For Schwarzman, the Action Is Anywhere but Here

Stephen A. Schwarzman has seen the future, and it’s not America.

Speaking at the Goldman Sachs U.S. Financial Services conference on Tuesday, Mr. Schwarzman, the chief executive and a co-founder of the Blackstone Group , had some barely veiled critical words for the Obama administration.

“The United States is going through a difficult time politically, and having other types of issues that everybody in this group knows about,” Mr. Schwarzman told the conference, adding, “The political calculus of the last two years hasn’t resulted in a winning calculus.”

Stephen A. Schwarzman
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Stephen A. Schwarzman

Mr. Schwarzman hadn’t seen Sunday’s “60 Minutes” interview with the Federal Reserve chairman, Ben S. Bernanke — he was attending the Kennedy Center Honors in Washington — but he dismissed the Fed’s aggressive fiscal policy, contemptuously referring to the suggestion that the regulator could “stop the economy in 15 minutes.” (Mr. Bernanke actually said, “We could raise interest rates in 15 minutes if we wanted to.”)

The Fed, Mr. Schwarzman said, is “looking at this economy as if they can just compete with the private sector for yield for financial institutions, and they will divert that and dramatically slow the economy.”

“And now, as I look at what’s going to happen out there, it’s good to know that the dealer at the table has a different way of playing this.”

The buyout magnate seemed puzzled by Mr. Bernanke’s decision to pursue a second round of so-called quantitative easing, “flooding the market with money” by buying $600 billion worth of long-term Treasury securities and keeping interest rates artificially low. But he offered some backhanded praise for the extension of the Bush tax cuts, even for top earners.

“They don’t believe there’s enough ability to use fiscal stimulus, but apparently, we fooled them yesterday,” Mr. Schwarzman said. Of the tax cuts, he added, “That’s almost another trillion dollars thrown into the pot.”

Mr. Schwarzman did sarcastically advise the private equity deal makers in attendance to thank Mr. Bernanke “for basically restructuring everyone’s debt” by keeping interest rates low enough to allow firms like Blackstone to finance their portfolio companies cheaply.

“When rates went down, you were able to take all your maturities and throw them out another five years, to give your companies more time to come back,” he said, noting that while the price of debt was “too cheap for the long term, our job is to borrow it now.”

During an hour-long appearance that included several questions from investors, Mr. Schwarzman sounded most optimistic when discussing Blackstone’s growing presence in the global markets.

“At least half the world is doing really well,” he said, mentioning Scandinavia and India as promising markets for investments. An acquisition in Central Europe would be “really neat” if regional economies held up, he added.

“As we look at the current situation in Europe, we’re basically waiting to see how beaten up people’s psyches get, and where they’re willing to sell assets.”

Among the European assets he’s examining: Irish real estate, which he believes will be soon available at bargain-basement prices as a result of Ireland’s sovereign debt crisis.

“They just set up a massive R.T.C.,” Mr. Schwarzman said, referring to the Resolution Trust Corporation, the government agency that liquidated assets seized during the savings and loan crisis in the United States. “They barely know what they own.”

But he does not like every foreign market, expressing relief that Blackstone stayed away from Spanish real estate in 2006, and noting that in parts of Europe throughout the last few years, “the risk/reward equation was really wrong.”

He also cautioned investors to remain patient in the face of economic unrest, and to wait for signs of improvement until investing heavily in distressed foreign markets.

“You want to wait until there’s really blood in the streets,” he said, adding, “You’re better off paying 10 percent more into a healing situation than trying to pick bottoms.”

Yet while Mr. Schwarzman sees opportunities oversees, his firm has had to deal with disappointment at home. Last month, Blackstone’s $4.7 billion bid for the energy company Dynegy was rejected by shareholders galvanized by the billionaire investor Carl C. Icahn and the activist hedge fund Seneca Capital.

And last week, The New York Post reportedthat Blackstone had failed to find a suitable buyer for one of its portfolio companies, the sock maker GoldToeMoretz, and had been required to try and arrange financing to save the company from bankruptcy.

Still, Mr. Schwarzman and Blackstone have been setting their sights abroad for some time. Last week, DealBook reported that Mr. Schwarzman would relocate to Europe — likely Paris — in January, spending three to six months managing Blackstone’s foreign portfolio and seeking out new international opportunities.

And at the Goldman conference, Mr. Schwarzman apologized that Blackstone’s president, Hamilton E. James, could not make it.

“He’s in Brazil,” Mr. Schwarzman said. “Which should tell you a little bit about the way the world is headed.”