The American "BlackRock Conspiracy" to Take Over German Industry

  The other day Robert Misik had a short piece in Die Tageszeitung - Warum sind viele Linke so peinlich? (Why are so many on the Left so embarassing?) - in which he pointed out the tendency by many on the Left to chase after absurd conspiracy theories.

A good example can be found in the left-learning, pro-Putin blog NachDenkSeiten, which often publishes as fact any bizarre conspiracy involving the United States.  Recently, Jens Berger of the NachDenkSeiten uncovered a sinister plot by the giant fund manager BlackRock to acquire major stakes in German industry:

Nur ein gutes Drittel der Anteile an den Dax-Unternehmen wird von Inländern gehalten. Ein weiteres Drittel gehört Personen und vor allem Finanzkonzernen aus den USA und Großbritannien, während das letzte Drittel sich auf den Rest der Welt verteilt. Die Spinne im Netz der Beteiligungen an den Dax-Unternehmen ist dabei ein Unternehmen, dessen Name wohl nur Insidern bekannt ist – BlackRock. BlackRock ist an jedem Dax-Konzern beteiligt, an 80 Prozent der Dax-Konzerne sogar mit 5 Prozent und mehr, bei mehr als der Hälfte der Dax-Konzerne ist BlackRock sogar der größte Anteilseigner. Doch wer ist BlackRock.

(Only about one third of the shares of DAX-companies are owned by Germans. Another third is held by individuals and mostly financial institutions from the US and Great Britain, while the remainder is distributed throughout the rest of the world. The spider in the web of ownership of DAX-companies is a firm that is known only to insiders-BlackRock. BlackRock owns a piece of every DAX-company, and owns 5% or more of 80%, and in more than half of all DAX-companies BlackStone is the largest single investor. But who is BlackRock?)

BlackRock is the world's largest asset management firm, with over $4.4 Trillion under management.  I suppose if you survey the American S&P 500 companies you would find similar ownership stakes by BlackRock.

The thing is, "BlackRock" doesn't own the shares. The shares are owned by the hundreds of different funds in the BlackRock portfolio, which, in turn, are owned by the individual investors.  BlackRock will invest in DAX (and FTSE and DOW) index companies, as long as the securities are aligned with the overall performance and investment strategies of the individual funds.  I happen to own shares in several BlackRock funds. If I decide to sell my shares in those funds, the fund manager needs to sell the underlying corporate securities to cover my position. BlackRock has no say in whether I hold on to or elect to sell my fund shares.

Jens Berger directs his focus on BlackRock CEO Larry Fink as a mysterious, sinister figure who deliberately keeps a low profile as he quietly builds his global empire. Fink's reliance on algorithms for risk management is seen as profoundly "undemocratic":

Spielte bei den Cowboys und den Investmentbankern noch die Gier die entscheidende Rolle, so ist nun eine in Algorithmen geschmiedete betriebswirtschaftliche Logik das Maß aller Dinge – Widerstand zwecklos. Noch nie waren die Entscheidungsprozesse über wirtschaftliche Prozesse undemokratischer als heute in der BlackRock-Ära.

(Whereas greed was the decisive factor previously for the cowboys and investment bankers, now everything is driven by the logic of the algorithm - it is pointless to resist.  Never has the decision-making process concerning economic process less democratic than they are today in the BlackRock era.)

But as CEO, Larry Fink has no control over how the shares in BlackRock funds are voted. He simply has the authority to  hire and fire BlackRock fund managers. BlackRock is owned by institutional and individual investors, with a minority stake by PNC, a regional bank. What is BlackRock's "agenda" other than maximizing the returns for individual investors, who can move their money in a hearbeat to any of thousands of other asset managers?

One final point:  BlackRock has a large German operation and actively sells its products to both individual and institutional investors in Germany. So at least some of the BlackRock money invested in DAX-companies is coming from home-grown German investors - not the scary foreigners feared by Jens Berger. Also, BlackRock is a large provider of Index Funds - passively managed funds that track the performance of specific indices. For example, the iShares DAX UCITS ETF (DE) invests in a basket of German equities that mirror the overall DAX performance, whether the DAX goes up or down.  This is beneficial to all investors in DAX-companies since it provides stability and liquidity in the market. I am a huge fan of index funds since a) the expense ratio is a tiny fraction of that of actively managed funds, and b) very few actively managed funds outperform the major stock indices.

BlackRock is not secretly taking over German companies or disrupting the German equities market. Jens Berger needs to use his imagination to come up with other anti-American conspiracy theories - something as creative as The Great Amikäfer Conspiracy.

 

Comments

[koogleschreiber]

BlackRock, Blackwater, all the same. Like when the Chinese bombed Pearl Harbor. Or when the Jews sank the Titanic. Iceberg, Rosenberg, all the same...

[David]

Larry Fink comes from a prominent Jewish family, so this fits nicely with the common view on the left and far right that "the Jews control the American media and financial institutions."

[Randy]

The real question that is always worth asking is simple. Who are the investors in Blackrock who managed to receive massive assets from supposed defunct mortgage foreclosures which in turn multiplied hundreds of times while millions lost their equity overnight with the massive government bailout of big banks. This is a conspiracy and the like the great Whore sells soul of nations all in the name of Greed. It seems so Prophetic.