(PhysOrg.com) — As the nation bristles, camps out, and opines against the destructive role of banks in bringing down the economy, a group of scientists has released a study that shows a critical piece of the puzzle went missing, and that piece continues to go ignored, to everyone’s peril, including the banks.
Their new study shows that banks themselves were under attack by other players on Wall Street. The study authors at the New England Complex Systems Institute (NECSI) retraced events to show that at a critical point in the financial crisis, the stock of Citigroup was attacked by traders by selling borrowed stock (short-selling) which may have caused others to sell in panic. The subsequent price drop enabled the attackers to buy the stock back at a much lower price.
This kind of illegal market manipulation is called a bear raid and the new study supports earlier suspicions that the raids played a role in the market crash.
The study has direct evidence. Through its analysis of stock market data not generally available to the public, namely the borrowing of shares, NECSI reconstructs the chain of events.