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What do you think the impact of the Japanese crisis will be on the economicrecovery and global financial markets?

From a human perspective, it is obviously a tragedy. Economically, I do not think theJapanese crisis will have a major impact on overall recovery. Japan accounts for 8% or 9%

of the global economy. This disaster could slow the growth of Japan's GDP by 2% thisyear, according to most estimates. There will be a particularly sharp drop in growth in thefirst quarter. But growth will resume in Japan next year already because of thereconstruction. Ultimately, this could reduce the overall growth of a quarter point this year,4.5% to 4%, if one refers to forecasting the International Monetary Fund (IMF). This is nota significant event on the scale of the global economy.

What is the main threat to the strength of U.S. recovery?

To me, the major risk for the U.S. recovery is stagnating housing market. According to thelatest figures, house prices are slightly down. Lack of funding limits the scope for privatehome purchases in the United States. Currently, banks have handcuffs. They can not do

anything against borrowers if they default on their loans. The private sector is frozenbecause of regulatory uncertainty on foreclosures. Banks do not want to grant mortgagesbecause their rights are guaranteed. Today, housing starts are at their lowest level for fiftyyears! That is why we have a recovery with slow job creation. We are at a lower level than300,000 new homes a year against a peak of 2 million in 2007 (which had helped create 8million jobs). Without restarting the housing sector and a minimum of 1 to 1.2 millionhomes built annually, it's hard to have a real strong recovery.

Have you lowered your expectation of a rebound by 8% to 10% in property prices in2011?

Yes. When I made this prediction last year was before the reform Dodd-Frank 2010. Since

then, banks have virtually halted lending for home financing because of the lack ofclarification on the rules. This will be difficult to have a rebound in property prices this year.But with any luck, if banks start to reconnect with mortgages, we could have a real estaterecovery in 2012 and 2013.

Does that mean you consider the financial reform of Wall Street as a failure in thisregard?

Yes. It could hinder the recovery. It is a text-heavy (2,000 pages!) And poorly thought to bevery difficult to implement. This reform precipitated mainly driven by an emotional reaction.The result is that it creates numerous conflicts and uncertainties. As Alan Greenspan, Ithink it will create market distortions. The European approach based on Basel III is much

better and more flexible. The temptation to over-regulate is counter-productive. Thefinancial crisis was linked to the fact that banks had excessive leverage and too many riskyassets. The solution is not to try to dictate to banks what they can do or not do, but torequire them to strengthen their capital to absorb potential losses and hold less riskyassets.

Can we say, however, that Wall Street banks have changed their practices bylearning from the crisis?

Absolutely. They have drastically reduced their leverage and have a much moreconservative leverage structure.

Do you think the Obama administration has changed its attitude vis--vis the businesscommunity since the last midterm elections?

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Initially, the Obama administration attempted to increase taxes, the traditional Democraticapproach. They are doing a step back today to further support the private sector to fosterjob creation. Barack Obama has changed its policy and granted aggressive tax incentivesto boost investment and stimulate growth. The weak point remains the financial reform.With a little hope, there will be changes to eliminate the negative aspects of this reform.

What do you think of the criticisms of quantitative easing implemented by the Fed to

stimulate the economy?

Do not forget that we have experienced the worst recession since the Great Depression.This necessitated the use of unconventional means to avoid economic collapse. In thissense, the monetary stimulus and fiscal stimulus provided by the government have beenvery useful to help get the economy get back on track. The problem is that the quantitativerecovery is not without consequences and creates the potential for inflation. Currently wehave no inflation because we still have overcapacity. But the risk exists.It is undeniablethat this monetary expansion is equivalent to running the printing press. It remains to beseen whether the Fed will reduce the recovery before it becomes inflationary.

Who will refinance U.S. since China and Pimco now seem reluctant to buy Treasurybills?

There are serious uncertainties about the exit strategy of the Fed. I'd be very surprised ifthere was a third round of QE. While many economists believe that the U.S. debt remainsat a manageable level, sooner or later it will reach a threshold that will be a problem.Today, our federal debt is still at a relatively reasonable (around 65% of GDP), but if weadd the local debt of the States and local governments are approaching the level of 100%of GDP which begins to be close to that of Greece or Portugal. It is a very serious potentialproblem. The U.S. does not have the ability of unlimited borrowings.

Do you think the dollar could lose its status as the term "safe haven", even if itremains the dominant currency today?

It's a possibility. But we must look at the currencies in relative terms. The UK is committedin the same way that the United States in terms of monetary stimulus. The euro has itsown problems. In these times of uncertainty for paper based currency, I feel more securein holding gold. Given the risks of inflation in three to five years and the volatility of theeuro, gold offers good protection against the paper currencies devaluation and even thepossibility of generating a return on fixed investment. In addition to our investment funds ingold which represents only 3% of our assets under management, we created a class ofshares for our other strategies denominated in gold. And about 40% of our investors havechosen this option. We were the first fund to launch this voluntary investment class onemonth after the launch of the first round of quantitative easing by the Fed in March 2009.

Do you think the gold price has still not reached a plateau?

Indeed. Over time, the price of gold will rise in proportion to the creation of paper dollars.In an inflationary environment where the demand for protection increases, the price of goldcan rise even further. Historically, gold has always been a safe haven against inflation anda safe haven in times of political instability. Today we face both risks.

How do you explain the accusations of destabilization of the euro you been in thefall of 2009 when your fund has been cited in a survey by the Department ofJustice?

It was a total misunderstanding. First, we were not present at the so-called "lunch ideas,"

where we discussed the euro. Above all, we're not a macro fund and we take no positionon the currency. The European Directive on hedge funds has undoubtedly helped to clarifyour strategy and our position through a better dialogue with European authorities. On the

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crisis of the euro, I think it is limited to Greece, Ireland and Portugal and I am quiteoptimistic about the stabilization plan implemented.

How do you respond to critics on the excessive size of hedge funds?

Actually, I see no reason to worry about our size or our excessive influence. Although weare the third largest hedge fund with $ 36 billion in assets, we are 100 times smaller than

BlackRock, which manages $ 3,000 billion. We are very small in terms of assetmanagement. Our specialty is to invest in the event arbitrage. In recent years, our maingoal has been to help companies avoid bankruptcy or emerge from bankruptcy, or to helpthem repay their debts to recapitalize. In total, we invested over 20 billion dollars over thepast two years to help companies restructure, both in Europe and the United States, andemerge stronger from the recession.