Larry Fink: The Rich Have Already Fled Greece; Social Catastrophe

Larry Fink: The Rich Have Already Fled Greece; Social Catastrophe
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Larry Fink, the chairman and chief executive officer of BlackRock, believes that China’s economic growth will continue to slow down. He noted that China’s leadership is transforming the country’s economy from an export driven into a domestic and service-oriented economy.

During an interview on CNBC’s Delivering Alpha Conference, Fink said, China’s markets increased 158% whether you call it manipulated or went up on a natural course. People became concerned when it went down 30%. Fink noted that the latest figure that China’s economy was growing at 7% was the “lowest quarter since 1990.” He said China’s “growth is coming down.

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Fink says China’s transition will lead to a slower GDP growth

Fink said the Chinese government is in the process of implementing a 10-year plan to transforming from an export to a consumer-oriented economy to create more jobs. According to him, the transition will lead to a slower GDP growth.

“We could argue China’s on a path for its economy to continue to evolve and slow down. Unless we have more demand for their export unless they have more competitive companies unless the consumers start to consume more; we’re going to see a slower China, which is frightening to me. It’s just a path that they’re going down, and maybe valuations are still a little high.”

Fink says European creditors were right to stand up to Greece

When asked about Greece, Fink commented that European creditors made the right decision to stand up to the Greek government. According to him, the creditors should not adjust the terms of its debt until they see a “full, firm commitment” from Greece.

“The contract and prior funding by the creditors to Greece was a contract to the state not to a political party. A new political party came in and said, ‘We’re going to renegotiate. You can’t go to your bank and say, ‘I want you to renegotiate.’ It just doesn’t happen that way.”

Fink added, “I think it was really important that Europe stood firm. You could not allow that same type of behavior to move to Spain and Portugal. I think a firm Europe was necessary.”

On Wednesday, the Greek government will vote on the reforms demanded by European creditors in exchange for a third bailout. According to Fink, Greece could renegotiate the terms of the bailout after passing the reforms. He also said, “The little, hidden secret is most people know they’ll never be able to pay it back.”

Furthermore, Fink emphasized that even the fundamental problems of Greece has been resolved, not all of the wealthy that fled the country would return.

“Since this crisis, most of the wealthy have left. The sad social issue is the people who are in Greece now are the poor and the middle class. They are left with this tremendous noose around their neck. This is a social catastrophe because money is so portable,” said Fink.

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