The latest pundit to make an ominous, indirect warning that the US may be on the verge of a civil war, was Blackstone's billionaire co-founder, Steve Schwarzman, who said that U.S. politics is nearly as heated and polarized now as it was in the days just before the Civil War.
"We are clearly going through some very unusual times and enormous difficulties getting groups of people to agree on things," Schwarzman said in an interview with Bloomberg TV's Francine Lacqua, noting that the "adversarial nature in politics" recalls the situation in the 1850s - just before the US civil war broke out - "when people weren’t even civil in politics" or anywhere else for that matter.
Private Equity titan Schwarzman, who has a fortune of about $16 billion, was described by Bloomberg as "a prominent adviser to President Donald Trump" and also "the president’s Palm Beach neighbor, a regular guest at his Mar-a-Lago resort and one of his most generous donors" and he has at times functioned as an intermediary between the U.S. and Chinese governments.
The Blackstone chief said his assistance hasn’t been limited to Trump: "It is not just this president. There have been other ones. People need advice or they need help in some area. I am like an equal opportunity employer: if I can do something that’s helpful in my view - not bias, but helpful for the greater good - I like to do things like that" said the altruistic financier who also happens to be America's largest landlord and the "largest owner of real estate in the world."
After indirectly warning that the US political environment is a explosive powder keg, Schwarzman pivoted to defending his line of work, and said "the image of private equity funds loading up the companies they acquire with debt and adding no value was wrong" explaining that fund managers need to make companies grow if investors are to make a profit.
Well, that, or they can just extract all the value they can from an investment via dividend recap while loading up the company with untenable debt and then, once it has been squeezed dry, letting the company file for bankruptcy.
Asked how to spot an overheated market, Schwarzman pointed to the issuance of debt securities that pay no interest and an abundance of available credit as signals:
"When your stupid friends are getting rich, this is usually a sign there is too much credit available," he said at a time when all of his stupid friends were getting rich, as increasingly more debt was being issued that paid no interest.