The CEO of private equity giant Blackstone believes America is like a once great athlete who has stopped training, let themselves go and put on a whole lot of weight.
“We actually have to relaunch America. It’s not just taxes, it’s not just spending, there’s a spirit and confidence that has been strained to breaking point,” Stephen Schwarzman told CNBC.
“We’re a bit like a great athlete who stopped training and gained a bunch of weight, we’ve got to get back into training,” he said.
Across the business Blackstone owns, Schwarzman has seen a sharp drop in growth as the year has progressed with August slower than July.
Europe is also a major concern for market, and Timothy Geithner, the US Treasury Secretary is expected to demand action from his peers at Friday's meeting of G7 finance ministers in France.
“The basic problem in Europe is that the banks are really short of capital if you mark to market all the sovereign debt,” Schwarzman said.
“So, it's difficult to know what to do about that problem because the more you talk about it and disclose it, the lower the bank stocks go and the more difficult it is to raise capital” said Schwarzman, who believes America’s debt is also a major problem.
“We have a serious financial issue in this country. We currently approximately borrow 40 cents of every dollar we are spending,” he said.
“We have a deficit of approximately $1.3 trillion. Historically we spent 20 percent of GDP, now on the federal government level it’s 25 percent,” he added. “What that shows is that we are way out of balance, and we have to get back to balance.”