Larry Fink and Jamie Dimon sound the alarm over geopolitical instability

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Larry Fink, CEO of Blackrock Inc., during the Berlin Global Dialogue in Berlin, Germany, on Friday, September 29, 2023.

BlackRock CEO Larry Fink (pictured) and JPMorgan CEO Jamie Dimon have warned of the possible economic consequences of rising geopolitical tensions. Krisztian Bocsi-Bloomberg via Getty Images

Geopolitical turbulence is at its worst since the world entered World War II – and the instability is pushing us all closer to recession, Wall Street heavyweights Larry Fink and Jamie Dimon have warned.

In an interview with the British newspaper The times Larry Fink, co-founder and CEO of BlackRock, said over the weekend that geopolitical turbulence is “shaping our lives” as the wars between Israel, Hamas and Russia and Ukraine rage on with no sign of resolution.

“We are facing increasing fear and less hope around the world,” said Fink, who is also chairman of BlackRock.

According to him, this could ultimately translate into a weaker economy.

“Increasing anxiety leads to a withdrawal from consumption or increased spending,” Fink said The times. “So fear drives recessions in the long term, and if we continue to experience rising fear, the likelihood of a European recession grows and the likelihood of a U.S. recession grows.”

BlackRock currently manages assets worth more than $9 trillion.

Fink, who founded investment bank BlackRock in 1988 with seven partners and has since amassed a personal fortune of more than $1 billion, has previously spoken out about the lack of “hope” in the economy.

At the end of September, the bank director said he had never seen as much concern among consumers and businesses as now.

“The biggest problem for me – and I say this to every government leader I see worldwide – what the world is missing today is hope,” he said at the Berlin Global Dialogue forum. “I see more fear than ever in my business career.”

Dimon’s vision

Also talked to The times this weekend, JPMorgan boss Dimon said the situations in the Middle East and Ukraine were “pretty scary and unpredictable.”

“We still have a strong economy in the US,” he said. “We still have a lot of fiscal and monetary stimulus in the system. But these geopolitical matters are very serious – perhaps the most serious since 1938.”

Dimon emphasized that the tense geopolitical backdrop was reshaping the world – and its economy.

“What is happening on the geopolitical front right now is the most important thing for the future of the world: freedom, democracy, food, energy, immigration,” he said.

It is not the first time in recent months that Dimon has raised the alarm about geopolitical risks – or their potential impact on the global economy.

In September, the Wall Street veteran warned that people should brace for a rise in interest rates as high as 7% – around the same time he said heightened geopolitical tensions were “absolutely” the world’s biggest economic threat right now.

“We’ve dealt with inflation before, we’ve dealt with deficits before, we’ve dealt with recessions before, and we haven’t seen anything like this this often since World War II,” Dimon told CNBC affiliate network CNBC TV-18 at the CNBC TV-18 conference. time.

“I think America is taking Russia’s invasion of Ukraine very seriously, I’m not sure how the rest of the world does,” he added. “You have a European democratic nation being invaded under the threat of nuclear blackmail. I think it was a good response, but it will affect all our relationships until the war is resolved one way or another.”

Fink and Dimon are not alone in their warnings about the breakdown of geopolitical stability.

Last month, billionaire investor Ray Dalio – who previously warned of the risks posed by the breakdown of Sino-US ties – estimated the chance of a “hot world war” at 50% thanks to “brutal” conflicts in Ukraine and Gaza.

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