أخطر شركة في العالم.. هل تتحكم بلاك روك في الاقتصاد العالمي؟
This is Elon Musk, the founder and the CEO of Tesla, SpaceX and other companies. He is the richest man in the world with a net worth exceeding $270 billion at the time of filming this episode, and this is also him after losing part of his fortune, which exceeded $300 billion in October of the previous year 2021. This is Bernard Arnault, the famous French billionaire who comes in second place after Musk with a net-worth estimated at 160 billion dollars, and next to him is Jeff Bezos, the owner of Amazon, who is currently ranked third with a net-worth estimated at 159 billion dollars. As for this, it is Mark Zuckerberg, the owner of Meta, which currently owns a group of the most important applications and social networking sites, the most important of which are Facebook and WhatsApp, and we can consider him a non-rich person because his net worth is only $ 60 billion nowadays, and this net worth is pretty modest compared to the aforementioned magnates.
That makes it difficult to place him in the list of the world's ten richest people that is why he is currently at number 16. Of course, none of you was waiting for me to introduce any of these people, you must have figured out who they are as soon as their pictures appeared on the screen. But for now, let us forget about them at all. Now, I will show you one last picture and give you a few seconds to guess who is in the picture. Has anyone figured out who this guy is? Some of you may have known him, but most of you certainly have not.. This is Laurence Fink, better known as "Larry Fink", the CEO of a giant entity called BlackRock Corporation.
This man, although his personal net worth is not comparable to the magnates aforementioned, and is known only among specialists and interested parties, he controls, through Black Rock and the company’s board of directors, the funds that exceed the sum of all these people’s net worth combined together plenty of times. In fact, we are talking about an unprecedented level of net worth estimated numbers that makes the net worth of a person like Elon Musk look like pocket money compared to him, a level of numbers that not only exceeds the wealth of any person no matter how large, but exceeds the GDP of any country in the world except for only two countries : United States and China. Well, how much is his net worth? Pay attention, last January BlackRock became the first asset manager to hit $10 trillion in assets. Yes, as you have just heard, that's the number, one with 13 zeros ahead, and that's roughly 40 times the current total of Elon Musk's wealth, and more than 10% of the total global product of all countries in the world combined, which the World Bank has estimated at $96 trillion in 2021. Who is Larry Fink then? What is that Blackrock firm he has been running? What is meant by asset management business as well? How has it been able to manage such an enormous net of fortunes and assets? And how much influence does the company have on global politics, and the United States in particular? Can we really consider it a global shadow government, as many believe? A government that controls official governments from behind the scenes? Or is it just a conspiracy theory? This is a sample of the crucial and exciting questions that we will talk about in today's episode Before that, I would like to ask those of you who are not yet subscribed to the channel to subscribe. Your subscription is important to us, guys. It galvanizes us to continue
the Economic Informant with the same quality of content, with better purport to benefit you.. Now, let's shed light on Black Rock wondrous story... I am Ashraf Ibrahim, and this is the economic informant This episode is sponsored by Wuilt, the first Arab platform through which you can create a website or online store for yourself or your job in just 5 minutes. It is easy and fast with a low cost. Whether you are selling a product online or you are a lawyer, doctor or designer, you can easily make your site. The internet is being used to doing almost everything, and most of people nowadays have smart phones.
The advantage of having your own website is that instead of reaching 50 or 100 customers in the vicinity of your office or shop, now you will be able to reach thousands of customers on the Internet, and this will increase your sales, God willing. Log into the Wuilt platform, make your site or store yourself without having any experience in programming or design at all. It is very easy. You will find a link to the platform in the video description below and in Facebook comments. Before we start such narration, we must first illustrate what is meant by "assets management".
Asset management is the process of increasing wealth over time by investing it in a way that maintains its value growth. So Who does such a thing? Individuals or institutions specialized in managing these assets. Any body with financial liquidity, even government entity that has funds for retirement for example, or even an insurance company or other institutions that have financial surpluses and want to invest them. They contract with asset management companies to invest their money with. The asset management company became in charge of the money. It sizes the risk that the person or organization
is willing to take, it collect diffrent amount of mony from diffrent people and begins to invest them collectively on behalf of its clients. Therefore, when they collect large capital, whether from individual investors, institutions, the private sector, government institutions, or businesses that have huge wealth, the funds will have the ability, flexibility, and benefit from diversification and complex investment strategies to generate returns for investors.. What do these asset management funds invest in? There are many real options, such as stocks, bonds, real estate, commodities, mutual funds, alternative investments, and others.. Now, let's get out of all this and look at the life of the most dangerous man in the world without exaggeration, Larry Fink. He was born in November 1952 in the San Fernando Valley in California, USA. His father owned a shoe store and his mother was an English teacher.
Larry was not a nerd, unlike his older brother, therefore he worked early with his father. After graduating from the University of California, he worked for a short period of time in real estate until he got an MBA from the same university, and then headed to Wall Street. He tried to work at Goldman Sachs, but he did not pass the last interview with the bank.
In 1976, he decided to join First Boston, an asset management company. He first worked in the bond trading department, and because he had experience in real estate, he traded mainly in mortgage-backed securities. Larry had a unique talent in trading and asset management. In just two years, his fame increased greatly and he formed a strong and diligent team in the company. Most of them were Jews. That is why they called Larry's office in the company Little Israel.
Within a few years, Larry became the youngest managing director in the history of First Boston, at 31 years old, and he was the youngest member of the company's management committee. he was a star twinkling in the sky. But suddenly everything changed in 1986 when his office in the company lost $100 million after interest rates fell unexpectedly and there were no precautions against this scenario. Despite the huge profits he made for the company in the years before that, he turned from the expected CEO to an outcast from all companies and banks until he resigned from the company in 1988.
Days after his resignation, he met with a group of his friends who are real nerds in asset management and mortgages. Larry was thinking of an entity that would collect securities in a portfolio and carefully analyze its risks. After the meeting they decided to establish a new bond investment company based on modern technology and risk management. They founded the company whose name was later changed to BlackRock.
The company's strategy at the beginning was purely simple, which is to form a fund based on investments that generate a fixed income. Instead, the returns of other investment funds came through short-term investments and multiple buying and selling operations. They decided to reduce trading operations and adopt the well-known strategy of buying and holding assets for a long period, or what is called "Buy and Hold", that is, investing in safe assets that is generating almost constant returns while ensuring that their value doubles over time. At this moment, the company had two people of significance: Ben Golub, the math wizard who designed many risk management tools at Larry Fink's old company First Boston, and his colleague Charlie Hallac. Their job was to develop a technology that links financial markets and computing power so that you can predict the risks of investing in securities. This part of the innovation was a financial revolution on Wall Street.
The famous Blackstone financial services company agreed to finance the new project in the amount of 5 million dollars in return for 50% of its shares. Immediately, Fink and his friends started working on the most important component of their new company, which will analyze indicators and risks and make investment decisions automatically. They called it "Asset, Liability, Debt and Derivative Investment Network."
Yes, I know it's a long name, but it's the acronym by which it's known on Wall Street: Aladdin. Aladdin and the genie of the lamp. Yes, the initials of the long name in front of you.. what does this Aladdin come up with? Well, In short, it is a huge network of 5,000 super-powerful computers that collect data from all markets and all companies and assets, and uses machine learning to execute 250 thousand deals per day, each deal with great accuracy within fractions of a second approximately. In short, we can consider the Aladdin network as a complete nervous system, not only for BlackRock, but for all the asset managers on Wall Street as we will explain later. In fact, the network's naming of Aladdin was pretty successful, as it actually turned into a real Aladdin lamp for BlackRock on Wall Street. Suffice it to say that in just six years since its establishment,
the size of the assets portfolio managed by BlackRock reached $23 billion. The number of its employees reached 150, and it could not be a subsidiary of Blackstone any longer, therefore it stood down from it in the mid-nineties and entered the first public offering on the stock exchange in 1999, and at this moment was managing assets worth more than 156 billion dollars. All this was before the real jump in the company's career took place.
We are talking about two big hard crises that shook the whole world but they were a blessing for BlackRock. The first crisis occurred at the beginning of the millennium, known as the bursting of the dot-com bubble. The great collapse that affected the most important technology companies, and caused investors to resort to maintaining stability and avoiding risks by searching for stable profits, even if they were few.
That turbulent period, however, removed BlackRock's biggest competitor from the market, and also gave the company an invaluable opportunity to take over some of its most prominent competitors to be transformed from a just successful bond investment firm to the world's largest financial asset manager. One of the most important acquisitions took place in 2006, when BlackRock acquired the entire investment assets of Merrill Lynch, the giant financing company, which was suffering from a major default at the time, in a deal worth 9.7 billion dollars. This deal alone raised the value of assets managed by BlackRock to one trillion dollars. In 2009, BlackRock concluded the most important deal in its history, known as the “deal of the century” on Wall Street by acquiring Barclays Global Investors, the huge investment arm of the British Barclays Bank, owner of iShares funds, in a deal worth $ 13.5 billion.
Today, iShares is a globally popular brand, and it is the largest and most important index fund issuer in the world. The company stops there? Of course not, the second golden moment came with the 2008 global financial crisis, at that time almost all the business and financial magnates in America and Europe resorted to BlackRock and Aladdin. We are talking about the major US banks and even the Federal Reserve and the US Treasury, thus, BlackRock has suddenly become the engine of financial policies in America and even in Europe. Simply, governments were resorting to Aladdin to decide what assets to keep and what to sell, and the platform was entrusted with the task of deciding about the $2 trillion that was printed in the aftermath of the crisis, and most of it was allocated to bonds and financing to support mortgage companies and banks, and these are assets in which BlackRock had been investing in already. Wherefore the firm made huge profits.
The success achieved by Aladdin Network succeeded in protecting the American market from a complete collapse during the financial crisis, which caused two major shifts in the course of BlackRock and Wall Street, perhaps USA and the entire financial system. The first shift was consolidating the shift of the asset management market almost entirely towards index funds (ETFs) and away from traditional active funds. During the last decade, more than 80% of investment in assets was made through index funds. This huge share is dominated by 3 companies that are currently called The Big Three on Wall Street, chief of which is BlackRock with a share approaching 40%, Vanguard Company with about 19.5%, and finally State Street with 12.5%. Controlling 40% of a huge market like this is not an easy thing at all! However, the surprise is not here. The surprise is that even the two competing companies, 'Vanguard' and 'State Street', rely on the Aladdin platform of BlackRock. Half of the ten largest insurance companies in the world do the same.
In addition to, a number of major pension funds such as the $1.5 trillion Japanese government pension fund, a group of technology giants such as Apple, Microsoft and Alphabet (the parent company of Google). Worth saying that those are the 3 largest American companies listed on the stock exchange in terms of market capitalization and have billions of dollars in their investment portfolios and many others.
In this way, the volume of assets managed through the Aladdin platform is close to 22 trillion dollars, which is slightly less than a quarter of the gross domestic product of the countries of the world combined. Well, this is the first transformation, what is the second transformation? The second and most important transformation caused by the global financial crisis is that BlackRock has gained a prominent position among governments and international bodies, prompting it to a new phase, It is no longer just an asset manager for large companies only, but also a manager of government investments and major sovereign wealth funds, Including the Norwegian government pension fund, which ranks as the largest sovereign fund in the world, and it has become a very usual to see Larry Fink meeting with the director of the International Monetary Fund, or with the head of a large European country like Emmanuel Macron, or any senior official in any country. Things have gone too far in the United States itself. President Joe Biden's administration almost decided to rely on former BlackRock executives for plenty of critical economic positions: such as Brian Deese, the former BlackRock chief investment officer who leads Biden's National Economic Council and serves as his economic advisor. Wally Adeyemo, Deputy Treasury Secretary who was chief of staff for Larry Fink himself, as well as Mike Pyle, a former chief strategist at BlackRock, who is now an economic advisor to Vice President Kamala Harris.
There is no need to clarify that this influence is not limited to the Biden administration. BlackRock has cooperated with all American governments from the time of the financial crisis, starting with Obama through Trump. During the latter’s era in particular, the Financial Markets Advisory Unit, known for its acronym “FMA '' affiliated with BlackRock that played a significant role in the US government’s response to the Covid -19 virus. In March 2020, the US Federal Reserve chose it to run a massive emergency asset purchase program to hedge against the crisis. Here comes the last question, perhaps the most important one of the episode: If a company [that manages $10 trillion in assets, has a digital platform used to manage the equivalent of a quarter of global GDP, its directors work in prominent positions in the U.S. administration, and its president has opened a hotline with The heads of the world's largest countries and international financial institutions] wouldn't it be a shadow government that controls the world economically behind the scenes? Let's be sure that this theory is so popular that if you tried searching for "BlackRock" on Google and YouTube, most of the headlines you'll see will be like: "The Company That Rules the World" and "The Institution That Controls the Economy Behind the Scenes," Bloomberg Agency itself described 'BlackRock' as the fourth branch of the government because of its close relationship with the Central Bank and the US Federal Reserve, as well as its influence in the American system that we talked about a little while ago.
But the problem is that this theory is exaggerated, as you know, the idea of a hidden entity controlling the world is one of the most popular ideas among people, and it is an idea that has stuck to many entities such as the Bilderberg Group, the Paris Club, and currently BlackRock. Which certainly reinforces the theory's popularity, is that BlackRock, and together with Vanguard and State Street, own a huge stake in most of the global giants: we are talking here of almost every type and category of company, from technology companies such as Apple, Google, Microsoft, Tesla and Amazon, to oil and energy companies such as ExxonMobil, to beverage companies such as Pepsi and Coca-Cola, and even major media companies such as Comcast, Disney, Sky media and CNN, Airlines like Delta and American Airlines, and even banks and financial institutions like JPMorgan, Citigroup and Bank of America. If we take a look at the list of those who own these companies, we will often find that BlackRock is among the largest 3 or 5 owners, at least.
Isn't there a trick? The idea is that we are talking about an asset management company that manages trillions of dollars of investments, so it is natural that the company injects its investors' money into almost all profitable companies in the market. Since it invests on behalf of major companies and funds, and sometimes government agencies, it is natural that their holding ratios reflect the strong financial portfolios of their clients. What we need to say here is that BlackRock and similar companies are not the real owners of these stakes, but the investors that the company manages the assets on their behalf, and the irony is that the investors are often the same big companies like Apple, Google, JP Morgan and others, it's like intersecting circles: These companies operate and achieve financial surpluses that they give to a company like BlackRock to invest in the stock market in the same shares of those companies. For example, we find that Google indirectly invests in Microsoft, and Pepsi is investing in Coca-Cola, and so on. This huge power gives BlackRock, for example, voting rights and influence on the boards of directors of most of the major companies in the world, and a large and unprecedented financing control that it can use to pressure these companies to adopt certain views, as well as, influence over countries and governments that will be interested in protecting the interests of their companies and their investment assets. All this and we have not yet talked about the small but existent possibility of
hacking a system like Aladdin, which could have a disastrous and devastating impact on the global economy. Talking about this topic may extend for a long time, but we are content with this much in today’s episode for your time and as usual before I conclude; I have a question for you: Do you really think that a company or entity can have the necessary influence and authority to play the role of a hidden government for the world? Isn't this idea really closer to being just a conspiracy theory? I will follow all your opinions in the comments, Don't forget to check the Wuilt platform if you want to create a website yourself in 5 minutes.. I hope you have liked this episode, like and share the video, and above all tell your friends and loved ones about us, they may like it as well. Please don't forget to subscribe to the channel as aforementioned. Goodbye..,