Whenever value is created by the increased value of corporations' assets in the stock market, productive work is not correspondingly created, and as a consequence we experience a transfer of wealth on behalf of the few and privileged and at the expense of everybody else. And when such financial bubbles continue to be created in the stock market, employees are laid off, corporations restructure their dimensional business, and acquisitions by bigger corporations continue at a more frenetic pace in the name of free market efficiency and globalization!

Our financial system is intrinsically predatory and therefore, it is not true that today's economic policies of globalization will be able to eradicate poverty in the world. George Soros, an international financier and philanthropist, has debunked the myth that speculators increase price stability by moving market prices toward their equilibrium, and has stated that when a speculator bets that a price will rise and it falls instead, he is forced to protect himself by selling, which accelerates the price drop and increases the market volatility. Soros says:

"Equilibrium is appropriate when a market deals with known quantities. But in financial markets, you deal with unknown quantities. You're trying to discount the future. But the future depends on how you discount it today. It's not something fixed, so your discounting can't correspond to the future."

The story of the intrinsic volatility of the financial markets is further reinforced by the intrinsic corrupted and greedy behavior of corporations and financial analysts. Yesterday, Air Canada was fined $1 million after the airline disclosed lower profits to selected analysts and affected the pricing of the related shares. And another example of market price manipulation occurred yesterday when James Archer, son of disgraced Lord Jeffrey Archer who has been recently convicted of perjury, was found guilty of "trying to manipulate the closing price" of the Swedish Stock Exchange (SSE). Air Canada and James Archer have been found guilty of manipulating the market, and therefore we can think that there are provisions for bringing market manipulators to justice. But no, this is not the case, and in fact George Soros claims that it is normal for speculators to shape the directions of market prices and create instability.

References

 When Corporations Rule the World, by David C. Korten, 2nd Edition 2001, Section "It's the culture" http://iisd1.iisd.ca/pcdf/corprule/corporat.htm

Interview conducted in the spring of 1999 (with George Soros), PBS Online http://www.pbs.org/wgbh/pages/frontline/shows/crash/interviews/soros.html

Air Canada fined $1 million over selective disclosure case, CBC Canada, July 27, 2001 http://cbc.ca/cgi-bin/templates/view.cgi?/news/2001/07/27/aircanada_010727

City bans Archer son, BBC, July 27, 2001 http://news.bbc.co.uk/hi/english/business/newsid_1459000/1459638.stm