Steve Schwarzman, Blackstone Group chairman, CEO & co-founder, shares his thoughts on Europe’s financial crisis.
Transcript:
we’re back on a tuesday morning, final thoughts from steve schwarzman. we haven’t talked about europe yet. you’re there all the time, you own a lot of portfolio companies. lay out what you think is going to happen here? i was there twice in the lasttwo weeks so it’s easy waking up for squawk box because i’m on european time but the reason europe is important is that it’s25% of the world’s economy. u.s. is roughly 23, to 25. got 10% to 15% other and the emerging markets 35. how do you see this playing out? if something goes wrong with europe it will affect people all around the world. they’re dealing with a number of simultaneous problems, a banking crisis, a fiscal crisis withlarge deficits, a competitiveness crisis, and they’re doing it all in the context of 17 countries needing to make decisions at the same time, along with the basel committee shrinking the amount of capital that can be invested in europe. do you think greece leaves? do you think there’s a lehman moment? does the euro survive? does it survive? you know, i look at thosequestions a little bit differently. i think there’s enough of aburden on europe that it’s going to have very slow to no growthover a period that’s longer than we all need or want, and that it’s going to affect sort of the global economy. would you invest in europe right now? we are making certain types of investments in certain countries. what kinds? we’re buying real estate incertain countries where we’ve avoided — which countries?spain, for example, we’ve been huge buyers of bank loanswhere in effect bank loans can be turned into ownership. at the right price, things are interesting. you’re not doing that in spain or greece? we’re not doing that in spain or greece because the situations there are — where are you doing it? that’s the question. where are you doing that in italy? where are you doing that? we’re doing that in the uk. we’re doing that in france.we’re looking at doing that in italy, actually, and one needs to be careful. there’s very little lending. it’s almost shocking howelending there is overall from the european — it is depression ary. to consumers, businesses or both? i’m talking businesses. consumers have similar problems but the business aspect is unbelievably serious, because you can’t get out of your deficit problems if you have no bank lending, because bank with economic growth. if you don’t grow, you can’t get over time more tax revenues. if you can’t get growth inrevenues, you can’t address easily your budget deficitproblems. steve, quickly, about six months ago you told me the world was less optimistic, that here we were less optimistic but if you go around the world people are more optimistic? do you still believe that? . no. i think in europe there’s a pervasive pessimism which is quite profound. , despite our political dialogue and you know, sort of unhappy environment, i think there’s a more positive tone in the u.s. countries, if you take the brics, they vary from country to country, but there’s a deep seeded confidence in those places that they wi overcome their problems. steve, we got to leave it there. we thank you and we have to have you back. it was a lot of fun. pleasure, glad to be here. good to see you, everybody. blackrock’s quarterly asset
