The United States’ economy is in trouble. Inflation is the highest it’s been in nearly forty years, and the Federal Reserve is raising interest rates in an attempt to bring it back down. Thus, the Fed is attempting to slow economic activity in the United States through rate increases. However, voices like Janet Yellen – claiming that the economy is not nearing a recession, are countered by the 70% of leading academic economists polled, who say we are set for one.
However you look at it, and at every level of understanding, when food and gas prices are high, it’s hard to claim that the economy is in good standing. Yet, we are seeing the Biden administration come out and boast about how the economy is doing. This disconnect from reality proves that they are so far removed from the everyday American consumer.
Once more, to show just how far removed the Administration is from the everyday consumer, the Energy Secretary for the United States, Jennifer Granholm, has said, “If you drive an electric car, fuel shortages would not be affecting you.” This statement was back in May of 2021 – and we are far past that energy crisis, but we are now staring down record-high gas prices. Again, almost a year later – she exclaims in an interview with Msnbc; “So the people can buy an electric vehicle and don’t have to ever worry about going to fill it up at the gas pump.” She gave an example: if you pay $55 at the gas pump to fill up your car, you would only have to pay about $10 to fill up your electric vehicle.” What she didn’t mention is that an electric car is about $55,000. In contrast, you can get a petrol vehicle for far cheaper, and most Americans fall into the far cheaper category of affordability.
Blackrock, an American multinational investment management corporation based in New York City, wields a plethora of influence over the companies it invests in. By investing their clients’ 401(k)s and other investments, Blackrock is a top shareholder in many competing publicly traded companies. For example, Blackrock owns; Apple (NasdaqGS: 6.34%), Microsoft (NasdaqGS: 6.77%), Wells Fargo & Co (NYSE: 4.30%), and JPMorgan Chase & Co (NYSE: 4.41%). However, those are only a small portion of the massive companies that Blackrock has significant influence over. Not only do they own a large portion of Media companies, but they also hold a drastic stake in oil companies.
Regarding Exxon Mobile, “In 2018 the company’s guiding principle was clear: “Exxon Mobil Corporation is committed to being the world’s premier petroleum and petrochemical company.” The company stated that its first responsibility was to make money for shareholders. Then last year a little-known investment firm called Engine No. 1, which held a 0.02% stake in Exxon, won three seats on Exxon’s 12-member board. Engine No. 1 waged an activist campaign claiming that Exxon should reduce its carbon emissions and become a global leader in profitable clean-energy production. BlackRock, Exxon’s second-largest shareholder, voted for three of Engine No. 1’s climate-focused board candidates. BlackRock claimed that its vote was motivated by concern over Exxon’s lack of a clear climate-change strategy. Every savvy market participant at the time knew that Engine No. 1’s proxy battle would end wherever BlackRock cast its die. Few knew that Engine No. 1 CEO Jennifer Grancio had been a managing director at BlackRock from 1999 to 2018.”
That is only one of the many companies that produce oil. Not to worry, Blackrock owns quite a bit more; 9% in Philips 66 and Occidental Petroleum; 8% in Valero Energy and ConocoPhillips; and 6% in ExxonMobil. Moving from oil to housing, Blackrock has you covered. Blackrock is heavily invested in real estate and for the most part investing in real estate is a good thing; when companies can buy an enormous amount of homes and rent them out, it influences the housing market and can easily push would-be buyers out of the market. For one, Blackrock isn’t just purchasing one house on a street – they are buying the entire street. That alone can hit the inventory available to would-be buyers. Now throw in low-interest rates, the covid pandemic, serious problems in developing new homes, supply chain issues leading to higher prices for lumber, and the new work-from-home model, and we have the newest housing crisis.
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According to Tucker Carlson from Fox News; “Chronicles journalist and associate editor Pedro Gonzalez said that BlackRock’s actions are leading 40% of American renters to believe they will never be able to purchase a home.”
Blackrock is not the only problem for the housing crisis, but they are a contributing factor. Many real estate agents have said there is so much cash in the market that it is hard for the local buyer to keep up and purchase a home because they can’t compete with a cash offer. According to a report from the Wall Street Journal; “Investor purchases have been rising in recent years and accounted for more than one in five home sales in December, according to housing research firm CoreLogic. Their effect on the housing market and local neighborhoods has become a hot-button issue. Home prices have also risen at historically high rates during the pandemic, and would-be buyers say they have a hard time competing with companies that pay in cash.”
Now, this is only a small portion of what is going on – we haven’t mentioned the Supply Chain issues, inflation, quantitative easing and quantitative tightening, the federal reserve, the Ukrainian war, the food shortages, and so much more. However, all of the aforementioned combined, plus what the government is doing, has lead many leading economists and Bank CEOs to warn of a recession. Scratch that, an ‘economic hurricane.’
“We’re in technical recession, but just don’t realize it,” said Hartnett, who notes ever murkier consumer data and household and consumer balance sheets indicating a shallow recession ahead. He added that “what can turn shallow into deep is the great unknown of the shadow banking system.” – Michael Hartnett, the chief investment strategist for Bank of America
“It’s possible, probably 50-50 odds now,” Gorman told a conference hosted by the Wall Street bank, revising up his own forecast from last month when he told investors the likelihood of recession was less than 50%. – CEO Morgan Stanley James Gorman
“I said there were storm clouds. But I’m going to change it. It’s a hurricane,” he said during a conference hosted by AllianceBernstein Holdings. “Right now it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle it. That hurricane is right out there down the road coming our way. We don’t know if it’s a minor one or Superstorm Sandy. You better brace yourself.” – JPMorgan Chase CEO Jamie Dimon
“The World Bank warned Tuesday that the global economy faces the risk of dreaded “stagflation,” with this combination of high inflation and low growth tipping some countries into recession.” – The World Bank
What say you, reader?
N/A. “US set for recession next year, economists predict.” Financial Times. . (2022): . .
Ann Saphir and Lindsay Dunsmuir. “Soaring inflation fuels bets on sharper Fed rate hikes.” Reuters. . (2022): . .
Will Parker. “Homeowner Groups Seek to Stop Investors From Buying Houses to Rent.” The Wall Street Journal. . (2022): . .
Charles Creitz. “BlackRock, other investment firms 'killing the dream' of home ownership, journalist says.” Fox News . . (2022): . .
Taylor Kuykendall Esther Whieldon Gaurang Dholakia. “BlackRock heading to net-zero but holds large fossil fuel investments for now.” S&P Global. . (2022): . .
Vivek Ramaswamy and Riley Moore. “The Market Can Curtail Woke Fund Managers.” The Wall Street Journal. . (2022): . .
Vivek Ramaswamy. “BlackRock’s Climate-Crusade Doubletalk.” The Wall Street Journal. . (2022): . .