https://vimeo.com/426900494 Finance is being propped up with public money while states and cities face disaster. BIll Black joins Paul Jay on theAnalysis.news podcast Transcript Paul Jay Welcome to theAnalysis.News podcast. I'm Paul Jay. As part of its management of the current economic crisis, the Federal Reserve will spend approximately 750 billion dollars to prop up the corporate bond market. It's also buying junk bonds, exchange traded funds and even directly buying into the stock market. Who's managing all this for the Fed? BlackRock, of course, the massive asset manager to know more about the extent of BlackRock power and the tremendous concentration of ownership that's taken place, read my article on the Analysis.news site titled, Three Investment Banks Control More Wealth than the GDP of China, and Threaten our Existence. Bloomberg reports that BlackRock is managing three debt buying programs on behalf of the Federal Reserve. Purchases of agency commercial mortgage backed securities. And our guest, Bill Black, is going to tell us what that means. Newly issued corporate bonds and existing corporate debt and debt based exchange traded funds, and bills can have to tell us what that means. Bloomberg reports that BlackRock is also advising the Bank of Canada a and buying up commercial paper, the short term debt that companies use to fund day to day expenses. Paul Jay In whose interest is this bailout of the corporate and banking sector? Is this what's needed to prevent the economy from free, falling into a deep depression? Will it work? What's the alternative? And what about the role of BlackRock? Bloomberg quotes William Bird ?? professor who studies the fund industry. It's impossible to think of BlackRock without thinking of them as a fourth branch of government. Bird Thistle says, Well, if that's true, the merging of corporations and government is what Roosevelt said was the definition of fascism. Now, joining us to break all this down is Bill Black. He's an American lawyer, academic, former bank regulator. Black is a professor of economics and law at the University of Missouri, Kansas City. He studies white collar crime, public finance, regulation and financial crisis. And he's the author of the book. The Best Way to Rob a Bank is to Own One. Thanks for joining us, Bill. Bill Black Thank you. Paul Jay So start with the basic strategy of buying up all this paper. Who does it serve? I mean, is this what's necessary to stop this spiral into a much deeper depression? And was there an alternative to this? Bill Black OK, so that actually depends on a broader question that the prior piece you alluded to in your introduction discusses a little bit. What's the concept of why we care about the financial sector? Financial sector is supposed to allocate capital efficiently. In other words, the places that need it to expand, to become more productive should be able to get funds, either from shareholders or from lenders. Right. And those lenders could be banks, but those lenders could also be people like us who might buy commercial paper, which is a short term kind of debt issued by corporations, typically very large corporations. Right? That's what it's supposed to do. In other words, it's supposed to be a middle man. And the efficiency condition for a middle man is exactly the opposite of what the scholar you were quoting was talking about when he said it's impossible not to think of Black Rock and its counterparts as a fourth branch of government. Efficiency condition is lean and mean. The financial sector should be relatively small. It's just a conduit. Right. And we’re just matching who needs it with the folks who have surplus capital to invest or lend. Instead, again, as your prior piece says, profits total 25 percent of total corporate profits at this time are going to finance sector. Right.
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