Charlie Rose Talks to BlackRock’s Larry Fink
Your company manages $4.6 trillion in assets, more than anyone. How did that come about?
I surrounded myself with really smart men and women. We had a really simple business model. We remain what we were 27 years ago. We’re only an asset management company. All our business is on behalf of our clients. All our revenues are from our clients. We don’t have our own accounts. When we started the company, 25 percent of the founders had a technology and risk-management background, and we’ve been able to consistently build this platform. We believe in globalization, and we’re in 41 different countries where we have over a billion dollars of assets on behalf of our clients.
What’s your economic forecast for 2015?
The world’s improving. The U.S. economy is going to grow a little faster than last year, though probably a little weaker in the first quarter. Europe’s going to be incrementally better, because they’ve fixed their banking crisis. They’ve benefited from a very weakened euro. And then you have economies like India, which was stagnating at around 5-ish percent GDP growth a year ago, and now they’re going to receive the benefit of lower oil prices. That’s going to add at least 1 percent to India’s GDP. Prime Minister Narendra Modi’s reforms will probably add 1 or 2 percent more growth to overcome all the weakness in China.
What do you expect to happen with oil prices?
The change in the oil market is driven by technology. We spend too little time focusing on how technology is changing our everyday economy, but I look at this as transformational. It’s going to create a permanent reduction in the cost of petroleum products. Can oil go back from where it is, around $50, to $70 or $80? Sure. But I don’t think you’re going to see it back at $100. Unlike all the other oil shocks we’ve witnessed in our lifetimes, which were demand-driven, this was supply-driven, and the supply was created by new technology.
Is the Keystone XL pipeline necessary?
Certainly not. It’s a symbol today. I was not against Keystone when it was originally proposed. But the fact that we did not do the pipeline [made us] more active in North Dakota in producing oil. We actually became more self-reliant because we did not do Keystone. I didn’t understand why we vetoed it originally. My strong view is that North America is the best place to be in the world today, and I’m talking Mexico, Canada, and the U.S. The fact that we cannot create a cooperative regional energy system is a shame.
Are you alarmed by the dysfunction in Washington?
It’s not alarming to me anymore, because I’m numbed. I think our economy would be growing at 4 percent today if we had a more productive Washington. We don’t have an infrastructure policy. I’m focusing on infrastructure investing in India, in Mexico. I can’t focus in the U.S., because it’s so hard to get anything done.
Talk to me about the situation in Greece and its impact.
A lot of people are asking, “Why are the markets calm about Greece?” But Greece is no longer a private-sector problem. In 2010 the private sector owned most of its debt. Today, 70-ish percent of that debt is held by the [European Central Bank], Greek banks, and then there’s the IMF, which has a huge loan outstanding to Greece. If you think about what’s transpired in the last five years, we’ve had a transformation.
How do you see that shift? What does it change for the Greeks?
Greece, in my mind, is part of the international grid. If you want to remain in the grid, you’re going to have to ultimately conform. If they don’t conform, they’re going to become Argentina; they did things the global economies said were wrong, and now they have no access to capital from outside. If Greece walked away today, its banks would be bankrupt. Greece experienced a 26 percent decline in GDP from 2008 to now. If they walked away, I think they would fall another ungodly amount.
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