♪ welcome to bloomberg businessweek. jason: we are inside bloomberg headquarters. trumping up, donald promised to drain the swamp in washington. tim o'brien, his biographer, shows he has done quite the opposite. m and facebook and twitter executives were there last week, promising more transparency. google founder larry tate was

not. he disappeared not just from the nation's capital, but from silicon valley as well. >> and years since the start of the last -- and 10 year since the start of the last financial crisis. where the next one may come from. >> it's a buzz kill, especially for investors who have been enjoying a record bull run. a run, one of the most beloved run ups in history. come to my terminal, this is a really good basic story that i love. sincep 500 going back 1924. this is the longest in history. we are already up on the s&p 500, almost at the 2900 level. intoy interesting heading the fourth quarter, you have a lot of analysts revising up their price target. we have already met those goals so far earlier on in the year. look forward to

potentially but so much behind it in this bull market. this sets the chart up nicely for this cover story in bloomberg businessweek, the most boring bull market ever. funds,he age of index even a boom can feel blah. >> i think it's safe to say it was basically boring mess of the stock markets. .t's one of the retrospectives they would have gladly taken it. a kind ofdoes look at disinfection that is going on. editors is working.

i think that's what we are trying to capture. while passed ball markets have been pretty raucous and pretty , this one hasn't been like that. >> it's interesting you say that. we also say it has been one of the most hated bull markets as it continues to grind higher and higher. you do say that companies are going -- aren't going public like they used to. >> that's probably one of the big features of this market. when you have tons of companies, that's the pace we are comparing two. it's way below it, 75% below it. reasonable people can differ on which is the correct rate.

there's no question that this of these bigone features hasn't been the sexy ipo companies and young companies. there have been big mature companies going public. and companies getting very huge right after going public on facebook. don't think the same celebratory aspect has happened. >> those three letters, ipo, had , three letters that are popular are etf. this whole shift took passive from active. what are the implications of this market? >> a becomes incredible he difficult to write compellingly about.

they are kind of monolithic themselves. kind of a quasi-monopolistic much -- monopolistic company. the rest of the people's investing experience is these passive products, where you have the ultimate buy and hold. ,hey are machine intermediated -- because of the electronic infrastructure of the market. no one totally gets -- the passive realms that are all kind of math experiments with the populist at large. they are not the yahoo! and aol

going up 30% a month with the sort of stuff you had back in the 90's. are tasked with making the cover this week. let's talk about the domestic cover. what went into the thinking here? thinking about ways we don't lean on the cliche is. opportunity that just leans really hard into it. >> i love this cover. something you can't stop looking. , perfect, it's great. >> let's talk about the international cover. magazine is the

known for. very clean but kind of powerful. >> this one took me a while to get. it's a fun one. and the stories are really interesting. >> looking for larry page, he didn't show up in washington with the other tech ceos. >> we use this kind of interface, it all has per a timing and everything came together. >> thank you very much. >> one of the world's best-known investors tells us where the next economic downturn may come from. >> and at a time when tech executives need to be accountable, where is larry? googles larry page is missing, and that's a problem.

♪ >> welcome back bloomberg businessweek. >> you can find us online on

businessweek.com. >> facing probably what is the biggest challenge in its 20 year history and its cofounder is nowhere to be found. a couple of text ceos were up on capitol hill testifying about u.s. election meddling. ceo twitter jack dorsey was there. larry page of google, a no-show. >> an empty chair in washington. the mystery extends to silicon valley where people are saying where is larry? kulaks we spend a lot of time with my colleague. him -- heardard of from him in the past couple of years. the issues that have arisen around the big challenges, the societal challenges, people are asking where is larry page right

now? massive company. >> he is at the ceo of avila best, which works for a number of subsidiaries underneath. a lot of people say we haven't seen him as much as we used to years ago, the reporting suggests he's more withdrawn than ever. more taking non-and emeritus role -- taking on and emeritus role. >> and the societal challenges so interesting to me. the companyse is that, years ago, came out and said don't be evil. they have always put on this cloak in many ways, been good for the world, caring in a more

holistic way than companies typically do. he was a chief architect. how do you circle that square. >> and just present some of the values that he stood for long ago when he founded the company. was quite jarring compared it to jack dorsey. he really has to come out of the shadows and speak to what the values are right now. i think you are completely right. shareholders deserve fan perspectives. -- to serve perspectives.

speed --e perspective perspectives. you spokeeople that to that cell might a are in larry page's inner circle. interesting.y the larger question is whether that is the most relevant to be thinking about. it's not the future that is the challenge but the president of alphabet. helios.called the >> this is amazing. way --e is no better this is just a crazy out there call for them. beckons --ating tube that kenexa san francisco to the mountain view campus.

it sounds crazy, it sounds insane. but those are things that are capturing larry page's focus in the past few years. >> another person who could have sat in that seat is the ceo of google. larry page is the ceo of alphabet. >> just to be clear, sources tell us only larry page was technically invited to the hearing. zuckerberg and others in the senate intelligence midi were fine with that -- gonerk zuckerberg had before several hearings in front of lawmakers. he -- exactly. the ceo of google also declined the opportunity to go. sources indicate the senate would -- he chose also not to

testify. therek there is a bet that facebook and twitter would take most of the hits. >> that is the point i wanted to get to. paid a pretty steep price for not showing up. the senate, the lawmakers essentially doubled down and kept bringing up the absence. do you think they didn't anticipate the blowback or do you think they would have thought right through it? >> it's not really that material, not really that substantive. it,theatrics played against they kept a blank notepad there and kept a microphone in front of it. which is a fascinating symbol

looking for larry page right now. >> on a world where everyone is caught on a cell phone or there are tons of cameras there, that shot became what so many of us remember from that day. >> especially concerning how present ceos are. when you ceo london mosque on a podcast recently smoking it, anda, no way to say jeff bezos, a public facing ceo, where is larry? >> there will be another financial crisis, question is are we ready? --and hedge fund tightened titan has some thoughts on the threat.

i'm jason kelly, and -- i'm jason kelly. -- and i'm carolmassa

massar. week's remarks, talking about too big to fail, remove or 10 years ago this week, lehman brothers collapsed, really triggering the worst financial crisis of that century. now towe better equipped deal with the inevitable best crisis -- inevitable next crisis? >> the question is if there is a crisis and inevitably there will be another one. you can do everything you can to prevent crises but break out what then. do we have the apparatus to stop the crisis once it inevitably starts? partly because of the crisis

itself, what it engendered. what it engendered was a real anger in the public. >> as josh green said, there was no testament justice. >> he was right. people would still be angry. fact that the session ragged on for so long, that was partly because the republicans were not passing the fiscal stimulus. people were in our and put legislation -- congress did. >> what specifically? >> three key measures.

had --eral reserve act which is the provision that to use extension circumstances to help nonbank financial companies bear stearns and the aig. -- with that of circumscribed. fed would have to cook up some kind of justification for dancing credit. you couldn't single out one. a key thing the fdic did during the crisis was push a blanket , covered by the

positive insurance. the fdic said there could be a run of the banks. put in a temporary guarantee. that is not permitted anymore under dodd-frank. provided market to the mutual funds. sort of an alternate way to save and invest. that would not be permitted. show -- of therr crucial firefighting tools. exist. talking tobeen well-known investors during the financial crisis. you did too. what were his observations? >> he does not think we are on the verge of a crisis.

he has several indicators that are not flashing. bridgewater has the depression in 2007, 2008. one, many years from now, he shares the concern of people like tim geithner. >> one of the influential folks -- founded bridgewater, the world's biggest hedge fund and he is one of the most influential voices on all things --ancial and all things we wanted to hear more. >> he doesn't think that we are in a bubble right now. he does see the growing financial and political risks. >> i don't think we are in the

midst right now. when you hit zero interest rate skew have a different type of debt crisis. i think the period we are in is similar to the 1935, 1941. 1929 to 1932, we had a debt crisis on interest rates. that is to print money and buy financial assets. that pushes financial asset process up. that also contributes to a weight -- to a greater wealth gap. as a result in both periods of improving,conomy not

we have populism. the last time we said when was populism popular it would be in that period of time. forward and we say on the next downturn, which will happen probably in a couple of years, we are going to have a different type of downturn. to the one that happened in 1937 to 1943. now andart of the cycle beginning to tight monitor -- beginning to tighten monetary policy. the duration of those assets is lengthened. banks have to be careful not to raise interest rates much faster than it is built into the curve. with that populism we have an issue.

we think about what the next downturn will be like. the next downturn will be different than the one in 2008. theill be one in which social and political problems will be great. i think there will be more conflict. and we are sort of at each other's throats and that. i also worry about the effectiveness and monetary policy because monetary policy has interest rates and we can't lower interest rates as much. it has quantitative easing, the purchase of financial assets to push other assets out and get liquidity in the system. when we have a downturn we are not going to have to be as effective. downturn won't just be debts. it will be health care obligations.

thing, it wille be about us having to sell treasury bonds to the rest of the world. that will also be an issue of two years out. two years out is when i'm worried about. i think about that for these various reasons. >> how bad is it likely to be relative to what we went through in 2008, 2009? >> i think it's more going to grind on. all of these obligations will be problem to be funded. and i think it will be more of a it would be athan debt crisis. >> still to come on "bloomberg the troubles at tesla. they keep coming. but maybe there's a simple solution. the swamp isn't

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>> welcome back to "bloomberg businessweek." i'm jason kelly. >> and i'm carol massar. ahead, elon musk, he needs some help? not necessarily the help you're but he does need someone to check him in check. >> how about a gut check on the in washington? or more specifically, the trump administration. >> and first up with the 10th of the lehman bankruptcy and the financial crisis really looming large this some we got behind-the-scenes thinking from

weber.rg editor joan >> i feel like everybody is back from summer. it's getting busy again. it is busy. what -- >> it never ends. >> so what went into the thinking behind this week's issue? are a couple things we wanted to include. one was this idea that we're 10 brothers,r lehman which reshaped wall street, the financial industry. it for written about basically 10 years now. but it was also an opportunity like pivot forward a little bit and not just talk about lehman brothers, because after all, we're now in the still of what is the longest bull market ever, right? forget what that means. >> and what is your conclusion on that, as you talk -- i mean, an area that obviously bloomberg is uniquely suited to cover. you have the ability to tap this massive amount of talent within the newsroom. what came back from those guys? a phenomenal story by chris nagy. that i thinkements

is profound about this is that even as someone who covers this day-to-day, there's just been nothing ever like this, where it just kind of keeps going and on and on.d and every once in a while, it feels like trump just throws some kindling on the fire and it keeps going. so we don't know where it's going to go. that weof the things asked chris was, like, how are granding to talk to your kids about what we're seeing? we don't know when this is going it will end. and how are we going to look back on this epic ride? feels like 100 years ago that we had big tech names on capitol hill, yet it only about 10 days. >> ha ha! >> what are the implications of story?going >> one of the things that we noticed when washington convened meeting was that there was wasetty prominent seat that vacant. google.

which was really interesting, because this was a moment in time when we think tech would be under the microscope. >> so facebook was there. we have twitter. >> jack dorsey shows up. the google.y in >> literally empty seat. pageid, where is larry right now? which is a question that i think especiallyould ask, perhaps google shareholders, because now -- one of the quotes about "where is larry" is about facebook has been under the microscope. everyone's ire. but not about google. up atf you don't show this meeting and prepare to discuss your business and what you're doing about the modern tech, you're leaving yourself pretty vulnerable. it looks like a major error in hindsight. this was an attempt to actually go find larry, who has not had a about fourview in years. >> great issue. thanks, joel. >> and staying in politics, that into the business

conflicts of the president and the rest of team trump. the executive -- o'brien is the effect editor of bloomberg. a biography of donald trump. this week, tim takes another look at the president and his administration. >> and it's one that many would say is financially conflicted. many in trump's inner circle came with extensive business ties and they maintain them in office. some have been caught doing illegalhat are either or clearly swampy. tim.is more from >> he's filled the swamp with bigger alligators. the promises he made to the voters was he would go to washington and institute codes, governing when members of congress could become ofbyists, the kinds activities lobbyists could engage in. we haven't seen any of that. fact we've seen lobbying and conflicts of interest become cores of the trump

administration. >> i think some folks would say, att a minute, go take a look other administrations. there are always conflicts of interest. what's different this time around? >> in our business week piece, we start with mark twain from age -- the gilded age. you're right. this is not a new problem. we've had situations throughout the entire century that were riddled with corruption or interest.of we begin to have cleaner government in the early 20th hadury but you still scandals in the warren harding administration. there were presidential who were problematic. been don't think there's an administration, certainly in the post-world war ii era, that has had as many conflicts of interest and certainly indictments attached to it as this one. >> one of the people you point out in the administration is streetmilar to our wall

viewers, will boras, who has caught up as much as any like,t official, it feels in a lack of disclosure and a lack of effort to really unwind through his work as an investor before he became the commerce secretary. him in some context for us. >> i think, you know, wilbur great example because i don't think we should say people with deep business experience shouldn't go to washington. we want them in washington. these are talented people. the business class is populated them. i think the argument is, how do you take money out of the in then, so voters public are certain that good decisions are made? has a vas portfolio. he's 80 or so years old. know, he's been in scores of companies. it's almost inevitable that toething that he's going touch in this administration could be attached back to something he had a business in his past.

i think you can say the stuff of years ago should just be left should trust someone to do the right thing. when they still have investments, that argument goes out the window. think this applies to betsy devos too. in both of their cases, they into the administration still retaining lucrative portfolios of actively traded or privately held concerns. example, hese, for owned shipping enterprise that had ties to the chinese government. and another company that did transactions with korea.es based in south just given those, it's a reasonable question to ask, can he negotiate any trade deal with or china, influenced wallet?s in his own betsy devos had investments in for-profit ventures, including a debt collection company that from indebtedy

students. that stuff should just be gone. think it speaks to the lack of process around this administration. they blew off the office of ethics.nt didn't have a good transition team in place, didn't have people saying, you know, it really bad if wilbur ross or betsy devos has this stuff. it's as much a problem with ethics as it also is a problem in bad management. >> another pair of leaders in trouble, this time in the corporate world. we start with elon musk, where in crisis, again and again. >> and the chinese internet attentionnt, global on its leader, revealing problems. >> this is "bloomberg businessweek." ♪

>> welcome back to "bloomberg businessweek." i'm jason kelly. >> and i'm carol massar. online atnd us businessweek.com. >> and on our mobile app. here's a shocker, carol. was in the news this week. elon musk tweeting about

response time. also, the most bullish analyst downgrading the stock. >> and they lost another high-ranking finance official. have suggested that elon musk needs another pair of hands. run theto help him company. >> liam has a simpler solution. needs a new board, period. >> lots of people think, the strain is showing. stories aboutn the live kind of toke on the joint in that recent podcast. but what i'm concerned about is helpat the company, running tesla. this is another idea that's out is needed ist what a chief operating officer or some other safe pair of to help.al hands >> we saw it play out with google. paper, it's sort of an attractive thought. aere's good reason to have

c.o.o., particularly in a manufacturing company. for me it ig fors a deeper problem that you would have to fix. >> and that is governance, right? yes.xing the board, >> why is the board the way it is? it is clearly stocked with people very friendly to this dynamic and, by many accounts, brilliant c.e.o. and entrepreneur. put these folks together, right? >> yes. i think in some ways, it's kind of similar of what you get at tech company that explodes onto the scene. tesla isem with there's a couple other factors. one is, you know, this board really looks like the kind of you might have in a start-up. his brother is still on it. lead independent director goes way back with him. of know, sits on the boards some of his other ventures, you

know, invests in his other ventures. this is antonio gracias. thisou also have obviously other situation where elon musk is the chairman of the board. he's the biggest shareholder in company. and for many people, he is synonomous with tesla. the two.t separate >> and to be fair, it's not unusual that you see this sometimes at a company, right? it's stocked with a lot of buddies. >> right. it's not unusual. know, tesla isu now eight years as a listed company. that,ind of hard to say oh, well, it's a start-up and you've got to make allowances. the technology section, we look at another troubled c.e.o. this is richard lue, the finder of jd.com. he's facing criminal accusations. and the company, which is the rival to al -- under was arrested suspicion of rape.

those legal woes are putting this company at risk. >> j.d. is the sort of number chinaline marketplace in after alibaba. about smaller company, at 38 billion right now. it's a big deal there in china. to they've been trying expand abroad to one degree or now.er for several years so their billionaire founder and lue, has goneard aspen in davos. set up a new york gallery, branded with j.d. swag, that sort of thing. the first time he's really popped the headlines, and theately, for him company, is when he was arrested over labor day weekend. >> what were the charges or the allegations? >> well, on september 4, minneapolis police came out and arrested onen suspicion of rape. then he'd been released with no charges. allowed to go back to beijing.

he hasn't been charged with anything but they said the investigation is not closed. >> it's not clear whether charges will come. gets into kind of the structure of the company and how much control he has. >> yes. this is any question of lue's orng either on the sidelines possibly incarcerated for a significant period of time. there are much bigger ramifications for j.d. than it for many other companies because j.d. is structured as a variable interest entity. that means, in practice, it's relatively rare here in the in., but surprisingly common chinese internet companies. it means that lue and a handful thather key executives j.d. technically controls, most thehe important assets, intellectual property, operating listed -- it.d. has to contract with lue and

dividendsget profits from those assets. >> he's been very much on the big-namerting a lot of investors, people who would be exposed in a pretty meaningful were to gos sideways, right? >> absolutely. yeah. one of the key elements here, what they call key man risks for that lue is, by most accounts, still pretty essential when it comes to with googlel fredericks, which invested -- $600xample, which invested million in j.d. this past june other cent, megacompanies. >> walmart is another key player in all of this. alibaba is very actuallyn and jack ma very up-front, this is a company that's still very much baked has alobal e-commerce, lot more ambitions beyond china. >> absolutely. complicates things again when dealer with a founder who

of thes about 15% outstanding shares, controls about 80% of the voting shares, the dual class structure. of reasons,variety having to do with the structure among other, things, the board of j.d. can't its meet without lue under own bylaws, even if he's been or otherwise incapacitated. >> up next, it's been almost a year since hurricane maria rico.ated puerto that island economy was struggling already. now it's looking at novel ways help fix it. >> and wonders for miami. for otherthe same cities? this is "bloomberg businessweek." ♪

>> welcome back to "bloomberg

businessweek." us on can also listen to the radio on channel 119 and in am 1130.on am 960 in the bay area. section thisic week, we take you to puerto rico. we know, jason, this place is still struggling to come back last year's hurricane, also still struggling to come back from a decades long recession. it's counting on small but transformative industries and ideas to bring back the economy. >> we're talking about technology, move production, even medical marijuana. kristina gives us a survey. >> i think people forget, maria the only disaster that visited that island in 2017. what was atled for largest -- what is the municipal bankruptcy in u.s. history. detroit look like nothing. and before that, the economy was

already on its back, because federal tax break that existed that had lured a ton of pharmaceutical companies to manufacture on the island and there was a 10-year sunset on ended in 2006. and tons and tons, thousands of jobs left the island. were in really bad straits. so now -- >> they gotta figure it out, right? mean,erally, because i the storm blew entire parts of the island away. mean, it destroyed the energy grid, which has to be rebuilt. so now the government is taking this approach of sort of like onhese bets, different kinds of industries. >> i love how they described it kind ofovernors creating a venture capital fun, hopefullyy bets and something becomes a facebook or google. one of the bets they're making is block chain and digital currencies. >> right. the year,rlier in brock pierce, who has become a big name in that company, made

forbes list of richest, you know, crypto billionaires. key of the mighty ducks franchise. wants to create a community in puerto rico of crypto investors. the island has favorable tax status. income tax, and favorable tax on capital gains investments.om >> it's been very attractive to john paulson and a number of big east coast investors as a place residence. >> yes. pierce does reside there now. have weedo apparently. >> the great american weed rush. to be left out of that, right? >> how is that manifesting in puerto rico? towell, the island is trying rebuild on some of that pharma foundation that it had. himself has a degree in biomedical

engineering. wants the university there sort of to turn into kind of an marijuana.center for and also he is -- what he's done is he's made sure that the laws are very clear, so puerto rico had legalized medical marijuana three years ago, but the law was very unclear, so that deterred investment. came in, he, you know, clarified some of that, with a law, and so now we're seeing investment coming in. and we, you know, talked to and the photograph, a grow oldlity inside an government building that has been rehabbed as a marijuana farm. company, called next gen, hopes to be able to expand. onwe're gonna end this week a lighter note. we're gonna take you to the pursuit section.

>> so it started in miami now, hong kong. and the company behind it was getting a lot of requests from what they dido do for particularly miami in other places. because it was a huge part of isning miami into what it now, like a town with many different neighbor neighborhoode full of art, kind of bringing miami back a little bit, to the international scene. of sparking a revival? >> yes, now places that you go luxury storesnd are there. a lot of people point to boswell for that. other cities were approaching this company, like, can you do that here? so the company behind it they callsomething art basel cities, which is sort miniature version of what they do in miami.

they are just doing their first buenos aires. >> what i found so fascinating about this was that we've seen cities over time go for what you therred to in the story as effect, because bill bowe puts this amazing museum and a lot of cities say i want to that.piece of but it doesn't work out so well. >> right. very famously, he had that museum. every has seen it -- everyone has seen it. money veryed their quickly. armally it takes a country or municipality years to get back that money. and it put bill bowe on the map. brought it around. so people since then have thought, okay, the arts and cultural institutions can be the thing that's gonna turn our city around. if the city is struggling or if maybe justou know, wants to go to the next level and if it just sort of hasn't worked.nally >> right. because not all all culture

products have been right.rmative >> our writer has a whole list of -- bill bowe non-effect. >> exactly. one thatia there's cost a billion dollars that immediately had construction problems. a museum in rome that cost over $150 million and the museum faced a budget crisis after that. people really thought that the bill bowe effect was going to it didn't happen in denver or valencia. l.a. did happen in >> it did. and downtown l.a. is sort of another example that people look to. >> another building. >> this is the disney concert hall. and, you know, i mean, a lot of it had to do with the global downturn. you can kind of point to that. but this is, you know, this city a miniature city of that, because you don't have to invest building.on in a you can just use a lot of the funding for the arts that you

your municipal plan and this company comes in with some of the infrastructure. any know how to draw international attention and draw international artists to a city. and hopefully you get some of that.ost from you get some of the attention, some of the investors to come in and check out your city. >> "bloomberg businessweek" is available on newsstands now. online at businessweek.com. what's your must read this week? tim love what we heard from o'brien. that story is really wonderful. he knows a lot about trump, has written -- about donald trump. there is also a visualization component to his story. go on the website, click on the different members of the trump them.nd find out about check it out. your must read? storyoved mark bergen's about, where is larry page? it's very much on the news. been austin carr, he's here for about five minutes. he delivers a story that everyone needs to read to is going on in silicon valley and washington and really with one of the

world's most important companies. more bloomberg television starts right now.

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