Byron Wien's Atrocious "Forecasting" May Have Cost Blackstone Hundreds Of Millions

Tyler Durden's picture

The one man in finance, who after Buffett and Munger is way overdue for retirement, Blackstone's Byron Wien who at 77 is only made relevant once a year with his atrocious following year forecast, which due to its ongoing track record of being right approximately on zero out of ten predictions, provides Wall Street with an annual bout of uncontrollable laughter. So far this has been an innocuous exercise in worthlessness, but not any more. According to Bloomberg, Wien's latest forecast may have so infuriated the New York pension system that they may no longer invest money with Blackstone. "The New York City Comptroller’s office backed out of a scheduled meeting with Blackstone Group LP and trustees for the city pension funds who want the firm to repudiate chief strategist Byron Wien’s statement that public- employee retirement benefits are too high." The reason: "Last January, Wien, 77, said in his annual forecast that taxpayers 'literally can’t afford the benefits we have given our retirees in state and local governments and we have to change that.'" The result: New York State pension administrators are not amused.

Even in today's "Bernanke numbers" times, the amount at stake is certainly not trivial: "The city’s pensions committed $225 million to Blackstone’s
latest private-equity fund last year. Three of the funds -- for
police officers, firefighters and civilian employees -- are in
the process of picking managers to oversee a new hedge-fund
investment program." It is only fitting that the world's worst forecaster may also cost his company hundreds of millions with his ramblings.

Bloomberg has more:

Representatives of the funds, which are weighing new investments with the New York-based firm, had planned to sit down with Blackstone President Tony James on Jan. 7, according to two people with the direct knowledge of the matter. They were set to ask Blackstone to support public pension benefits in an advertisement in the Wall Street Journal, said the people, who asked not to be named because the discussions were private.

Lawrence Schloss, the city’s chief investment officer, canceled the meeting after the comptroller’s office was asked for comment today by Bloomberg News, one of the people said. Schloss works for Comptroller John Liu, who oversees the city’s $110 billion in pension assets.

“There is no meeting scheduled,” Michael Loughran, a spokesman for Liu, said in an e-mail. Schloss declined to comment. Peter Rose, a spokesman for Blackstone, said the firm “talks with our limited partners all the time about issues that concern them.”

In June, Joan Solotar, Blackstone’s senior managing director for public markets, wrote a letter saying that state and local pension funds have been the single largest investors with Blackstone since its founding in 1985.

“We are proud of the returns we have been able to achieve and the part those returns have played in helping states and cities keep the promises made to their employees,” Solotar wrote in the letter to Pensions & Investments magazine.

Blackstone’s response didn’t satisfy union representatives who sit on the city’s five pension boards and vote on which managers to hire and fire, the people said.

Of course, Blackstone's loss is someone else's gain. Therefore, people like Bill Miller can only hope that Wien's 2012 forecast expands from 10 to well over 100 predictions. Who knows who else the oracle may insult next:

The city comptroller’s office, which makes recommendations
to the funds’ boards, had already compiled a list of potential
hedge fund-of-funds managers that included Blackstone and
Baltimore-based Legg Mason Inc.’s Permal Group, according to the
people, who also asked not to be identified because the list
hasn’t been made public. More than one manager probably will be
chosen, according to the people.

Yet the supreme irony in all of this, is that Wien is absolutely correct: there is no way that the US pension system is sustainable in its current form, and absent trillions in backstop funding from the US government. But in a country in which only propaganda is endorsed, and the truth is to be only whispered in dark corners, people particularly in positions of power, should know their place, and stick with the program.

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Dismal Scientist's picture

Hilarious, the one time that old fart gets it right, it costs his firm money. Who are the bigger douches, sponging retired public servants or the Blackstone mob for employing him ? 

Jake3463's picture

Well the Hedge Fund is obviously the bigger douche.  Occasionally the public employees actually clean streets, put out a fire, catch a common criminal.

Don Birnam's picture

Speak of the devil, and the devil appears: Ol' "Pequot" Wein was the guest star this morning, along with the other wooden Indians on "Squawk Box."

Interesting, that the old chap would take such a position in opposition to Big Union, biting the pinkie-ringed hands which feed his shop -- and also the fact that Byron was an unapologetic supporter of Barry O'Bama, during Campaign 2008.

johnnymustardseed's picture

2011... the year of defaults. State and locals will crash hard. This will lead to much higher unemployment. Welcome to the Third World

Oh regional Indian's picture

Blackstone is nothing but a Ponzi front company, re-distributing "wealth" amongst it's "wealth" managers. Their investments are all (mostly) in nudge-nudge, wink-wink type deals.

Check out their Indian investment strategy, mostly in "infrastructure" and real estate, typically the worst offenders in terms of opacity in India. More nudge-nudge.

The man is irrelevant. Their money power is dangerous though. it inflates all the wrong things. Send all the wrong signals.


Canucklehead's picture

I suspect the people who write for Credit Writedown and Naked Capitalism will be on the phone to take Blackstone's place.

Arius's picture

give the man another chance. i'll bet he will get 2 or 3 right next time.

Dollar Bill Hiccup's picture

Wien may suck at forecasting but what he says is absolutely true.

taxpayers 'literally can’t afford the benefits we have given our retirees in state and local governments and we have to change that.'"

I might also add that taxpayers can't afford to bail out banks either.

Dr. Sandi's picture
I might also add that taxpayers can't afford to bail out banks either.

Hell, at this point most taxpayers can't afford to bail out a small rowboat.

rustybenelli's picture

We will see more outrage in the near future over public sector pension plans.  The sheeple need their angered directed at someone(eat your own).  I never heard a peep from these same sheeple when the banks looted the treasury.  I explained what was going on and all I received were glazed looks.  The govt has gotten its moneys worth from the education system(dumbed down sheeple).  These are my observations from blue collar main st.

JR's picture

Watching the attacks on congressmen at last year’s town meetings and the response to Tea Party candidates taking on not only Democrats but Republicans who voted for the bailouts, it may be time to give the term “sheeple” a little rest.  Let’s see what the increasing anger of the taxpayers will produce in their opposition to a leviathan big government and the excesses of public sector employees. IMO, the time is here. :)

Things that go bump's picture

What about federal retirements?  I don't think we can afford those either.  

johnnymustardseed's picture

9 trillion for banks...poverty for everyone else

JR's picture

+ $23.7 trillion and counting

Salinger's picture

the 8k makes interesting reading

my guess is senior managers and partners spend more on gratuities than most readers here pay in taxes


PS Rosie coming up on Bloomberg Radio





Gordon Freeman's picture

Does ZH now have new doubts that these pensions are not absurd??

I despise Wien as much as the next sane individual, but to citicize him for this no-brainer is truly petty.

Jake3463's picture

I think it is a zero hedge laughing moment.  Most on here know that the states can't afford the promises they made to their employees.


The funny thing in the upside down dystopian nightmare that we live in, is the one time this old fool actually says something that is true and likely to happen, his firm loses money because of it.


That is what is sobering, hilarious, and scary at the same moment.

FoieGras's picture

Wien is to the perma bulls what the Celentes and Rosenbergs are to the bears.

None of these clowns would survive in a trading pit for more than 15 minutes because they lack a vital ingredient that distinguishes the trader from the economic analyst: the trader understands this game isn't about being right or wrong about the economy, it is about being on the right side of the trade.

Jake3463's picture

Celente buys gold and silver and stays out of the market and has been doing it for quite sometime.


I think with that strategy, Gerald is doing pretty well.

psyclopz's picture

Agreed. Gerald Celente is probably not the trader type, and given that he recommended gold in 2001, even if gold corrected he would still not be too badly burnt. 

Rodent Freikorps's picture

That's what they get for employing a zombie.

JR's picture

Taxpayers 'literally can’t afford the benefits we have given our retirees in state and local governments and we have to change that.'" -- Byron Wien

Facing a public outcry and a flood of letters to editors throughout the state, University of California Regents yesterday denied the request of 36 UC executives earning more than $245,000 a year to lift their retirement annnual pension cap of  $183,750, according to the UC (Los Angeles) Daily Bruin.

Under UC’s formula, which calculates retirement benefits on only the first $245,000 of pay, an employee earning $400,000 a year who retires after 30 years would get a $183,750 annual pension.

Lift the cap and the pension rises to $300,000 a year.

In a Dec. 9 letter to the UC Board of Regents, 36 high-paid executives said commitments were made in 1999 by UC to lift its cap on benefits for individuals making more than $245,000. The IRS lifted its Federal limit cap in 2007, but the increases were never allocated—“because of the economic downturn, that never happened,” according to the petitioners’ statement.

The letter petitioners earned up to $729,000 in 2009. The letter calculates the cost to the University at $50.6 million to raise benefits for some 200 employees.

According to the Daily Bruin, petitioners Yudof and Gould “feel prepared to defend their position in court if necessary.”


San Francisco Chronicle, Dec 29, 2010

Missiondweller's picture

I read that previously. Their arrogance is absolutely stunning. Even banksters would blush a little after reading that.