Schwarzman: Fed Has Done a `Pretty Heroic Job’

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Sept. 27 (Bloomberg) –- Blackstone Chairman and CEO Stephen Schwarzman discusses the possibility of a credit downgrade and the Fed’s next move. He speaks with Betty Liu on Bloomberg Television’s “Market Makers.” (Source: Bloomberg)

Tax increases, we addressed on a first cut basis enough of those issues that if you were a rating agency, you look at this and view this as an internecine fight without the same consequence as when budget deficits were over a trillion dollars.

They are now probably half of that and going down.

So, i don't think there will be that type of ratings response.

The other day, steve, you mentioned that you felt that policy was losing its effectiveness.

Where do you think the fed should move next?

How should they move next?

I think the fed is the only player in this drama guarding america.

And, you know, there is almost no ability fiscally to make any decisions.

Congress just can't seem to do much of anything.

So, it is all left to the fed.

And they have done a pretty heroic job taking the u.s. economy from being in a very difficult lace i -- place in 2009 and moving it to a slow growth environment.

Two percent is not a lot to be proud of but it is better than one percent and not as good as three.

So, we have had a subpar recovery but there are people who are principally responsible.

I think as they have looked that qe1, qe2, no qe3 -- now qe3, if you talk to the fed a would say that each one would be less potent in terms of accomplishing their objectives.

And i think that has turned out to be true.

So it is probably time to bring that party to an end, and that is what bernanke said, i guess it was in june around the 22nd or something like that.

And he laid out some criteria.

And we haven't satisfied the criteria, so he didn't go ahead in september, which apparently shocked people -- it didn't shock me because he laid out what he needed, and the economy isn't doing it at this point, and it will probably at some other point.

I think that interest rates have already responded a lot with him doing nothing, other than just talking.

So when they finally start doing this, i can't predict exactly what will happen but a lot of it is already discounted.

And it is inevitable that we will be stopping.

Whether we do it in november or december or january, it will be reduced in terms of the amount of securities we are buying at the fed and life will go on.

You are not worried about any impact on the economy?

It depends on how you do something and what is going on in the economy at the time.

If we are growing at two, rates have gone up already sharply and the fed reduces the purchases over a period of a year, i don't believe that will have impact on the content -- a lot of impact on the economy.

That is betty liu sitting

This text has been automatically generated. It may not be 100% accurate.

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