As I was looking at the Bloomberg article about Larry Fink, the big fish over at BlackRock, it reminded me of an older post in which an exasperated Scott Sumner pointed out the idiocy of a financial news article, exclaiming that anyone can say just anything, anything at all, anything goes. Because if one puts anything thought to the content of this article, it really wouldn’t make much sense.
Here’s the article on Fink:
Laurence D. Fink, who runs the world’s largest asset manager as chief executive officer of BlackRock Inc. [and Treasury Secretary hopeful], said the current rally in equities may not be justified and won’t last unless earnings pick up.
“If we don’t see better-than-anticipated corporate earnings I think the rally will be shortlived,” Fink, 63, said in an interview Thursday.
When I take out the handy-dandy Dajeeps translator, it says, “There’s a bubble in stocks,” which of course is pretty ambiguous. Saying there’s a bubble in housing, or a bubble in MBS, or a bubble in something more specific like railroads or maybe even tech, would make a lot more sense because stocks cover just about every industry under the sun. But the most specificity we get is “corporate.” That’s really helpful. Isn’t it?
By the way, I just get a real kick out of it when the privileged are quoted saying really nothing at all, but something that might in some way simply serve their own self-interest. It seems to me that unless someone is into fixed income, which of course BlackRock is to a large degree, earnings from quarter to quarter may not really matter. At least that’s not the way I play equities. But then, I haven’t been able to quit my day job yet. So, it’s really up to the reader to make up his or her own mind about what Fink may be up to here, if anything at all.
On another note about privilege, concerning my last post regarding Mr. Fox’s implication that ignorance is reflected in voters’ choices of late, especially concerning the rise of Trump and Brexit. This point, from my point of view, is cringe-inducing because voters are not, in particular, voting against their own self-interest.
Way back in Reagan’s time, in the hay day of supply side economics, there was the idea of “trickle down” that encompassed the concept, simplified here, of creating a business-and investment-friendly environment that would ultimately take care of everyone; the way to get everyone a piece of the pie was to increase the size of the pie.
It worked quite well until… I really can’t put my finger on any point in time, or any one policy that ended the positive effects from corporate welfare. But the era of mutual backscratching and pie sharing ended, to probably a much larger degree than any one person might be aware of. Instead what we have now are entities receiving tax breaks and competition protection from the regulatory apparatus that import labor or do off-shoring. And all of us who fit into the category of the domestic labor force, and society in general, receive a greatly diminished benefit from all of the perks bestowed on the supply side, directly though job loss and indirectly when the local economic ecosystems that depend on the larger corporations are destroyed.
The summary of my point here is that one cannot vote against their self-interest if they no longer have any interest in whatever goes on in the financial world.
I really do not want to sound like a leftist here, but think about the corporation that has all kinds of public perks bestowed upon it in order for society to benefit that then decides to cut labor costs by firing 80% of its workforce that possess US passports and proceeds to fill in the gap with foreign nationals. It’s happening. Now. There is only one label for it and it starts with “G”.
I am going to temper this idea with the notion that free trade is fine. There is nothing wrong with free trade. I am not for, nor will I ever be for the government telling people with whom they can or can’t do business. But there is such a thing as taking it too damn far. The subsidies and domestic regulatory competition protections have to end. These entities must stand on their own if the common theme to all of it is that the only thing that matters is the bottom line, while whatever happens to all the Average Joes across the country that they boot through the door is none of their concern. We don’t subsidize for no reason, but that is basically what it comes down to – getting much less or perhaps nothing in return after investors take their cut while the bill for all the perks ends up handed to posterity.
If what goes around starting to come around hurts Mr. Fox and his buddies, it really is no concern of mine.