accounting principles, America - USA, bailouts, banking, banks, budget deficits, Business, Business Methods, Creating Solutions That Work, credit crunch crisis, credit default swaps bonds, Cricket Diane C Sparky Phillips, cricketdiane, currency values, Economic depression, Economics, Economy, Federal government, financial derivatives, global economic crisis, government corruption, investment banking, investments, local government, macro-economic future forecasting, macro-economics, Macro-economics future forecasting, Principles of Economics, Recession - Depression, Solutions, state budgets, state government, states, States Rights, stimulus bill, stimulus package, US currency, US dollar, US economic bailout, US economic crisis, US government policy
On cnbc’s Power Lunch just now, there was a specialist on air discussing non-profits. In the short question and answer session, he said, “Let’s think about what endowments are. Endowments are perpetual pools of assets to be invested for the long run.” 1.17 pm,02-06-09, cnbc.
That is likely what endowments, charitable gifts to non-profits of all types, corporate income streams in for-profit companies, tax pools in state and local governments, insurance company premiums and every other pool of existing money in banks are being used to do.
These are all funding investment portfolios of varying diversity and feeding into securities market brokers’ hands to be invested as tremendous blocks of power. To say they could not manipulate stock and investment values by virtue of sheer volume would be unreasonable.
On bloomberg in a special report a couple weeks ago about AARP, there was a mention that AARP hijacks all premiums paid by members for insurance that has been sponsored by AARP.
By using these funds from premiums as an investment pool of over $5 billion, this “non-profit” then invests them in hedge funds, stocks, bonds and derivatives as they see fit.
After manipulating these moneys from premiums for their own advantage, AARP then sends the premiums along to the insurance companies and I suppose, re-invests the difference.
The institutional players, such as these are placing funds into even larger funds which are then manipulating huge blocks of shares. As a result, the true value of stocks, bonds and other financial products is being set by an artificial and intentionally molded construct.
– cricketdiane, 02-06-09
Corporate Governance and the Impacts of Institutional Investors on the Financial Markets –
entry from Wikipedia under Corporate Governance includes an interesting insight about institutional investors which are currently shifting the values in the stock markets and other interest-bearing assets by moving huge blocks of shares at a time.
Role of Institutional Investors
Many years ago, worldwide, buyers and sellers of corporation stocks were individual investors, such as wealthy businessmen or families, who often had a vested, personal and emotional interest in the corporations whose shares they owned. Over time, markets have become largely institutionalized: buyers and sellers are largely institutions (e.g., pension funds, mutual funds, hedge funds, exchange traded funds, other investor groups; insurance companies, banks, brokers, and other financial institutions).
The rise of the institutional investor has brought with it some increase of professional diligence which has tended to improve regulation of the stock market (but not necessarily in the interest of the small investor or even of the naïve institutions, of which there are many). Note that this process occurred simultaneously with the direct growth of individuals investing indirectly in the market (for example individuals have twice as much money in mutual funds as they do in bank accounts). However this growth occurred primarily by way of individuals turning over their funds to ‘professionals’ to manage, such as in mutual funds. In this way, the majority of investment now is described as “institutional investment” even though the vast majority of the funds are for the benefit of individual investors.
Program trading, the hallmark of institutional trading, averaged over 80% of NYSE trades in some months of 2007.  (Moreover, these statistics do not reveal the full extent of the practice, because of so-called ‘iceberg’ orders. See Quantity and display instructions under last reference.)
Unfortunately, there has been a concurrent lapse in the oversight of large corporations, which are now almost all owned by large institutions. The Board of Directors of large corporations used to be chosen by the principal shareholders, who usually had an emotional as well as monetary investment in the company (think Ford), and the Board diligently kept an eye on the company and its principal executives (they usually hired and fired the President, or Chief Executive Officer— CEO).