Stephen A. Schwarzman
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Stephen A. Schwarzman



Following is the unofficial transcript of a CNBC interview with Stephen Schwarzman, Chairman, CEO and Co-Founder of the Blackstone Group, today on CNBC’s “The Kudlow Report.” All references must be sourced to CNBC.

LARRY KUDLOW, host: All right, we welcome back to the show Steve Schwarzman, the powerful CEO of the great banking firm Blackstone. Steve, thank you very much for your time. I know you're traveling Europe.

Mr. STEVE SCHWARZMAN: Well, thank you, Larry. I'm glad to be here.

KUDLOW: Let me just ask you, being in Europe, what are you hearing from people about the Japanese disaster, about the civil war in Libya, about Saudi Arabia and Bahrain? Do you personally think that Europeans think these are obstacles to world economic recovery?

Mr. SCHWARZMAN: Well, I think there's a real almost fixation on what's going on around the world, rather than what's going on in Europe. I think that probably makes sense. The last six weeks or so have really been unprecedented in most of our lifetime with natural disasters and enormous political change and religious strife and a variety of other issues, spiking of oil and commodities. And I think in that sense, Europe is not much different than the States. But because people here are physically closer to a number of these things, it home--hits home easier for them.

KUDLOW: Steve, are you confident about European economic recovery from what you're seeing?

Mr. SCHWARZMAN: I think it's slow. I think the biggest issue--well, a lot of significant issues, but one major issue, I should say--is that the people running the banks in Europe are very concerned about Basel III. The first tranche of that concern was over capital requirements, and now it's over the new liquidity proposals. And a number of heads of banks have really said that that's going to get in the way of their extension of credit, and that's not an optimistic element for economic growth.

KUDLOW: Is there any confidence in Europe, Steve, about getting through the debt problems of the so-called periphery countries: Ireland, Spain, Portugal, Greece and so forth? Are they moving to resolution? Do you have any confidence there?

Mr. SCHWARZMAN: I think--I think people here believe that those problems are handleable. They have big rescue fund. And there's enormous commitment to the euro, much more than one would expect living in the States, where people discuss issues regarding the euro. In Europe it's sort of a given that the euro is a--is a good thing and needs to be preserved at virtually all costs.

KUDLOW: What's your level of confidence right now in US recovery? We've had a strong stock market, as you know, in the last six months or so. The manufacturing sector has been very strong in terms of recovery, even while unemployment has been sluggish. And of course, housing is down. How do you see the American story, Steve?

Mr. SCHWARZMAN: I think the American story's pretty good. I think for a variety of reasons there was--there was really almost sort of a ceiling put on the recovery with political dialogue and a variety of other things over the first two years of the administration. And the kind of change that's been made is very good and it's very positive, and I think it's engendered much more business confidence and consumer confidence, and that will be reflected in good economic growth. Whether you believe three, whether you believe four, or whether you believe something in between, it's not a huge growth rate coming off this severe recession, but it's in the acceptable zone given the fact that there's still a lot of deleveraging going on. So I think the American story, frankly, is a--is a pretty good one.

KUDLOW: You know, as a--as a leading CEO member of the business roundtable, I want to go there, I want to ask you, it sounds like your confidence level in White House policies is a little better. And I want to ask you, are they pro business now after the elections? Are they going to tackle the budget problems? Will they tackle business tax reform and trade?

Mr. SCHWARZMAN: Well, Larry, you're more of an expert than I am, frankly, on the political world in the States. Just as a simple observer of the scene, albeit from afar over the last month, month and a half, I think there's clearly been a change in approach, tone. I think there's a recognition that unless the business community is putting its shoulder to the wheel and helping to drive the economy, that it's not going to be a good outcome for anyone in America. And what we all care about is that--is that the country moves forward. So I think the change is, frankly, a good one, and people are responding to it.

On the issues of the deficit and so forth, for whatever the series of reasons, that there's a lot of focus on some good things, but they're not necessarily on the big money issues. And until the big money issues are really addressed, you're not going to get the kind of resolution on the budget that is needed.

KUDLOW: Am I right in saying, though, that I'm talking to a more confident, more optimistic Steve Schwarzman today?

Mr. SCHWARZMAN: Yes, that's true. I must say that one has to temper that with the issues of what's been going on over the last six weeks in North Africa and the Middle East, and the most unfortunate in Japan, which really puts somewhat of a cloud over the kind of changes that are occurring in America. But the US is still 23, 24 percent of a global GDP. It's got forward momentum, it's got governmental policies that have changed, and the basic tonal change, which is--which is good and much more supportive. So on balance, certainly, you could put me in the more positive camp than a year, year and a half ago.

KUDLOW: All right, I'm going to leave it there. Thank you very much for your time. I know you're terribly busy. Steve Schwarzman, CEO of Blackstone, a more optimistic Mr. Steve Schwarzman. Thank you again.

Mr. SCHWARZMAN: Thanks, Larry. Have a great day.

KUDLOW: All right, you, too

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