Authored by John Haughey via The Epoch Times,
U.S.-based capital markets will fuel the private investment needed to grow the nation’s energy grid to build out an electrifying digital economy, BlackRock cofounder, Chair, and CEO Lawrence Fink told energy corporation leaders and innovators Monday.
President Donald Trump’s drive to dramatically scale back the nation’s federal workforce, however, could backfire by delaying approvals for projects and innovations financed by private sector investors, he said during the 43rd annual CERAWeek by S&P Global conference at the Americas Hilton-Houston.
“The only way we can navigate this” need to scale up the nation’s electrical capacity “is not by cutting, because cutting is going to destroy the economy,” Fink said.
“We must grow the economy,” he continued.
“We have to encourage more and more private capital. And this is why, if we can reduce the timing of permits, reduce the regulatory [requirements], we have a little opportunity” in the next few years that could be squandered if key agencies are understaffed and in disarray.
Fink shared numerous insights during a 75-minute one-on-one interview with S&P Global Vice Chair Daniel Yergin during the opening day of the five-day CERAWeek conference, a premier annual gathering of energy leaders with more than 8,000 attendees, including at least 450 energy corporation CEOs and energy officials from more than 80 countries.
U.S. Energy Secretary Chris Wright delivered the keynote address Monday. Interior Secretary Doug Burgum, who was also at the conference, will speak Wednesday.
Fink said private investment and “energy practicalism” can generate 3-to-3.5 percent growth in annual gross domestic product (GDP) to chip away at the nation’s $37 trillion deficit; that the U.S. faces a short-term worker shortage but, as artificial intelligence (AI) advances, long-term job “deflation”; and that preparing workers for retirement is “the great crisis of America that nobody wants to talk about.”
And no, he added, BlackRock “did not buy the Panama Canal,” referring to its March 4 $22.8 billion acquisition, with other investor groups, of 44 ports in 32 countries owned and operated by Hong Kong-based CK Hutchison.
“This is something we’ve been working on with the seller, Hutchinson” during “a very concentrated period of two weeks, really. They’ve been faced with a very poor stock price for some time. From our estimates, Hutchinson was trading at 30 percent and they decided, after much deliberation, to see what the market would take related to selling” dozens of ports, including six in the Suez Canal, Fink said.
BlackRock now owns or has majority interests in 100 ports, he said.
“Unfortunately,“ Fink said, ”the far left and the far right didn’t mention that we bought 44 ports. They mentioned we bought two.”
BlackRock, with more than $11.5 trillion in its investment portfolio, is the world’s largest asset manager, according to the U.S. Securities and Exchange Commission.
Fink was among co-founders who created the Manhattan-based firm “in a one-room office in 1988” that went public in 2000. “I did my 100th earnings call this last January,” he said.
As the acquisition of 44 Hutchinson ports indicates, he’s bullish on the global economy and remains staunchly “optimistic that U.S. exceptionalism will continue” into the foreseeable future.
Mexican migrant workers load boxes of organic cilantro during the fall harvest at Grant Family Farms in October 2011 in Wellington, Colo. John Moore/Getty Images
Labor Shortage to Job ‘Deflation’
But there are challenges on, and beyond, the horizon, Fink cautioned.
“We have to think about power and energy in a pragmatic way,” he said, adding that while “we’re going to have to focus on decarbonization” until breakthrough technologies, including nuclear power, are commercially affordable, an “all of the above” energy policy is the key to growing the grid to meet growing demand.
“Everyone talks about the opportunity with hydrogen. Well, we can have green hydrogen and blue hydrogen, but is anybody willing to pay the cost?” Fink asked.
In speaking with “hyper-scalers” that need massive electrical loads, there’s been a shift from what they want to what they can get, he said.
“Four years ago, they would say, ‘If we’re building a data center, it must be renewable’ energy,” Fink said. “Two years ago, they said, ‘We prefer renewable,’ and today, they care about power.”
Biomass, or “vegetable power,” is among under-tapped power sources that are coming to the fore, he said. “There are many opportunities in working side-by-side to try to work this out. I talk about ‘practicalism’—it’s how to solve these problems in a holistic way.”
Fink said inflation and a labor shortage in key industries are quickly emerging as major issues.
“Over the course of the next six to nine months, we’re going to see embedded inflation” aggravated by the Trump administration’s “deportations and speed at which it is happening,” he said.
The administration’s immigration policies will have a “severe impact” on the nation’s agricultural and construction sectors, Fink said.
“I’ve talked to CEOs in the [agriculture] sector [and] they remind me that 70 percent of the men and women in agriculture were not born in the United States,” he said. “Many of them have work permits” but are leaving or not planning to return just as planting spring crops is beginning.
Fink said at least 40 percent of construction workers on sites across the nation “were not born in the United States,” which concerns private investors.
“The whole idea is that we’re going to have to use private capital that builds up this economy. Are we going to have enough workers?” he asked, noting the data centers that will key the emerging 21st century economy wonder “if we’re going to run out of electricians as we build out AI data centers. We just don’t have enough.”
Those same AI data centers that could be impaired by short-term skilled labor shortages could, potentially, present a long-term “deflation” of the job market, Fink said.
The advancement of AI robotics is “going to reshape the economy,” he said. “It’s going to change every business that we could think of.”
As the war in Ukraine shows, “technology even changes war. If war is fought in a whole different manner than we are used to … take that into every different business across the board and think how that translates.”
‘You translate that across all the economies, everything,” Fink continued, “and we’re going to have a shortage of jobs. Just the social implications are pretty frightening and we have to be thoughtful about it. We have to be working towards this. We, the private sector, must work with governments and work together on how can we shape this together.”
“Uncertainty” and “angst” by retired Americans is a crisis that few are addressing, he said.
“To every CEO in the audience, we need to be focused on how to make sure our employees have the right financial literacy so that they can navigate their own retirement,” Fink said. “As we moved away from defined benefits to defined contributions, we took the liability off us, passed the liability onto the individual, but we have not provided, as a country, as companies, enough of the financial literacy to help them over this long journey.”
That presents a double-edged problem, he said. Retirees need investments to generate an income and capital markets need their contributions to provide seed money to finance emerging technologies.
Capital markets have provided the United States a big advantage on the global stage, Fink said.
“So much of the U.S. exceptionalism is our capital markets. If you’re a startup company with a good idea, you can get capital in the United States. You probably can’t get that if you’re a small Indian company.”
To make America great, the nation must “make energy great” with a “practicalism” that funds a government that can provide swift surety in permitting and regulating, stable labor availability, and strong capital markets to fuel private investment, he said.
“How do we make this a conversation across the board? To me, this is the beauty of this country,” Fink said. “When we have a conversation, we fix problems.”
Tyler Durden
Wed, 03/12/2025 – 07:20
