- The 2008 financial crisis and the economic damage caused by the COVID-19 pandemic are very different, according to BlackRock CEO Larry Fink.
- “This is an existential problem, so it is beyond a financial crisis that we saw in 2008,” Fink said in an interview with CNBC on Friday.
- Fink said he believes it will take longer this time than 2008 to find stability, both in the economy and in society.
- “BlackRock has never believed that we are going to have a ‘V’ shaped economy. We believe this will be a slower and more persistent rebound,” said Fink.
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Investors shouldn’t expect a “V” rebound in the economy as COVID-19 cases rise across the country, according to the CEO of the world’s largest asset manager.
In an interview with CNBC on Friday, Larry Fink, CEO of BlackRock, explained why the current economic downturn caused by the COVID-19 pandemic is very different from the 2008 financial crisis.
“This is much more psychological because of the fear of the virus, the fear of health,” said Fink. “This is also an existential problem, so it is beyond a financial crisis that we saw in 2008.”
Furthermore, the COVID-19 pandemic has made people feel unstable and are “looking for hope,” Fink said, adding that “hope” is a medical advance in the treatment or prevention of the virus.
Fink also said it will take longer than 2008 to stabilize parts of our economy and society.
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The main reason? Because, according to Fink, the COVID-19 pandemic is much more deeply rooted in our entire economy, unlike the 2008 crisis, which was more limited to the real estate and financial sector.
When it comes to the political actions of the Fed and Congress, Fink said the purpose of these policies is not “to choose winners and losers,” but “to protect jobs.”
“These are very different policies and programs than in 2008,” said Fink. In 2008, policies focused more on acquiring bad assets from financial institutions in hopes of stabilizing the financial sector, while today policies focus on stabilizing the entire market and economy.
And when it comes to a “V” economy, don’t hold your breath, according to Fink.
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“BlackRock never believed that we will have a ‘V’ shaped economy. We believe this will be a slower and more persistent rebound. But we believe there will be a rebound, it will only take longer,” Fink said. said.
But Fink also warned that a continued increase in COVID-19 cases could lead to a second round of economic closings, which would be devastating to the economy.
“If the disease continues to grow, if death rates rise from where they are today, then we will have to see another closure of parts of our economy and then small and medium-sized businesses will have more difficulties.” Fink said.
A possible solution to the problem? According to Fink, it is more compassion. “I think if we can have a more compassionate society, we can all wear masks and get through this much faster,” said Fink.
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