Over 55% of the equity shares of U.S. corporations which belong, in the final analysis, to U.S. households and nonprofit organizations, are held indirectly through intermediaries, such as life insurance companies, private pension funds, government retirement funds, and mutual funds.

(See: Federal Reserve Flow of Funds Table B100e. )

The graph shows how the voting power and hegemony of these financial intermediaries has grown over the decade, 1995-2004:

The percentage of equities belonging to households and nonprofit corporations increased from 42.8% to 55.4% between December 1995 and December 2004.

Losses in the 2000 Crash Reached $7.2 Trillion

The next graph shows how households and nonprofits lost, in total, over US$7.2 trillion in market value in the collapse of the Great Bubble of the 1990s; this amounted to over 40% of their holdings.

Subsequently, the market recovered from the low of 2002, but households and nonprofits were still US$2.9 trillion poorer in December 2004 than in December 1999.

In 2004, the value of equities under the control of financial intermediaries reached US$7.9 trillion, as the graph shows:

Since these intermediaries had the power to stop the buyback-option schemes that so wildly distorted the U.S. stock market throughout the decade, it would not seem that they exercised their fiduciary responsibilities with prudence.

(See: Buybacks and Options.)

This entry was posted on Friday, February 24th, 2006 at 8:07 am and is filed under Equities, Corporate Managers, Individual Investors. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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