Oligopoly in the market for credit rating agencies

"At least one of the three biggest credit-rating companies was hired for 98 percent of municipal bonds bigger than $50 million this year, up from 94 percent in 2007, according to data compiled by Bloomberg. About 99 percent of U.S. corporate issues have a grade from one of the three, compared with 98 percent four years ago, the data show...

The three companies provide 97 percent of all credit ratings, the U.S. Securities and Exchange Commission said in a September report. S&P leads with a 42 percent share, Moody’s holds 37 percent and Fitch, majority-owned by Paris-based Fimalac SA, is at 18 percent...

It’s very hard to convince someone to stop using S&P and Moody’s ratings because they’re such a market norm... If you don’t have one, people will wonder what’s wrong with you."

See more on the distortions in the market for credit rating agencies in this excellent Bloomberg story.

The emergence of corporate monopolies in the US

Nancy Folbre points to a Monthly Review article which notes that in 1995, the six largest bank-holding companies (JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley) had assets equal to 17 percent of gross domestic product in the United States. By the third quarter of 2010, this had risen to 64 percent. This graphic from Mother Jones captures the evolution of this concentration of market power over the last decade.



The Monthly Review article points to similar concentration of market power and emergence of monopolies across different industries. The number and percentage of US manufacturing industries that have a four-firm concentration ratio of 50 percent or more have risen dramatically since the 1980s. More and more industries in the manufacturing sector of the economy are tight oligopolistic or quasi-monopolistic markets characterized by a substantial degree of monopoly.



This concentration of market power has been a constant theme across sectors. The graphic below shows the rise in four-firm concentration ratios in six key retail sectors and industries, over the fifteen-year period, 1992-2007. Most remarkable was the rise in concentration in general merchandise stores (symbolized by Wal-Mart), which rose from a four-firm concentration ratio of 47.3 in 1992 to 73.2 percent in 2007; and computer and software stores from a four-firm concentration ratio of 26.2 percent in 1992 to 73.1 percent in 2007.



Another graphic highlights the rising share of the top 200 US corporations as a percentage of total business revenues in the US economy over the 1950-2008 period. The revenue of the top two hundred corporations has risen steeply since the mid-nineties.



In this context, a pathbreaking scientific study of the network of global corporate control by Stefania Vitali, James B. Glattfelder, and Stefano Battiston has thrown up several astounding insights. They mined the Orbis 2007 database of 37 million companies and investors worldwide and mapped the ownership and control networks of all the 43060 trans-national corporations (TNCs). 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. They write,

"We find that, despite its small size, the core holds collectively a large fraction of the total network control. In detail, nearly 4/10 of the control over the economic value of TNCs in the world is held, via a complicated web of ownership relations, by a group of 147 TNCs in the core, which has almost full control over itself. The top holders within the core can thus be thought of as an economic "super-entity" in the global network of corporations. A relevant additional fact at this point is that 3/4 of the core are financial intermediaries."

Most remunerative investment?

Which is the most remunerative, recession-proof investment? No, it is not gold or housing. It is the New York City Taxicab Medallion, a license to drive a New York City taxi!







A Bloomberg report says that the cost of a New York City cab license has risen more than 1,000 percent since 1980, a market that’s outperformed gold, oil, inflation, and the housing market. The medallion, the transferable aluminum plate found on the hood of all cabs, sold for $678,000 in July, up from $2,500 in 1947.



The story attributes its success to a small, tightly controlled supply of licenses and an unwavering demand from entrepreneurial immigrants, coupled with a huge demand for New York taxi cab rides. Econ 101 has another name for this - the power of monopoly!

Nuclear Power Exposed as a Product of the State (Video)

Freedomain Radio

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Use the Dollar or Else

Only use our monopoly money.
Terrorists use silver and gold
Dees Illustration

Llewellyn H. Rockwell Jr.
Lew Rockwell

Look up the phrase "a unique form of domestic terrorism" on a search engine and you will turn up a story about a man whom the US government is trying to cage from now until the time of his death.

And his crime? His unique form of terrorism? He minted silver and copper coins and sold them. In other words, he did what innumerable entrepreneurs from the beginning of time have done. He attempted to provide consumers with a store of value. No one was forced to buy. He met a market demand, and that’s it.

Whom did he hurt? No one. Unlike illegal drugs, which the government bans on grounds that it doesn’t want us to hurt ourselves, these silver coins did not endanger their users. They only gave people an option on what to do with their money. Did the proprietor attempt to claim that these were legal tender for monetary exchange? No, he sold them for what they are.
Could people use them for money? Yes, but people can use anything for money: shoes, shells, flash drives, or books. Whether something is money or not depends on the intentions behind the exchange. Do you acquire something to consume it? It is not money. Do you acquire something in order to trade it for something else? In that case, it takes on money-like properties.


It is wholly understandable that people have doubts about the future of the paper dollar. Many people are seeking alternatives, in their own financial interest. What this proprietor did was provide something that turned out to be a possible alternative to the dollar. And for that, and that alone, he is being hounded and destroyed.

His name is Bernard von NotHaus and he is 67 years old. In the course of the proceedings, he was called every name imaginable. He was called a crook, a terrorist, a crank, and a crazy man. What he actually did, however, should be fully legal and encouraged in any nation, in all times and all places.

A nation that is confident about its money’s future would not fear currency competition. A nation with a dying money uses every possible means to crush the competition. That is precisely what is happening in the case of the so-called Liberty Dollar.

What’s striking here is that no one believes there is any reason to argue the point. It is obvious to his persecutors that he is a criminal. "He's playing on a core idea of the radical right, that evil bankers in the Federal Reserve are ripping you off by controlling the money supply," said Mark Potok of the Southern Poverty Law Center. "He very much exists in the world of the anti-government patriot movement, whatever he may say. That's who his customers are."

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RELATED ARTICLE:
Monetary Reform Begins with Competing Currencies

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