Good one on BlackRock & the shadow banking system...vert distubing
Posted by MikeD on April 25, 2021, 1:03 pm
BlackRock, Vanguard & Co – How the New Capitalist Players Are Acting Against Labour, Environment and International Law and How They Use the Corona-Pandemic |
The unregulated shadow banks are now the owners of even the regulated big banks, but also of, for example, all the big digital corporations. At the same time, BlackRock & Co have managed to remain virtually unknown to the general public.
BlackRock Corporation is currently a co-owner or a shareholder, in 18,000 banks, companies, and financial service providers, primarily in the U.S. and Canada, in the European Union, and in Western-oriented nations. Such a numerous simultaneous presence of a single owner has never been seen before in the history of capitalism.
Yet BlackRock is only the tip of the current, newly formed capitalist iceberg. The next largest capital organizers of this new kind are Vanguard, State Street, Capital Group, Amundi, Wellington, Fidelity, T Rowe Price, Pimco, Norges. BlackRock is exemplary for these currently determining players of US-led Western capitalism. Smaller new capital players with related, also hardly regulated business models such as private equity investors (“locusts”), hedge funds, investment banks and venture capitalists are also part of the current phase of the newly formed capitalism at the latest since the banking crisis of 2007 – they here are only briefly referred to. (1)
BlackRock – Rise of the Leading Shadow Bank
BlackRock is the result of a long series of deregulations in the U.S., but also spills over into the entire Western economic, financial, fiscal and governmental system, in Europe mostly through subsidiaries in the City of London.
Headquarters in the largest U.S. financial haven, Delaware
BlackRock does have its operational headquarters in New York and branches in a few dozen states. But the company’s legal headquarter as a corporation is in the U.S. financial oasis of Delaware.
This tiny U.S. state built its position as a leading Western financial haven in the 20th century, initially for U.S. companies: Particularly low taxes on profits, low disclosure requirements, the establishment and management of letterbox companies as a business segment, and extremely “liberal” corporate law: liability and transparency are particularly limited, for example, compared to a classic stock corporation. Since the 1920s, the U.S. corporation DuPont (pharmaceuticals, armaments, auto supply) has been at the forefront of this development: It had and still has its legal domicile there and thus evaded public control and tax payments even during its worldwide expansion; it also cooperated, for example, with the German pharmaceutical cartel IG Farben during the Nazi era. These capitalist freedoms have also been used for decades by most multinational corporations and banks, not only located in the USA, but also from the EU, Asia (especially Hong Kong), Latin America, also for hundreds of subsidiaries each.
The EU has recognized the legality of this corporate law on its territory. The Federal Republic of Germany, which was founded after World War II at the instigation of the U.S., recognized already in the German-American Friendship Treaty of 1954 under its founding chancellor Konrad Adenauer that U.S. companies could operate in the Federal Republic under the laws of the financial haven of Delaware. (2)
Deregulation since U.S. President William Clinton
Freedoms under Delaware law have been continuously expanded and have become significant beyond the U.S. on a large scale globally since the beginning of the 21st century.
In the 1980s, Wall Street bankers began new financial products and practices, which were then legalized under the presidency of “Democrat” William Clinton. For example, at Bank First Boston during the 1980s, Laurence Fink, who later founded BlackRock, made it a business model to bundle and sell individual hypoptheque loans (for the purchase of condominiums and homes) to banks and turn them into tradable securities. Fink first practiced this in one of the equally deregulated new financial players, the private equity firm Blackstone. In 1988, he went independent from Blackstone with Blackrock (written much later as BlackRock): The small black stone became the great black rock. (3)
Blackrock & Co were not and are not subject to the old banking regulations, renewed after the 2008 financial crisis. U.S. President Obama even made BlackRock the advisor for the resolution of the financial crisis: as advisor to the U.S. Federal Reserve, Blackrock helped decide the fate of insolvent banks, insurance companies and corporations: Who would be rescued, who would not? In the process, BlackRock’s own business scale skyrocketed.
The EU followed suit, and BlackRock has also been an advisor to the ECB since the head of the European Central Bank, Mario Draghi (until 2020), came from Goldman Sachs. In 2020, BlackRock also got a consulting contract with the European Commission for ESG (Environment, Social, Governance). (4)
BlackRock: Largest “shadow bank”
BlackRock & Co are not considered banks under corporate law, despite many bank-like operations. The World Bank, the central banks and the G7 countries still officially regard BlackRock and Co as “shadow banks”. To this day, they remain unregulated “under observation” in the central bank of central banks, the Bank for International Settlements (BIS, headquartered in Basel/Switzerland), which is dominated by the Federal Reserve Bank. (5) Through their lobby, BlackRock & Co have achieved that Western governments keep postponing regulation. (6)
The basis of capital power: The Super-Rich and the U.S. location
BlackRock & Co obtain their capital base through the capital they raise from entrepreneurs, corporate foundations, banks, insurance companies, pension funds. An increasingly important group of capital providers is the number of super-rich, multi-millionaires and multi-billionaires, which is growing by leaps and bounds with deregulation: They are known as High Net Worth Individuals (HNWI) and Ultra High Net Worth Individuals (UHNWI).
BlackRock commands more than $8 trillion in 2021, earning itself in fees, commissions, and its own trades, but essentially acting as the legal representative and manager of the capital providers. To all of them, BlackRock also guarantees higher annual returns than previous asset managers, traditional banks, and corporations because of its greater freedoms.
BlackRock under the US administrations since William Clinton
Wall Street and the new capital organizers supported the Democratic Party by majority in the USA since the 1990s because they had become powerful through its deregulations. That’s why BlackRock CEO Fink was in the conversation to be Treasury Secretary under presidential candidate Hillary Clinton. He had brought Obama administration staffers to BlackRock.
But when anti-Wall Street Republican Donald Trump won the 2016 election, cutting taxes on corporations while promising them higher government subsidies, Fink declared: “Trump is good for America. ” (7)
U.S. President Joe Biden, in office since 2021, has appointed several high-ranking BlackRock executives to his administration. So Brian Deese: The head of BlackRock’s global sustainable investing division will be the president’s chief economist. Wally Adeyemo has served as U.S. President Obama’s chief advisor on international economic relations, then joined BlackRock as Fink’s chancery chief, and has been president of the Obama Foundation since 2014; now he is deputy Treasury secretary under Biden. Michael Pyle was in charge of International Financial Relations at the Treasury Department under Obama. Then he became head of global investment strategy at BlackRock, now he is chief economist for Vice President Kamala Harris.
Biden himself was a senator for the state of Delaware from 1973 to 2009. He helped build Delaware into the world’s most important corporate financial haven – and thus a tool for BlackRock & Co. So BlackRock is more than ever active part of „America First“.
The new power of the invisible capitalists
BlackRock & Co have also replaced the traditional big banks at latest since the financial crisis of 2008: the unregulated shadow banks are now the owners of even the regulated big banks, but also of, for example, all the big digital corporations such as Amazon, Google, Apple, Microsoft and Facebook. At the same time, BlackRock & Co have managed to remain virtually unknown to the general public.
BlackRock combines the following characteristics and practices:
*Ultraliberal corporate constitution under the laws of the financial haven of Delaware
*Status as an unregulated “shadow bank”
*the unique volume of capital employed, currently $8 trillion
*the unique insider and monopoly position as a simultaneous major shareholder in 18,000 corporations, banks, financial service providers
*the advisory function with important governments, with the US National Bank Federal Reserve, with the ECB and with the European Commission
*with ALADDIN, the largest collection and analysis system in the Western world for financial, economic and political data
*a system of paid influence agents in key countries such as the U.S., Germany, the U.K., France, Mexico, Switzerland
*Integration with “America First” political, media, legal, rating, consulting, intelligence and military systems. For example, BlackRock is a shareholder in the leading Western liberal media outlet, the New York Times.
It is this combination that creates power. From this it becomes clear that in capitalism it is not enough for the exercise of power to simply be rich or super-rich, multimillionaire or multibillionaire. Rather, it is the multiple presence in companies, banks, financial institutions, governments, leading media and the multiform systemic multiple networking that is decisive.
Simultaneous Multiple Ownership: Example Wirecard
It is often claimed in “critical” circles that BlackRock & Co. cannot have such a large influence because they only ever own 3 or 5 or at most 10 percent of the shares. This was also the argument of BlackRock’s former chief lobbyist in Germany, the CDU politician Friedrich Merz.
But BlackRock is intertwined with the next dozen similar capital organizers through cross-ownership and consults for decisions in the joint enterprises, such as before shareholder meetings: To coordinate voting, the Big Three in particular, BlackRock, Vanguard, and State Street, often hire the financial agencies Institutional Shareholder Services (ISS) and Glass Lewis.
And there is the multiple ownership around one company where BlackRock & Co are the determining shareholders. Let’s take the fraud company Wirecard, which is currently the subject of scandal in Germany. Members of the Bundestag and leading state and private media are fiercely denouncing Finance Minister Scholz, the financial regulator Bafin and the auditors Ernst&Young (EY) for failing to uncover the multi-billion dollar fraud perpetrated by this financial services provider over many years.
But no one asks: who are actually the owners of Wirecard? That’s right, BlackRock was a shareholder for the longest time with 5 percent, making it the third largest shareholder. But BlackRock is at the same time much more:
*BlackRock is shareholder in Wirecard’s other major shareholders, e.g. Goldman Sachs,
*BlackRock is shareholder in Wirecard’s largest lenders, Commerzbank, Société Générale, and Deutsche Bank,
*and Blackrock is shareholder in the rating agency Moody’s, which determined Wirecard’s creditworthiness and credit terms. (8)
This de facto multiple presence of BlackRock & Co is as important to the functioning of contemporary capitalism as their public obscurity.
Network of Influential Agents
BlackRock maintains paid agents of influence in all major states: These are leading people from governments, political parties, corporations, central and other banks. These individuals receive high-paying consulting contracts and seats on boards of companies in which BlackRock is a major shareholder.
Laurence Fink, BlackRock’s chief executive, acts (or acted) as an influence agent himself:
*Member of U.S. President Donald Trump’s Business Council
*Director in the Council on Foreign Relations (CFR)
*Presenter at the World Economic Forum
*Meets heads of state, government and corporations in person
*Lobby office in Washington, donor to both U.S. political parties
*Lobby office in Brussels.
Friedrich Merz, ex-faction leader of the CDU in the Bundestag: partner in the U.S. business law firm Mayer Brown, until 2020 chairman of the supervisory board of BlackRock Deutschland AG.
Michael Rüdiger, ex-head of Dekabank Deutsche Girozentrale, on the Supervisory Board of Deutsche Börse AG: successor to Merz at BlackRock Deutschland AG.
Hildegard Müller, President of the German Association of the Automotive Industry, on the Executive Board of the CDU Economic Council and the Central Committee of German Catholics: Member of the supervisory board of the largest housing company in Germany, Vonovia where BlackRock is a major shareholder.
Cherryl Mills, ex-chief of staff to Hillary Clinton at the State Department: member of the supervisory board of BlackRock.
George Osborne, ex-finance minister in the British Tory government, editor of The Evening Standard newspaper: BlackRock advisor with a 650,000-pound-a-year contract.
Philipp Hildebrand, ex-president of the Swiss National Bank: head of BlackRock’s European headquarters in London.
Jean-Francois Cirelli, ex-chief executive of France’s largest energy companies GDF/Suez/Engie: head of BlackRock France.
Marco Antonio Slim Domit, son of the richest Mexican, Carlos Slim: member of BlackRock’s supervisory board.
How does BlackRock generate the super profits?
Through its position of power, BlackRock generates higher profits than traditional companies, banks, and asset managers in Western capitalism. (9)
New Monopolies and Oligopolies
BlackRock & Co are the controlling shareholders in the most important companies in the same industries, i.e., simultaneously in the most important banks, the most important pharmaceutical, oil, agribusiness, automotive, logistics, airline, defense, and digital corporations, both throughout the capitalist West and in each of the most important individual states, such as in the United States, Germany, France, Great Britain, and Switzerland.
On the one hand, this means a new kind of monopoly formation, for example when BlackRock, Vanguard, State Street & Co are at the same time, in changing composition, the new major shareholders of the most important Wall Street banks, for example in Germany at the same time major shareholders of the two largest banks, i.e. Deutsche Bank and Commerzbank. Or like this: BlackRock & Co are, again in changing composition, at the same time determining shareholders in the 30 DAX corporations of Germany, in the 40 CAC corporations of France and in the 500 S&P corporations of the USA. This type of monopoly formation is not covered by any of the outdated antitrust laws of Western countries.
Mergers and acquisitions
Another form of monopoly or oligopoly formation is mergers and acquisitions. BlackRock & Co can do this all the more easily because they are at the same time co-owners in the most important companies in the same industry, both nationally and internationally.
For example, BlackRock & Co are the major shareholders of the two chemical companies Bayer in Germany and Monsanto in the USA. Bayer’s largest shareholders during the 2016 – 2020 Monsanto takeover were, in this order: BlackRock, Sun Life Financial, Capital World, Vanguard, Deutsche Bank. Monsanto’s largest shareholders were, in slightly different order: Capital World, Vanguard, BlackRock, State Street, Fidelity, Sun Life Financial. At the same time, BlackRock is also a shareholder of Deutsche Bank.
This is how the world’s largest agrochemical group came into being: it combines market leadership in seeds, pesticides, agricultural patents and global data on farmers, agricultural companies and agricultural markets. And, of course, BlackRock & Co are also major shareholders in other agricultural and chemical companies such as BASF, LG Chem (South Korea), Akzo Nobel (Netherlands), and Pfizer and DowDupont (USA).
BlackRock & Co are the determining shareholders of the large digital corporations Google, Amazon, Apple, Microsoft, Facebook and many others as soon as they stabilize their success. This also applies to such corporations as those in the automotive and logistics sectors that are developing self-driving cars, trucks and delivery drones with artificial intelligence, including Tesla, for example. Of course, this also applies to defense corporations.
The management of the Corona pandemic by Western governments has further spurred the expansion of digital corporations by leaps and bounds, not least through government contracts for healthcare, public administration and government communications. BlackRock & Co are the first to benefit from this.
Digitization with the help of artificial intelligence is also taking hold in finance. BlackRock & Co do not wait anxiously like traditional shareholders for the dividend decided and paid out at the end of the year. They take that too, but the much more lucrative business is the speculation with the shares that runs throughout the year. Every movement in the value of the stock – up or down – is used for speculation.
The advantage that BlackRock is the biggest insider in the Western economy is increased by its subsidiary ALADDIN (Asset Liability and Debt Derivative Investment Network): This is the biggest collection and exploitation facility for financial, economic and political data. In the nano-second range, the values of all shares and other securities on all stock exchanges in the world are simultaneously recorded, compared with each other and evaluated, bought, sold in a largely robotized manner. Through additional purchases and sales, reinforced by loan shares, upward and downward movements of securities can be accelerated and used for speculation – faster and more profitably than by competitors and small speculators. If, for example, a stock constantly rises and falls due to scandals, as in the case of Wirecard, or in the case of a merger that drags on for years, as in the case of Bayer/Monsanto – then this is the ideal, profit-generating business area for BlackRock.
If national reporting laws are violated in the process – in Germany, for example, the Securities Trading Act – then financial regulators such as Bafin are not in a position, either technologically or in terms of personnel, to exercise the necessary control. (10)
Aiding and abetting global tax evasion
Part of the higher return for capital providers is BlackRock’s organized tax evasion for the benefit of its wealthy capital providers, the HNWIs and UHNWIs. For example, the 5 percent of shares in the lignite company RWE represented by BlackRock are distributed among 154 shell companies in a dozen financial havens between Delaware, the Cayman Islands and Luxembourg. The shell companies bear names such as BlackRock Holdco 6 LLC. In this way, the actual beneficial owners, the super-rich investors, are anonymized and made to disappear in front of financial and stock exchange supervisory authorities, tax offices, employees and the public: organized irresponsibility. (11)
In addition, this further impoverishes the affected states, the public infrastructure decays, private infrastructures, on the other hand, are expanded.
Low wages, union hatred, rents, privatized pensions
BlackRock, as a simultaneous shareholder of the five largest housing corporations in Germany – Vonovia, Deutsche Wohnen, LEG, Grand City Properties, TAG – promotes excessive increases in rents and utility costs.
BlackRock profits from low-wage labor in national and global supply chains – at Amazon and Apple as well as at Tesla, promotes precarious working conditions also in the housing management subsidiaries of the housing corporations controlled by BlackRock&Co.
BlackRock lobbies the EU and governments through its influence agents for privatized pensions – also tax-subsidized, of course – with the help of the financial product ETF (Exchanged Traded Funds), a kind of “people’s share” in which BlackRock leads the world market ahead of Vanguard. (12)
Environmental destruction, armament and new wars
BlackRock is a shareholder in the major coal, lignite, oil, pharmaceutical, agribusiness, and automobile corporations in the United States and the European Union. BlackRock’s high profit withdrawals thus also prevent the necessary innovations in transport, energy and the environment and endanger the survival of mankind. Newly launched environmental funds are only an addition of comparatively very small size, while disproportionately larger ownership stakes in fossil fuel corporations continue to be held.
BlackRock, Vanguard & Co are also the largest shareholders in the leading defense corporations – including those involved in nuclear bomb production – in the U.S. and EU: Boeing, Lockheed, Northrop, General Dynamics, Raytheon (U.S.), BAE (UK), Rheinmetall (Germany), Leonardo (Italy) and others. BlackRock & Co use rearmament, military interventions and wars by the US and EU states as a source of profit and increase the global threat of war.
Practices include circumventing export restrictions currently in the wars in Yemen and Libya, for example, by supplying warring parties such as Saudi Arabia. BlackRock has not withdrawn from any of the aforementioned groups.
Corona pandemic: accelerated build-up of private world power
BlackRock CEO Fink has been the acknowledged spokesman at the World Economic Forum (Davos) since several years for the “renewal” of capitalism, particularly in environmental and climate matters (Great Reset of Capitalism).
Fink notes correctly that the governments of the West are increasingly failing to meet the expectations of their populations. As an alternative, however, Fink & Co are concerned not with democratizing states, such as collecting taxes, fostering labor incomes in accordance with human rights, and expanding public infrastructure.
Rather, Fink said as a star speaker at the World Economic Forum: The alternative is to build a new private power structure, with multinational private companies and private foundations at its core. The “Corona” measures are intended to serve as an accelerant. “Neoliberalism has had its day,” writes World Economic Forum founder Klaus Schwab, but revolutions and uprisings are to be prevented. (13)
Current international law, the Universal Declaration of Human Rights including social and labor rights, the UN majority decision to ban nuclear weapons, the UN conventions, for example, on the rights of refugees, children and migrant workers, and on the sanctioned responsibility of companies in global supply and production chains (Binding Treaty) – Fink, Schwab & Co do not mention any of these in their new canon of values.
A greened new capitalism is supposed to whitewash all violations of international law, human rights and democracy: Greenwashing. Current governments and international institutions like the World Bank, the UN and the European Commission are supposed to assist in this. (14) BlackRock also advises the Federal Reserve Bank and the European Central Bank on their trillion dollar/euro Corona recovery programs.
BlackRock & Co want a renewed green capitalism. Many new funds are being launched for this purpose. However, they are comparatively small in scale. In essence, BlackRock & Co continue to be the controlling owners of fossil capitalism, i.e., the oil, mining, automobile, pharmaceutical, and defense corporations that maintain a global, deep-pocketed network of subcontractors and persistently violate human rights with impunity. Tax evasion, shrinking of national economies, prevention of necessary innovations for the environment and mass-serving infrastructure, impoverishment of states, and last but not least: dwindling political approval of the majority of the population for the complicit governments and previous governing parties: Fossil capitalism in more ways than one.
China wins system comparison, the West arms up
Poverty in the colonies, in the neocolonially exploited regions of Africa and Latin America, and increasingly also of their own populations, including the middle classes of the rich metropolises – the old Western capital democracies have long put up with this, most brutally and for the longest time in the leading Western state, the United States.
But with the People’s Republic of China, an alternative has emerged in just a few decades: Now the world’s largest economy, it has brought many millions of feudally, colonially and capitalistically impoverished people into sustainable upward development, in contrast to the capitalist West and the developing countries dependent on it, such as India and Brazil. In China, labor incomes of the majority and the middle class have been rising sustainably for at least three decades, the number of socially insured people has been increasing (labor, health, pensions), and the infrastructure for housing, new cities, ground-based mass transportation, free education has been expanded.
To this domestic development comes the alternative, namely inclusive globalization: on all continents, even for instance in a growing number of states of the European Union, the approval for the multiple investments of the New Silk Road is growing. This kind of globalization goes, and this is a very important difference, with respect for international law: without military accompaniment, without a global ring of military bases, without capital ships constantly patrolling off distant coasts, without covert or overt military intervention.
Last but not least, the fight against the Corona pandemic showed: China is winning the systems competition. In contrast, the economically, technologically and politically declining U.S.-led West – at least so far – sees armament against China and its most important cooperation partners, Russia and Iran, as the main way out. (15)
At the same time, BlackRock & Co continue their efforts to acquire stakes in China’s leading companies and to obtain licenses for financial operations in China. In doing so, they accept government regulations that they fight against in the West. The battle of the systems is multifaceted and by no means decided.