The Influence of BlackRock: A Comprehensive Analysis

BlackRock, the world’s largest asset manager, has grown to be a behemoth in the financial industry, with over $9 trillion in assets under management. Its significant influence on the market and its questionable relationship with the US government have sparked concerns among citizens, economists, and investors alike. In this blog post, we will delve into the pros and cons of BlackRock’s market influence, its ties with the US government, and the implications for consumers.

BlackRock’s Market Influence

BlackRock’s massive size and global presence give it considerable sway in the financial markets. The company’s index funds, which track the performance of various stock market indices, are among the largest in the world. This has led to accusations that BlackRock has too much power over the markets, as it can effectively dictate which companies get listed on major indices and which ones don’t. Critics argue that this concentration of power can lead to market distortions and favouritism .

On the other hand, supporters of BlackRock argue that its influence has helped to create a more efficient and transparent market. By providing low-cost index funds, BlackRock has made it easier for individual investors to access the market and diversify their portfolios. Additionally, BlackRock’s stewardship activities, such as voting on corporate resolutions and engaging with companies on environmental and social issues, have helped to promote good governance and responsible investing practices.

BlackRock’s Relationship with the US Government

BlackRock’s close ties with the US government have raised concerns among critics. The company has been involved in various government-related initiatives, such as the Federal Reserve’s quantitative easing programs during the 2008 financial crisis and the US Treasury’s Exchange Stabilization Fund. Critics argue that these relationships have created conflicts of interest and favoured certain companies or industries over others.

Furthermore, BlackRock has been accused of profiting from its close relationship with the government. For example, the company’s CEO, Larry Fink, has been a close advisor to the US government on economic and financial issues. This has led to accusations that BlackRock is using its influence to advance its own interests rather than those of its clients or the broader public.

On the other hand, supporters of BlackRock argue that its relationships with the government have helped to stabilise the financial system and promote economic growth. By providing liquidity to the markets and investing in government-backed securities, BlackRock has helped to mitigate the effects of the financial crisis and support the US economy.

BlackRock and Cryptocurrencies

BlackRock has been a vocal sceptic of cryptocurrencies, with Larry Fink describing Bitcoin as a “speculative store of value” in 2018. However, the company has since changed its tune, announcing in 2021 that it would be launching a Bitcoin futures fund. This has led to accusations that BlackRock is attempting to profit from the cryptocurrency craze while simultaneously undermining it.

Critics argue that BlackRock’s entry into the cryptocurrency market could lead to market manipulation and distortions, as the company has the ability to influence the prices of Bitcoin and other cryptocurrencies through its massive trading operations. On the other hand, supporters argue that BlackRock’s involvement could help to increase institutional investment in the cryptocurrency market and promote greater transparency and regulation.

Circular Ownership:

The concept of circular ownership raises significant concerns about transparency and potential market manipulation. This structure effectively creates a closed loop where the financial sector essentially owns itself, further concentrating power and potentially reducing accountability. It is crucial to note that this circular ownership structure amplifies worries about transparency and potential market manipulation as it blurs the lines of traditional ownership and control.

The Illusion of “Passivity”:

BlackRock’s claim to be a “passive investor” provides them with a legal loophole to avoid stricter regulations. Even though they benefit directly from government bailouts and influence corporate behavior through ESG initiatives, BlackRock evades the level of scrutiny applied to traditional financial institutions due to their “passive” status. This lack of transparency surrounding their operations, coupled with their self-certification of “passivity,” fuels concerns about potential unchecked influence.

The “Woke” Facade:

The controversy surrounding BlackRock’s ESG initiatives is further highlighted by the examples of Philip Morris receiving a higher rating than Tesla, as pointed out by Patrick Bet-David. This suggests that ESG scores can be manipulated, and BlackRock’s push for sustainable investing might be more about optics and control than genuine ethical concerns. It strengthens the argument that ESG is being used as a tool for potentially exerting undue influence on corporate behavior.

Larry Fink: More Than Just a CEO:

Larry Fink’s personality and ambitions are worth exploring in greater detail. His desire for a political career, financial losses early on, and current power over the financial sector are all relevant factors in understanding BlackRock’s influence. Fink’s quote about wanting to be perceived as a “good human being” raises questions about his true motivations behind ESG initiatives. A dedicated section on Fink could explore whether he is a true believer in ESG principles or a shrewd operator using them to advance his own agenda. Linking his political aspirations to his current role at BlackRock would be a compelling addition.