>> welcome to bloomberg>> is as great, i'm carol massar. >> and i'm oliver renick of it largecandal of proportion. >> no patient is left behind because every patient is a gold mine. >> facebook's anti-fake gold mine. all that ahead on bloomberg businessweek. ♪ >> we are here with bloomberg businessweek editor-in-chief make an murky. let's start with the opening remarks. you do a great job summarizing a complex edition but it keeps on

going deeper and that's the political corruption that exists in brazil. tell us how you guys took decades of corruption and synthesized it into this really good piece. show that even decades of corruption is actually sentries old in brazil and sort of deal back the layers as -- of the carwash scandal, which is this latest scandal that's been enveloping brazil. it takes us back to the president before her and its enveloping in the existing president and has the roots in the structure of brazil generally, one of the last countries in western america to have a monarchy that was departed in 1889. but if you go back that far and see the sequence of scandals they have grappled with, it's a natural outgrowth of how the government was set up over not just decades, but centuries now. >> i think when de la rue set was ousted, it brought a lot of

hope that the carwash scandal was behind them. that's not the case. when you are looking through this and when your reporters are assessing this, how do they figure out whether we are on the downswing or this is a scandal that keeps going? what are the signs of an end? >> carwash is a perfect example of every time you thought the boyle has been carter rise, you are exactly right, people thought it was going to be the sign. you have to look at the magnitude of companies involved. are talking about the construction company that has been at the center of this scandal, as well. it reaches to the very highest levels, but also what we do a good job of showing in this piece is that on a local level, how it stretches and help desk it's just a officialdom of life. ofple can earn in those type kickbacks they take.

my favorite quote is along the lines of, anytime you think you are moving into new brazil, you will likely end up in old gazelle. that summarizes the state of affairs. >> it's a great story. you have the company angle and specific examples of politicians and what they use money for and a good history lesson. let's shift gears and talk about the cover story because it's a fantastic look at what i think is a microcosm of a broader conversation that has really gripped politics and markets for the better part of the last couple years, that's the prices for drugs. specifically, you guys are looking at orphan drugs. how exciting was it to see the story come together? >> we are incredibly proud of this story and it reporting that has been done on it. some of the stuff we have uncovered. any sell this drug that is orphan drug, drugs that treat very rare diseases. they can be profitable for pharmaceutical companies and we $500,000 toabout

$700,000 a year per patient. but there are very few people that are affected by this disease that you need the drug for. when you have that model, a conundrum is, it's viewed as a wonder drug for people who have taken it, but the kind of the sales tax that has gone in to make sure the market continues to exist are incredible. we opened that story with an anecdote where a doctor, who had taken one of her patients off the drug, got a call from a sales rep while she was still treating the patient, asking white they are taking the patient off the drug. you should keep them on it. ,hose aggressive sales tactics in an industry known for aggressive sales tactics, are beyond. anecdotes, of great a complex math story behind the pricing as well. we talked to a reporter in bloomfield. >> you write about the pharmaceutical company, alexi on. tell us about the company and

what are the successful for? sincey have been around the early 90's, but they surprised everyone around 2007 when this drug for a very rare disease, so the risk, came out begin are and blockbuster, making almost $3 billion last year, a really tiny number of patients. with they have been known for is taking this one drug and making it an enormous success even though it treats a very small number of patients, under 11,000 patients. it also costs a huge amount of money come up between 500-700,000 dollars. it's really only known for that one drug and work -- big sales even though it only treats rare conditions. >> in layman's terms, what exactly is the disease and are there other sort of products that service it? do they have a monopoly on one of the best

service for or the best drug? how do they quarter this market? >> you have two conditions, both of them are having to do with part of the immune system called the complement system. what soliris does is clamp down on that system. there are two systems that they deal with and in both of them, the koppelman system goes haywire and starts attacking red blood cells and causes really horrific problems. before this drug came around, neither of these really had a drug that was aimed at treating it. like go ondo things dialysis machines for many patients, whose kidneys failed, or get blood transfusions. there is really nothing else on the market right now i'm a though are working on things, because there is nothing else that targets this part of that immune system, which is overreactive in both these conditions. >> this should be a good thing, right? defined a drug that helps

a bunch of people that normally didn't have any other options in terms of treatment. so this should be a good story, but this is a little bit of a twist. what's going on? >> in day. small patientery population and for a long time, these patient populations were elected. companies wanted to make drugs that service people with arthritis or heart disease, that have millions and millions of patients. they can recoup costs, make profit, so it's indicative of a good trend, more often drugs being made, however, what's happened is, there has been a lot of stories late as of soaring drug prices. at the forefront is the orphan drug industry. these drugs cost far more than most other drugs and for instance, in the case of soliris, you are talking almost $700,000 per year.

and that's every year. a lot of these patients are on this drug for life. that's more than the cost of a new home. so there is governments around the world that is groaning under the cost of this drug and how do they pay for this? they have to take the money out of somewhere else. there is a lot of tension now between the cost of these drugs and the folks that have to pay for it. >> turning the orphan drug store into a cover image was the job of bob vargas. >> big story this week, an in-depth look at what goes on the pharmaceutical industry. how did you guess process all the information and condense it into in image? andfter reading the article how they turned this insane amount for this drug, we were thinking about waste to do it and we wanted to get across that this corporate powers are almost forcing this drug on the people that depend on it.

it's actually administered through infusion, so we had this idea of a hand wearing a suit, which is kind of represents the pharmaceutical companies as corporations, squeezing the infusion bag, almost forcing the drug into the patient system. >> did you really use a hand model? >> we did. >> i always am curious when you feel comfortable enough to go to the bloomberg businessweek, it's a brand, you want the name act, but you are ok putting the image at the. how come? >> we do it selectively. that's a much of it that you don't recognize it, but i think our rationale for doing it is that we want the idea to come forward and it gives this effect that we think is nice. >> conventional. >> > right. text isnk the interesting because it's bold in some sense. there's not a lot of writing. >> the photo has a clinical feel

and we didn't want to over the text, syndicate simple. >> we thought about it for a little bit for me landed on this, but once we discussed it up, we knew it was the one. >> the art within the magazine is fantastic as well. >> there was some concern that people may miss it for the sake of advertising, but -- -- why everyone roams the globe. you will find a certain brokerage office angling for their money. >> this is bloomberg businessweek. ♪

>> welcome back to bloomberg businessweek, i'm carol massar. >> and i'm oliver renick. in the future's section, a very english story about an english profession. >> we talked to our respondent.

written --ndent correspondent. the english legal system is divided between solicitors who, more or less, are the equivalent of attorneys in america. they work at firms. they are due in court. barristers are self-employed and they band together in this organization called chambers where they share expenses but not profits. and clerks are middlemen. -- sell thecell services of solicitors. it's unclear who works for food. thearristers employer clark's formally, but if you are a barrister i do have a problematic relationship with your clark, it strangles your supply of work.

it a complicated power dynamic. as with many things in the u k, social clark's is a big factor. quite upper-class sections of society and clark's are working-class, so it's a professional interaction that boundariesial class and that's why it's so fascinating. of that,r on top sometimes clark's can make a lot of money and in some cases more than the barristers. it is a very well-paid it is an relative to the formal qualifications you need to have it, you don't really need any. the clark, chief clark in the chamber is paid 10% of the overall take of the barristers. as chambers expanded, it became unsustainable and was dialed down. most of them are now on some kind of salary and bonus structure. but at the top end, the amounts paid off considerably.

about half a million pounds upward. it's a lot of money. >> not a bad gig. there's a pretty wide range there, as well. where you start out and a lot of these clerks start out very young and they work their way up and become personalities and well-known figures of their own. what are the skills that make a good clerk? >> i use a phrase in the story, wheeler dealer, which is a british phrase. the way we used it in the piece was like a hustler. didn't you also use the word "pimp" atle bit -- little bit? >> to varying degrees of irony, yes. traditionally, it's a dynastic profession historically. they would historically come in

and after living school, to the chambers. but then they work their way up. they have to sell a commodity and they have to know how much barristers are worth. one of the thing a clerk said to me was that barristers are very bad at knowing how much they are worth and clerks handle money negotiations. allarristers and sometimes know how much they are being paid, which is a weird situation. that creates this sort of abdication of response ability. barristers are proud of their independence. they are self-employed. nobody can tell them to tidy their room. that's a begin. even have their power to give their clerks new names in case there is another clark. if you arrived at a junior clerk and someone had the same name is you, you had a new one. english, there is

a brokerage that has a reputation for going after wealthy british. their tactics have landed them in the crosshairs of financial regulators. here's reporter zeke fox. storyeel like this is of coming to a movie theater. but i feel it's already been done. >> all these stories are movies coming soon. world'ssay they are the largest financial advisory firm, whatever that means. they have offices all over the world like hong kong, africa, basically anywhere you might find bruce ex-pats with money. oil workers in dubai. they are there. they hire brits to call other brits and say, never you are offshore, you need to move your money and a save for retirement in this new way. so the world largest financial advisors have a duty to their clients to do what's best. to some extent, but they weren't

necessarily doing either. they were operating on the fringe. >> so what my story is about is that they came to the u.s. a couple years ago. regulations are much looser. the u.s. operation from what i'm told by former brokers, did not comply with u.s. rules. so they were double dipping, charging both upfront commissions and ongoing advisory fees. thinks you could get away with in dubai, but don't fly here. so i'm told that securities and exchange commission is now investigating their u.s. operations. >> nigel queen is the guy behind this since he was like 15 years old. >> he's been very successful, he's british, founded it after working at another offshore brokerage that collapse. he started in hong kong and opened in offices all over the world. it's a successful formula. it's aided by this loophole in british tax law that allowed people in certain situations to

move their pensions to countries like multi-and avoid being taxed when they withdrew the money. >> sounds too good to be true. >> yes, no recommendations here. i'm sure it's complicated to pull it off, but it's better than your average hits. now the u.k. government has change that law and made it more difficult, so it's restructuring. they haven't addressed any allegations that the former employees told me about. allegations?hose >> after i've heard about the investigations, i sorted talking to former employees. they did describe a boiler room type atmosphere in the new york office. weree were come up some taking during the office. it was just a party culture, people were making a lot of money. >> up next, why president trump doesn't actually want his budget passed. >> there is one republican

compass medical may be key to getting any kind of deal done at all. >> this is bloomberg businessweek. ♪

>> welcome back to bloomberg this is good, i'm oliver renick. >> and i'm carol massar. you can also catch us on the radio at series channel 119, and in new york and in 200 in boston, 90 one fm in washington, d.c., a m naik 60 in the bay area. >> and in london and asia on the bloomberg radio plus at the >> president trump's budget isn't expected to get passed congress. >> but that could be what it white house wants. peter coy explains. >> we got a first look at what the budget looks like. give us the rundown on how both sides of the aisle are reacting and what the hope is to accomplish what trumps are. >> the budget of course is very ambitious.

the concept is that trump inks he can wipe out the entire federal budget deficit and produce a surplus like 2027. at the same time that he raises spending on the military and and protects the retirement portion of social security and medicare. >> provide some scope on that. how big of a challenge is that when you talk about wiping out the budget? >> it's a huge challenge because most people who have looked at the budget said the biggest portions of the spending are interest on the debt, which has security,, social medicare, and the military. ,hose are all being set aside written off as being out of bounds, which puts more pressure to do something about the discretionary portion of the budget, which is spending everything on the national weather service to the post the courts and the

state department and on and on and on. >> it's picking away at the tangential things rather than the big buckets of money that need to be addressed? >> right. then the tax side comes. i do think people would say is, if you want to balance the budget, unit -- might need more tax revenue. when we got that one pager about the trump administration's plan for taxation, they said we will cut rates but get economic growth that will get us back to neutral, so we will be revenue neutral. but in the budget i came out this week, they said, we are going to get more tax revenue, which will help us bounce the budget. >> republicans may not be able to test any kind of health care reform without the help of one republican smith from louisiana. >> here's editor matt phillips. rightpolitics, you guess about dr. bill cassidy, first time republican senator from louisiana, shaping up to be a critical vote in the senate,

especially when we talk about health get. >> republic's had 52 seats in the senate, not a big majority. they need 51 to pass anything that health care bill. if conservatives get their way, whatever health care bill would defund planned parenthood, that immediately loses the support of two female senators. it's sits up casserley to beat the potential crucial 50 vote with mike pence, the vice president being the 51st boat. even though he's not on the working group that is working on the group behind closed doors, this gives him a huge amount of leverage come fairly moderate when it comes to health care of it and they need him if they want to do anything. from?t is he come >> he's a louisiana senator, medical doctor, spent a lot of his career working in a charity hospital. he got into politics after hurricane katrina. it shook him seeing how inactive

the government was in taking care of its people. he set up a medical center in an abandoned kmart, spent time in the state senate, then went to the house visiting louisiana. in toy 14,y landrieu so he's been in the senate for two years. >> his mission was to do what trump promised on the campaign trail, he wants more health care for everyone and make it so that they can afford it. >> that's right. in a political savvy move, it tides the president to his words on the campaign trail, to lower costs and broaden coverage, which isn't something that the bill that came out of the house does. in fact, it goes extremely in the opposite direction and it probably result in 20 million people losing coverage and premiums going up. he said we can do the opposite and he has some plans that are pretty radical in terms of the conservative agenda. he wants state to have the

option to keep obamacare, wants to keep a lot of obamacare taxes to pay for some of the stuff and he wants to take lessons from the retirement industry, 401(k) industry, where you auto enroll people in coverage, rather than lead them opt in come at you make them opt out, which will do away with mandate, but still result in a broad poll of young, healthy people that will have lower costs. >> and people are most likely to stay in been opt out. >> that's right. and the evidence is 95% to 65% if you do this default change. a couple insurance companies have done this and they saw premiums go down by 20%. the old and new generations in iran are forcing the country's old guard to reconsider how it governs. >> facebook is trying to curb extremism. this is bloomberg businessweek. ♪

>> welcome back to bloomberg

this is big, i'm oliver renick. >> and i'm carol massar. this but cracks down on extremism. a massive failure of a music festival in the bahamas. >> all that still ahead here on bloomberg business week. ♪ >> we are back with bloomberg businessweek, megan murphy to talk about the magazine. let's go to the economic session in global he can't because similar to how it to you guys did at rate file in brazil, you did a historic file on a

different country, iran, and the politics behind what's happening right now and the different shades of revolution, if you will. >> we wanted to look at the recent reelection, who's viewed as a liberal reformer in iran, and reelected with a large majority earlier this month. we wanted to take that back and how the demographic of supporting him have changed. as we go back to i run tonight and 79, where we had the revolution, islamic order came in. there was a substantial change in the way of life and what you are finding now is that decades later, parts of that revolution are starting to fade a little bit from public life, but you truly among youth, who have very different lifestyles. it's not as strict. as a girl who says they can write around with her boyfriend, which would have been unheard of. but it's still within the islamic order.

it has a platform for a different, modernist, more western way of life every that's starting to bubble forward and push forward in iran. >> it does seem to be a point here as the iranian citizens realize how port -- important it is to get out and vote. what i thought was interesting is that you has also profiled some of the older generation that remembers -- a lot of times we forget that it wasn't the conservatism of the past couple decades -- there was a. longer ago in which there was a sort of shift toward liberalism, but then it reversed and went back. anand in such a way, 1979 is so long ago, and how fundamental that was in a change of life for many iranians. the issue now is that it's also an economic issue, but eagerly with sanctions and the u.s. deal that we struck has really opened the veil to other ways of them to consume western ideas.

there are people who download dead, they have internet. they have more access than they used to have. it's in a notable consequence of society and a digital society. the economics of iran has forced through and people wanting a better life and realizing an existing regime couldn't serve that. it'll be interesting to see come out looking forward, what policies they put in and how powerful he really is in terms of changing the economic structure of the society. >> absolutely. another topic is as we did a good job of getting the polls on, this is . the emergence of people using facebook live, people using facebook newsfeed as a way to disseminate ideas, some are more harmful than others. tell us about the reporting that went into how facebook is fighting the hate speech and terrorism recruitment that happens on the world's most popular social media platform. >> this is one of the most

important issues of our time is can policeplatforms this kind of hate speech, where they had become such a disseminating mechanism of desk far more than its founders anticipated when they started it as a way to connect with friends. it's become an unbelievably powerful way of galvanizing and giving voice to what happened relatively isolated groups, to give platform and send out messages of hate and racism and seen horrible posts of death and killing. for facebook and other companies like it, it's an immense album that they are grappling with mark zuckerberg, they've hired money into this come up with this story tells is how a small band of people with a very dedicated mission of looking at racism in germany on the far right, out using a counter narrative, almost telling a different story, is a way that on a small-scale you

can come back to this kind of speech if you can scale it up. >> i really like the profile of the folks in the company that are combating it. is also interesting to look at the political angle as well, where in germany you have an answer measures, punitive economic measures that facebook doesn't do. we talk to a reporter, germy con. >> facebook has taken a lot of racism as well as other communities for extremist content. from began a, isis videos, right wing hate speech in europe aimed at immigrants. two, as you say, more horrific postings of just very traffic violent content. there was a case in thailand of somebody who filmed himself killing his child. there's a place in cleveland, ohio, so many who uploaded a video of him murdering somebody. these sorts of horrific

incidents have brought a lot of attention to what social be get is and is not doing to police content. >> now that they are seeing that this is something that is not going away overnight, what is facebook doing to combat this? >> facebook is doing a lot of things. the main thing is trying to take down this content when they are made aware of it or it the other thing they are doing, that my story focuses on, most people are not aware of, in a case of facebook they have started funding companies and organizations, charities, to do what is counter narrative. this is essentially content that is designed to take the same kinds of digital tools that you find it humorous groups using to spread their message, and turning it around, using those same tools to spread a counter message, counter propaganda, if you will, that's designed to undercut peoples believe in this extremist content is designed to undercut the message that the

cutest groups are trying to present. >> and basically using the same method that those who use hate speech online use the same tools. >> that's right. you are trying to create viral videos, means, using hashtags, creating content that will spread, often trying to target specific groups of people. hoping they will comment on these posts. either positively or negatively and in some cases, that enables -- experts are enabled in the radicalizing extremists, to enter one-on-one dialogue with people. some of the content is designed to do that, create one-on-one dialogue that will actually change the views of some people that are leaning towards extremism or are part of extreme is groups. some of it is aimed at a general population to try to inoculate the population against falling under some of these extremist viewpoints. >> i find interesting in the stories, you write about this is

similar to what the advertising agency is. is like selling coca-cola you have to approach it in that way. >> that's right. that's a quote in the piece from someone who runs a think tank in london. facebook has given money in order to research what does and doesn't work in terms of counter narrative. he specializes in what a lot of this x-unit content is an tries to reverse engineer it. why does it work? what is it effective? if you figure that out can create counter messaging. you think a lot of it is similar to advertising any product, that you can take a lot of lessons from selling coca-cola to selling anti-isis propaganda. >> up next, indonesia goes to war with its so-called chile market. >>

>> will come back to bloomberg businessweek, i'm oliver renick written >> and i'm carol massar. >> in the businessweek section, indonesia police is breaking up chile cartels. >> we spoke to our editor. heard chile and bank in the same sentence, it's a story about in indonesia, the andral banks have original flesh team that has 500 units that are spread out across the country. we are talking about 7000 inhabited islands that monitor inces of many of the items the basket that are used to track inflation. this is about a particular town that saw the price of chilies triple. all of a sudden, that immediately set off alarms. teams, that is0

not composed of central bankers but also law enforcement and representatives from the national competition agency, they started investigating and they investigation spread to borneo and an adjacent island. and there is a wholesale corner to this market in this one area and they are selling the surprised -- supply of chile that was supposed to be going to local markets. what's important here is that chile is an important part of a diet for people in indonesia. >> it's in everything, breakfast food, bull of paste that you get at restaurants every time you order food. yes. >> when the price spikes, it impacts some a people in indonesia. the majority of the population. how troubling and how expensive did it get for them? >> a triple the price. and half the country lives

either low or really right around the poverty line. are the populations that are most impacted by inflation. that's why the government is so vigilant. behavior andke smuggling has been a particular problem in this country because of the logistics of moving food around. also they are very strict food import control. there are few parties that could affect the price of certain items that's the case with chilis. the regional team is meat anden cartels in it's looking at sugar, so it's an interesting way desk you think of bankers living inside their office, shuffling papers. economic realm come up within that rum, to provide

scope, you have the issue of inflation, higher prices, rice is based on, at least in the u.s., we think of it as a basket of goods. that basket of goods in indonesia is constituted by , so prices go up and you have an inflation issue. why is it so article for the essential bank economically to get this under control? why is inflation such a problem? targetingve inflation 5% a year, but they know they are monitoring for regional differences, soak for this one place where the investigation started, inflation is starting to trend of both the 5% and that's what they began to act. by the standards of venezuela and other developing countries, inflation of 5% is not that much. but when you have a large percent of the population that is super exposed to changes in food prices. if you have a staple, let's

signal tripled in price in the united states, you could see people really reacting to that. in the technology section, washington, d.c. has a new plan to help the city's cabbies compete with uber drivers. >> here's ever reported. trouble comingg getting competition from an industry that was doing a pretty good job of pushing out, but they are starting to adapt. >> that's the hope in washington, d.c.. the local taxi regulator at the end of this summer will actually remove the taxi meters from all caps. make taxis a is to little more like uber in the sense of being nimble. they are going to move -- use smartphones or tablets to make new services that will reinvigorate the tax -- taxi industry there. >> they are stepping in

aggressively to stir up an industry, the taxi industry, the drivers that have been around a long time. >> traditionally, the uber story has been both the taxi companies and the regulators resisting change. at this point, change is not worth resisting. it has come and that there is a real scrambling to figure out come what do taxis offer now? what can they be? >> we are better to have this symbolic shift. there is a lot of pushback. point that turning made regulators and lawmakers in dce say, we have to figure out our own situation? is a getting to plan with existing the taxi situation dwindling? >> it's not doing well. the department of for higher vehicles, use because the taxi commissioner, they removed the taxi work from its name and they have a new director. they are trying something new

come apart is new blood, part is recognition of reality. >> what's their approach? is not like they are going to have one at. they are going have multiple choices for drivers. >> is pretty interesting. ethically what they did is remove meters, there is up process for certification for smart phone apps. if you are an app developer, you would develop an app, show it to the department, if they approve it, and drivers can decide if they use it. they service traditional meters come up but they can also layer on other services that might attract drivers, delivery services for one. maybe. these are things that will happen, were not sure what they look like. >> the taxi industry and the government doesn't have a specified, dedicated technology group to come up with a solution here.

they are just kind of crowdsourcing to a certain extent from programmers saying, you must your best idea and see if we can roll with one. >> sort of a controlled crowdsourcing. actual payments will be handled by square at first, have seven different developers who will make his first generation of apps. there will be a limited at sort for taxi drivers to choose from and we will see if a couple of those rise to the top. they could also add more in the future. >> the next wave of virtual reality entertainment and the company leading the charge from hollywood. music ise fire and what may have been doomed before it began or tried to begin. >> this is bloomberg businessweek. ♪

>> welcome back to bloomberg businessweek, i'm carol massar. >> and i'm oliver renick. you can also catch us on the and 1200 in york

boston, 90 91 fm in washington, d.c. and a m naik 60 in the bay area. london on dab x three and in asia on the bloomberg radio plus at. and the companies and industry section, imax is rolling out but will be the future of movie theaters. >> we are talking about virtual reality parlors. >> i am really excited about your story because it sounds like a lot of fun and it sums like a big new step for bringing virtual reality public. tells about what you are looking at with imax right now. >> earlier this year, imax bought some people into it and center it in l.a. where it is demoing of new the our games that if things will be a format for a new sort of friday night out if you like, or a new form thattdoor entertainment will be an alternative to going

to an imax theater. was an eye-opening experience because today, as a film reporter, you get to see a lot of virtual reality. it's a really important part of the hollywood story. new technologyto and new medium, not just for marketing films, but there are people who really do believe it's going to be a new medium for which to tell stories. beyond just gaming, which it's really known for at the moment. and it felt to me, for the first time, something i could see myself doing. i enjoyed a lot of the multiplayer games. and it's eye-opening. it's apparently doing financially very well for an expert >> is it doing really well? >> it's a pilot program at the moment. it has one center in l.a., and will open one in new york and midtown. >> the infamous failure of the

fire festival is quickly becoming the stuff of legend. >> but it may have never had a chance. >> a lot of us have heard about this disaster that was the fire festival, you guys go into some of the details in business week. indeed, under the could, it's a mess financially as it was for people who tried to take part. tell us what happened. >> there was a festival held in the bahamas to promote this mediacalled fyre. fyre runs this app that you use for booking talent. they help the stressful to raise awareness for their rant and hype it up and get people excited about it. but, when people arrived there at the festival, that they paid $1200 to $1250 to attend a music festival with big names, they arrived to a total disaster. >> what demon total disaster? stay? no no places to

food, what? >> once they arrived, they realized these tense look like disaster shelters. and the luxury villas and fancy accommodations just didn't exist. so they pulled their stuff out of a shipping container, their luggage was brought in that way. and they are removing it from the shipping container that based on the pond. and then they stayed at the tense for a while until they were called over to the mess the, which was just -- types of meals being sold or given to them there were not what they were promised. they were promised gourmet meals come but they got a ham sandwich with cheese on it. and it are repaid for all of it. >> so the participants, the revelers, let's call them. they already paid, they loaded up there wristbands with money,

per instruction from the organization is. island, and they find hurricane relief tents, hansen was. what about the stars? was this thing dead on arrival when people got there? >> it seems that way. liquidate to was one of the headliners there and they pulled out even before the festival began because they said they were going to be able to provide the type of experience expected of them because the place just wasn't professionally done. 182's stuff is actually stuck in the bahamas right now. >> tell me about the revelers planning to attend. from $100,000 packages. gotbilly mcfarland and fyre a couple loans, millions of dollars. >> don't forget ja rule.

>> you are talking about millions of dollars in loans. where did this money go? >> we don't really know. what happened was, a little before the month of the festival, they took out a $4 million loan to help pay for everything. three weeks before the festival, they took out a another $3 million loan to up to $7 million was funded for this festival. who are these people that loan them the money? >> they were going to repay the second loan with rfid payment. they had loaded up thousands of dollars on to these wristbands that were to be used to on-site get upgrades. what set you wanted to rent a boat for a day, you boot your wristband and get a book for your friends. then you go out and you can have fun.

that never happened because the festival was canceled. apparently, nobody has gotten their money back yet and the lender has sued fyre or jeffrey his money back, which he alleges was never repay. >> bloomberg businessweek is available on newsstands now. >> also on bloomberg.com. what you like? >> two stories i wanted to mention. i didn't realize how important chili was to the economy. the london story driven windows into the world. we all learned something. torture. sure. >> also the story about brazil, corruption about different topics. i think we should talk more about it. >> great story. a lot of history there. >> more bloomberg television starts right now. ♪

♪ yousef: welcome to "best of bloomberg markets: middle east." i'm a yousef the mellow dean. -- yousef gamal el-din. a big week for the middle east with a top-drawer visitor and globally watched election and business deals running today -- into the hundreds of billions of dollars. it was a powerful message for reformers and young voters. that opens the door for iran's relations to the outside world. then, attention swung to saudi