♪ carol: welcome to "bloomberg businessweek." jason: we are here at bloomberg's global headquarters in new york. issue, thehis week's predatory lending machine crushing small businesses. anon: and what is crushing auto executive from nissan. stocks have lost

over $800 billion is the end of august. jason: putting silicon valley on edge. these companies have insinuated themselves so far into our lives, that there is not that much more of a place for them to go. apple cell phones are their main business. people do not buy phones as frequently anymore, and there is ,ot reasons to buy the new one because they have gotten so good. jason: and they are not going to give unit growth numbers going forward. joshua: that is a signal to investors, we don't think we will be selling quite as many phones. carol: we are trying to

reconcile that earnings for all these companies, we are seeing this dramatic slowdown, with so many of these names. we have been here before. people have said, big tex, they areover -- bigg te tech, they over. joshua: before you write a story about how big tech is troubled, you want to go back and look. stories from several years past talked about how we are in a bubble. there is an industrywide is slowing going on. arol: we talk about google. they are not just a young startup. they are acting like a more traditional company.

we see that with a lot of big tex names. -- big tech anmes. joshua: it is the maturity of an industry that has been revolutionary. said, everyone knew these companies were going to slow down. it is the nature of public markets. too excited when things are good and pessimistic when things are bad. jason: how much does that play into the nature of the stock market? josh: part of that is coincidence. companies that make products that are such a big part of our lives, everyone will have an opinion. there is a connection. as these companies start to hit leaner times, they will have to squeeze profits and ways they have not had to do before. -- in ways they have not had to

do before. carol: as you get more dominant, everyone notices you and your power. then comes the regulators. josh: that is one of the things going on. investors and the companies, there is this anticipation something will change. they don't know what, but that some regulation will come. there is a fear that is going to make these companies less profitable. the resulting uncertainty about what that will look like. -- there is uncertainty about what that will look like. carol: a high-speed debt collection machine is chewing up small businesses across america. ason: and we have the shocking arrest of a larger-than-life figure in the world is this. -- of business.

joel: carlos had a bit of compensation that wasn't accounted for, to the tune of $44 billion. he was a global executive for the globalist era. uber before all in by this massive company he had built. it dissolves like he has met his maker. japan,nsion is between where nissan is based, and the structure of that seems to be unfolding and unraveling. jason: not an upper, this investigation.

joel: we talk about business loans coming into their own after the financial crisis. small businesses were getting cash advances because they could not get loans. when you sign a contract, there is something that is known as a confession of judgment. in most places this is a legal -- illegal. new york state still recognizes it. the small business loans have been recognized. this confession of judgment statement can be used against you when you get your loan. the moment there is any lapse in , you could go bankrupt. carol: they could say something is wrong with the loan and there might not be. joel: that is frightening, how

shady dissents -- this industry is. into wholesale changes after the fact. stor, oneghtening of those ones we wanted to look at. up, more on how lenders are seizing assets from small businesses across america. carlo: and the end of carlos ghoan. jason: this is "bloomberg businessweek." ♪

carol: welcome back.

jason: join us every day on the radio. carol: and on our mobile app. carlos ghosn was arrested over financial misconduct allegations. it is sent politicians and executives scrambling to figure out the future of the automaker. carol: we have what it all means for nissan. >> the sky is larger-than-life. than life. is larger he's the subject of a manga in japan as a superhero saving the auto industry. nissan was failing and ghosn took this moribund automaker and turned it into a competitor.

he is andind us who where he came from. .e came up through michelin car industry was facing an existential crisis at the time. micheline up through and got hired by renault. he went to japan to try and fix nissan. he gave himself a 50-50 chance of succeeding. he succeeded amazingly. nissan has grown dramatically. it now sells more cars than renault. if market cap is almost twice the size. he has flipped this thing on its head. nissan is kind of a bigger

company. he came into it when it was early on. he became the primary architect of its success. what was different about this tie up? david: they are aligned, not merged. they work together and develop models together. but they still have two distinct corporate cultures and stocks. there is a lot of separation. on top ofon -- sat this whole thing. he was chairman of mitsubishi at various times over the years. he always held the reins of p ower. there is veryce, little in the way of real

structure. crossholdingse are murky. ghosn sits on top of the whole thing. jason: he is the structure. david: yeah. this: an analyst said alliance is heavily bound up in ghosn's personality. guy put together this partnership and made it work, to make it something significant. now he is not going to be there. i am curious about where this goes at a time when the global auto world is changing and being affected by electric vehicles. nissan is ceo of kind of trying to rewrite the script. he said, this alliance is bigger than one person. it's due to the efforts of many

people. without specifically naming ghosn, he said, it is not just carlos. the story to bed as events were unfolding. .com for thenessweek latest updates. story has toover do with the confession of judgment, helping debt ehorn smallsho businesses across america. >> if you are a small business owner, you probably get calls all the time from people offering you loans. , they are running companies called merchant cash advance companies. carol: a mouthful. these guys can get you

$50,000 tomorrow if you need money, at a very high interest rate. application, there is a separate page called the confession of judgment. in order to get the loan, you have to sign this. what you say by signing this is in the future, if there is some sort of legal dispute, you will lose automatically. you sign anhen arbitration agreement as part of your cell phone plan. you are not even saying, we want go to court. you are saying the lender can go to court secretly, no need for you to have a lawyer. show this confession of judgment and the business owner loses. how did this become a thing a lender can do? zeke: this has been around for hundreds of years and they are used in less abusive context at times, if there is a legal

settlement and you have already negotiated. one of the parties consigned so it is easier to enforce the settlement. signs it so it is easier to enforce the settlement. collectors slipped this clause and because they had trouble collecting money from small businesses. signed, you this can win automatically and sees the bar was take accounts -- seize borrower bank accounts. jason: there is no judgment. proof.o need for the lender sends you the money. these guys require daily payments. the payback $800 a day. a day.payback $800

at any point, they can go to court. carol: they can even make stuff up. zeke: it is pretty tempting to say, to go to court and file this. you can get all your money back with interest, immediately. carol: the courts become a high-speed debt collector for these merchants. zeke: the courts may not even realize the role they are playing. it has gotten huge. carol: coming up, why the new nafta has a long road. jason: and already during up for 2020. carol: this is "bloomberg businessweek." ♪ oh my gosh jason: welcome back.

carol: you can listen to us on york, boston,ew washington dc -- >> and in the bay area and in london and our app. the new nafta is scheduled to be signed at the g20 conference at the end of this month. -- theca is about to be new nafta is about to become law. with the house appears reluctant to give president trump the win he craves. >> house democrats don't like what they see. labor provisions don't like the enforcement measures. requirements that

mexico allow the creation of independent unions. it addresses what is the bigger concern for democrats. this is the wage gap between mexico and the u.s.. the second thing was a bigger fight over trade. donald trump released all the democratic senator. he argued against trade pacts like nafta. carol: talk about bob lighthizer. tell me about his role in all of this. he is perfectly suited for the job. he served in the ronald reagan

administration. has been one of those rare, protectionist voices in the republican party. argued with the new nafta that we speak trying to remake the politics of trade agreements in washington. he has tried very hard to forcit democratic support this deal. his argument is, if we can get a new paradigm on trade, it will be better for the politics of trade in the long run, and a less toxic environment. carol: you have a quote in your story this week. it is from the new jersey democrat. he made a statement. housel be in charge of a ways and means subcommittee.

he wonders about the balance democrats have to take in moving forward. if they push too hard and pushed the president into a corner, we know the president will push back already on trade. thanks to pressure from the business community and capitol hill republicans and others, he is close to renegotiating. but he probably wants to pull out of this thing. democrats keep pushing too hard for changes he doesn't that may trigger that instinct and him. -- in him. people are already worried about the economy in 2019. if we get a withdrawal from nafta, cause a serious reaction in financial markets. profile of a democratic

go to lawyer in election recounts. labeled him the democrats best election stealing lawyer. he was involved in bill nelson's florida recount battle. but he may be involved things that come up in elections, everything from how campaigns raise money to have you count the votes. -- how you count the votes. he has been a key figure in recounts going all the way back to 1996. he was the general counsel of

hillary clinton's campaign and figures in a lot of different controversies we have had in elections and governments over the last 20 years. jason: we talk about following the money. has gone to his firm from various national committees? the firm shows up. the firm handles barack obama's campaigns, some of the super pac committees. carol: and tell us what bill nelson was doing in florida. he tweeted he was going to go down to florida and look at this close result. he filed a number of lawsuits down there, trying to overturn

officials were interpreting election law. victory, whichr was how they evaluate whether or not an absentee ballot and a provisional ballot is cast and should be counted, in terms of matching signatures between photo registrations and the ballot. carol: in 2020, everyone is looking ahead to the presidential election in a couple of years. 2016, democrats put a lot of emphasis on things like redistricting fights. elias has been involved in a number of those suits.

the idea is to get more democrats to go to the polls. democrats think he is a very good practitioner. but they feel like this is the new walking around money. how do you boost turnout on election day? they are putting all their emphasis on things like absentee money. and found over, howhis battle do we count the votes? as is among the lawyers who were battling this. tesla'soming up, inside forgotten gigafactory. carol: and how thousands are living in the streets of america's richest cities. ♪

rule welcome back to "bloomberg businessweek." profitahead, facebook's margin is shrinking. jason: plus, why not travel with hacks from a to z. carol: first, we need to talk

about tesla's forgotten gi gafactory. took $750n musk million in subsidies to the rust belt. but he hasn't even shown up to the factories -- factory. >> one of the biggest trends in the sort ofustry is mecca subsidy deals. werenn in wisconsin, there three billion dollars in incentives to get foxconn to come to the state. that is missing in all these arguments is whether

or not this creates an economic ripple effect. businesses tobout support. >> you were there. it is one production line. it is not fully automated. you can say they employed 380 people at the factory. us this is tell roughly 10 times the size of the walmart supercenter. areas.s a lot of empty

i have made multiple trips to buffalo for the story. there has been an evolution in what they think of tesla and elon musk. they were so excited for the sky, who was famous in california and brings a lot of innovation to industry. for him not to go to that factory, everyone knows. what point are they going to start living up to their promises? heard since 2014 bisping would be ramping up. -- this thing would be ramping up. say?: what does tesla this is a complex product to make and they are trying to grow

the business sustainably and they are conscious about how they grow their factory so they don't enter what you want has described as production hell. they got really distracted with car manufacturing. they don't want to enter that same type of tension. they don't want to run into the same types of issues. governments lure big tech companies with tax breaks. but is the economic payoff worth it? there are unintended consequences as well, like skyrocketing rents and lower wage growth. >> a lot of homelessness in the u.s. right now is being caused

by economic circumstances. issue, talk about this we hear things like drug abuse and we talk about mental illness. other dimension that seems to be driving the crisis, especially in west coast cities like los angeles and seattle. how do we make sense of a lot of wealth being created and the economy continuing to grow, and get the number of homelessness seen it growing around the country. we're talking about people who are working multiple jobs, but still cannot afford a half. noah: which we think is driving the crisis is this combo of low-wage growth and skyrocketing rent. places, up and down the west coast, job growth has been so strong. you have this wider housing affordability crisis.

extreme, it is a continuum. when you have this widespread housing affordability crisis, that is going to impact some people in a way they can no longer stay in housing. how do nonprofits and the public sector in general respond? how i found interesting is wide those reactions have varied. u.s. have cities in the that has made measurable haveess on homelessness -- made measurable progress on homelessness challenges. the most in houston has been cut in half. homeless population in houston has been cut in half. amazon wanted to avoid

some of the same mistakes it made when it developed in seattle with hq2. what are these companies doing to help the situation is the problem of homelessness? noah: here in seattle, earlier this year they fraught a pretty t a modest tax on employers that would have raised $50 million a year for homeless services. then he said -- jeff bezos said he was going to make this pledge of $2 billion for homeless services. amazon is also giving to a local nonprofit that helps with homelessness. up tocompanies are waking their impact on their communities and in a place like

seattle, amazon has political capital here they seems to not use over the past many years marshaled tove push through zoning changes that would have allowed for more housing and the kind of density that would have helped our affordable housing crisis and with our homelessness. still ahead, facebook's profit margin is shrinking. and women's entrepreneurship day. jason: this is "bloomberg businessweek." ♪

jason: welcome back. radio join us on the every day from 2 p.m. to 5 p.m. wall street time. jason: you can find us online at businessweek.com.

mark zuckerberg has repeatedly told investors and congress facebook will spend so much to safeguard its network against foreign propaganda. carol: we have heard that. we hear that facebook's profit margin is shrinking, but not for the reason you think. >> they have the our products and this hardware you might see advertised during the holiday season. they are building data centers to support their business there. they are spending money on programming to build up these web video portals started. facebook is spending more on everything. carol: you talk about cost of revenue in your story.

it is the biggest bucket that has gone up this year. facebook's overall spending is up by $7 billion. 4 billion is a net cost of revenue bucket, which has nothing to do with preventing russian style propaganda or weeding out hate speech. to buildike it costs computer data centers and buy equipment. carol: capital expenditures? >> things like developing new advertising products and to headsets. this kind of social goods spending facebook would like us to talk about. we like to dig through a financial spreadsheet at bloomberg, really get away from those big bank numbers and understand what the company is spending on. era, wherein this

facebook is under a lot of scrutiny for kind of bad practices. >> it is true. facebook likes to talk about the spending initiatives they are doing to protect elections and to prevent hate speech and other kinds of abuses. facebook does not talk about this other stuff, the sporting cost of hiring technical talent. they talk about this with investors, but not of the audience that is on facebook every day, preventing these kinds of abuses. we have had very prominent executives at facebook over the last year. sheryl sandberg and mark zuckerberg said, we are going to spend money and fix it.

but as you say, when you break it down, they are spending money, but not as much as everybody thinks. >> this no longer looks like a fortress business model. facebook has acknowledged they are in this weird time where ofwth is slowing and some their promising businesses have not yet filled their potential. theseok messenger and video and photo diaries. the big question is not just about these kinds of social and is nowal issues, it about business issues. that is a real change for facebook. this is a company that looks like this inevitable one or for the future. carol: we have this big story from the knee or times questioning where they are focusing on.

how does this add another layer of problems? >> it seems that facebook's leadership team was one of the best in technology for a long time. months, therew have been questions about their , and the newad york times pointed out they have been more interested in obfuscating the truth then doing the right thing. there has been this leadership failure from the very beginning. failures were not as obvious until all of these problems started to come to a head. jason: another issue facing silicon valley and around the world is gender inequality. carol: they are trying to change that. there is a mission to empower women across the globe. this is through events around the world, including an annual summit in new york and the

united nations. here is the ceo and founder. >> all the people that are part of our movement are really looking at this as a ground-up the part -- approach and helping to alleviate poverty. women are dedicating their money to educate and provide for their families. educated and they earn money, they have self-confidence and dignity. when you look at the world today as a capitalist society, we need a hand up, not a handout. carol: do you see a difference? >> 100%. we just funded financial education in foreign countries. our team and saudi arabia created a program this past year and educated in reported 60,000

women within entrepreneurship program and funded 50 of them. carol: great stuff. talked with someone who talked about the horns of having entrepreneurship taught in , so that all kids are taught they can be entrepreneurs from an early age. no one is working at factories for 30 years anymore. you need to be proactive and be able to contribute to what ever are doing in this world. carol: what is the importance of , especiallyke yours in an environment where we are still seeking parity for women and men and equality in the workplace? women are still having a tough

time getting to higher positions in the workplace. >> if everyone understood that women on the boards -- are on the boards of businesses that are 30% more profitable. today,k about the world more people are going to realize and start talking about the importance and the success of why it is great to empower women and -- in business. coming up, travel hacks. insiders,s, industry and million-milers share their tricks. plus, the future of auction houses. jason: this is "bloomberg businessweek." ♪

carol: welcome back to "bloomberg businessweek." listen to usn also on the radio on a sirius xm, in new york, boston, washington, dc -- >> in the bay area and in london and on the bloomberg business app. houses are facing masterpieces are limited in quantity. furniture, not so much. carol: our editor was warmed by the future. about there are pursuits all of the interesting things that came out of auction week in new york. there were not that many surprises. weird, record breakers. everything you expect it happened.

expected happened. this is a problem auction houses are facing. auction houses hope to find other revenue streams. one of them is decorative arts. it is a broad term. it can be furniture, it can be prints. it can be drawn is by artists. it can be anything from a meteor to win earn, something that is 1000 years old. these alternate revenue streams are becoming increasingly important. carol: tell us about the traditional mainstays of the art world.

chris: heritage auction house housesribbled -- auction have quadrupled sales. now, there are online salespeople. another auction house a quired a company that sells home goods. this is something they never would have done before. carol: is there demand? chris: yes. auction houses are looking at that wall space and saying, why can't we own that? opportunity. an now people have more money because the economy -- of the economy. gettingillions are ready for their planes, trains, and holland mobiles --

automobiles this holiday season. kill: we have just what you need. a-z is a really fun concept. we are bringing on a particular podcast, from people who travel in their job, more than i do. they are coming to share all of their favorite hacks and secrets and their best travel stories. carol: you did an alphabetical list. i thought this was brilliant. channel an extra travel host that told me

splits up with her husband at the gate. she will take all the luggage onto the plane first. she will let her kids play and run around and tire themselves out before they get on the plane. it skips the stressful part of being stuck in aisle. by the time they boarded they go straight to their seats and they fall asleep. carol: you say you can use a fanny pack? cheek lked to a pretty lady-- chic lady. -- chic lady. if you know you are an over , this is her hack for bringing a third bag on the plane. chic babyare pretty packs now -- fanny paks now,

like $800 ones. carol: google map your way to goodies? what do you mean? >> i am a big google user. food writerrom a who taught me something i did not know about google maps. you can use filters when you search nearby to screen for i don't wante, chain restaurants. i don't want anything less than four stars. whatever filter you want to apply can help you hone in on exactly the right restaurant. businessweek is available on newsstands -- >> and online and our mobile app. who knew elon musk had another facility in buffalo?

they got some tax breaks and incentives to build a facility. elon musk has never been there. carr takes us inside. carol: this is a sure he -- story everyone shoudl check out -- should check out. elias is one of the most powerful forces in the democratic party. he even earned a tweet from the president. carol: you can find more stories at businessweek.com over the weekend. jason: and check out our podcast talk with thee president and ceo of the 9/11 the more real and museum. -- emmorial and museum. we also caught up with the chief security officer at

bridgewater associates. we talked all things security. jason: more bloomberg television starts right now. ♪

♪ emily: i'm emily chang in san francisco. this is "best of bloomberg technology." volatility is the main headline. tech is leading the way. we break down tech's role in the slum. facebook is divided, a new report of tension between zuckerberg and sandberg. how are the troops responding? almost a year ago, bitcoin hit $20,000 and it has tumbled more than 75% from the peak.