent as most economists did not foresee the events of the current economic crisis but most of these economists were not necessarily lateral thinkers...most ascribed to prevailing orthodoxies in matters of economics. Nevertheless, not sure that economists should be making predictions anyway since economics like physics is a science. That is unless you are a proponent of faith based economics and believe that faith based economics is true economics/science...(i.e. Creation Science is true science)

With any system you study the nodes and the interelationships of nodes and estimate the impacts and influence of a system being too intertwined. I don't think there is anything to belittle or ridicule with what these physicists are hypothesizing even if one doesn’t necessarily believe in the conclusion that large sparse networks seem to be dominated by a few major companies making the whole system vulnerable when only a few nodes fail. The too big to fail syndrome with the major banks seems to suggest that this is the case anyway..so again not sure the ridicule is justified...all the illuminati talk is just a distraction from the real issue here of powerful companies holding too much sway over the global economy. That should be the discourse not inane and contrived conspiracy stories that cloud the issue and perpetuate ignorance...

[avaiguite]

Eh, economics is a pseudoscience.

[QWNPdpr5]

Eh, economics is a pseudoscience.

I don't necessarily disagree with your opinion given all the mark to fantasy models that wall street ran that showed none of this economic mess was going to happen. Then you have the politics and ideology that makes things worse. Nevertheless, economies are governed by systems and again the study of systems is scientific in itself whether your studying a ponzi economic system or not.

Anyway, despite the ridicule it seems these physicists are on to something afterall as noted below and with my initial post...

The last sentence is the caveat of course. Predicting the stock market and make a ton of cash is not gonna happen since everyone will start factoring in the predicative power of the model, and selling out of late-stage bull markets earlier. Predicting a bubble burst is much easier since bubbles always burst although Greenspan and Bernanke would disagree...they would rather let the taxpayer clean them up after the fact....while they plan for the next expansion/bubble of course. Too bad the bubble factory is running out of soap...


WITH 20/20 hindsight, financial crashes seem inevitable, yet we never see them coming. Now a team of physicists and financiers have bucked the trend by successfully predicting a steep fall in the Shanghai Stock Exchange.

Their model, which employs concepts from the physics of complex atomic systems, was developed by Didier Sornette of the Financial Crisis Observatory in Zurich, Switzerland, and Wei-Xing Zhou of the East China University of Science and Technology in Shanghai. The idea is that if a plot of the logarithm of the market's value over time deviates upwards from a straight line, it's a clear warning that people are investing simply because the market is rising rather than paying heed to the intrinsic worth of companies. By projecting the trend, the team can predict when growth will become unsustainable and the market will crash.

Sornette, Zhou and colleagues applied their model to the Shanghai Composite Index, which tracks the combined worth of all companies listed on the Shanghai Stock Exchange, the world's second largest. Early this year, the index gained 50 per cent in just four months. In July, the team predicted that the index would start to fall sharply by 10 August ([0907.1827] The Chinese Equity Bubble: Ready to Burst). The index duly began to slide on 4 August, falling almost 20 per cent in the subsequent two weeks.

Anyone hoping to exploit the model for profit should think twice. "If enough investors take action based on our predictions, the evolution of prices will probably be affected," says Zhou.

Physicists successfully predict stock exchange plunge - physics-math - 28 August 2009 - New Scientist