Charlie Rose talks to ... Stephen Schwarzman

Blackstone Group’s CEO discusses his winning bet on housing and why America’s future could be very bright

So you’re a believer in the housing recovery? We started actually buying individual houses from foreclosure about a year and a quarter ago. We’re now the largest owner of houses in the U.S. In fact, it’s turned out to be even faster than we wanted, because housing within the last year has on average gone up around 10 percent. In the cities where we’ve been buying, it’s gone up 20 to 25 percent because housing was so beaten down. There were a lot of markets down 40 percent from the top, with very little construction. Meanwhile, America is about the only developed country that continues to grow its population.

Tell me about your Schwarzman Scholars program in China. It sounds like what Cecil Rhodes did.

Absolutely. He started his scholarship in 1902. What I’m trying to do is be in the 21st century but use the same basic model to attract terrific kids for a year in graduate school. What we’re trying to do is create a group of future leaders from around the world. So we’re going to have 45 percent Americans, 20 percent Chinese, and 35 percent from the rest of the world.

And this is for 200 students a year, right? How did you choose the school?

Tsinghua is one of the top two universities. It’s where the current president of China went to school. It’s where the previous president of China went to school. So it’s pretty much of a power alley, if you will, in China.

What’s your economic outlook right now?

The basic economy around the world is OK. The U.S. is growing somewhere around 2.5 percent. Europe’s pretty much hit the bottom of where it’s going to go. And Asia has slowed down. It’s getting close to a bottom. We’ll have global growth somewhere in the 3.5 percent, 3.75 percent zone. So the overall environment isn’t as pessimistic as it’s been.

Talk about the American fracking boom.

[The U.S.] could significantly increase its growth rate. We can be attracting companies and investment from all over because we have such cheap energy and we have rule of law and safety. Not all the places where you produce energy have rule of law or are safe or don’t have threatening neighbors very close by. This can be a kick-start for a new economic age in America — if you were to dream.

Can you raise the money you need to do the investments you want right now?

At the moment, we’re in a pretty advantageous position because not only are [pension funds] giving more money to our asset class, but they’re simplifying the number of managers they give money to. So they’re giving it to the better-performing managers.

How does the Chinese government feel about its investment in your IPO?

Well, we’re about close to even now with dividends. I checked the other day, and I think we’re the fourth-best-performing financial stock in the Western world, so they’ll be back to even pretty soon, which is not a bad outcome.

Watch Charlie Rose on Bloomberg TV Weeknights at 8 p.m. and 10 p.m. ET


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