By Werner RÜGEMER | April 23, 2021
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
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.
Please go to Strategic Culture Foundation to read more.
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News update for 24 April 2021:
The central bankers plan. Do we have enough evidence to suggest that this is in fact what is going on? Read more then take strategic evasive action the first step being take back your mind.
The carnage is only going to continue unless we stop it:
What is the culmination of power of the central bankers'?
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