Why BlackRock, not sovereign debt, is the global crisis

–Let’s start with a quote:

Zambia defaulted on interest payments to some of its private lenders in November 2020 when private creditors refused to suspend debt payments. In February 2021, Zambia applied for a debt restructuring through the Common Framework, but little progress has been made on the negotiations as large private creditors, such as BlackRock, have so far refused to reach an agreement on debt relief. BlackRock, headed up by Larry Fink, is the largest of a number of bondholders who are refusing to cancel Zambia’s debt, despite lending to the country with interest rates as high as 9% (in comparison to wealthy countries like Germany, UK and USA who were given loans at 0-2% interest in the same time period) potentially making huge profits. Debt Justice estimates that BlackRock could make up to 110% profit if repaid in full. Meanwhile, Zambia is experiencing devastating impacts of the climate crisis such as flooding, extreme temperatures and droughts, which are causing significant disruption to livelihoods and severe food insecurity. Unsustainable debt levels mean the country lacks many of the resources required to address these impacts. This decade, Zambia is due to spend over four times more on debt payments than on addressing the impacts of the climate crisis.

https://debtjustice.org.uk/wp-content/uploads/2022/10/Debt-and-the-Climate-Crisis-Briefing-October-2022-UPDATED.pdf

It’s also been reported that only two nations, the USA and PRC, have GDPs greater than the wealth managed by BlackRock, whose recent assets have been around $10 trillion. It’s also said that the ten largest asset-management firms together manage some $44 trillion, roughly equivalent to the annual GDPs of the USA, PRC, Japan and Germany.

Now, it’s always good to check the numbers, be they for Zambia, the globe or points in between. But let’s assume the orders of magnitude are correct.

–Yes, of course, we could say that the current sovereign debt crisis could be better managed. Fair enough.

It would be more accurate to say that BlackRock could be managed for the better, because, well, BlackRock is actually being managed in ways the sovereign debt crisis can’t. (Think BlackRock’s C-suite, starting with Larry Fink.) Why then not start with BlackRock being managed differently? After all, it rose to an undisputed shareholder superpower only after the last financial crisis of 2008. Nothing is set in stone here.

–In other words, think of BlackRock as the global financial crisis currently underway and the “sovereign debt crisis” as its smoke-and-mirrors to get the rest of us to believe otherwise.

We know exactly who benefits from placing the blame on the Government of Zambia’s fiscal and monetary management, when the Global Behemoth BlackRock is managed even worse in terms of self-interest.