Less than a week after Steve Schwarzman’s Nagasaki joke bombed in Boca (of his failure to get the loan money to buy mortgage company PHH, Crab Hands said, “Trying to buy a mortgage bank in the midst of the subprime crisis was the equivalent of being a noodle salesman in Nagasaki when the atomic bomb went off. Not a lot of noodles left, or even a person, and that’s what happened to us on this deal.”), Blackstone has announced it would like to get in on some deal opportunities in Asia.

It plans to do so with the launch of Blackstone Altius Advisors, an event-driven strategy based in Hong Kong, with staff in Tokyo, Mumbai, and New York, and focused on money making schemes on the left-hand side of the Pacific. Good to see no one over there’s holding a grudge. Though, to be fair, it’s been a while since the atrocities that Schwarzman made light of in Florida went down. That real test would be to have Schwarzman make some cyclone cracks in his next public appearance, and see if they have an effect on Blackstone’s (non-existent) business efforts in Myanmar (which you know he would probably call Burma, after making "Formosa" and "Peking" jokes).

Blackstone to Launch Blackstone Altius Advisors, an Asia-Focused, Event-Driven Investment Business [BusinessWire]

Steve Schwarzman, the head of private equity giant Blackstone, has found himself in hot water after he made some remarks at his firm’s boondoggle at Florida’s Boca Raton Resort & Club. In an early morning session, Schwarzman was noodling over Blackstone’s failed attempt to buy the mortgage company PHH, a deal that collapsed when Blackstone discovered no one was willing to lend it money for the acquisition, Peter Lattman explains on DealJournal. To illustrate just how radioactive the mortgage industry has become to financial players, Schwarzman decided to exercise his well known penchant for world history.

“Trying to buy a mortgage bank in the midst of the subprime crisis was the equivalent of being a noodle salesman in Nagasaki when the atomic bomb went off. Not a lot of noodles left, or even a person, and that’s what happened to us on this deal,” Schwarzman said.

Some are now speculating that this remark could have some serious fallout with Blackstone’s business efforts in Japan. If it does mushroom into a major issue, it could cast a cloud over Blackstone's many important Japanese connections. Apparently, some of those Japanese types don’t find noodle salesmen appropriate material for homey, jokey anecdotes.

Steve Schwarzman’s Take on the Subprime Mess [DealJournal]

“How do you get from here to the rest of the world?”

The question is one of the most heart-breaking moments on this season of the Wire. It’s asked of Cutty, an ex-con turned proprietor of a neighborhood boxing gym. The youngster asking it is Dukie, of the desperate kids caught up in the mess of youthful drug dealing but who is told by friend and foe alike that his talents lie elsewhere. “I wish I knew,” is Cutty’s humble answer.

One guy who might know is Steve Schwarzman, the billionaire head of private equity giant Blackstone. And last week he went to the Sacred Heart School in the Bronx to deliver his answer. Unlike conventional advice—that it was important to work hard at school and stay out of trouble—Schwarzman seemed to propose that doing well in school isn’t all it is cracked up to be.

Apparently a quiet night at home in the largest living room in Manhattan wasn’t cutting it for Stephen Schwarzman. His birthday celebration was certainly toned down from the multimillion bash at the Armory the year before. But he still managed to make it out for the night with his wife Christine Schwarzman. The couple was spotted by spies for Page Six at Le Cirque on Schwarzman’s birthday, which also happens to be Valentine’s Day.

DealBreaker was unable to determine if Schwarzman ordered the crab salad.

A Night Of Love [Page Six]

Blackstone badboy Steve Schwarzman is still planning a big let down for his Valentine's Day birthday party. Last year's bash rang the bell at the top of the "golden era" of the private equity deal frenzy. It featured giant portraits of Steve hanging in the Park Avenue Armory and Rod Stewart's crooning, giving new meaning to "over the top." It's said to have cost at least $3 million.

This year Schwarzman is apparently planning on celebrating with a quiet party at home with his family. Fortunately "at home with his family" means spending the night in one of New York's most lavish and expensive apartments in one of the city's toniest apartment buildings with a woman five years his junior who has some quite entertaining skills. The guy has the biggest living room in New York City.

Over at the New York Post, the boys are asking for better suggestion on how Schwarzman should spend his 61st birthday. Twenty eight percent of readers suggest buying a dinner at Tad's Steak House. But another 29% suggest just buying Tad's Steak House altogether. (To take the poll, click here and scroll down. The poll is on the lower right._

“How does it feel? Unattractive. No thinking person wants to be reduced to a caricature," Steve Schwarzman tells James Stewart in the giant New Yorker profile we haven't gotten around to reading yet.

Blackstone big Steve Schwarzman may have gone into hiding but he’s still the talk of the town. Especially if your plot of land in that town—Greenwich, East Hampton, etc—was bought with private equity tax-advantaged dollars.

“Whenever group of private-equity guys gets together nowadays, the conversation inevitably turns to Steve Schwarzman,” the Economist reports today.

“It was all going so well until Schwarzman went over the top,” one will say. “Yeah, why did he have to hire Rod Stewart to sing at his birthday party?” replies another. “And then make quite so much money in the Blackstone IPO? Now everyone hates us, no one wants to lend to us any more, and Congress wants to tax us to hell and back.”

The forces of envy and political rent-extraction had been aiming at private equity for quite some time but there is little doubt that Schwarzman and the Blackstone IPO provided them with a much easier target. It’s always harder to attack abstractions than actual people. One of the Okies of The Grapes of Wrath once asked, “Who can we shoot?” Schwarzman accidentally volunteered his head—or, well, claws—for the rifle scope.

But it’s not just the politicians, labor unions and tax-eaters who have Schwarzman in their scopes. Another special interest group is looking askance at Schwarzman—his own industry. According to the Economist, a popular question among private equity hochos is “Well, what’s Schwarzman going to do to clean up this mess?”

The suggestion of the Economist editors is philanthropy. That’s a popular decision among the super-wealthy but we’re not sure it’s the right one. For starters, we can’t remember a single malefactor of great wealth whose reputation was rescued within his lifetime by charitable donations. Most of those who have made huge donations recently—say, Warren Buffett or Bill Gates—were already hugely popular. Schwarzman is no Buffett.

What’s more, there’s little evidence that huge donations to institutional charities are effective at accomplishing the presumed goals of the charities. Schwarzman may simply be throwing good money after bad if he pumps up the coffers of our giant charity industry. So what’s a down-on-his-luck private equity king, who brags about his own skill as a counter-puncher, to do to rescue his rep?

Saving Steve Schwarzman [Economist.com]

After the monumental IPO last month, Blackstone Group may already be an appealing target for private equity, Slate columnist Daniel Gross suggests.

What makes a good target? Slumping stock, healthy margins, lots of cash, valuable brand name, manageable debt, liability in public ownership. Check, check, check, check, check, check.

There's a final bonus to Blackstone taking Blackstone private. Buyout firms pay substantial fees to the investment bankers who steer them toward targets, and help structure, and negotiate deals. Blackstone, of course, has a well-regarded financial advisory unit. So, Blackstone's partners could essentially pay themselves for advising themselves to take Blackstone private.

Before the IPO, Institutional Investor predicted a Blackstone reprivatization in 2012, but with stock down 25% since June, this may be a conservative estimate. BX is trading down 1.75% today at $25.91.

Blackstone, Meet Blackstone [Slate]

Let’s see what two guys (Kurt Andersen and a friend, who asked requested his name be withheld) had to say about the matter:

* Guy New York contributor Kurt Andersen knows who works around private equity “snarls” when he says the name “Steve,” and “blames the current anti-private-equity spasm not on whiny anti-business liberals, but on Steve Schwarzman”

* “The fucking birthday party” (attribution to same “guy”)

* “Where no one gave a toast, by the way, not one” (same party, same guy)

* “We’re where we are right now because of the unbelievable egos of guys running the private-equity firms like Blackstone. They put big targets on their backs by what I consider stupid actions like throwing these big parties.” (same party, different guy—head of the National Venture Capital Association)

* “Ostentatious, churlish, megalomaniacal, tone-deaf—and a hypocritical dissembler to boot.” (Andersen, in cahoots with “guy”)

You’d think that a man who could get Tom Wolfe to accidentally wander in a side door on the floor of the New York Stock Exchange on B-Day, the day his private equity firm went public would get some attention in St. Tropez but apparently you’d think wrong. Oh yes, you’d think wrong (you’d also think: Es ist mir scheiss egal).

On Saturday, Tommy Hilfiger—TOMMY HILFIGER, not Ralph Lauren, but TOMMY HILFIGER— reportedly “drew a bigger crowd of admirers” at Club 55 than Stephen Schwarzman and his wife Christine. We don’t know about you, but we can’t think of anyone we’d rather gawk at/fawn over/ask for an autograph from/tell we’ve loved since he acquired Prime Hospitality and converted thirty-seven Wellesley Inns to the Extended StayAmerica brand than old crab hands. Or can we? Can we list some? What about: Christian Bale, Eric Bana, John Kraskinski, GOB, Paul Rudd.

Actually, that was our LIST. But, really, gets lets serious for a second—you would gladly trample Stephen Schwarzman for a moment with ______?

Riviera Retreat [New York Post]

If you happened to skip out on the Schwarzman party before his 30-minute self-tribute, before the hired orchestra did the Zeppelin cover, or before party favors were handed out, the Schwarzintor has a pocket full o’ reckoning to issue your lowly $5 per crab-claw eating self. After all, what is there left to live for after attending Schwarzman’s 60th Birthday Party to End All Parties (La Fiesta Terminal)?

This was the reasoning of party planner Philip Baloun, who passed on 6/28, shortly after losing all sense of purpose in the grim spectre of Schwarmapalooza. New York Social Diary commemorates Baloun’s passing by adding him to “The List.”

Baloun, pictured here with a girl wearing a purple tablecloth, ninja Martha Stewart and fashion designer Edna Mode from the Incredibles, was the go-to submissive when it came to Wall Street ragers.

Some background – Baloun started out as a high school English teacher and completely freaked out when he turned 30 (in 1976). He ditched his students (right in the middle of the Heart of Darkness unit), “changed his life,” and moved to New York to become a theatrical director (translation – out of the closet, with a punctuation mark). A short three years later, Baloun started his own design firm in New York and the rest, as they say, is inanity history.

According to New York Social Diary, Baloun “became a pioneer in combining forestry, interior design, lighting, exfoliates, carpenters, pipe cleaners, painters, early Bowie LPs, seamstresses, livestock, epidermis and funnel cake into transforming an ordinary room into a palatial confection.”

Baloun’s catalogue of notable ragers included George Soros’ Millennium Party, Saul Steinberg’s $1mm 50th Birthday Bash, a Sandy Weill Sock Hop, a Richard Lefrak C’est Chic Fete, an Alfred Taubman Date Auction, a Steve Cohen Bris and an Evening with Journey featuring Jamie Dimon.

Baloun was not a stranger to his own “artistry,” frequently decorating his own residences (notice the plural). For instance, Baloun acted as contractor, landscape designer, hedge trimmer, decorator and freshly manscaped lawn boy for his own East Hampton house.

Philip Baloun, dead at 61. R.I.P.

Old Rich People Are Productive Normal Members of Society [New York Social Diary’s “The List”]

So much for keeping a low-profile.

Despite criticism he had attracted unwanted attention to his company and the hedge fund industry with his lavish spending and huge parties, Blackstone’s billionaire founder Stephen Schwarzman hit the party scene again last week.

The scene was the New York Yacht Club, where the tony and very old school main hall is decorated with wood paneling and small models of sailboats. Schwarzman was one of the hosts for the party in honor of the 40th birthday of Democratic Rep. Patrick J. Kennedy of Rhode Island, Robert Novak is reporting. The principal host was Ted Kennedy. Other honored guests listed on the invite include David Boies, Norman Hsu, Felix Rohatyn, Bernard Schwartz, and Todd Slotkin. Of course, access to this kind of crowd doesn’t run cheap. Individual tickets cost $1,000. A cool five grand would get you treated as a VIP.

Schwarzman, co-founder and CEO of the Blackstone Group, made newspaper front pages when it was reported he would earn $7.5 billion from the public offering of his private-equity firm. Other big money Democrats listed on the invitation included David Boies, Norman Hsu, Felix Rohatyn, Bernard Schwartz, Todd Slotkin and Kenneth I. Starr. The principal host was the congressman's father, Sen. Edward M. Kennedy.

Schwarzman is better known as a Republican donor and fundraiser. It’s amazing what a change in control on Capitol Hill and a bit of threatened tax legislation can do to create a bi-partisan contributor.

No one-- no one-- loves Blackstone Papa Bear Stephen Schwarzman like we do, so it was with great pleasure that we read the PR wonk job in today’s Journal about the little man. There’s the usual stuff that everyone knows (worked at Lehman, bought Equity Office Properties, has no immunity to chicken pox, threw himself a big birthday party), but a few new, interesting things were revealed. For instance, Schwarzman:

Hates hot food, eating slowly and the knowledge of the market value of shellfish:

He expects lunches consisting of cold soup, a cold entrée such as lobster salad or fresh grilled tuna on salad, followed by dessert, Mr. Zeugin says. He eats the three-course meal within 15 minutes, the chef says. Mr. Zeugin says he often spends $3,000 for a weekend of food for Mr. Schwarzman and his wife, including stone crabs that cost $400, or $40 per claw. (Mr. Schwarzman says he had no idea how much the crabs cost.) Recently, Mr. Zeugin has been ill and is no longer working, although he is still on Mr. Schwarzman's payroll.

Relishes in creating elaborate scenarios that no man, woman, dog or cat could perform, whether on the pitch, in the boardroom or in the bedroom.

Later, for intramural soccer games at Harvard Business School, he devised "elaborate triangular formations that were not flawed in conception but that nobody was capable of executing," says Jeffrey Rosen, Mr. Schwarzman's roommate and now a deputy chairman of investment bank Lazard Freres & Co.

Is Rain Man:

Mr. Schwarzman is exacting in his personal life too. Once, while sunning by the pool at his 11,000-square-foot home in Palm Beach, Fla., he complained to Jean-Pierre Zeugin, his executive chef and estate manager, that an employee wasn't wearing the proper black shoes with his uniform, according to Mr. Zeugin, who says he has great admiration for his boss. Mr. Schwarzman explains that he found the squeak of the rubber soles distracting.

(This Schwarzman, he's a bit of a nut. Someone told me he fired the last guy because his nose whistled when he breathed. Let's say it comes down to you and one other guy. He's got a nice pair of shoes, and you’re squeaking all over the place. Who do you think he's gonna hire?)

Steve Schwarzman’s apartment is giant, huge and “the best l’il apartment in New York City,” writes Michael Gross. But it’s not quite as big or as expensive as a recent profile in The Business describes it.

Gross, who quite literally wrote the book on the building at 740 Park Avenue containing Schwarzman’s apartment, notices that The Business describes the apartment as having 34 bedrooms and a last-selling price of $39 million. Wrong on both counts, according to Gross. It’s not a 34 bedroom apartment. It’s merely a 34 room apartment. (Unless Schwarzman has recently converted all the rooms to bedrooms. In which case, short Blackstone. Schwarzman’s lost it.) And Schwarzman didn’t fork over $39 million. He paid about $10 million less than that.

But if Schwarzman is disappointed that his apartment isn’t quite as big as the fervid imagination of writer Ian Watson would have it, he can at least smile at the fancy-nancy pedigree of his apartment. “Built for Mayflower descendent George Brewster, it was then occupied in turn by John D. Rockefeller Jr. [and] Saul Steinberg,” before passing into the top ‘Stoners hands, Gross writes.

Schwarzman Gets An Upgrade [Michael Gross]
The King of Wall Street goes public [The Business Online]

Is personal animosity standing in the way of Blackstone’s bid for the enthusiast magazine titles Primedia has put on the auction block? That’s what the New York Post’s Keith Kelly claimed in his column yesterday.

Although Blackstone is said to have put in a bid for some or all of the titles—which include Surfing, Motor Trend and similar niche magazines—in the first round of the auction, it may have backed out of bidding in the second round, Kelly reports.

One reason is that Schwarzman and Primedia's chief shareholder, Henry Kravis are bitter rivals on many high-stakes deals.

The deal for the Primedia Magazine Group is expected to fetch over $1 billion.

One source close to the situation said there is "no way" Schwarzman would want to fork over that kind of money to Kravis.

Is it plausible that Steve Schwarzman has personally quashed the Primedia bidding just to avoid giving money to Henry Kravis. We're rating this story a "sell" because it doesn't quite make sense. Why would personal rivalry stand in the way of a second round bid but not the initial bid?

Fat chance [New York Post, second item]

BX.

"Word around Wall Street this morning was that the private-equity firm has settled on BX as its stock-listing handle, after considering a number of two and three-letter monikers," Deal Journal's Dennis Berman reported this afternoon.

Why BX? As in "Bronx?" Or "bitter-ex?" Or maybe "Beware: Crossing?"

"As in bucks. Lots of bucks," Berman writes.

Blackstone’s Ticker Symbol: It’s BX [DealJournal]

Dwight Cass at BreakingViews runs some numbers to figure out how Steve Schwarzman might stand to make hundreds of millions if he reduces his salary to nothing.

A canny accountant might argue that Mr. Schwarzman should draw no salary, to maximize value of his stake. That might also help the firm brush off inevitable fat-cat criticism - and it would benefit its soon-to-be-shareholders, who would likewise enjoy a higher value for the company. In that case, investors in the public markets may find something to like about their long-time critic at Blackstone after all.

When was the last time you heard someone use "compliance culture" in a positive way? Believe it or not, there was a time when creating a "culture of compliance" was all the rage within corporate American and on Wall Street. But it seems far less popular today.

With a bit of distance from the corporate and accounting scandals of the turn of the century, it seems that many observers are more worried that the emphasis on compliance culture may have gone too far. Yesterday, CNBC showed up Maria Bartiromo's interview with Blackstone Group CEO Steve Schwarzman and BlackRock CEO Laurence Fink. What struck us as surprising was not that Schwarzman was critical of compliance culture but that he leveled his criticism so casually, as if his point was obvious. What's more, his point did not meet with any objection from Bartiromo or Fink.

Here's how CNBC describes Schwarzman's remarks:

Schwarzman praised the private equity sector not only for its profitability, but for the "enormous good" it does for the economy. He said that the sector can undertake "certain things" that publicly traded firms cannot, citing the squeamishness that public companies' "emphasis on quarterly earnings" creates.

Schwarzman lamented the timid "compliance culture" engendered by the Sarbanes-Oxley Act, saying it exacerbates the tendency of boards to shy from long-term strategies as they try to "please shareholders" in the short-term.