Financial Markets: Lecture 11 Transcript
February 20, 2008
Professor Robert Shiller:
I believe that we still have on, for Friday, Stephen Schwarzman. He said he would
do it. I always worry about people who have such important businesses because some big deal may become
in crisis or something; people like that have trouble sometimes adhering to a schedule. As far as I know we're
getting him, so I hope that you will all be able to come this Friday, here, at the usual time. If there's any
problem with his appearing I will email you.
As you know, Stephen Schwarzman is a graduate of Yale College and he's one of the great stories of our
century. He created just about the biggest private equity firm from scratch in 1985 and I guess they just went
public and they have a huge market cap. They're comparable to one of the biggest old line investment banks
in New York. He just--he and Peter Peterson--just created it so I think it will be very interesting to hear him.
Again, you'll have a chance to question him about what he's done. I put on the reading list
The New Yorker
article that's out right now. Well actually, I guess it came out a couple of weeks ago, but it's up on our
syllabus. I think I might want to take it down before he comes. I'm going to turn--I'm going to reflect on this
because he may not be pleased with the article. It's a very hard-hitting critical article. He had to be a tough
businessman to arrive where he is.
The New Yorker
article talks about the price of his condo--or co-op--in
New York, which set some record, and so they tell things like that.
I was just yesterday in London and people like to gossip about things like that. The limo driver was driving
me to the airport and was pointing out the scenes in London. He said, you know that building? Some Arab
Sheikh just paid one hundred million pounds for that apartment--that penthouse apartment--in that building
and the same Sheikh is ordering a Airbus for his--one of these big Airbus airplanes--for his personal plane
and he's having it plated with gold leaf. Did you hear this story? Does anyone--is this true? This limo driver
told me this yesterday; he said it's going to cost him five hundred million pounds or something like that to do
this. These are gossip. The real substance is what the man does--or woman does--for the world.
So, I gleaned here a list of some of the charities that--Stephen Schwarzman is a major philanthropist. He set
up something called The Blackstone Foundation from the Blackstone Group and he's a major donor or
collaborator with the Frick Collection, The Whitney Museum, Phoenix House, The Red Cross, The Inner
City Scholarship Fund, New York City Outward Bound, and the Asia Society. I think that's the real thing we
should talk about, not the size of his penthouse. So, I might try to find a more even-handed account and put
that up on the website. Incidentally, there's sort of a resemblance between him and David Swensen in the–
well, first of all, they're both phenomenally successful, but they both are emphasizing alternative