Up until the credit crisis, private equity firms had it made. They had plenty of leverage to play with and could load up their acquisition targets with it. So, they could realize a fantastic return on equity, mitigate their own risks, and show that they were the studs of the Street.

Then, all that went away. Credit markets dried up, and private equity companies lost their acquisition fuel. The numbers aren't as big as they used to be, but it looks like the private equity market is back in action.

The private equity industry has been through the worst, but now it seems the situation is taking a turn for the better. Stephen Schwarzman, CEO of Blackstone (NYSE: BX) expects deal flow and IPOs to bounce, saying the economy is showing "more than green shoots" of recovery.

Schwarzman, speaking at the Super Return Middle East conference in Dubai, doesn't expect another slip into recession, but the full recovery will take time, for all the same reasons you've been reading on BloggingStocks for a while: tighter lending standards; uncooperative consumers who won't spend beyond their means and so on.

When the Blackstone Group (NYSE: BX) reported its Q4 results, the company's CEO, Stephen Schwarzman, said that the stock price was "dimwitted." Well, since then, the stock price has surged from $4.87 to $13.44.

What happened? Perhaps it's the fact that the financial system has stabilized.

But, if you take a look at the Q1 results (announced yesterday) for Blackstone, things still look ugly. In fact, on the conference call, President Tony James gave a particularly negative view on the economy. For the most part, it looks like it will take a long while to get things back on track.

No surprise, the Blackstone Group (NYSE: BX) posted a horrible fourth quarter. The firm, which is massive private equity firm, suffered a loss of $827.1 million. Basically, the firm had to recognize that the values of its portfolio are shrinking. Oh, and there will be no cash distribution for the quarter.

Yet, Blackstone's stock spiked 25% to $4.87.

This post is part of our feature on Money Losers of 2008. See all 20.

There's no doubt about it -- times are tough. People are struggling to find work and to pay the bills as the value of their homes and savings dwindle. The poor get poorer, and the rich get richer.

Or do they? It's all relative, of course, but world's billionaires have been taking some big hits too. We take a look at Sheldon Adelson, Kirk Kerkorian, and Lakshmi Mittal in their own separate posts, but here are some other billionaires who have lost billions this year (courtesy of Forbes and Business Sheet).

• Brothers Anil and Mukesh Ambani of India's private conglomerate Reliance lost $32.5 billion and $28.2 billion, respectively.
• Warren Buffett, the Sage of Omaha, lost $16.5 billion. Shares of Berkshire Hathaway Inc. (NYSE: BRK.A) are down about 32% since the beginning of the year.
• Microsoft (NYSE: MSFT) founders Bill Gates and Paul Allen lost $12.3 billion and $2.6 billion, respectively, while CEO Steve Balmer lost $6.5 billion. Shares of Microsoft are down 46% since the beginning of the year.
• Larry Page and Sergey Brin, cofounders of Google Inc. (NYSE: GOOG), lost $11.9 billion and $11.7 billion, respectively, and CEO Eric Schmidt lost $3.8 billion. The share price of Google has fallen 55% since the beginning of the year.
• Larry Ellison, CEO of Oracle Corp. (NASDAQ: ORCL), lost $8.2 billion. Shares of Oracle are down 21% since the beginning of the year.
• Media maven Sumner Redstone lost $7.2 billion. Shares of his private investment firm National Amusements fell 70% this year.

In early December, the powerhouse private equity shop, the Carlyle Group, announced layoffs of 10% of its workforce. Let's face it, there's not much deal making lately.

Well, now it looks like another biggie in private equity is letting go of workers: the Blackstone Group LLP (NYSE: BX).

In all, the cuts are expected to come to 70 positions (the firm has about 1,300 employees), according to Bloomberg.com.

Back in November, Blackstone's chief, Stephen Schwarzman, was actually bullish on things. This was despite a terrible Q3, in which the firm reported losses of $502.5 million, or $0.44 per share.

For the most part, Schwarzman is eyeing some good deals (although, there has yet to be much activity). Also, he thinks there will be lots of growth in restructuring. In fact, General Motors (NYSE: GM) has hired Blackstone to help with restructuring options.

Despite all this, investors are quite skeptical of Blackstone. Simply put, the firm's portfolio write-downs do not seem to reflect the severe economic environment. Then again, Blackstone's shares have continued to languish.

In February of 2007, Blackstone Group (NYSE: BX) boss Stephen Schwarzman spent $3 million on his own birthday party at the Park Avenue Armory. Patti LaBelle and Rod Stewart (singing 'Reason to Believe' perhaps?) provided the entertainment for the 500 guests.

The lavish excess was ill-timed, as the industry went sour shortly thereafter. A few months after that party, Blackstone went public in the $25 per share range. Now the stock trades at less than $9 and the orgy surrounding Schwarzman's $8 billion cashout helped fuel calls for increased regulation of private equity.

Now Schwarzman regrets the whole thing -- or at least the birthday party. Speaking at a conference in New York, he said that "Obviously, I wouldn't have wanted to do that and become, you know, some kind of symbol of sorts of that period of time. Who would ever wish that on themselves? No one."

Indeed. Who would ever want to become a symbol of having enormous amounts of money? How awful.

Despite having lots of cash – and little debt – shares of Blackstone Group LP (NYSE: BX) have collapsed along with the other financials. Over the past year, the stock price has plunged from $29.38 to a recent low of $6.88.

But the firm's uber dealmaker, Stephen Schwarzman, is getting optimistic. At the Super Return Middle East conference, he gave a presentation that extolled the benefits of the US's ambitious – and expensive – plan to get things back on track. Yes, he thinks it's a good idea for the Feds to become equity holders in some of the top US banks.

So, why is this die-hard capitalist turning into a government supporter? Well, I guess the globalization of finance requires new approaches. In fact, Schwarzman mentioned that it was critical that the recent interventions have involved a variety of governments.

What's more, by having a strong government backstop, institutions will have a comfort level with counterparty risks. In other words, it's a good bet that we'll start seeing some risk taking again. And, for Schwarzman, it should also mean a re-emergence of buyout activity, which has been virtually frozen over the past few months..

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website

Despite having lots of cash – and little debt – shares of Blackstone Group LP (NYSE: BX) have collapsed along with the other financials. Over the past year, the stock price has plunged from $29.38 to a recent low of $6.88.

But the firm's uber dealmaker, Stephen Schwarzman, is getting optimistic. At the Super Return Middle East conference, he gave a presentation that extolled the benefits of the US's ambitious – and expensive – plan to get things back on track. Yes, he thinks it's a good idea for the Feds to become equity holders in some of the top US banks.

So, why is this die-hard capitalist turning into a government supporter? Well, I guess the globalization of finance requires new approaches. In fact, Schwarzman mentioned that it was critical that the recent interventions have involved a variety of governments.

What's more, by having a strong government backstop, institutions will have a comfort level with counterparty risks. In other words, it's a good bet that we'll start seeing some risk taking again. And, for Schwarzman, it should also mean a re-emergence of buyout activity, which has been virtually frozen over the past few months..

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website

I'm not sure how management at Lehman Brothers Holdings Inc. (NYSE: LEH) has time to run the business. What's more, with all the turbulence, I'm wondering if many of the employees are working mostly on parsing rumors and fine-tuning resumes.

Of course, this week Lehman got rid of its CFO, Erin Callan and president, Joseph Gregory. The company also raised $6 billion, which was quite dilutive. So from Monday to Friday, the stock price plunged from $33 to $25.81.

Yet, by Friday, things were perking up. The stock price shot up 13.7%. Maurice "Hank" Greenberg, the, who is the former CEO of AIG (NYSE: AIG), said he bought shares. This was also the case with BlackRock (NYSE: BLK) and Putnam Investments.

But there was something else: Wall Street was abuzz with buyout rumors.

In fact, according to a report from CNBC, it looks like the senior management team of Lehman is meeting this weekend (which is a rare thing). Are they talking to possible suitors? Or, is it to review the figures for Q2? Both?

Despite all this, the fact remains that Lehman's potential suitors are also distressed. So, even if there is a deal, the valuation is likely to be muted.

But there is an interesting scenario: Blackstone Group LLP (NYSE: BX) as a buyer or major investor. The firm is well capitalized and may want an investment banking platform. Moreover, the firm's cofounders -- Stephen Schwarzman (CEO) and Peter Peterson (Senior Chairman) -- were formerly with Lehman (back in the 1980s).

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Former Barclaycard Marc Howells can relax a bit. Even though he was forced to quit on the last day of 2007, his comment that the company's results were "like Muslims - some were good, some were Shi'ite" is no longer the most offensive joke uttered by a corporate figure that ended up in the hands of the media in the past 6 months.

According to MarketWatch's David Weidner, Blackstone Group (NYSE: BX) head Stephen Schwarzman actually said the following in a speech to investors in Boca Raton:

"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."

Wow. Just wow. Making jokes about the atomic bomb in a speech to investors is ... ambitious? Weidner points out that "the analogy probably went over pretty well at Blackstone's brand-spanking new Tokyo office," and then proceeds to compare Schwarzman to Marie Antoinette. Ouch.

I'm sure he'll have to issue a tail-between-the-legs apology, but most Blackstone Group shareholders are probably more worried about the billions of dollars in market value that have evaporated since the company's IPO. After hitting a high of $38 on June 22nd, the stock has settled in at right around $19.

Last month, Stephen Schwarzman's Blackstone fund announced that its fourth-quarter earnings for 2007 had plunged a precipitous 89%. What was particularly galling was that this occurred in the same year that the fund released its IPO, for which it received top dollar. Of course, by the time this was announced, Schwarzman had already collected a $5.1 billion paycheck for 2007.

There has been some talk about how Blackstone's declining profits had led to a comparable decline in Schwarzman's fortunes. However, given his considerable 2007 salary, it doesn't seem like he's hurting all that much. In fact, he recently donated $100 million to the New York Public Library; while this is a very impressive gift, it comes with an equally impressive price: the main library building at 42nd Street and Fifth Avenue will now be named the Stephen Schwarzman Building. In return for his munificence, Schwarzman's name will be carved in five separate places on the white marble edifice: thrice on the front of the building and twice on the 42nd Street side. While this will, no doubt, be far more attractive than a graffiti "tag," one cannot escape the feeling that the concept is the same.

One Blackstone investor has recently sued the fund, claiming that, in its IPO documents, it failed to disclose key information about the unimpressive performance of some of its companies. Had this information been made available to investors, they presumably would have had lower expectations for Blackstone and would have paid considerably less for shares in it. In addition to being unethical, the suit avers that this is a violation of federal securities laws.

For me, one of the most interesting things about reading through the financial pages of the newspaper has been the realization that America's economic situation, both in good times and bad, is not a pre-ordained matter of fate. While economic processes, the intervention of various governmental organizations, and good old supply and demand all play their part in determining the direction of the nation, these forces are also not the whole story. A large chunk of the economy can also be tacked up to the personalities of its big players. For example, the failure of Silverado Savings and Loan in the late 1980's was due in no small part to Neil Bush (by the way, we're still paying for the bailout, which was estimated to have cost the American taxpayers $1 billion). Similarly, the Savings and Loan crisis was itself fueled by the amazing Michael Milken, whose ability to "restructure" debt made him the poster boy for 1980's greed. And, after all, who can deny the importance of Ivan Boesky when it comes to demonstrating the seductive nature of insider trading? While it is unreasonable to lay any economic boom or bust at a single person's door, there is no doubt that individuals can strongly influence the economy, both for good and for ill.

Warren Buffett

One person that I've been researching lately is Warren Buffett. The CEO and largest shareholder of Berkshire Hathaway, he is currently listed as the richest person in the world. On the surface, Buffett's business strategy is amazingly simple: he believes in so-called "value investing," in which he finds companies that are undervalued, purchases significant amounts of their stock, and holds on to it until the market comes to its senses and values the company more highly. Of course, while Buffett's strategy is simple in concept, it requires a great deal of financial knowledge and economic muscle to make it work.

What's really gotten to me about Buffett is his surprisingly egalitarian stances on pretty much everything. Although he is almost incalculably wealthy, he chooses to stay in Omaha, where he famously lives in the same house that he has occupied for almost fifty years. His salary is only $100,000, which is low for a senior executive in a holding company; for somebody with Buffett's skills and knowledge base, it borders on the ridiculous. In fact, as Buffett has repeatedly noted, under the current income tax system, he pays far less in taxes than many of his employees.

I've been bearish on The Blackstone Group (NYSE: BX) as a public company since before the IPO for two reason: 1) the IPO had all the hallmarks of a classic top of the market cashout for insiders, and 2) the company had poor corporate governance, leaving insider Stephen Schwarzman in what amounted to complete control of everything, with the shareholders at his mercy.

In The Wall Street Journal, George Anders reports (subscription required) on just how much of a corporate governance chamber pot Blackstone is: "Blackstone's top executives set their own pay, without the checks and balances -- sometimes perfunctory, sometimes real -- set up by other public companies."

Blackstone has no compensation committee, so partners Schwarzman and co-founder Peter Peterson make their own pay decisions.

Perhaps this explains how Schwarzman earned $350 million in 2007, in spite of the evaporation of more than $4 billion in market value since the company's IPO in June.

I know that a lot of investors are looking at Blackstone anew now that is dipped down to the $16 per share range. But without good corporate governance -- or any meaningful corporate governance -- I would still be skeptical about the company.

It's also disappointing that the New York Stock Exchange provides a market for companies that are run for their benefit of their insiders, not their shareholders.

Stephen Schwarzman, CEO of Blackstone Group (NYSE: BX) is donating $100 million to the New York Public Library, according to the New York Times. After Blackstone CEO got some bad press last year about eating $400 worth of crab claws and complaining about the squeaky shoes of his waiters, Blackstone stock had an IPO at $31 -- but it's now trading over 50% below its offering price.

Last month, Schwarzman tried to improve his image in a New Yorker interview, but that just got him more grief. A New York Public Library board member commented that he was not giving to his capacity. Now, for a mere $100 million, Schwarzman will have his name emblazoned on the "venerable lion-guarded New York Public Library building on Fifth Avenue at 42nd Street ."

If there was ever a signal that Blackstone stock is going to sink further, this is it. That and the 89% decline in profits it reported for the final three months of 2007. Also, it is not good news that Blackstone warned that the deep freeze in the credit markets - and, by extension, in the private equity industry - is unlikely to thaw soon.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Blackstone securities.