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BlackRock's Larry Fink Wants to Be 100% in Stocks

Wednesday, 29 Jun 2011 | 4:52 AM ET

Larry Fink, one of the world's most high-profile investors, would like to put all his money in equities at the moment.

Larry Fink
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Larry Fink

In an exclusive interview with CNBC on Wednesday at the Monaco Fund Forum the chief executive of BlackRock said: "I am not afraid of treasurys but if my accountants would allow me I would be 100 percent in equities.

"Equities are historically cheap, but people are still going out of equities and paying 2 and 20 (for hedge fund exposure) and hoping for better returns than on equities.

"Anything earning 3 percent or lower is the dumbest thing you can do," he added. "If we went on holiday four years ago and came back better human beings with a tan, markets would still be back where they were four years ago."

The danger to the US is far from over, he added.

"The US cannot kick the can down the road anymore. We are going to see a 2 trillion dollar down payment on the deficit before Aug 2nd. It needs to be between 4-6 trillion dollars."

"Oil prices are falling which will feed through into the pump," he said. "Corporations are also stronger than ever, they have lots of cash, which in itself could be a problem as they are not investing."

"If you are worried about sovereign debt or the Treasury market there may be more safety in strong equities or corporate debt issued by those strong firms."

BlackRock , is avoiding peripheral European debt according to Fink. He warned politicians that institutions are not about to start buying until there is a permanent solution to the crisis.

"There is likely to be an ugly contagion but it will be manageable," he said.

"The real situation is that there is great connectivity between sovereign debt and the banking system. Europe cannot allow a default, it would add great strain to the banks."

He warned that the potential for dramatic social change following the economic crisis in Europe was high.

"The problem we have here in Europe, as we delay these issues, is that the social fabric is being challenged," he said.

"We saw this in Germany after World War 1, money drained out of the country. We need to focus on social fabric of these countries like Greece and Ireland."

"The situation is very serious and will probably lead to another crisis. The politicians and bankers are the ones that will need to solve this and that is a dangerous cocktail" said Fink.

"We are asking countries like Greece and Ireland to impose a lower standard of living, while the financial community get their bonds paid out."

"This is not fair, as other countries like Iceland have been able to default," he added.

"We have to be vigilant on preventing another major crisis whilst also being aware of solvency problems"

Fink said central bankers such as Jean-Claude Trichet at the ECB and Ben Bernanke at the Federal Reserve were not central to resolving the debt crisis.

"This is not a central banking problem, this is a problem for finance ministers," said Fink.

"You need populist sentiment to get these bailouts. Like Paulson with TARP, finance ministers are going to need to raise money and will need votes to do so."

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