♪ >> welcome to bloomberg businessweek. i am taylor riggs. >> i am jason kelly. favorite stories, justin trudeau, we spoke about how he is navigating negotiations with president donald trump. >> trade on the forefront, we also go global with one of the most listened to voices on

business and economics. he tells us what to be worried about and what not to be worried about around the world. taylor: with our cover story, some say tears are us. a deep dive into the world's most famous toy store. taylor: and some saying why they didn't have to declare bankruptcy. carol massar spoke to a reporter. >> toys "r" us was really one of the first of the big box stores, started in the late 50's but really came into its own in the 70's and 1980's. started by charles lazarus, who had a simple idea. a lot of people were coming home from world war ii, he served. families andrting were going to have kids and they wanted homes and wanted to fill those homes with lots of things, including toys. so let's sell toys to kids. the first was among

and he was able to spread nationwide, he was the first category killer, meaning a lot of the small neighborhood toy stores went out of business because of toys "r" us. 1994, mr. lazarus steps down. why? i don't know if he recognized the company was at a peak, but he had worked really hard. he was still involved for a couple of years but like a lot of people, decided it might be time to take it easy, let the next successors try. whether or not he knew in the back of his head that walmart was encroaching -- obviously, he knew the market share, but did he see what was about to come? carol: talk about that. a few years later what happens with walmart? later, they have already gone through his two deputies who take their turns as ceo and by 1998, walmart has

overtaken toys "r" us has overtaken toys "r" us as the biggest toy seller in the u.s.. stock price goes down, all of a sudden, they look like they are no longer invincible. carol: the other thing is online. what happened with toys "r" us and online? >> they made a big mistake. they weren't the only company, but they underestimated amazon. at the same time, they trusted amazon and made a deal where they would basically transfer their early website on to amazon and sell through amazon. carol: basically gave away control. >> right, and the opportunity to learn about customers, data, about the supply chain and being able to deliver, what people eventually led to a lawsuit and toys "r" us did get its website back, but they had lost some really crucial years.

carol: talk about what happened in 2004 and 2005. the company looks to sell itself. >> a decide to look for investors and eventually, sell the company to two private equity firms and a real estate trust. that is kkr and for nato -- vornato. >> i assume it involved a lot of debt? >> it was the leveraged buyout era. they didn't do anything so radically different from other big deals at the time. one could -- i shouldn't say no one -- but they couldn't foresee what was to come in the next years and what would make that deal so problematic in hindsight. ande was a lot of debt, toys "r" us obviously had to pay off at least the interest on that every year. in the good years, it was maybe a manageable amount, but there were not many good years.

carol: where are we today? we know they have filed for bankruptcy. this company is done. >> it is, in the u.s., it is done. they have an overseas division, some of those were sold to asian business. toys "r" us will exist outside the u.s., but in the country theymade it what it is, are liquidating everything down to the chairs in their headquarters in new jersey. taylor: we're here with the creative director of the magazine. walk us through the making of the cover. toys "r" us this week. >> it was a great story with a lot of visuals to work with. toys, and we chose something people would recognize quickly. their mascot, jeffrey the giraffe and had him bawling on the cover. jason: how challenging is it when you have these iconic images? it feels like an opportunity, but also a challenge. this one, we had the idea

of toys getting fired from work, so that ended up on the inside of the magazine, which turned fferyreat, but we felt geo was the cleanest, grabbed the viewer and worked well. taylor: the other thing that caught my eyes are the tears. it has been a sad part of the company. how did you come up with that idea. to put him in a situation that is distressed. first we thought he was depressed on his couch, but the tears felt like the cleanest way to do it. jason: it is very evocative. turning to the inner national -- international cover, we have the noted investor, how to fix a fragile system. you chose to use words, but not straight ahead. >> because it is dealing with more abstract concepts, we chose

a type direction and messed up the type. you can see the look of it. inting at this volatility the world and using that in a typographic way. jason: next, evidence much of the world has yet to recover from the great recession. taylor: plus, the most important voting bloc in italy. this is "bloomberg businessweek." ♪

taylor: welcome back, i am taylor riggs. jason: i am jason kelly. you can find us online and on our mobile app. taylor: opening up the remarks section, we got to speak with one of the most influential voices in global economics. advice heasked what would give policymakers around the world. here is what he had to say. >> we have had years of distorted markets. we have had massive liquidity

come into the marketplace, it has felt really good. look at last year, over 20% returns in global markets, we even mades, money on government bonds and all of that was very low volatility. that is not supposed to happen, but it did because we have exceptional circumstances. now, we are slowly exiting exceptional circumstances and it will take some time for markets to realign themselves to more normal patterns. >> one of the phrases you used new the top of this piece, and i too many years, " of insufficiently inclusive growth does more than undermine economic performance and potential, it tears at the fabric of society." that is a pretty sweeping statement. what are the implications of that? mohamed: the simple point i was trying to make was when a economy grows too slowly and the benefits of those growth are smallnd do go to a

segment of the population that is already better off, people get angry, and when people get angry, it puts pressure on the institutions, on the establishment, on the social fabric, on the political system, and on the economy. that is what has happened. when you look at brexit, the antiestablishment candidates, president trump here, president macron -- if you look at what is happening in italy, that is only a reflection of people saying enough is enough, the system hasn't delivered for us and therefore, we are going to change the system. taylor: what would be a good solution for that? mohamed: to grow rapidly, more inclusively so that more people feel they are better off, and problems in glaring the economy and in the politics. that is the best solution. getting there is not a question

of engineering. it is a question of political will. i think the big question for disruptions, is the we are seeing in domestic political systems shakeup the political establishment so much that we get the willingness to implement policies that deliver better outcomes? mark out big question there. it is true for the u.s., europe, and emerging economies. jason: are you seeing early signs across the world that may be happening now that we are a year plus into the trump administration? continue in cannot the new normal as we called it, period of low and insufficiently inclusive growth. things start to break and there is now great awareness of this among both the antiestablishment movement and the establishment movement. second, we have seen progress in the u.s.. you have seen efforts to promote growth. growth has gone to be the number

one issue. you see it happening in europe. there is a lot of hope in france under president macron. you are seeing some early signs of a course correction, but it is important that be sustained. taylor: what you point out is there has been some progress, but it might not be enough. the u.s. has done a good job, macron, but the rest of europe and some emerging markets -- brazil, other countries, still have a ways to go. the u.s. was policy driven. in europe, the result of the natural healing process. economies heal. intensive longer in care, but if you are structurally impaired as europe is, you can walk, but you can't run. the pickup doesn't get sustained. in the emerging worlds, countries were bouncing back from a particular shock. brazil, political shock. india, russia. we failed to see that this

wasn't really a virtual self-feeding cycle, this was some temporary factors and only a few more permanent ones and therefore, the global economy would run out of steam and that is what we are starting to realize today. piece, youyour mentioned how they did not address volatility. almost on purpose, they took a hands-off approach when the volatility earlier this year really spiked up. was not the right approach? the ecb and the fed giving a hands-off review on volatility? mohamed: i think it was because they had conditioned markets too much to buy on dips every time. i had conditioned markets to believe that we live permanently in the low volatility world, and that causes also some this allocation of resources. it causes excess of rick -- risk taking. it is not a good idea to permanently repressed volatility. jason: in the economic section,

we are taking to italy. taylor: our editor tells us what is really troubling rome. >> behind this surprising victory in march for the two really extreme parties is this sense of malaise. the two parties being the five-star movement, which is populist, represents the poor south of italy, which is more right-wing, anti-immigrant, representing more of the wealthy north of italy and the two parties came together and formed if coalition government which will be a little tricky because they differ on a lot of issues. one of the issues they agree on is helping the older worker. is the equivalent of the bernie sanders wing of the democratic party and the donald trump wing of the republican party having to figure out how to govern together. >> there are a handful of issues

in which they see eye to eye and one of them is the for now law, in 2011, the agreed they would try to raise the retirement age in italy because as a society ages, there is a higher share of the population that is out of the job market. being supported by a small tear of working people and that partly goes back to the low birth rate. you can deal with that problem if you raise the retirement age wildlys 2011 reform was heralded as an extent forward for the rest of europe and the world. now, they want to roll that back. let the italians retire younger. how can they do that? if you look at what is going on in their economy, i think about what that will do potentially to pensions and sovereign debt? peter: it raises the cost to the

government, and at the same time the other party is pushing for a flat tax structured to pull in less revenue and the five-star movement is pushing for some guaranteed income to raise spending, so you have pensions, guaranteed income, tax cuts all coming together. carol: how do you pay for that? peter: you don't. the support, these parties agreed on the idea of lower age of retirement. what is interesting is the support of that party has come from younger folks. peter: the five-star movement is well-known to be a youth movement. it is almost like a nonparty party. the lega is more balanced in terms of age, but its weakest support is among the older people and of the population. where youhave parties

voted for us so you have to -- and yet, they are taking advantageous action to the elderly and disadvantageous to the young. jason: next, trudeau on trade and trump. taylor: plus, policies on global economics. this is "bloomberg businessweek." ♪

jason: welcome back, i am jason kelly. taylor: i am taylor riggs. you can listen to us on radio on sirius xm channel 119, and on am 1130 in new york, 106.1 in boston, 99.1 fm in washington, d.c. and am 960 in the bay area. jason: in london on dab mux 3 and in asia on the bloomberg radio plus app. you are here with editor in chief joel weber. inside the magazine, a debrief with justin trudeau.

jolt: it is our flagship interview series with the biggest names we can speak with kerry justin trudeau, head of stating canada is one of them. minister, we spoke to him ahead of the g7 in canada and generated a ton of news out of this. the same day we spoke with him, canada nationalized a pipeline. there is a lot of internal politics that will come of this but he framed it as a trade issue and a trade has become such a sticking point with canada in general since the u.s. and canada are trading partners above any other two countries in the world. jason: to say it is a sticking point is an understatement in the way that justin trudeau has really sharpened his language back to the u.s. after spending a lot of time cozying up to donald trump. g7 is an amazing framework where we have talked to them and trade continues to blow up. now it seems like more of a g

six versus a g1 almost, that g1 being the u.s.. , butr: trade is timely what else did he say about jobs and other things outside the trade story? joel: the big thing he has done is turned canada into a country that the u.s. look like not too long ago. a huge welcoming place and they are kickstarting innovation through ai, trying to diversify workforce. one of the biggest things he will talk about is how proud he is of his cabinet, which is more than half women. the first time that has happened anywhere in the world. it is an outward facing, international message at a moment in time when the u.s. has become much more protectionist, which is something we talk about in the issue. jason: you mentioned the brief is a flagship interview. who are the types of people you have heard from? joel: melinda gates, we are really after people who are game

changers. bigger than life and have the capacity to really affect change and justin trudeau is obviously someone like that. taylor: we focus a lot on global trade this week. it was a big topic with the g-7 meetings going on. jason: in the politics session, how the policies from the trump administration are having a destabilizing effect around the world. taylor: we spoke with editor matthew philips. jason: things keep ratcheting up. were just getting out of the g-7 meetings where secretary of treasury steve mnuchin, who counts himself alone these days and the trump administration as the free trader, was ganged up by a lot of u.s. allies saying what is going on in washington? why are you doing this? we failed to provide exemptions and canadamexico, for terrace on steel and aluminum and they have responded with retaliatory tariffs on a

lot of u.s. goods. through thealk us difference between raising tensions with european union and canada versus the heightened tensions we have with china, as well? toughw: he wanted to get on trade. it was key to his agenda on the campaign. a premise on that was wrapped around pushing against china. are an unfair trade partner and they skirt a lot of established global trade rules established by the wto. what we are seeing now is this across-the-board shot at our allies and people are raising these questions about, how does that affect the situation with china and does that actually to knockour attempts china's momentum down a little bit and does that actually themtage them by allowing to drive a wedge between the u.s. and its allies?

jason: house apprised were you, if at all, by the strength of the rhetoric we heard from some u.s. allies? matthew: not very. the idea trump would come in -- one of the premises of the peace written by a great reporter in beijing was that trump would come in and use the bully pulpit and use trade as his big stick. use the leverage of the $3 trillion or so of foreign goods that the u.s. buys every year as a way to renegotiate these deals with friend and foe alike. i think he expected to get traction on that. i think he expected countries to willingly renegotiate, but that is not what has happened. he has gotten minor concessions, the most of the world has stood its ground and said no, we are not going to do this bilaterally and we are going to respond with reciprocal tariffs ourselves. taylor: is there any fallout

that could have an impact on the primaries and the elections coming up? matthew: the degree to which he has changed the republican party's platform as it relates to trade is pretty astonishing in the span of one election cycle. he has taken what has been for decades the party of free trade and moved it into a situation that has been historically held by the democrats, which is protectionist platform. research pollw that was done that said majority of republicans do not favor free trade agreements, especially compared to democrats who favor free trade agreements more than republicans. there is obviously political components to this but it is not a geopolitical writ large component. it is more focused to u.s. voters in places like

pennsylvania, places like ohio, georgia, that have lost a lot of manufacturing jobs and you hear people who are in these industries -- this, to them, is a big change in what they feel in been a conversation washington for decades that has forgotten them. islor: next, why get hub worth $7.5 billion to microsoft. jason: and where credit card fraud is alive and thriving. taylor: this is "bloomberg businessweek." ♪

♪ jason: welcome back to "bloomberg businessweek." taylor: still ahead, a look at why online merchants are still struggling with fraud. jason: in a different crime, crimes that built one of the most ambitious museums, and outdoor museum in brazil. taylor: to want to go over to the technology sector. a big deal happening in the mma space.

jason: $7.5 billion for this company that is a playground for developers. taylor: a playground for the ceo. he changed his stamp on how he feels about the open source software. jason: we caught up with our tech guru for more. that is a really important thing to developers, developers get very excited about it. i'm sort of like oh my gosh, i can have an unlimited storage. it is such a good tool. at oneably had a chance point to make it into the way that we do files in the future, but it kept us focused on developers. that is a microsoft came in and bought it. come when you about that but we didn't know about this? is a different world? >> this is pretty low level stuff. it could also argue that it is a big idea that no one has figured

out to commoditized yet. unlimited undo. >> also, everyone can share that control. you can have your own version and everybody can work together and meet up in the middle, but you never lose anything. magical to developers and never found the consumer use. you could argue maybe this is why github is getting bought by microsoft instead of being the next microsoft. jason: if you're sitting down in silicon valley at google or facebook or apple, what is your reaction? developer on the underlying software works at google. i think a lot of them are just like ok. you saw it happening, those numbers are no longer crazy. i think it is just like it had to go somewhere, it had trouble getting a ceo. a lot of trouble about the company four years ago. it is a venture capital backed.

there have to be an acquisition or. son: at some point there was going to be some kind of exit? >> exactly. i think everybody said ok. >> the founders or key executives have a stock deal. they're now becoming the biggest shareholders in microsoft. what say might they have in microsoft going forward? >> i don't know. microsoft corporate structure, i don't know. -- when you talk to people coming out of there, it doesn't feel like they are all pointing guns at each other like it used to be. who knows? github is key to it. they pulled off something to the $7.5 billion. -- thatfinitely a new

part of the world is definitely running along the different principles than it was 10 years ago. it is quite a take a while to figure out what is really happening. jason: you had a line where you said if apple makes yachts, microsoft makes a battle ships. >> microsoft makes great tools for developers.it is just such a beats st. apple comes along and says hey i have this one thing and it is really slick. you're going to be pretty happy. there's a real difference between those two companies. it is hard to imagine apple wanting github. it once things along apple's blinds. they are going to tell you how to program. they're happy that you use it, but they have a way they want things to be done. microsoft is like come on, let's all get in here. they have always loved developers.

developers made microsoft into a huge great company. foundationt of their really matters to them. jason: this could be a galvanizing moment for microsoft? >> they are putting some money where their mouth is. they're saying we are going to commit to this. if they blow it up, there went to blow up with all the developers they deeply care about. there is a lot on the line here. it would be pretty bad if they screw things up. jason: retailers really cracked down on fraud in their stores, but now online they are losing tens of billions each year. taylor: it doesn't seem like the probe -- problem is going away anytime soon. >> the head of e-commerce investigation at petsmart, he and his team spend their days in petsmart's headquarters in phoenix and they come through hundreds of transactions that come in through petsmart's website every day looking for

suspicious activity and trying to fair out the fraudsters who have stolen credit cards to buy items from petsmart. >> tell us about the online fraud we are seeing. >> chadha started to look at these transactions. petsmart has a very prosecutorial take on this issue. they want to actually build cases, turn them over to police and actually prosecute these fraudsters. one day last summer they noticed an unusual thing happening where a bunch of fraudsters were ordering dog collars. collars.lectronic dog collars.he shock last summer, he started to notice all of these fraudulent transactions happening and shipping to homes across the country. he is based in free next -- phoenix. policeded to work with

in tucson and when he arrived, when he discovered -- >> a stakeout, essentially. where is the dog collar? >> he is sitting in this hot police car all day, he said he spent the whole day with these police officers waiting for the sky to get home and pick up the delivery. when he goes in to interrogate the guy, he asks what are you doing? the guy said that his job was basically, he found a stop on craigslist or he basically received packages and forwarded them on. they paid him $20 a package and that was the extent of his involvement. chad convinces this guy to give him a list of everything that they were shipping. it was things like dog collars, tents, containment fences, close, shoes backpacks -- cothlothes, shoes, backpacks.

the way they make their profit is buying a tv and selling it. dog collars and tents, those are nothing to resell. police basically started to suspect that this is humna trafficking -- human trafficking. what they found that was the sky was shipping them to freighters that works for companies in the eastern block. it has now been turned over to the fbi, we are working with interpol. it is an insane example where we -- retailers going after these fraudsters can stumble into something darker. this specific i may be a couple steps ahead of the law in some cases, and not always getting exactly what they need from an enforcement perspective. >> yes. chad said that when he first started at this job, he was laughed at. he would call police and say we

have these fraudsters, we need your help. he didn't have the data or any information you need to turn his cases over. now, he works with a bunch of different technology companies that give him the data he needs. he built binders and hands them over to police, doing their job for them. getting them to where they need to go to really prosecute these guys. jason:, the ceo of health care giant cigna sits down with us to talk about the future of health care. taylor: this is "bloomberg businessweek." ♪

♪ jason: welcome back to "bloomberg businessweek." taylor: you can find us online at businessweek.com. big week this week that bloomberg. we had the investor conference. you helped kicked off with a big interview in a health care space. joel: the ceo of cigna, we spoke

on monday night. we tried to talk about strategy at cigna. this is a space that a lot of people are talking about. there is so much disruption. the government is talking about high.sts are one of the things we spend a lot of time talking about was the express scripts merger and why that is happening for cigna. what they think the opportunity there looks like. taylor: what did they say about the changing landscape of health care? such a controversial topic here, what are some of his thoughts about the projections yet go joel: it is one really -- projections? joel: it is one really about costs. he said this is less about an insurance company and more about how can we become more of a wellness company? --t caters toward consumers most consumers are really frustrated with their relationships with their insurance companies. jason: he is a guy very much in the center of everything. here is what he had to say.

>> we see environment in the future were three things exist. one, the products and solutions are more individually designed been designed on averages for large groups. two, the health care professionals and many fractures es are rewarded based on the quality and outcomes of what is delivered based on consumption. three, we engage in the capabilities of what technology can do. we think those three building are credible for the future. >> what are those bright spots at this point? advantage.medicare we have really wonderful pockets around the country of highly engaged, integrated physician groups that are much more actively and copper sensibly managing the patients are customer group. they are treating the whole person and a comprehensive way and able to extend their practices into the home.

at cigna, we do that and about 12 cities around the united states. we like those bright spots, we just want to supercharge them and drive them further.>> let's talk about the opioid prices . it feels like almost every day it becomes clearer and clearer that something massive is going on. immediately ways that you are trying to stem those? >> a little over two years ago, we as a company stepped over to amplify the narrative around the u.s. opioid epidemic. we also came forward with a pretty aggressive pledge to reduce the consumption of pharmaceutical opioids for our customers by 25% in three years. not the customers being actively managed, not the at risk customers, the fatality of our customers across medical and dental. the good news is, we achieve it in 22 months. through our relationships, working position by physician, our clinical community aided

with information, we are reaching out relative to prescribing patterns. in many cases, an individual will become chemically dependent on opioids after 10 days. and a high percentage of cases, over 21 days. we need to be mindful of the number of scripts being written. we came directly to the physicians and dentists. the protocols in advance of that, the cbc protocols have changed relative to lower consumption levels, because it was perceived that there was less risk, but the data was showing the risk was there. why did sigmastat then? in?eren't -- cigna step we weren't invited. we define health and well-being quite broadly. we saw data that suggested that four out of five people recently addicted to heroin were recently addicted to pharmaceutical opioids. we wanted to step ahead of the equation and engage. to do so, our mandate is much

broader than the insurance company. you have to view that you are working hand in glove with the medical profession. you are using information and actual outcomes to be able to drive the results. what are you hearing from regulators, any idea on if they will sign off on the deal and when? >> we are actively engaged with the doj as we go through the process now. both companies are, mentoring to one another. -- complementary to one another. >> are you still happy you are pursuing this company? >> yes. it is a tremendous opportunity to further improve affordability of health care. today, we are rapidly approaching a time frame or almost 25% of all medical costs pharmaceutical. thirds arewo especially pharmaceutical.

lastly, half of that is in the medical side of the equation. you have to have the medical and pharmacy side of the equation linked together. taylor: up next, a brazilian billionaire and his art museum built on taxation and worth. this is "bloomberg businessweek." ♪

♪ taylor: welcome back to "bloomberg businessweek." to us you can also listen on the radio on sirius xm channel 119 and a.m. 11 30 in and a.m. 960 in the bay area. over in the features section, we profiled a man i had never heard about. pretty far field we go to, the brazilian countryside to

a one-of-a-kind museum. taylor: that museum built on tax evasion and child labor. tycoon -- hening is a mining tycoon and a very interesting character. he is on his sixth wife, but apart from the fact that he built one of the world's largest open-air art museums in his backyard, he is unlike other very rich people in that he doesn't like to show off his wealth. he is not interested in yachts and private jets. place in thethis hills of southeastern brazil. this amazing art park and tropical garden where the installations are by all sorts of top contemporary artists. i think it is important to exactlythat he is not an entirely public minded

billionaire. came in part from tax evasion and money laundering. he was convicted for those things late last year. what people did not know about him until this story was published is that he built his fortune, the fortune that he used to create this amazing art park also by breaking environmental and labor laws. when i say environmental laws, i am talking about using illegally the amazontrees from as fuel. when i say labor laws, i am talking about apparently using child labor. >> the darker side that you just described, how is that expected to play out and what is the ultimate effect on him? thehis kind of changes moral cap kilis of the value of this place. has become the

patrimony of the country, but at what cost? i went to the middle of nowhere haveazil where it used to vast fields of eucalyptus that he turned into charcoal for his pig iron plants. i talked to a man who says he was 10 when he started working in the ovens that turn that would into charcoal. .e didn't have any protections he had to claim brought top of the ovens and sometimes burned his feet because all he had was flip flops. >> he is facing financial sanctions. i think he was indicted last year. there are some substantial charges against him. what is the future of some of his companies? the museum, is that up for grabs? theis business has been on decline for a while. he is in iron ore.

obviously, prices have come down a lot. he has also faced some government sanctions for breaking environmental and labor laws. the museum itself looks like it will be fine. brazil, andnt of specifically of the state where the museum is located is very interested in preserving this because millions of tourists have gone and put brazil on the map for contemporary art in a way that it never was before. he actually struck a deal with the government to hand over or transfer ownership of 20 of the most famous artworks at the museum. to a: now we turn feel-good story. a game changer at the end of the magazine. taylor: you sat down with the ceo of mission asset funds. jason: this is a firm that works with new immigrants and gives them a new credit history and credit score. we are a nonprofit

organization based in san francisco. we worked primarily with low income immigrant communities to help develop their financial security. we got started about 11 years ago in san francisco working with immigrant communities here to help them develop their more activeget them in the financial marketplace. programstarted our about how to actually help individuals to develop their financial security, one of the things we noticed was that have you actually do that when in fact, our community was largely un-banked or the vast majority of them had no credit score credit history? we realized that this was a big impediment for actually getting active in the marketplace, when you have to find a creative way to actually help them transition into the financial mainstream. that help them truly build their

financial security. >> it was a marketplace of sorts, just not being organized in a way that could actually be used to create any sort of credit history, is that right? >> that is correct. conventional wisdom added that all the people needed to do was get more financial location and training. in fact, that sort of idea was based on the notion that they were financially illiterate, they didn't know what they were doing, they were spending too much on latte's or whatever it is. theact, we said that in immigrant community, they are actually very financially savvy. people do say that but save in a way that we don't recognize. they manage their money and much more complex ways than we give them credit for. they know more about exchange rates than many of us do. they know a lot that we were not giving them credit. thatf the things we found

there was this tradition of people coming together to lend and save money together in very informal ways very when we saw this activity, this had been going on for millennia across the country and across the world, we basically found a way to actually bring more value to that activity by helping build thatmprove and formalize in a loan process so that we could service that loan and report that to the credit bureaus. i virtue of us reporting to the credit bureaus, we were able to help people build and improve their credit scores, or even if they didn't have a credit history, we were able to establish a credit history for them. >> what is a typical loan amounts and who is a typical customer asking for money? do most people end up paying it back? >> average loan is about $900. they usually have in the lending circle about nine or 10 people. the loan amount is determined by the people in that group. some groups may decide to do

500, others may do 700. others made $1200 or so. they also decide on who goes first and gets the loan on the first try and second try. default is at .7%. in our industry, that is extremely low. to get that 2.7% is like something significant has happened. taylor: "bloomberg businessweek." is available on newsstands now. cover.our global more about the economy. so many warnings. pointing of different cracks that we may have not have been looking for. jason: even the physical cover, shaking words feel like a warning sign. i love private equity, as you know. the story of toys "r" us and what really happened. what is the most famous toy

company in the world, all the things that could have gone wrong really did. it is a fascinating read. more bloomberg television starts right now. ♪

♪ emily: i'm emily chang, this is the best of bloomberg technology , where we bring you all of our top interviews from the week. apple rolls out software upgrades at the worldwide developers conference, and fires a shot across the battle at facebook. we bring you highlights and reactions. to theirrosoft returns developer roots with a $7.5 million, but not all developers