carol: welcome to "bloomberg businessweek." jason: we are here at bloomberg's global headquarters in new york. carol: in this week's issue, the predatory lending machine crushing small businesses. jason: and what is crushing an auto executive from nissan. carol: some stocks have lost over $800 billion is the end of august.

jason: putting silicon valley on edge. joshua: 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 not 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 are over -- big tech, they are 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. carol: 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 tech anmes. joshua: it is the maturity of an industry that has been revolutionary. people said, everyone knew these companies were going to slow down. it is the nature of public markets. you get 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. when you have 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 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 here is uncertainty about what that will look like. carol: a high-speed debt collection machine is chewing up small businesses across america. jason: and we have the shocking arrest of a larger-than-life figure in the world 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. that tension is between japan, 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. and this confession of judgment statement can be used against you when you get your loan. the moment there is any lapse in payment, 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. we dug into wholesale changes after the fact. it's a frightening stor, one of those ones we wanted to look at. jason: coming 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. jason: 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. >> this guy is larger than life. 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. jason: remind us who he is and where he came from. he came up through michelin. the car industry was facing an existential crisis at the time.

>> he came up through michelin 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. jason: 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. ghosn set on -- sat on top of this whole thing. he was chairman of mitsubishi at various times over the years. he always held the reins of power. in this alliance, there is very little in the way of real structure. these corporate crossholdings are murky. ghosn sits on top of the whole thing.

jason: he is the structure. david: yeah. carol: an analyst said this alliance is heavily bound up in ghosn's personality. but this 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. david: the ceo of nissan is 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. jason: we put the story to bed as events were unfolding. head to businessweek.com for the latest updates. carol: this cover story has to do with the confession of judgment, helping debt collectors shoehorn small businesses across america. >> if you are a small business owner, you probably get calls all the time from people offering you loans. these guys, they are running companies called merchant cash advance companies. carol: a mouthful. zeke: these guys can get you $50,000 tomorrow if you need money, at a very high interest rate.

in the loan 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. it is like when you sign an 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. jason: 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. debt collectors slipped this clause and because they had

trouble collecting money from small businesses. once you get this signed, you can win automatically and sees the bar was take accounts -- seize borrower bank accounts. jason: there is no judgment. zeke: no need for proof. the lender sends you the money. these guys require daily payments.

you payback $800 a day. 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." ♪

jason: welcome back.

carol: you can listen to us on the radio in new york, boston, 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. the usmca is about to be become law. carol: 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. these are 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.

he has been one of those rare, protectionist voices in the republican party. he has argued with the new nafta that we speak trying to remake the politics of trade agreements in washington. he has tried very hard to solicit democratic support for 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. he will be in charge of a house 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. shawn: 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. if democrats keep pushing too hard for changes he doesn't like, that may trigger that instinct 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. carol: a profile of a democratic go to lawyer in election recounts. president trump labeled him the

democrats best election stealing lawyer. jason: he was involved in bill nelson's florida recount battle. but he may be involved in 2020. >> he deals with all kinds of things that come up in elections, everything from how campaigns raise money to 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. $90 million has gone to his firm

from various national committees? bill: 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. bill: 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 how local officials were

interpreting election law. he had one major victory, which 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. bill: after 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 ballots and found money. you have this battle over, how do we count the votes? and elias is among the lawyers who were battling this. jason: coming up, inside tesla's forgotten gigafactory. carol: and how thousands are living in the streets of america's richest cities. ♪

jason: welcome back to "bloomberg businessweek." carol: ahead, facebook's profit margin is shrinking. jason: plus, why not travel smart with hacks from a to z. carol: first, we need to talk about tesla's forgotten gigafactory.

jason: elon musk took $750 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 tech industry is the sort of mecca subsidy deals. foxconn in wisconsin, there were three billion dollars in incentives to get foxconn to come to the state. the big thing that is missing in all these arguments is whether or not this creates an economic ripple effect. carol: it is about businesses to

support. >> you were there. it is one production line. it is not fully automated. you can say they employed 380 people at the factory. our sources tell us this is roughly 10 times the size of the walmart supercenter. there is a lot of empty areas. 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. at what point are they going to start living up to their promises? they have heard since 2014 this thing would be ramping up. carol: what does tesla say? >> 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. jason: local governments lure big tech companies with tax breaks. but is the economic payoff worth it? carol: 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. when we talk about this issue, we hear things like drug abuse and we talk about mental

illness. there is this other dimension that seems to be driving the crisis, especially in west coast cities like los angeles and seattle. carol: 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. taken to its 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? what i found interesting is how wide those reactions have varied. we do have cities in the u.s. that has made measurable progress on homelessness -- have made measurable progress on homelessness challenges. the homeless population in houston has been cut in half. carol: 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 fought a modest tax on employers that would have raised $50 million a year for homeless services. 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. these companies are waking up to 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 they could have marshaled to 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. jason: still ahead, facebook's profit margin is shrinking. carol: and women's entrepreneurship day. jason: this is "bloomberg businessweek." ♪

jason: welcome back. carol: join us on the radio 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. this is like it costs to build computer data centers and buy equipment. carol: capital expenditures? >> things like developing new advertising products and to headsets. it is not this kind of social goods spending facebook would like us to talk about. carol: 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. especially in this era, where 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.

carol: 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 growth is slowing and some of their promising businesses have not yet filled their potential. facebook messenger and these video and photo diaries. the big question is not just about these kinds of social and political issues, it is now 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. in the last few months, there have been questions about their ability to lead, and the new 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. the leadership 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. when women are 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. i talked with someone who talked about the horns of having entrepreneurship taught in schools, 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 functions like yours, especially 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. we think about the world today, more people are going to realize and start talking about the importance and the success of why it is great to empower women in business. jason: coming up, travel hacks. celebrities, industry insiders, and million-milers share their tricks. carol: plus, the future of auction houses. jason: this is "bloomberg businessweek." ♪

carol: welcome back to "bloomberg businessweek." jason: you can also listen to us 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. jason: auction houses are facing the fact that masterpieces are limited in quantity. furniture, not so much. carol: our editor was warmed by the future. chris: there are pursuits about all of the interesting things that came out of auction week in new york. there were not that many surprises. not a lot of weird, record breakers. everything you 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 squid dribbled -- auction houses 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? that space is an opportunity. now people have more money because the economy -- of the economy. jason: millions are getting ready for their planes, trains, and holland mobiles -- automobiles this holiday season. kill: we have just what you need. >> travel hacks a-z is a really fun concept.

we are bringing on a particular guest on our 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. there is an extra travel channel host that told me when she is traveling with her children, she 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? >> i talked to a pretty cheek -lady- chic lady. -- chic lady. if you know you are an over packer, this is her hack for bringing a third bag on the plane. and there are pretty chic baby 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. this comes from a food writer who taught me something i did not know about google maps. you can use filters when you search nearby to screen for things -- like, i don't want 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. carol: bloomberg businessweek is available on newsstands -- >> and online and our mobile app. carol: 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. jason: austin carr takes us inside. carol: this is a story everyone should check out.

jason: marc 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 available -- we talk with the president and ceo of the 9/11 the memorial and museum. carol: we also caught up with the chief security officer at bridgewater associates. we talked all things security. jason: more bloomberg television

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