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Can a company use money to run the world?


Author: K. Roedel


2020-05-24 02:16




$7.4 trillion. That is how much money BlackRock, the American global investment management corporation, manages. A sum that far exceeds Germany's annual GDP of approximately 3.7 trillion dollars. However, despite these dimensions, the company is virtually unknown in Germany and probably in most parts of the world.

 

The investment advisor BlackRock is on of the winners of the financial crisis. One of their most important businesses are exchange-traded funds (ETFs) - mostly passively managed index funds on the stock exchange. During the long stock market boom following the financial crisis and in times of low interest rates, many small investors want to use ETFs to make private provisions for their retirement. They are considered to be particularly cheap and low-risk. In Germany, BlackRock dominates about half of the ETF market. In some countries, above all in the USA, BlackRock plays a decisive role in insurances and pensions. What if something goes wrong? Although BlackRock manages enormous sums of money, unlike in the banking system, there is hardly any strict supervision that controls the company.

 

Do many shares lead to major influence?


BlackRock is a major shareholder in many corporations such as Apple, Microsoft, Facebook or Shell, but also in the 30 Dax companies in Germany. According to an anonymous insider, the financial group is represented at around 17,000 annual general meetings. At annual general meetings, they can make it clear what they want and what they don't want. In this way, BlackRock exerts influence on the management of a company.

 

BlackRock's software decides when and where in the world money is invested. $18 trillion is managed through BlackRock's system “Alladin”. It is a supercomputer, which ensures the financial success of Customer's investments. The secret algorithm is the heart of BlackRock's investments. "The system is unique in its size and consistency," said Larry Fink, the current CEO of BlackRock.

 

Another sensitive issue is the discrepancies in BlackRock's social responsibility. Larry Fink likes to emphasize the importance in his public letters to large companies. On the other hand, the financial group also invests in arms companies like Rheinmetall, which produce metal for weapons, among other things. Another point of criticism of BlackRock is that the financial group invests in direct competitors ("common ownership"). This reduces the competition, which for example leads to airlines making their tickets more expensive.

 

Should we be afraid of BlackRock?


It is impossible to scale the influence BlackRock has on the global economy. During the financial crisis many countries and institutions resorted to BlackRock's advisors to find bad loans in the banks' books. The European Central Bank also works with BlackRock. According to the conviction of some German politicians, many people feel that “a lot of money is controlled by very few people”, but what is this supposed to say? Should the governments establish more regulations and intervene in the market? Should the market be self-regulating, as in other industries? All we know so far is that companies with such an economic power should not fish in the dark and it might be reasonable to monitor the company not only by the government , but also by the public.

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Taifa Li 2020-05-24 11:59:13

I really really like it.
reply

Tom Rich 2020-05-24 04:31:18

great topic
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yangyi 2020-05-24 04:24:45

Good point
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yangyi 2020-05-24 04:24:44

Good point
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Chrissss 2020-05-24 03:57:43

Wow interesting topic
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lukelh 2020-05-24 03:10:13

like
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Leland Chow 2020-05-24 02:40:30

Great
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