♪ carol: welcome to "bloomberg businessweek." in this week's issue, reinventing ge. let's go meet the editor. ♪ carol: we are here with the editor of "bloomberg businessweek," ellen pollock. in the global economic section, you write about a capital mystery. meaning capital expenditure. ellen: we look at why companies are investing less in software tools, the percentage of total investment on an annual basis is

down. and so we treat it as a sherlock holmes mystery, complete with an illustration of sherlock holmes and we look at why that may be. it is partly because some people because corporate taxes are too high. it is a variety of reasons. it has led to stagnating wages, stagnating standards of living, productivity down. carol: not helping productivity. ellen: economists are trying to figure out why that is. there is the possibility that companies are returning money to investors rather than buying equipment. but, it is a problem because it has added up to slow growth. david: a story involving online defamation, dune lawrence writing about how she was defamed online. that is one of your reporters here. ellen: this is a story that took courage to write.

dune lawrence wrote a story about how she went online one day and got to a website that labeled her as racist, dumb, bloated on fried chicken. it went on and on. it went back to a guy she interviewed for a story about chinese companies buying u.s. shales in order to get listed on the exchanges. and this man kept coming after her. eventually, he as actually been indicted on a variety of crimes. carol: benjamin wey we have been talking about. ellen: yes. he has been indicted for a number of crimes that have nothing to do with this. but along the way, what dune realized, there was nothing she could do about it. there was nothing she could do to get him to stop.

down, was not taking it facebook was not taking it down, there was very little recourse for her. every time she would check and search her name, there it would be at the top of search results. it has gone on for a couple of years. carol: if you search on general electric, and you guys covered stories on them this week, you might find it is different than it was. ellen: ge is a company our readers are fascinated with. it is sort of, to use it word i do not like to use that much, it is an iconic company. famous for jack welch heading it up. but also, having gone through rough times in recent years, pulled down by its unit, ge capital. jeffrey immelt has been the ceo for quite a while. he has finally hit on what he thinks will be a solution, which he is trying to turn the company more into a software company. he hopes it will be in the top 10 software companies in 2020.

and so he is betting big on software. and in fact there are signs the , company is changing the way it does business. carol: ellen, thank you so much. we actually caught up with a writer of that story. leonard. devin: it is a real transformation. he has been in there since 2001 and people have been waiting for something to happen. i think people have given up. in the last year, they are outperforming the s&p, he is getting rid of financial assets, that caused trouble during the financial crisis. they will be focusing heavily on the industrial side, and also the industrial internet. they have developed an operating system to connect this stuff.

david: we associate ge with refrigerators and jet engines, and jeff comes in and he wanted it to become a software company. it caught a lot of people by surprise. >> it did catch people by surprise, especially the people they try to hire. they set up a software company, started calling people, people did not know they were there. they did not know ge was in the software business. it is a battle they have been fighting. i guess a guy that they were trying to hire, he said, they do not know anything about software. that is a real battle they are fighting. they are still fighting it now. carol: tell us about the software. you write that everyone knows about the internet of things. you talk about ge doing the internet of very big things. software is crucial to that. devin: it is a natural thing. they develop jet engines and how -- and the generators. it is not like an iphone. customers keep these things for years, for decades. especially for like a power generator, three decades. a lot of the money ge makes is in the service contracts. this is a way to optimize. it is called predix. and it is an operating system

like apple's ios, google's android system. it is for big machines. great big machines. and so it is more secure. and they put sensors on the machines and they collect all of this data and they analyze it. and that is what they are hoping. they hope to do this not just for the customers, but for other big manufacturers. david: ge moving to boston, is the premise for that a desire to attract more tech talent? along that route 128 corridor there and boston? devin: the whole thing is trying to attract more millennials. millennials will not want to work in the suburbs. they want to work in the city. you know they have gotten rid of , annual reviews and all of the stuff that dates back to welch and before that. when ge had a different image. it was much tougher, they fired people in the bottom 10% after the annual reviews. so they need to change their image and make themselves more

appealing to the younger people and hopefully more software literate people. carol: they have had a great commercial running. when you see it, you did not know it was general electric. >> i got a job. i will do programming at ge. writing code. that helps machines communicate. >> look at it. devin: that technology, despite what they have done, it is an uphill battle. people -- kids and young people would rather develop apps. at things like that and they don't think ge is cool. that is ge making fun of themselves but acknowledging that they are a software company. hopefully, some people will think they would rather work on locomotives and jet engines rather than work on apps and make pinterest buttons and things like that. that is the ticket. carol: next up, what to do when you or your business is the

target of a social media smear campaign. david: the european art scandal washing up on american shores. carol: the next "house of cards" netflix may have up its sleeve. and, the rap video explaining beijing's development strategy. ♪

♪ david: welcome back. carol: if you have been struggling to understand china's long-term strategy, never fear, beijing has its animated rap for you. ♪ [rapping and foreign-language] carol: you can read about it in this week's global economic section.

it is a three-minute video and it talks about reform and prosperity. ♪ david: pretty amazing. you have the dad waving his forefingers in the air. for the comprehensive. it is a special kind of propaganda, i must say. carol: it does deal with serious issues. david: we talk about the transition the chinese economy is undergoing, between building and the consumer economy, you really see it in this kind of comical video. carol: it promises prosperity for everybody. >> you see it in this video. i got year's day 2014, this e-mail about racism, from this guy who says he will be investigating about the kickbacks i am getting.

from short-sellers to write negative articles. your racism. eventually, it got into the nitty-gritty, sources say you have gained weight due to stress, the important questions. and then, two days later, out came this story. which i found googling myself. david: so i just googled you here on my phone and one of the first things that comes up is a photograph of you, colored in red. it says, racist captured. this virtual paper trail began here and still persists until today. how did it come about and what was he trying to do? dune: he is exploiting the protections that online content gets. which is good. it has created the internet as we have it today. right? but a lot of these -- you know, google cannot be liable for some random content that someone else posts. and that you find from google. carol: let's set the record straight.

are you racist? dune: i am not racist. i swear. carol: do you take kickbacks? dune: no. why would i spend years studying chinese if i just hated the place, you know? david: you have written an article about all of the harm that this has caused. what prompted you to do that? you are not suing him. you decided not to do that. walk us through how this happened to you. dune: i was very naive. for journalists, i should have known more about this. i did not realize that i would find it impossible short of suing him to get the stuff taken off-line. it seemed egregious to me. but you know, twitter, google, facebook, to them, that is censoring the internet. so, i thought it would go away. i figured, eventually, i am a journalist, i am writing step -- new stuff all the time. it did not go away. even after he was indicted, it still did not go away. this guy is under criminal indictment. anti-still manages to do sco.

is, itthe crazy thing does impact you personally. and other victims. david: you are not alone. dune: i am the least of his victims. carol: another scandal has come across the atlantic. at the center of the scandal is a rediscovered masterpiece by leonardo da vinci. keri: we have a russian billionaire, dmitry rybolovlev, and a well-known art dealer, a swiss businessman who runs his own business. yves bouvier. bouvier is a swiss businessman. he runs his businesses out of a tax-free warehouse storage for ultra high-priced art. and you have the russian billionaire accusing him of selling him art and dramatically marking up the price and pocketing the difference. not nice. is and isly, he innocent until proven guilty i want to make that clear. however, this has brought the attention of prosecutors in monaco and prosecutors in the u.s., who are scrutinizing these

are deals. they are looking to see if this could be constituted as fraud. you are looking at whether or not the person selling the heart -- art, has a duty to give them all the information, the exact price, commission, all of that. that is at the heart of the dispute. what role art dealers play in these deals that are -- you know, these are in the millions of dollars. david: is the u.s. looking into this? keri: monaco has arrested and has charged yves with money laundering and fraud. prosecutors have opened up an inquiry looking into the deals, which mr. bouvier is in the middle of. so it could potentially lead to broader charges against him and other people as they go down the road in the investigation. carol: there could be other clients involved. keri: my guess is there is going to be more and more complaints coming out of the woodwork now that it is more public. and also, now that we have u.s. authorities looking into it. carol: if you have watched "house of cards," i have your next fix.

it is called "occupied." we checked in with our editor of a bloomberg businessweek, bret. bret: this is a political thriller from norway, 10 episodes. totally manageable right now. carol: now airing in the u.s. is it doing well? bret: it is doing well. it is on netflix. it is getting a ton of buzz and acclaim. it is set in oslo in the near future. it falls in a climate-science fiction category. the plot is convoluted, it involves oil drilling and gas

drilling. norway decides to stop doing this because of the environment. russia does not went norway to stop doing this. and thus ensues the political drama. david: next, how mathematicians are changing the face of trading in the u.s. stock market. carol: we will take you inside america's deepest mine shaft. david: the university of arizona tells us what happens when your bonuses tied to the rice of oil. -- carol: redefining how men buy clothes. ♪

♪ carol: welcome back. david: bonuses are often tied to a company's performance. the university of arizona does this in an interesting way for its football and basketball coaches.

this is an article in the latest issue of bloomberg businessweek. those bonuses are tied to the price of oil. carol: that could be good or bad. david: we have seen the price of oil decline. those bonuses have dropped 38%. so you have these guys making money with these football teams , they are looking at their bonuses really shrink. carol: universities are trying to attract top talent in terms of coaches. they are trying to figure out different ways to do it. this is a way of transferring the risk to the coaches. which would have done ok, but -- david: these bonuses given by anonymous donors to the university, it really stands out as a school that does this differently than other institutions. carol: i guess we will see over , whether thosee bonuses work out or not. well, you can see what it is

like to be lowered into the deepest mine in america. we caught up with matthew phillips. matthew: almost 7000 feet down from the surface. 1.3 miles down. it is really hot and wet. it is like you are in a tropical rainstorm. they bored through an ancient lake and it is pouring into the mine shaft. they spent a couple of years trying to figure out how to stop the water from coming in. they basically had to just build this huge pumping system to shoot it back up. it is 180 degrees down there. heat to theries the molten core. they have to have a huge refrigeration system to cool it. ways to get hurt, and died potentially and a mine. but rio tinto takes things very seriously, takes safety seriously. i never really felt in danger. david: what is the bet they are making, digging a mine this deep? matthew: they are going to be about $7 billion in by the time they get their first downs of

copper out. the bet is the historic crash we have seen in metal prices is going to rebound. they will have timed it perfectly, they think. by the time it is in production, -- the surplus will be in the way and demand will be rising. it is a bet. they will be $7 billion into it, and analysts are saying i would not be doing that. carol: the hope is there will be demand at some point down the road. matthew: irrespective of what happens to china. they are hooking this to the growing demand in the u.s. they think by the time this is at full capacity they will produce about as much copper as the u.s. imports. so they will close the copper gap. and they think that wind turbines take several tons of copper, lithium-ion batteries are going to need a locked copper. that is what they are hanging this thing on. david: have you heard of bro tailors?

carol: sam explains. sam: these are online retailers that have a certain kind of cocksure swagger to their identity. young,rt of mere the 20-something man and america today. they also specialize in one kind of garment. shorts, rugby shirts, and most of them sell online. they have become successful. carol: even the names for some of these garments is fun. it is a growing business. sam: that is right, companies are taking advantage of how easy it is to be an e-commerce retailer. we are seeing a lot of new of retailer.ind think of almost any garment and there is a company that wants to sell it to you with irreverence, wit, and silliness. they are speaking the same language as their customers.

carol: we are here with ellen. editor of bloomberg businessweek, and there are so many other must-reads in the magazine this week. one of the articles caught our attention. inhas to do with robots europe, especially for senior citizens. ellen: they have a huge problem in that the number of elderly are going to increase dramatically over time. they have decided one of these solutions is robots. companiesnvesting in that create robots. the idea is that a robot will escort you from your room in a nursing home to the dining room. it will help you with your shopping, will have a touchscreen. they are creating a wide variety, hoping robots help patients with alzheimer's. we have someone saying, if you repeat something a million times, the robot will not be annoyed.

carroll: how great is that, right? david: how far along are we? ellen: the sense is some of these projects will come out in the next few years. david: an article about do-it-yourself quant types. ellen: the idea is you don't have to live in new york city or london to be a quant or be investing, using algorithms. we call them free range quants. we interviewed a guy who has created his own algorithms, written his own code. they are doing the kind of trading that big operations in new york are doing. their view is "we can do it, they are using open source coding and they think they can

play with the big boys. carol: diy for coders. it is really kind of interesting and giving the established hedge funds a run for their money. and some of the traders in big firms say -- they cannot compete with us. you may think that, but there are smart people everywhere. carol: in the company section, company news, you have a story about coca-cola and what they are doing with milk. this is kind of an area they are interested in working in. ellen: we call it designer milk. i think they call it the specialty health category. milk that is lower lactose, high calcium, lower sugar. coca-cola is collaborating with a dairy company. there are other companies doing this to, like dean foods is doing this.

very big, very cooperative. the idea is that you are more likely to buy fancy milk. one of the reasons coca-cola is doing it, soft drink sales are down. people are trying to avoid sugary drinks. and those specialty milk sales are up, something like 20%, as regular milk and soft drinks go down. david: that sounds interesting. have you tried this stuff? ellen: no, i have not tried it. i have to admit for me, it is skim milk and nothing else will david: thank you. ellen: thank you. carol: "bloomberg businessweek" is on stands now. we will see you next week. have a great weekend. ♪

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