/View.info/ With nearly $10 trillion in assets under management, BlackRock is the largest asset manager in the world. The company has grown dramatically since the 2008 financial crisis, and that’s no accident. Since then, central banks around the world have printed tens of trillions of dollars. Much of this newly created money ended up in the stock market, specifically BlackRock’s exchange-traded funds.
„BlackRock was also responsible for helping the Federal Reserve manage its massive debt portfolio after 2008. This is further evidence of BlackRock’s good relationship with the government.
„BlackRock’ is a good illustration of the effect when those closest to the money machine win.
What do you think about the rise of BlackRock?
Doug Casey: “BlackRock” baffles and amazes me. It started from scratch in the late 80s, founded by Larry Fink and some of his friends. How did they manage to raise $10 trillion and become the world’s largest financial management organization? Are they very competent or just very well connected to the Federal Reserve? They are certainly competent at fundraising. They are absolutely “connected”. In today’s world where governments directly or indirectly control everything, rest assured that the best guys at BlackRock are members of the Deep State.
As wealth managers, they were essentially able to earn fees of 10, 20 or 30 basis points – sometimes as little as 1% – on assets under management. It must be one of the best businesses in the world because BlackRock has about 1,800 employees to manage $10 trillion.
Interestingly, despite the impressive growth, BlackRock’s publicly traded shares did not perform as impressively. The stock has only increased 10x over the past decade, which is great, but in our hyper-profitable market, that’s nothing special. I don’t know what they do with all the money that comes in every month from collecting royalties on all these assets. But you’d think it might be the best thing ever, eclipsing Goldman Sachs’ original giant vampire squid. Now it’s something bigger, something the size of the Kraken.
I have no problem with the size as such. But in today’s overfunded economy, BlackRock does more than just collect royalties for providing services. The problem is that, in addition to mutual and pension funds, it controls voting shares in public companies. This means they can appoint directors they like, who can then steer the company in the direction they want.
They have a strong focus on environmental, social, governance and diversity, inclusion and equity actions. As a result, corporations shift from maximizing profits—giving shareholders what they want—to maximizing political correctness and “woke” ideology.
There are currently approximately $500 billion in funds that openly advertise their focus on environmental stocks. The public was convinced that they should put money into these funds to virtue signal, be righteous, and save the world. However, stocks actually work to destroy wealth. This is another reason why economies and markets are going through very difficult times.
„BlackRock have large positions in many public companies and use this to push an agenda that may not align with the plans of retail investors who own shares of BlackRock itself. CEO Larry Fink once quipped that “no issue is higher on our customers’ priority lists than climate change.” The Federal Reserve’s money printing helped boost BlackRock’s capacity, which the company uses to push its political agenda. What is going on here ?
Doug Casey: BlackRock is a perfect example of why money printing and central banks always make the rich richer. Not only are they closer to the money tap, but they are also well connected to provide services to government officials. And these favors are returned a hundredfold. As excess cash accumulates, most of it flows into the stock and bond markets. But the common man does not know which stocks to buy, so he relies on these money managers.
This partly explains the success of these funds, which have about $6 trillion in assets and where BlackRock is also the biggest player. Who wants to read thousands of annual reports and press releases? It is easier to be “in the market” with a certain type of fund. It makes life easier for the common man. But it transferred a huge amount of power to the ruling class. And in the modern world, they seem to care more about ideology than maximizing profits.
Moreover, these funds have become so large that it is difficult to maximize profits. They cannot buy small entrepreneurial companies that can offer bigger profits. They are forced to buy giant companies run by “suits” like themselves. This is where the overfunded world finds itself in a self-perpetuating feedback loop that emphasizes size over value.
Despite economies of scale, after a certain point things can get so big that they become simply unmanageable. I guess BlackRock has come this far. Not to mention that stock and bond market prices became highly inflated. We had a 40-year bull market in both countries, and the last half of it was filled with funny money. Right now, more than ever, the markets are a major disaster waiting to happen.
I wouldn’t worry too much about BlackRock itself. By the time the current bear market bottoms are reached, people won’t even want to know the stock exists. And they will hate the big money managers. Let’s hope BlackRock has sown the seeds of its own destruction.
On the other hand, you usually don’t want to own such stocks. Of course, they save you the time and research required to buy individual stocks. But now may be the time to step up your level of personal responsibility. Try to learn how to pick small individual companies, ones that are too small to be bought by BlackRock. Do not rely on this type of funds. Basically, they’re just picking on the biggest, not the best, companies in their field.
„BlackRock’ is the largest and most influential player promoting environmental actions in the corporate world. If it wasn’t for BlackRock, they wouldn’t be as prominent today. How do you rate BlackRock’s dominant role in promoting them?
Doug Casey: This is a real problem. When a large institution owns a significant portion of the stock of any publicly traded company, it can appoint whatever directors it wants. And today, many or most of them work in the diversity space.
To run a company according to the principles of environmentalism is to prepare for disaster. It is part of a whole complex of collectivist ideas that are flooding the world like a wave of raw sewage.
It’s not just that BlackRock is making a lot of money from what are essentially royalty on the stock market as a whole. The problem is that BlackRock in particular has particularly toxic values. They have long been leaders in promoting this type of stock, using their equity stakes to elect board members and management teams guaranteed to drive companies into bankruptcy. It’s part of the reason why companies like Shell and BP say they want out of the oil business, and why Disney makes unappealing movies with values that run counter to those of traditionally oriented Americans. Embracing environmentalism and political correctness gives enormous power to people with an anti-capitalist mindset. It’s pretty perverse.
„BlackRock’ seems less an entity of the free market and more an expression of the confluence of big business and big government. What do you think?
Doug Casey: BlackRock is actually Mussolini’s wet dream made a reality on a grand scale.
The dominant economic and political philosophy in the world is fascism, and that includes the United States.
Fascism has nothing to do with boots, smart uniforms and midnight knocks on the door.
Fascism is an economic system. This word was coined by Mussolini. Its symbol is the ax representing the state surrounded by sticks representing corporations. They reinforce each other.
Under socialism, the means of production belong directly to the state. Under fascism, however, the big corporations remain. The state and big business support each other. It is a more efficient system than socialism. Corporations still make profits, so the economy can still grow. More money can be stolen than under pure socialism. The rich in business and the powerful in government keep their nests clean.
This applies everywhere. China, the US, Europe and Russia have essentially similar economic systems. Now the world is ruled by fascism. Terms like communism, socialism, democracy and capitalism are really just meaningless and confusing anachronisms.
There are no real capitalist countries in the world today. There are no socialist countries in the world today, except for a few anomalies like Cuba and North Korea. “Communist” China is run by an organization called the Communist Party, but it has nothing to do with the system called communism. The CCP is actually just a fraud designed to provide its members with a fair ideological cover so they can live large.
Here in the US, the Biden regime is creating an ideal environment for fascism to breed and mutate, an environment where the likes of Washington DC get richer and more powerful. Politicians, lobbyists, corporate crooks, NGO representatives, forensic intellectuals and the like connect with government and the deep state to become very wealthy within the law using what appear to be market processes.
The situation is bad and I fear it will get worse with time. This is one of many factors that will make the 2020s the most tumultuous decade in at least living memory.
Given what we’ve talked about today, where does this all lead?
Doug Casey: When I look at the “spirit of the century” now, he doesn’t have a very friendly face.
It seems to me that all the world’s institutions have become too big. This, of course, includes governments and large corporations that directly control much of the world economy. There is a revolving door between large corporations and government, universities, NGOs and the media. I would say that the world upgrade has become too big, too cumbersome, too concentrated and too burdensome on top. This made her very unstable.
Meanwhile, more and more members of the middle class, which has always created all the wealth, are sliding into the lower class.
BlackRock and what it stands for are symptomatic of the problems that exist in the world today. There are stains on it. This has nothing to do with capitalism and free markets.
Translation: V. Sergeev
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