What Scares the Most Powerful Money Manager in the World?
Larry Fink Predicts Major Trends and Risks
Larry Fink is the CEO of BlackRock, the largest money-management firm in the world with more than US$10 trillion in assets under management. He was born 1952 as one of three children in a Jewish family in Van Nuys, California. Fink's net worth is estimated at US $1.1 Billion. He has been criticized by his opponents as a man with too much influence on governments and economy, and as a supporter of World Economic Forum’s globalization plans (which lead to more centralized control and less national and local sovereignty). He recently shared his candid prediction of economic trends and risks at the Berlin Global Dialogue forum. When Fink talks, it’s worth listening because he can explain better than anyone else the denatured exchange (economic) system created by Homo economicus (the theme of my book and articles):
Deflation to Inflation Transition: He sees inflation and high interest rates as long-term systemic problems and a trend, such that 10-year notes will continue to offer rates higher than 10%.
Fragmentation and Re-shuffling of Global Supply Chain: Following the COVID pandemic and the wars in Ukraine and the Middle East, national security and supply chain reliability are now major concerns across the world. Domestic production is being encouraged in many countries (although at higher cost, leading to inflationary pressures). There is also a lot of realignments in global trade. For example, he sees countries like Turkey, Vietnam, The Philippines, and Mexico taking away market share from China in global trade and exports. But all these changes are expected to create inflationary pressures on economies.
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More AI and Robotics: This may lead to higher unemployment rates and job market and social instability in the future.
Capital Flow from Banking to Capital Markets: Although investment banks and retirement funds are less leveraged than bank deposits, they can be quickly impacted during downturns and recessions when funds are withdrawn at lower market valuations.
Fiscal Deficits: Many governments are relying on deficit spending, so Fink believes we may be approaching thresholds of too much debt (a point of no-return) unless public finance attracts private capital in expanding infrastructures such as power grids, renewable energy, electric vehicle charging stations, etc.
Decline of Consumer Spending and Hope: Companies like BlackRock sell/invest hope. Fink sees an alarming level of pessimism in consumers about future economic prospects and a high level of mistrust in global governance and corporations. Many people are now driven by fear, particularly after the COVID lockdowns. This may lead to drastic cuts in consumption (consumer spending) and long-term investment in capital (stock) markets. When people spend less and save more (in their bank accounts, or in physical assets like homes) Fink starts to get worried because that means less funds flowing to investment bankers like BlackRock and to consumer-dependent economies like America’s. This will hurt especially when the recession hits, which may be sometime in 2025!
My articles here on Substack outline the plague of our metamorphosis into a new species I call Homo economicus. For those who like history, psychology, neuroscience and economics, in my book I use a parallel timeline to correlate our brain evolution and our history with our metabolism (health), economy, health and behavioral psychology.