The Thread

[deneb]

CIL to set deadline for signing FSAs

Coal India plans to take an aggressive stand against power producers and set a deadline after which it will not sign fuel supply agreements (FSAs) with the companies, as the state monopoly fights back after being arm-twisted to commit long-term fuel supply. Coal India's board has already decided to impose negligible penalties if it defaults on FSAs and has asked companies to accept its price if CIL needs to import coal.

CIL is concerned about slow growth in output and blames delays in environmental clearances for the coal shortage. However power companies accuse the state-run firm of abusing its monopoly and offering FSAs from which it can easily back out.

Most power producers have not come forward to sign the FSAs, making Coal India officials impatient. "Depending on the final response (from power companies) we will take a decision next week. We also intend to ask for the ministry's view on the same," Coal India chairman S Narsing Rao told ET.

Another official said the company can't wait forever. "We are planning to introduce a cut-off date for signing the agreements because we cannot keep on waiting indefinitely for all the firms to come and enter into contracts," a senior Coal India official explained.

Coal India's board agreed to sign FSAs after top industrialists jointly approached Prime Minister Manmohan Singh and sought his intervention to help power projects that had not fuel to burn. Subsequently, the company was directed to sign supply pacts.

Power companies say they are discouraged by the draft FSA prepared by Coal India. NTPC and Damodar Valley Corporation along with a number of large private sector companies are viewing the draft of the fuel supply contract as heavily biased towards the coal company.

About 50 firms are expected to sign the contracts but only about 10 has approached Coal India so far. Almost all biggies who would be consuming bulk of the additional coal have not yet approached the company.

NTPC does not intend to sign separate fuel supply agreements for new units and old units at the same power station as is now required by Coal India. It intends to sign the same set of contracts - the one it has already signed for some its units. It will be consuming almost 50% of the incremental coal that will be supplied by CIL under the new draft agreement.

"We have already written to Coal India expressing our intention because it is not practically possible to sign two sets of fuel supply agreements for different generating units of a single power station. We would like to sign the same old set of for the new units as well," NTPC chairman Arup Roy Choudhury told ET.

Following a presidential directive, CIL has prepared a new draft of fuel supply agreement that it wants to sign for units which have come up between April 1, 2009 and December 31, 2011. This draft is different from the ones that NTPC has signed for units installed prior to April 2009.

The new draft contract has fixed the penalties in case of supply falling below 80% of the committed amount to 0.01% which will be effective after three years. While the penalties for existing agreements are 10%

 

[deneb]

Why Coal India is Not a Child’s Play

The Children’s Investment Fund of UK is Coal India’s second largest shareholder and owns 1% of the company’s equity. The largest shareholder is The President of India who owns 90% of this $ 41 billion market cap behemoth.

The owner of 1% of this behemoth is now battling the owner of 90%. This “epic battle” has been covered by the media over the last few days.

And how is this “battle” taking place? By the firing of letter missiles by The Children’s Investment Fund to Coal India’s Board of Directors and the Secretary, Ministry of Coal and their subsequent release to the media.

Primarily, this fund accuses Coal India’s Board of Directors of “breach of fiduciary duty” for (1) not resisting government’s ”request” to roll back coal price hikes (it claims that Coal India sells coal at 70% below prevailing international coal prices); (2) refusing to defy the orders of India’s Prime Minister directing the company to urgently enter into fuel supply agreements with electricity generators in order to mitigate the power crisis faced by the nation; and (3) refusal to resist the Draft Mining Bill in India’s Parliament, which the fund claims is highly detrimental to the interests of Coal India.

The Children’s Investment Fund ends its letter by threatening Coal India’s individual Board members with legal action.

Does it have a case? It doesn’t.

Without going into the merits of the arguments made by the fund, I want to point out something it apparently missed. The Children’s Investment Fund bought into Coal India by making an application for allotment of shares under the company’s Offer for Sale made by The President of India in October 2010. It seems to me that the Fund forgot to read the small print in the offer’s prospectus.

Buried inside this 510 page document, however, is a section called “Risk Factors.” Of the seventy risk factors listed, just two are enough to demolish The Children’s Investment Fund’s case.

Risk Factor 17: “We sell our coal at prices lower than the prices otherwise in the Indian and international coal markets. Although pricing of coal in India was completely deregulated with effect from January 1, 2000, we have followed a strategy of focusing on improving cost efficiencies to avoid price increases, and generally consult with the GoI in determining the price of our coal.”

Risk Factor 55: “The interests of the GoI as our controlling shareholder may conflict with your interests as a shareholder. Under the MoU signed with the MoC and our Articles of Association, the President of India may issue directives with respect to the conduct of our business or our affairs for as long as we remain a government owned Company… In particular, the GoI has historically played a key role, and is expected to continue to play a key role, in regulating, reforming and restructuring the Indian coal mining industry. The GoI also exercises substantial control over the growth of the power industry in India which is dependent on the coal we produce and could require us to take actions designed to serve the public interest and not necessarily to maximize our profits.”

If Children’s Investment Fund was to carry out its threat of legal action, the learned judge would surely throw out the complaint upon reading these risk factors. Her judgment would be brief: Caveat Emptor – a Latin phrase for “let the buyer beware,” meaning that buyers must perform their due diligence before purchasing anything.

Then there is another issue I am highlighting here because The Children’s Investment Fund has kept quiet about it, which is not surprising. This issue revolves around two questions.

First, just how profitable is Coal India?

Coal India is a stunningly profitable company. Over the last seven years, it’s coal mining business has delivered pre-tax operating cash flows aggregating to approximately Rs 91,000 cr ($18 billion) or an average of Rs 13,000 cr ($2.5 billion) a year while employing average operating assets of just Rs 21,000 cr ($4 billion).

That translates into a stunning pretax return on capital employed of 62% a year on average, which makes Coal India not just the largest, but also the most profitable coal mining company in the world. When it comes to profitability, other global coal mining companies do not even come close.

Second, what causes Coal India to be so stunningly profitable? After all, this is the same company which is “run to serve the public interest and not necessarily to maximize its profits” according to its majority owner. And this very company also has a Board whose members are in “breach of their fiduciary responsibility” according to a minority owner.

How can such a company become the world’s largest and the most profitable one in its industry, one with zero debt, and one in possession of more than $10 billion of cash?

You see, the Lord (“President of India”) that Taketh is also the Lord that Giveth. Coal India is stunningly profitable because the “Lord” grants it coal exploration rights, mining rights, acquisition of land and surface rights, and many other rights at throwaway prices. If Coal India was required to pay market prices for these rights, it’s super profits would turn into horrendous losses in no time.

It cuts both ways. A minority shareholder mustn’t complain about the majority’s interference with free market forces, without willing to sacrifice the profits sourced from that very interference.

You can’t have your cake and eat it too.

http://fundooprofessor.wordpress.com/2012/03/29/why-coal-india-is-not-a-childs-play/

 

[deneb]

The Good Soldier Svejk- Book review

If I had to explain The Good Soldier Svejk in one sentence, I couldn't do it. It's dark comedy (in fact, a comic strip at one point). It's political, and it's tragic. It's historical fiction that spotlights a slice of military relations during the first World War. If irony and comedy and horror combined, The Good Soldier Svejk would surely be the offspring.

Even the main character, Josef Svejk (last name pronounced "Shvayk") cannot be pinned by a single representation. At times, he appears as a hopeless idiot while at other times, he proves himself to be completely intelligent and adept. From what I've read, this book is as confused and unfinished as its writer, Jaroslav Hasek, who went from being a scholar to a bum to an anarchist to a writer to a soldier to a communist and back to an anarchist and writer.

How, then, can such a book make it on the list of the best 100 novels of all time? O ho, my friends, only a person who has not read it would ask such a question! It's popular because it's powerful. The Good Soldier Svejk was almost unknown during the writer's lifetime (he died before finishing it). Unsurprisingly, many did not take kindly to the fact that Jaroslav Hasek was quick to poke fun at the horrors for which they had all so recently endured. Furthermore, the imbecilic character of Svejk did little to promote the esteem of the Czech countrymen, but even worse was his representation of the Austrio-Hungarian military.

It would be like if someone wrote a funny story about the incompetent U.S. forces in Iraq and Afghanistan and made the common soldier look like he was one step away from institutionalization. We can laugh now, but I wonder if die-hard Czech patriots aren't still cursing the name of Jaroslav Hasek!

Jaroslav Hasek took a blight on his country's history and he exploited it for all its possibilities. He wasn't afraid of controversy, and because of it, he lived much of his lifetime in drunkenness, shame, and poverty. Ah, well. Such is the sacrifice for good literature, right friends?

What I Loved...
was the comedy. Svejk possesses a bumbling curiosity and proudly declares himself a half-wit. The fact that he is in the army at all is apt to induce humor. He is a likable dude, and his storytelling skills are exemplary. But there are times when he is amazingly clever. The police become desperate to trap Svejk into committing treason. Since Svejk is a dog trader in civilian life, they try to make friends with him and buy his dogs.

The St. Bernard was a mixture of mongrel poodle and a common street cur; the fox-terrier had the ears of a dachshund and was the size of a butcher's dog, with bandy legs as though it had suffered from rickets. The head of the Leonberger recalled the hairy muzzle of a stable pinscher. It had a stubbed tail, was the height of a dachshund and had bare hindquarters like the famous naked American dogs.
Later detective Kalous came to buy a dog and returned with a wildly staring monster which was reminiscent of a spotted hyena with the mane of a collie...

And then, things just seem to work themselves out for Svejk:

And that was the end of the famous detective Bretschneider. When he had seven monsters of this kind in his flat, he shut himself up with them in the back room and starved them so long that they finally gobbled him up.

Svejk and his cronies are hilarious. There is so much humor worthy of showing you here that all I can say is that you have to read the book. Sadly, another aspect of the book that I can only talk about and not fully portray are the pictures! Didn't I mention that The Good Soldier Svejk was turned into a comic strip? Due to Czech copyright laws, I can't show any of the pictures here even if I critique them, so all I can do is repeat: you have to get the book.

And I think we all know how much I love history! I gobbled up every page that profiled the trials of the Austrio-Hungarian military during World War I...and I sometimes got a good chuckle out of it, which is rare for historical fiction. Like when the soldiers are given a motivational speech, Svejk makes his assessment:

"Won't it be marvelous when, like the chaplain said, the day draws to its close, the sun with its golden beams sets behind the mountains, and on the battlefields are heard, as he told us, the last breath of the dying, the death-rattle of the fallen horses, the groans of the wounded and wailing of the population, as their cottages burn over their heads."

I don't know how to react to that. Should I laugh or cry? I think it depends on whether or not you see the glass as half-empty or half-full.

What I Hated...
was the drunken rambling. My copy of The Good Soldier Svejk is 800 pages long. I'm estimating that a good 15% of it is nonsense--and that is a conservative figure. While entertaining, there are times when the writer's vices (Hasek was an alcoholic) show itself clearly on these pages. Frankly, we could trim this book back by quite a bit and not lose a shred of significance. Here is just one example of a character who is clearly as drunk as the writer:

"It doesn't burn," he said despondently, when he had used up a whole box of matches. "You're blowing it."
But at that moment he lost the thread again and started to laugh: "This is a lark. We're alone in the tram, aren't we, my dear colleague?" He began to rummage in his pockets.
"I've lost my ticket," he shouted. "Stop, I must find my ticket!"
He waved his hand resignedly: "All right, let's go on..."
He then began to wander: "In the vast majority of cases...Yes, all right...In all cases...You're quite wrong...Second floor?...That's just an excuse...It's not my concern, but yours, my dear madam...Bill, please...I had a black coffee!"

And it goes on like this for six pages. From what I can discern, there are no purposes for these moments except that the writer was wasted off his butt, thought he was hilarious, and wanted to fill pages.

But the worst part about this book is that it is unfinished. Jaroslav Hasek was an interesting character who lived hard. He possessed an inherent hatred for authority and alternated between being respectable and being repugnant. He was a lawless drunk who, for much of his life, was forced to live under the radar and among the homeless. He didn't necessarily take care of his health. So, it happens that the writer dies and The Good Soldier Svejk ends abruptly before Svejk's battalion even makes it to the battlefront. What would we have seen there, I wonder. What piece of history will never be shown because the writer did not live long enough?

http://thebookclubbook.blogspot.in/2011/01/96-good-soldier-svejk.html

 

[deneb]

Does growth devalue brands?

How do upmarket brands resolve the conflict between the need to grow their topline and having to go down-market to achieve that? Hidesign, the leather bags maker, provides a neat example of the dilemma.

For 25 years, it made top quality men's office bags. Owning these became a status symbol for men not only because the bags looked so nice, but also because the price was high. Then in 2003, four things happened, three of which kept on happening till 2010 and then slowed or stopped; the fourth has gone on happening.

First, thanks to economic growth accelerating in India, the upper middle class expanded.

Second, therefore, not only were more people earning now, they were also earning more.

Third, inflation became muted at around 5 per cent.

Fourth, women displaced men as Hidesign's main market. This is still the case while the first three factors almost disappeared after 2008.

Taken together, this has meant there are more people in the market for leather bags. That, in turn, has meant there is more money to be made by making and selling them.
Tough choice

Hidesign was now faced with a choice. It could either stay small, trendy and expensive; or it could become bigger, highly affordable but as a result less trendy.

At the same time it didn't also want to dilute the brand by selling multi-coloured handbags to yesterday's hoi polloi. So it has kept an arm's length relationship with its handbag brand called Holii.

This way it hopes to get the revenue from the masses of the middle class while protecting the mother brand for the upper classes. Will the strategy work? Only time will tell.

The unanswerable question is: How do you define the upper classes and therefore, how much can you charge them for snob value?

The answer lies in the economics of competition between multi-product firms which try to cater to different segments of the market.
Compete with yourself

Economists have analysed the phenomenon threadbare and, to the extent that they can ever agree, concluded that:

a. Buyers of lower-quality look mainly at the price but will pay a premium for the brand; and

b. Buyers at higher prices look mainly at quality and may not pay a premium.

My own conclusion from these findings is that a brand tends to become less relevant as you clamber up the coconut tree.

That is, if it is a cheap variant I am looking for, I will worry about the brand; but if it is a high-quality thing I am in the market for, I will not care so much about the brand.

Indeed, that is how new brands get built.

In short, multi-product firms, in their quest to boost the topline, tend to kill the goose that lays the golden egg because the rich turn up their noses, so will the less rich sooner or later.

Thus, if five million Chinese are buying Louis Vuitton bags, at high prices, what is LV doing to its brand? How long before it is pass to carry a LV bag?
Brandbust?

This problem is not confined to bag makers. Soap-wallahs as well as hotel-wallahs, car makers as well as computer makers face it because if your maid can afford a downmarket version which has an upmarket version, it doesn't make you feel great if you have the latter. After all, the label is the same and only a few know the difference between your version and your maid's.

It's like flying: The difference between business and economy is tiny – only those on the plane know you flew business – and the guy in economy thinks you are a fool for paying three times as much for sitting in the same aluminium tube.

http://www.thehindubusinessline.com/opinion/columns/tca-srinivasa-raghavan/article3300407.ece

 

[pradeeeep32]

Can any one show some examples of Gann angle trading.
pradeeeep32

 

[deneb]

Why FMCG stocks are so pricey

An ever-increasing consumption of personal and household products by the masses has made companies selling these products, stock market favourites. The index that tracks these stocks — the BSE FMCG index — has gained 22 per cent since January last year even as the Sensex lost 15 per cent. The FMCG index even hit 52-week high last week. Within this category, domestic companies and those in food products are preferred.

Other consumer-driven sectors — cars, apparel, durables and such — have fallen prey to rising inflation and shrinking spending.

But it is not so with soaps, skincare, haircare, processed foods and other staples. The premium the FMCG index is currently commanding over the Sensex and the broader BSE 500 is at its highest in seven years.

Widening premium

During the heady days of 2007, the FMCG index had only a narrow premium over the price multiples of the broader market. In April 2007, for example, the FMCG index traded at 21.5 times, the Sensex was at 18.7 times and the BSE500 at 16.8 times.

This gap remained narrow for most of 2005 to 2009. The premium began to rapidly inflate from 2010 onwards and has been in double-digits since mid-2010. In effect, investors are now willing to pay much more for every rupee of earnings from these companies. The BSE FMCG index is now at a price-earnings multiple of 35 times. In contrast, the BSE Sensex trades at 17.6 times, and the broader BSE 500 is at 19.1 times. Many factors explain this fancy for FMCG stocks.

FMCGs account for a low share in the consumer wallet. A good portion of the products are for frequent use, such as soaps, toothpastes, hair oil, detergents and so on. These factors mean that while big-ticket purchases slow, spending on these smaller items tend to hold up.

This also makes it easier for FMCG companies to increase product prices, mitigating the effect of pricier raw material. Marico, Dabur, Hindustan Unilever, Emami, GSK Consumer Healthcare, Godrej Consumer Products and others have effected price hikes and managed to sustain volume growth as well. Operating profit margins for FMCG companies have averaged a minimum of 20 per cent over the past five years.

These companies also operate on very low debt. This is a distinct advantage in a world of high interest rates and heavy interest outgo telling on profitability of other sectors.

Strong earnings growth and steady margins have meant consistent, superior return ratios. Return on equity has been in excess of 20 per cent in the past five years for FMCG companies. Only about a fifth of BSE500 companies have managed such consistent return.

Finally, the Government's steps to boost the economy during the downturn have aided these companies. Employment schemes lifting average wages and good harvests increased rural money. FMCG companies too have focused on increasing rural penetration.

Playing catch-up

Within the FMCG space, the market is now paying more attention todomestic consumer companies. In terms of price-earnings multiples, the premium multinationals command over domestic players is shrinking.

Domestic companies such as Emami have successfully introduced new brands, while Dabur firmed up presence in the herbal category. These companies went on a buying spree, picking up stakes in promising overseas markets such as Africa and Latin America, as did Marico and Godrej Consumer. These acquisitions, apart from broad-basing operations, shielded the companies from harsh domestic competition. Godrej Consumer, for example, gets more than a third of revenues from global operations.

Marico's PE at the start of 2005 was 16.1 times, against behemoth HUL's 28.9 times. The former's valuations rose to 28.4 times six years later, while the latter's inched up to 29.1 times trailing earnings. ITC's sedate multiple of 18.7 trailing earnings in 2005 ran up to the current 30.5 times.

Also playing catch-up were smaller companies relative to their larger counterparts. Consider Marico's example. Starting out with a niche product like hair oil where it has retained a dominant share, it has made successful forays into grooming and health foods.

Healthy foods

Companies, whose main offering is packaged and processed foods, have been dealt a generous hand too. The food segment is under-penetrated, especially when compared to categories such as soaps and detergents, and thus offers far more growth promise.

Segments such as noodles and health drinks have only lately seen new entrants; firmly established biggies such as Nestle and GSK Consumer Healthcare are at a distinct advantage.

Nestle, in fact, has been the highest rated stock among FMCG peers in the past five years. It shot up from a PE multiple of 31.7 times to 46.9 times in a space of four years to April 2012.

With healthy growth in premium brands, still-strong rural demand and good penetration in these markets, the growth story for FMCGs is not yet in its final chapters.

 

[deneb]

ITC rides high on the predictability factor

With India's macro-economic condition uncertain, investors are increasingly turning towards defensive spaces such as FMCG to avoid getting caught in the downward spiral. So it was no surprise when consumer goods major ITC touched its all time high last week when the markets were extremely range bound. What is that that makes this company a safe haven?

Since the announcement of the union budget, ITC's PE (price-to-earnings) relative to BSE Sensex has expanded from 1.6 times to 2 times, which underscores that premium investors are willing to pay for predictability of earnings, robust cash flows and low risk of government intervention.

Deutsche Bank in its company note zeroed in on the 'predictability factor’ as one of the major reasons to raise its target price by 22% to Rs 270/share.

With the union budget now behind us, the much-speculated risk of rise in excise duty has reduced considerably. This leaves ITC in a sweet spot as any rise in excise duty would have hampered ITC's valuations driven strongly by its cigarette business as the company has a strong pricing power owing to its monopoly in this space.

Even as compared to its peers, ITC will be able to manage its margin profile much better as central excise and state VAT (two of the biggest cost building factor) is largely fixed for FY13. So, at 25x one yr forward earnings, the stock currently trades at a 13% discount to the one year forward PE multiple of the consumer sector (ex-ITC) of 29 times.

Another factor which bodes well for the stock price is the continually declining loss in its FMCG business. A 23% revenue compounded annual growth rate between financial year 2010 and 2012 in the FMCG segment is a reflection of the scale benefits that this business has been able to generate. It currently enjoys presence in hair care, personal wash, skin care and biscuit segment. Also, there are plans to extend its FMCG portfolio with launches in chocolates, milk products etc. which will help extend its reach in the food business.

However, one huge impending negative for the stock is the implementation of Goods and Service Tax (GST) in its current form which leaves alcohol and tobacco products out of its ambit. This will enable the state governments to increase State GST leaving them with no other option but to hike taxes on alcohol and tobacco products. But this is some time away.

So until then, ITC may continue to enjoy the premium of the 'predictability factor’.

http://www.business-standard.com/india/news/web-view-itc-rides-highthe-predictability-factor/163969/on

 

[deneb]

Revealed – the capitalist network that runs the world

AS PROTESTS against financial power sweep the world this week, science may have confirmed the protesters' worst fears. An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy.

The study's assumptions have attracted some criticism, but complex systems analysts contacted by New Scientist say it is a unique effort to untangle control in the global economy. Pushing the analysis further, they say, could help to identify ways of making global capitalism more stable.

The idea that a few bankers control a large chunk of the global economy might not seem like news to New York's Occupy Wall Street movement and protesters elsewhere (see photo). But the study, by a trio of complex systems theorists at the Swiss Federal Institute of Technology in Zurich, is the first to go beyond ideology to empirically identify such a network of power. It combines the mathematics long used to model natural systems with comprehensive corporate data to map ownership among the world's transnational corporations (TNCs).

"Reality is so complex, we must move away from dogma, whether it's conspiracy theories or free-market," says James Glattfelder. "Our analysis is reality-based."

Previous studies have found that a few TNCs own large chunks of the world's economy, but they included only a limited number of companies and omitted indirect ownerships, so could not say how this affected the global economy - whether it made it more or less stable, for instance.

The Zurich team can. From Orbis 2007, a database listing 37 million companies and investors worldwide, they pulled out all 43,060 TNCs and the share ownerships linking them. Then they constructed a model of which companies controlled others through shareholding networks, coupled with each company's operating revenues, to map the structure of economic power.

The work, to be published in PLoS One, revealed a core of 1318 companies with interlocking ownerships (see image). Each of the 1318 had ties to two or more other companies, and on average they were connected to 20. What's more, although they represented 20 per cent of global operating revenues, the 1318 appeared to collectively own through their shares the majority of the world's large blue chip and manufacturing firms - the "real" economy - representing a further 60 per cent of global revenues.

When the team further untangled the web of ownership, it found much of it tracked back to a "super-entity" of 147 even more tightly knit companies - all of their ownership was held by other members of the super-entity - that controlled 40 per cent of the total wealth in the network. "In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network," says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.

John Driffill of the University of London, a macroeconomics expert, says the value of the analysis is not just to see if a small number of people controls the global economy, but rather its insights into economic stability.

Concentration of power is not good or bad in itself, says the Zurich team, but the core's tight interconnections could be. As the world learned in 2008, such networks are unstable. "If one [company] suffers distress," says Glattfelder, "this propagates."

"It's disconcerting to see how connected things really are," agrees George Sugihara of the Scripps Institution of Oceanography in La Jolla, California, a complex systems expert who has advised Deutsche Bank.

Yaneer Bar-Yam, head of the New England Complex Systems Institute (NECSI), warns that the analysis assumes ownership equates to control, which is not always true. Most company shares are held by fund managers who may or may not control what the companies they part-own actually do. The impact of this on the system's behaviour, he says, requires more analysis.

Crucially, by identifying the architecture of global economic power, the analysis could help make it more stable. By finding the vulnerable aspects of the system, economists can suggest measures to prevent future collapses spreading through the entire economy. Glattfelder says we may need global anti-trust rules, which now exist only at national level, to limit over-connection among TNCs. Sugihara says the analysis suggests one possible solution: firms should be taxed for excess interconnectivity to discourage this risk.

One thing won't chime with some of the protesters' claims: the super-entity is unlikely to be the intentional result of a conspiracy to rule the world. "Such structures are common in nature," says Sugihara.

Newcomers to any network connect preferentially to highly connected members. TNCs buy shares in each other for business reasons, not for world domination. If connectedness clusters, so does wealth, says Dan Braha of NECSI: in similar models, money flows towards the most highly connected members. The Zurich study, says Sugihara, "is strong evidence that simple rules governing TNCs give rise spontaneously to highly connected groups". Or as Braha puts it: "The Occupy Wall Street claim that 1 per cent of people have most of the wealth reflects a logical phase of the self-organising economy."

So, the super-entity may not result from conspiracy. The real question, says the Zurich team, is whether it can exert concerted political power. Driffill feels 147 is too many to sustain collusion. Braha suspects they will compete in the market but act together on common interests. Resisting changes to the network structure may be one such common interest.

When this article was first posted, the comment in the final sentence of the paragraph beginning "Crucially, by identifying the architecture of global economic power…" was misattributed.

The top 50 of the 147 superconnected companies

1. Barclays plc
2. Capital Group Companies Inc
3. FMR Corporation
4. AXA
5. State Street Corporation
6. JP Morgan Chase & Co
7. Legal & General Group plc
8. Vanguard Group Inc
9. UBS AG
10. Merrill Lynch & Co Inc
11. Wellington Management Co LLP
12. Deutsche Bank AG
13. Franklin Resources Inc
14. Credit Suisse Group
15. Walton Enterprises LLC
16. Bank of New York Mellon Corp
17. Natixis
18. Goldman Sachs Group Inc
19. T Rowe Price Group Inc
20. Legg Mason Inc
21. Morgan Stanley
22. Mitsubishi UFJ Financial Group Inc
23. Northern Trust Corporation
24. Socit Gnrale
25. Bank of America Corporation
26. Lloyds TSB Group plc
27. Invesco plc
28. Allianz SE 29. TIAA
30. Old Mutual Public Limited Company
31. Aviva plc
32. Schroders plc
33. Dodge & Cox
34. Lehman Brothers Holdings Inc*
35. Sun Life Financial Inc
36. Standard Life plc
37. CNCE
38. Nomura Holdings Inc
39. The Depository Trust Company
40. Massachusetts Mutual Life Insurance
41. ING Groep NV
42. Brandes Investment Partners LP
43. Unicredito Italiano SPA
44. Deposit Insurance Corporation of Japan
45. Vereniging Aegon
46. BNP Paribas
47. Affiliated Managers Group Inc
48. Resona Holdings Inc
49. Capital Group International Inc
50. China Petrochemical Group Company

* Lehman still existed in the 2007 dataset used

http://www.newscientist.com/article/mg21228354.500-revealed--the-capitalist-network-that-runs-the-world.html

 

[SavantGarde]

Money Masters

http://youtu.be/_9wYu1SR1Wk

The True History Of Banking Cartels & Federal Reserve

http://youtu.be/SMqb_WrnVTc

 

[SavantGarde]

Meltdown - The Secret History Of Global Financial Collapse

http://youtu.be/T3CDGh4cXU0 (Part-1)

http://youtu.be/VBmOEI7Ob9M (Part-2)

http://youtu.be/JB4wefzZLNc (Part-3)

http://youtu.be/XU6c1lIEkuQ (Part-4)