NEWS: Blackstone Chairman Warns For Trouble

Pete Peterson co-founder and chairman of The Blackstone Group latest book, "Running on Empty," will be in stores soon. The book raises the possibility that government deficits and out-of-control federal spending could bring serious economic harm to the United States. The Bush administration's record government deficits and fiscal policies are a security risk to the nation, according to Peterson. Adding that much of the debt issued per day ($2 billion) is bought by the governments of Japan and China.

REUTERS

"There are some extremely brilliant people who believe we're taking a very high risk of a hard landing.�

"We used to be the party of fiscal responsibility."

original news source
It isn't unusual for private equity executives to play a role in politics. Steven Rattner of Quadrangle Group and Roger Altman of Evercore Partners, for instance, are both active in Democratic circles.

And Carlyle Group is peppered with former Republican government officials, including, until recently, former President George Bush.

But it is rare for one investment banking firm to reflect the opposite ends of a party's spectrum in its two top executives, experts say.

Schwarzman, for instance, recently raised hundreds of thousands of dollars for Bush and is on a first-name basis with the president and a White House regular.

Peterson, however, says that while he's a life-long Republican, he hasn't decided who he'll support in the upcoming election.

Controversy at Blackstone?
The investment bank's second co-founder, Stephen Schwartzman, a known Bush supporter isn't impressed by his colleague's latest work. Schwartzman recently said, that he will not even read the book.

"I've been listening to Pete for 20 years."

"I know every line in the book and could repeat it backwards,"he said.

Deniying any rift at the Blackstone Group, Peterson stated, that founders' views won't influence the bank's top financial preformance standard.

"We're a nonpartisan firm."

original news source
Some observers say the Schwarzman-Peterson political rift reflects heightened strains in the party itself, pitting the "deficits don't matter" crowd against the "deficit hawks."

"My sense is that Pete Peterson has not run away from the Republicans but the Republicans have run away from Pete Peterson when it comes to fiscal responsibility," said Michael Granoff, founder of buyout firm Pomona Capital and advisor to John Kerry, the Democratic presidential contender.

Despite Schwarzman's views, Blackstone recently hired Paul O'Neill, the Bush Administration treasury secretary until 2002 who resigned to become one of Bush's harshest critics.

Schwarzman, by contrast, was recently named chairman of the John F. Kennedy Center for the Arts board of trustees, winning public praise from Sen. Edward M. Kennedy, a liberal Democratic standard-bearer.

Relevant Information:

Blackstone - Peterson, Peter G. - Fact Sheet (PDF)


[edit on 6-6-2004 by Hoaks]

[edit on 6-6-2004 by Valhall]

Suprising but logical.


What if Japan and China both decided they no longer wanted US Treasury Notes at once?

If they dumped suddently and the price plummeted, then some hedge funds would pick up
some t-bonds at a cheap price and make lots of money arbitraging between dollar/euro and t-bond/euro-debt markets.

Then China and Japan would be stuck with dollars. What are they going to do with them---sell all the dollars and buy what? Yuan and Yens?

Their currencies will shoot up and their exports become suddently less competitive. Their industrialists will complain and their own manufacturing companies on their own stock markets will plunge. People will bitch in Chinese and Japanese, "# the what?"

Foreigners have indeed been keeping the US economy going by buying US debt especially Asians. Fundamentally the US economy is in very big trouble for the long term but Bush is not concerned about the long term.

As long as the US dollar continues to fall in an orderly fashion it should keep us going for while and asian central banks have been selling US dollars consistantly making sure it does.

However the europeans are none too pleased with this arrangement as the euro continues to climb it reduces european exporters ability to compete and reduces their profits. Expect the European Central Bank to devalue their own currency as euro approaches the 1.35 level. Will make for interesting times.

In the long run expect the US housing and credit bubble to burst. There will be no quick fix for this one. Bring back the Democrats they spend less lmao!!!

there is a real problem with the similarities between enron and what blackstone is doing in Africa and elsewhere now

reinhardt