It's the beginning of the end of globalization: BlackRock's Larry Fink and Oaktree's Howard Marks

[BeyondGeography]

“The magnitude of Russia’s actions will play out for decades to come and mark a turning point in the world order of geopolitics, macroeconomic trends, and capital markets.” That was Larry Fink, CEO of BlackRock BLK, in his annual letter to shareholders that published Thursday. And in our call of the day he closed the door on decades of global economies connecting.

“I remain a long-term believer in the benefits of globalization and the power of global capital markets,” said the head of the world’s biggest asset manager. “But the Russian invasion of Ukraine has put an end to the globalization we have experienced over the last three decades.”

…While dependence on Russian energy is in the spotlight, we’re also likely to see companies and governments bring operations either onshore or close to home, which could benefit Mexico, Brazil, the US or Southeast Asia. And that means higher costs and margin pressures are ahead. “While companies ‘and consumers’ balance sheets are strong today, giving them more of a cushion to weather these difficulties, a large-scale reorientation of supply chains will inherently be inflationary,” said Fink.

Also weighing in on globalization was Oaktree Capital Management founder Howard Marks, whose own letter to investors discussed the “pendulum” swinging back toward local sourcing. “Rather than the cheapest, easiest and greenest sources, there’ll probably be more of a premium on the safest and surest,” he said. That could impact investors as globalization has boosted worldwide GDP, but may also boost domestic manufacturing jobs.

https://bookmarkposting.com/its-the-beginning-of-the-end-of-globalization-say-blackrocks-larry-fink-and-oaktrees-howard-marks/

[Strelnikov_]

1. "Rather than the cheapest, easiest and greenest sources, . . . "

greenest . . .right

[Greybnk48]

15. Greenest is such a lie. They escape environmental laws in many other countries. And easiest?

It's "easier" to ship things halfway around the world on smoke belching barges? (again, greenest?) And cheapest? Given the fuel it takes to ship the merch from around the world, or are we just talking slave labor prices?

I don't trust anything he says now.

[Johnny2X2X]

18. Economies of scale

Economies of scale can be greener. It's counterintuitive, but large grocery store chains for produce are greener than farmer's markets. Mass producing and shipping food via large trucks or trains has less of a carbon footprint per ton of food than hundreds of individual farmers driving a small truck of their produce to a farmer's market. And it's the same with mass producing things more efficiently overseas.

But a caveat is that the environmental laws in some of these places are non existent and need to be improved.

[lapfog_1]

2. The pandemic and resulting supply chain issues

started the retreat...

The war has put the nail in the coffin.

Globalization was supposed to prevent war... you can't go to war with your trading partner.

Oops

[2naSalit]

4. +1

I have always wondered how long the globalization could last.

[lapfog_1]

9. it was always doomed...

I have written about the "Race to the Bottom" for over 20 years.

We outsource to other countries to gain access to cheap labor and lax environmental regulations. But we pay for this in terms of more energy inputs, i.e. shipping finished goods all over the planet costs energy (typically oil). When those costs go up, the money saved by outsourcing to cheaper labor markets, etc starts to evaporate.

The corollary is that, as we employ the "third world" as our cheap labor source, the people so employed become less willing to work in the factory building our cheap iphones... they want better jobs, more education, more affluence, and less pollution. I.e. they become us.

Last point... automation will, very soon now, make this ALL go away. Eventually all of the manufacturing jobs... and even higher skill jobs... can be done by AI. It is the next revolution... industrial, information, AI, the three defining revolutions of the last 200 years.

not just manufacturing, almost ALL jobs can be done by AI (from truck drivers to CEOs).

Which leaves the question... what do 8 Billion humans do, how do they get money to buy shelter, water, food, transportation, entertainment. I don't have an answer to that yet.

Maybe we all become artists and musicians.

In any case, the robot factory will take in raw material and output finished products... so there would not be a case to locate it far from the consumers of those products or to ship building block products half way around the planet at enormous expense. End of Globalization.

[2naSalit]

12. Well...

We, humans, have blasted far beyond sustainable as a species. All that automation still requires energy and programming which can't take place if we all starve due to lack of arable land because of drought and pollution. With that in mind, I think we won't make it to the point where all is AI driven because that will take more time to employ globally than the biosphere will allow. We have ten or less years before Mother Earth evicts us entirely.

I agree with your summary of how we got here. Saw that coming decades ago but it's hard to get those who are addicted to the current paradigm to see it, need serious convincing.

[lapfog_1]

13. One alternative

is that there is NO need for 7 billion people... or even 700 million people.

the 1% can live very comfortably in an AI driven world... and sustainably too.

[2naSalit]

14. I think that...

The 1% actually believe they can out-survive the rest of the species but I truly doubt they would last more than a few months after the rest of us are gone. Most other species are going with us, flora and fauna. Without their slaves to keep their robot running, they're screwed.

[marie999]

16. What if AI decides it has no use for humans at all?

[2naSalit]

17. I think we'll be gone by then...

due to lack of food water, and breathable air not to mention shelter from fires and severe storms. And we can't let that massive arsenal go to waste so I guess there will be more mass killing and destruction of more habitat, air and water.


Pootie's war is accelerating the decline of the biosphere so there's that. Don't forget the UN study explaining how we have less than a decade to clean up our act, we're not doing that and by the time we make significant change, sans major disruptions, it's already too late and our survival will be in question beyond 2030 - 2035.

It's not looking good for us.

[Demsrule86]

10. Globalization destroyed the middle class in this country IMHO and enriched but a few

at the expense of many. Good riddance. Time to make our own goods. It is not just about economics but about national security.

[FreepFryer]

3. If by "globalization" they meant "oligarch bankrolls" maybe - but isolationism isn't the next step.

The next step is a greater mutualism, without so much skimming off the top by the .01% ers.

[Beastly Boy]

5. In the context of the letter to shareholders, good riddance!

When it comes to globalization, CEOs of multinational corporations have their blinders firmly affixed to their heads. Their concerns are limited to "macroeconomic trends and capital markets", and I am not even convinced that geopolitics will be affected in the same way. Contrary to the narrow views communicated by CEOs to their shareholders, corporate interests do not define globalization.

While large corporations may lose some of their levers to affect worldwide outcomes in economic terms, globalization in terms of multinational and multicultural exchanges will continue and probably expand. As far as I am concerned, both the former and the latter are a good thing.

[Samrob]

6. Mother Nature will have something to say about all of it!

Bringing operations closer to home and back on shore requires a careful study of where negative environmental changes prevail. Many of the so-called "red states" are not well suited for some operations back on-shore. Environmental hazards must be a consideration for inhabitants as well as operations. Just saying we ignore environmental issues at our own peril. Now is not the time to stop movement toward greener energy INMHO.

[Demsrule86]

11. Really, so we should exploit some foreign country to make things we want? No, we need

manufacturing and it can be done in a green way...but no more shipping jobs overseas.

[Bernardo de La Paz]

7. On the other hand

The punishment of Russia by deglobalizing it is severe and that is good for peace.

The more the world is globalized, the less countries will risk their economies by violating global norms and rules.

Beat up your neighbor to get land and resources? Set your economy back 20-30 years with a sharp 30% severe depression.

[hatrack]

8. Somewnere, Tom Friedman weeps while talking with his taxi driver . . .

.