♪ carol: welcome to "bloomberg businessweek." jason: we are here inside bloomberg headquarters in new york. carol: donald trump promised to drain the swamp in washington. tim o'brien, his biographer shows he has done the opposite. jason: facebook and twitter executives were in washington promising more transparency. google founder larry page has all but disappeared.

carol: as we mark 10 years since the start of the last financial crisis, ray dalio has plenty to say. jason: it is a bit of a buzz kill, especially for investors who have been in equity markets. carol: taylor riggs, what a ride. taylor: come into my terminal. this is just one of the basic market stories i love. i am going back to 1924. we have a regression line. already up on the s&p 500. and caroline jason, it's really interesting heading into the fourth quarter already revising up their price target. goalseady met those earlier in the year. jason: with so much behind us in

this bull market already. this sets the chart up nicely for the cover story in "bloomberg businessweek." "the most boring bull market ever." carol: even a boom can feel kind of blah. chris: i think it is probably safe to say we are looking at the boring quality of the stock markets over the last 10 years. the story is one of these retrospectives. when i say boring, some people get a little bit upset. boring was exactly what people were hoping for this time 10 years ago and they would have gladly have taken it. the story looks at a kind of disaffection that has gone on in the stock market. this is changing nature. one of the editors used the word

bloodless to describe the bull market. i think this was the theme we were trying to capture. while past bull markets have been pretty raucous and pretty celebratory, but this one has not been like that. on the part of companies themselves, there has been a kind of reluctance to get involved. carol: you say boring, but i think there has been the most hated bull market. it continues to grind higher. you use the word disaffection. you do say companies are not going public like they used to. chris: that is one of the big features. it's debatable as to what the anomaly is. when you have tons of companies going public in the 90's, that's the piece we are comparing it to. it's a way below, like 75% below it. reasonable people can differ on the correct rate, but there is

no question with this bull market -- one of its big features has not been the sexy ipo companies doubling in a day. there really hasn't been corresponding versions of that. there have been mature companies going public, companies getting huge right after going public like facebook. but i don't think the same kind of celebratory aspect has happened. and there's a bunch of reasons for that we get to in the story. jason: if ipo are three letters are less popular, three letters that have been very popular are etf, this shift from passive to active. -- to passive from active. what are the applications -- the implications? chris: from a journalistic perspective, you have this sort of monolithic structure in the stock market. not many people own individual stocks. there aren't sort of -- there's

the faangs, but they are monolithic, all kind of quasi-monopolies that get bigger and bigger. this some degree you run out of things to say about them. and the rest of the people's investing experience, it's as you say, it's these are passive -- these passive products. the ultimate buy and hold. they are machine intermediated etf's. they are possible because of the electronic infrastructure of the market. sort of the most interesting thing is they give themselves to these quantum strategies -- strategies no one gets, things like smart beta, and risk parity that are all mathematical experiments to the populace. but they are not the yahoo! and aol going 30% a month, which is

what you had back in the 90's. carol: we are here with the creative director of "bloomberg businessweek." you were tasked with creative -- with a couple of covers this week. this one is all about the long bull run. chris: we were thinking about ways we don't lean on the cliches of the business world, but once in a while we find opportunities to lean hard into it. carol: you are having some fun with discover. -- with this cover. chris: it is the dumbest way to make the joke, and it works really well. something about it you can't stop looking. carol: it makes the bull really long once we did it. we were like, perfect -- it makes the bull really long. once we did it, we were like, perfect. carol: this one is simplistic, clean but powerful.

chris: it took me a long time to get upon, that get the pun -- get the pun, but it is clean and works right well, nd the story works perfectly. carol: it talks about how you cannot find larry page in silicon valley. a very clever cover. jason: ahead, ray dalio tells us where the next economic downturn may come from. carol: and when tech executives need to act accountable, where is larry page? jason: this is "bloomberg businessweek." ♪

♪ carol: welcome back to "bloomberg businessweek." jason: you can visit us online. carol: and our mobile app.

jason: google is facing one of the biggest challenges in its 20 year history. its cofounder is nowhere to be found. carol: tech ceos were up on capitol hill testifying about election meddling. jack dorsey and sheryl sandberg were there. larry page, a no show. jason: an empty chair in washington, but the mystery extends to silicon valley. austin: we spent a lot of time with my colleague trying to figure out where he is. no one has heard from him in the past couple of years, especially with the challenges facing google and alphabet right now. a lot of google employees are asking that same question.

carol: he runs this massive company. is he not at headquarters? austin: he is the ceo of alphabet. in terms of how involved he is in the day today, that is vague. people are saying we have not seen him as much as we did two years ago. reports are suggesting he is more withdrawn than ever. google disputes this, but it is quite clear he is not involved in the more societal challenges. jason: the societal challenge thing is so interesting. this is a company that came out and said years ago, don't be evil. they have put on this cloak in many ways, be good for the world, care in a much more holistic way.

he was the chief architect of all about with his cofounder, and created this company that is admired in many ways. for him to be absent at this moment seems especially conspicuous. how do you circle that square? austin: i agree. this should have been a home run pitch for larry page to show up and represent the values he stood for. that absence was quite jarring compared to jack dorsey and sheryl sandberg being there. i don't know how to square that. he has to come out of the shadows and speak to what his values are right now, whether that don't be evil model has evolved at the company, but you are right that shareholders deserve answers. i don't think anyone can tell you what larry page thinks about these issues. carol: there are so many

factoids or people you spoke to that sound like larry page's inner circle. what are they saying about what he is up to? austin: he has always been more attracted to the more futuristic projects. the larger question is whether that is the most relevant thing to be thinking about right now. maybe the present is the challenge, not the future. in the story, we talk about a hyperloop for bikes. this is a large floating tube they envision connecting san francisco to their mountain view campus, in which bicycles would be propelled by a mix of oxygen and helium at faster speeds.

those are the things that are capturing larry page's focus. jason: another person who could have sat in that seat is the ceo of google. where is sundar? austin: larry page was only officially invited. mark zuckerberg, the senate intelligence committee -- jason: and mark zuckerberg had testified previously. which may have been the reason sheryl mated to this hearing. google also declined the opportunity to go. sources indicate the senate would have been fine with sundar presenting, but he also chose

not to go. there was a thought that facebook and twitter would take most of the hits in their absence, but that turned out to be the complete opposite. jason: they paid a steep price for not showing up. carol: that did not happen. jason: lawmakers doubled down and kept bringing up the absence. do you think they didn't anticipate the blowback? austin: there is no doubt that perhaps they didn't go to the senate hearing because of the theatrics and showboating. it is not really that material, but some of those theatrics played against them. they set up that chair for larry page, they had the place card for google and kept a blank notepad and a microphone there, muted the whole time. a fascinating symbol for looking at larry page right now.

carol: in a world where everything is caught on a cell phone, there were also lots of cameras there. so many of us remembered that shot from that day. austin: especially compared to how present ceos are today, with elon musk going on a podcast smoking marijuana, and jeff bezos, a public facing ceo, where is larry? jason: coming up, another financial crisis. are we ready? carol: ray dalio has some thoughts on tomorrow's threat. this is "bloomberg businessweek." ♪

jason: welcome back. carol: you can listen to us on radio on sirius xm, in new york, boston, washington, d.c. --

>> jason: and in the bay area and in london. carol: 10 years ago this week, lehman brothers collapsed. triggering the worst financial crisis in about a century. jason: one of the big questions everyone is asking -- are we better equipped to deal with the inevitable next crisis? carroll: peter coy read through a lot of research. here's what he found. >> if there is a crisis, and inevitably there will be another one. you can do everything you can to prevent them, but they are going to break out. what then? the focus of the story is on the what to then part. to stopve the apparatus a crisis once and inevitably starts. a littlen is we are bit less prepared in that department than we were before. jason: why? peter: partly because of what

the crisis engendered. what it engendered is a real anger in the public. out whatuys got bailed a good guys, the little guys suffer the consequences. >> there was no old testament justice. peter: right. even if they had meted old testament justice, people would still be angry. the recession dragged on for so long because the republicans were not passing the fiscal stimulus the democrats thought. people were and are angry. they put that anger into legislation, congress did. it significantly tied the hands of regulators to deal with future crises. carol: what specifically? peter: the federal reserve gets something, a provision that

allows them under unusual exigent circumstances to help non-bank financial companies bear sterns and aig, both of which were rescued. that has been circumscribed. not under the same terms. today the fed would have to cook up some kind of justification about why it was advancing credit or some other paid class of financial institution. >> you said three things, what are the other two? peter: the fdic issued a blanket guarantee of all bank liabilities. we know that banks are liable to depositors, covered by deposit insurance. as always other creditors to the

banks don't get any special treatment. but there could be a run of the banks, even if depositors are protected. that is not permitted anymore under dodd-frank. is the treasury department in the fall of 2008 providing major help to the money market mutual funds, which is part of the shadow baking system. sort of an alternate way for people to save and invest. that would not be permitted the same way today as it was back then. three of the crucial firefighting tools don't exist. >> all this weekend at bloomberg, we have been talking to well-known investors who were there during the financial crisis, getting a perspective of where they are. you did too. he runs the world's largest hedge fund. >> he does not think we are on the verge of a crisis.

i think he's right about that. he points out that he has indicators not flashing. -- bridgewater has a depression gauge. it's not on now. one, it coulde come many years from now, he shares the concern of people like tim geithner, that we need those firefighting tools. jason: one of the influential folks peter talked to was ray dalio. he of course founded bridgewater, the world's biggest hedge fund and he is one of the world's most influential voices on all things financial and investing. he has concerns about the ability to fight the next financial crisis. we wanted to hear more, so we asked him to stop by. carol: he does not think we are in a bubble. he does see growing financial and political risk that reminds him of a previous era. ray: i don't think we are in the midst of another bubble.

when you hit zero interest rates, you have a different type of debt crisis. you are more likely to have a depression. this is similar to the 1935-1940 period. the me explain that in a minute. 1929-1932, we had a debt crisis and interest rates hit zero. 2007-2009, the same thing. the only thing for banks to do is print money and buy financial assets, which pushes asset prices up and puts a lot of liquidity in, and contributes to a greater wealth cap. those who own night -- own financial assets -- as a result in both periods of , time, the economy did not

improve for a large segment of the population, we have populism. the last time we would say when populism was popular would be in that period. that populism issue is an important issue. as we look forward and we say when the next downturn comes, which will probably happen in a couple of years, we are going to have a different type of downturn, similar to the one that happened in 1937-1940. we are in the part of the cycle that the central banks, in varying degrees, are beginning to tighten monetary policy. asset prices are sensitive to monetary policy is the duration of those assets has lengthened. central banks need to be careful not to raise interest rates much faster than is built into the curve.

with that populism we have an issue. when you think about the next downturn, it will be very different than the one in 2008. it will be one in which the social and political problems will be great, because of that wealth gap and populism, i think there will be more conflict. right now times are good and we are at each other's throats. i worry about the effectiveness of monetary policy reversing that. monetary policy has interest rates, and we can't lower interest rates as much. and this has quantitative easing, the purchase of financial assets, to push other financial assets out and get it into the system. and that is at its maximum. downturn, itve a will not be as effective. the downturn in our form of debt crisis won't just be debts. it will be pension and health-care obligations and unfunded obligations. i think it will be about us

having to sell a lot of treasury bonds to the rest of the world. that will be an issue about two years out. two years out is what i am worried about. i would think for these various reasons. erik: speaking in financial terms, if we look at what you are seeing through the lens of the markets, how bad is it likely to be relative to what we went through in 2008-2009? ray: i don't think it is going to be as severe. i think it will grind on. all of these obligations will be a problem for funding. it will be more of a dollar crisis than a debt crisis. jason: to come, the troubles at tesla. maybe there is a solution. carol: the swamp keeps building up.

jason: this is "bloomberg businessweek." ♪

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♪ jason: welcome back to "bloomberg businessweek." carol: elon musk need some help. he needs someone to keep them in check. jason: how about a gut check on the swamp in washington? carol: with the 10th anniversary of the financial crisis looming large, we went behind the scenes with joel webber.

carol: everyone is back from summer. it is getting busy. what is the thinking behind this week's issue? joel: we are 10 years after lehman brothers, which reshaped wall street and the financial industry. we have written about it for basically 10 years. it was an opportunity to move forward a little bit. we are now in the mist of what is the longest bull market ever. let's not forget what that means. jason: what is your conclusion on that? bloomberg is uniquely suited to cover this. you have the ability to tap this massive amount of talent in the newsroom. joel: there is a phenomenal story by the head of the u.s. equities team.

even as someone who covers this day-to-day, there has been nothing like this, where this keeps going and drags on and on. every so often trumps throw some -- trumps throw some kindling on the fire. we don't know where this is going to go. we asked chris, how are you going to talk to your grandkids about what we are seeing? how are we going to look back on this? jason: it also feels like 100 years ago we had big tech names on capitol hill. it was only about 10 days. what are the implications of that story? joel: when washington convened that meeting, there was a pretty prominent seat that was vacant -- google. it was interesting. this was a moment in time we

thought tech would be under the microscope in a new way it has never been. carol: sheryl sandberg and jack dorsey show up. no one from google. joel: we said, there is larry page right now? -- where is larry page right now? that is a question everyone should ask, especially google shareholders. story is about facebook has been under the microscope. now what about google? if you don't show up at this meeting and prepare to discuss your business and what you are climate,ut the modern you leave yourself vulnerable, it looks like a major error. this was an attempt to go find larry, who has not had a press interview in about four years. jason: thank you. and that in-depth dive into the

business conflict of the president and the rest of team trump. tim o'brien is the executive editor of numbered opinion. he also knows a thing or two about the president, having written a biography about donald trump. look at the takes a president and his administration. carol: one would say the administration is financially conflicted. many in trump's inner circle came into the campaign with extensive business ties and have maintained them in office. some were caught doing things illegal or swampy. here is more from tim. tim: he has filled the swamp with bigger alligators. one of the promises he made to voters is that he would go into washington and implement new ethics. the kinds of activities lobbyists would engage in. we haven't seen any of that. we have seen lobbying and graphics of interest become

problematic course of the trouble administration. carol: some folks would say, take a look at other administrations. there are always conflicts of interest. what is different this time? tim: we start with mark twain from the gilded age in our iece. not a new problem. the 19th century riddled with corruption and conflicts of interest. you had scandals in the warren harding administration. relatives were problematic, such as roger and billy clinton. but i don't think there has been an end administration, especially in the post-world war ii era that has as many comforts of interest and certainly indictments attached to it as this one. this is in a class by itself.

one of the people you pointed out is -- jason: you point out wilbur ross has been caught up as much as any cabinet official in a lack of disclosure and a lack of effort to really unwind what he owned through his work as an investor before he became the commerce secretary. put him in some context. tim: wilbur ross is a great example. we shouldn't say people with deep business experience shouldn't go to washington. we want them in washington. these are creative, talented people. the argument is how you take money out of the equation so the voters and the public is certain good decisions are made? wilbur ross has a vast portfolio. he is around 80 years old. he has been in scores of companies. it is almost inevitable something he will touch in this administration could be attached

back to a business link in his past. you could say the stuff of years ago could be left aside and someone could do the right thing. when they still have investments, the argument goes out the window. this also applies to betsy devos. they came into the administration still retaining lucrative portfolios of actively traded companies or privately held concerns. in ross's case, he owned a shipping enterprise that had ties to the chinese government. there was another company that did steal transactions with companies based in south korea. it is a question to ask, can he negotiate a trade deal with south korea or china uninfluenced by what is in his own wallet? betsy devos has had investments in for-profit education ventures, including a company that collects money from indebted students, which had a contract with the department of education, which she was

overseeing. that stuff should just be gone. there was no transition team whispering that says, this looks -- whispering, this looks really bad. it's as much a problem with ethics as it is a problem with bad management. jason: another pair of leaders in trouble in the corporate world. we start with elon musk where tesla is in crisis again and again. carol: and the head of jd.com. global attention on its leader. jason: this is "bloomberg businessweek."

jason: welcome back. carol: you can find us online. jason: and our mobile app. >> tesla was in the news this week. musk was tweeting about response

times. the stock was downgraded. carol: and the company lost another high-ranking finance official. maybe musk needs another pair of hands. jason: we have another solution -- musk needs a new board. >> lots of people think the strain is showing. there was the live to of the joint on that recent podcast. this is another idea that's out there now. what's needed is a chief operating officer. carol: an adult in the room. >> on paper it's an attractive thought.

there's good reason to have a clo in a manufacturing company -- coo in a manufacturing company. but it ignores a deeper problem you would have to fix for that to work. jason: governance. >> fixing the board. jason: why is the board the way it is? it is stocked with people very friendly to this dynamic, by many accounts brilliant ceo. he put these folks together, right? >> it's similar to what you get with any kind of tech darling company that explodes onto the scene. i think the problem is with a couple of other factors. one is this board really looks like the board you would have at a startup. his brother is still on it and the independent director goes way back with him.

he sits on the board of some of his other ventures. jason: antonio. liam: you have this other situation where musk's the chairman of the board into the biggest shareholder in the company and for many people synonymous with tesla. carol: it is not unusual you see this sometimes, where the board is stocked with a lot of buddies of the ceo. liam: tesla is now eight years as a listed company. it is hard to call it a startup. jason: we look at another troubled ceo, richard liu, the founder of jd.com. he is facing criminal accusations, and the company finds itself dealing with the fallout. carol: liu was arrested a couple of weeks ago on suspicion of rape. legal woes are putting his company at risk.

here's more from editor jeff musket. jeff: jd.com is the number two marketplace in china, after alibaba. it's a much smaller company, worth about 38 billion right now. nonetheless a big deal. they have been trying to expand abroad for several years now. their billionaire founder, chief executive, and chairman, he has gone to aspen and davos, set up a new york gallery with jd swag -- but the first time he pops into international headlines was when he was arrested over labor day weekend. carol: what were the charges? liam: he was arrested on suspicion of rape in minneapolis and arrested with no charges having been filed. so he was allowed to go back to

beijing and was not charged, but the investigation is not closed. carol: what is interesting is the story gets into the structure of the company and how much control he has. jeff: this is the question of him being on the sidelines, possibly incarcerated for a significant time. this has much bigger ramifications for jd than many other companies because it is structured as a variable interest entity. in practice -- it is rare in the united states but common among chinese companies. several executives control the most important aspects of the company. jd has to contract with the

executives to get dividends from those assets. jason: he has been on the road, courting a block of big-name investors, who would be exposed to this in a meaningful way if this were to go sideways. jeff: absolutely. this is a key man risk for jd. liu is pretty essential when it comes to closing a deal with google, for example, or tencent and other mega companies that have taken an active interest in the company's future. jason: alibaba is well-known and jack ma is up front, this is a company still baked into global e-commerce and has a lot more ambition beyond china.

jeff: that complicates things again, when dealing with a founder who controls about 15% of outstanding shares, 80% of the voting shares -- for a variety of reasons, the board of jd cannot even meet without liu under its own bylaws, even if he has been kidnapped or arrested. jason: next, it's been almost a year since hurricane maria devastated her to rico. -- devastated puerto rico. that island economy was struggling already. now it's looking at ways to help fix it. carol: and what it's done for miami, can it be sustained for other cities? this is "bloomberg businessweek." ♪

carol: welcome back.

jason: you can listen to us on the radio on sirius xm, new york, austin, washington, d.c. -- carol: and in the bay area and london. we take you to puerto rico this week. it is struggling to come back from last year's hurricane. right now, it is counting on small but transformative industries and ideas to bring back the economy. jason: we are talking about blockchain technology, even medical marijuana. >> people forget maria was not the only disaster that visited that island in 2017. they filed for the largest bankruptcy in u.s. history, $74 million, which makes detroit look like nothing.

the economy was already on its back because there was a federal tax break that have blurred a time of fargo -- pharmaceutical companies to manufacture on the island. thousands of jobs left the island. the storm blew entire parts of the island away. it destroyed the energy grid. it has to be rebuilt. the government is taking the approach of making these bets on different kind of industries. carol: i love how they describe it as a venture capital fund. one of the bets they are making is blockchain and digital currencies. cristina: earlier in the year, brock pierce was a big name in the community.

he made it to the list of richest crypto billionaires. he owns the mighty ducks franchise. he wants to create a community in puerto rico of crypto investors. the island has favorable tax status. that's one of the reasons people are attracted to it. >> it has to be very attractive thanks to john paulson and a traditional new york or east coast investor for all of this. you have blockchain and lead, apparently -- weed, apparently? how is that manifesting in puerto rico? cristina: the island is trying to rebuild on some of that biotech and pharma foundation it has. the governor has a degree in

.iomedical engineering he wants the university to turn into an innovation center for marijuana. done is he has made sure the laws are very clear, so puerto rico had legalized medical marijuana three years ago, the law was unclear, so that the turn investment. that withes some of the new law. we are seeing investment coming in. a grove facility inside an old building. company hopes to be able to expand. carol: we will end this week on a lighter note. we want to talk about art basel. it has been going on for two decades, it happens every fall in miami.

what interesting about this, jason, it has transformed the city, making unsafe locations in the miami area safe and hip. jason: the company behind this thinks it may have the secret sauce to helping other cities. chris tells us more. chris art basel started in : switzerland. the company behind it was getting a lot of requests from other cities to do what they did in miami in other places. art basel was a huge part of turning miami into a town with many different neighborhoods full of arts, bringing miami back a little bit to the international scene. carol: a revival? chris: neighborhoods are places where you would go and hang out. the company behind art basel developed art basel cities, which is a miniature version of what they are doing in miami. they are doing their first one in buenos aires. jason: we have seen cities over time go for the buildout -- bilbao effect. they put together a amazing museums.

a lot of city say, i want to get a piece of that, but it does not work out so well. chris: bilbao put on something that cost 220 million dollars, and they recoup their money quickly. normally it takes a country or a municipality years to get back that money. it really brought it around. people have thought the arts and cultural institution can be the thing that will turn our city around. it's sort of hasn traditionally worked.

has -- our writer has a whole list of projects. in valencia, when complex cost a billion dollars, that immediately had construction problems. there was the museum in rome, cost over $115 million. there was a budget crisis after that. people really thought this effect was going to help elsewhere, but it did not happen in denver or in valencia. carol: didn't it happen in los angeles? chris: downtown los angeles, it was another gary building. the disney concert hall. with theit had to do global downturn. a lot of these projects invest. this is a miniature version because you do not have to invest $100 million in a building. you can use a lot of funding for

the arts that you are you had in your municipal plan. this company comes in with the rolodex and the infrastructure and knows how to draw international attention and artists to the city. hopefully you get some of the boost from that, investors to come in and check out your city. carol: bloomberg businessweek is available on newsstands. jason: and online and on our mobile app. what is your must read of the week? carol: there is a visual component to this story. go to the website, click on the different members of trump team and find out. your must read? jason: i love austin carr's where is larry page story. it's very much on the news. and austin has been here about five minutes, he delivers a story everyone needs to read.

and willie was one of the world most important companies. more bloomberg television starts right now.

selina: i'm selina wang and this is the best of "bloomberg technology," where we bring you all of our top interviews and this week in tech. apple unveils a faster iphone x. will it kickstart more growth for the first trillion dollar tech giant? some investors aren't convinced. plus, coffee on the run. how convenience in tech is plain into starbucks's global strategy. we hear from the company's ceo. a