the banks will end up in the pockets of terrorists or countries where sanctions prevent any kind of financial activity. carol: some banks have gotten in trouble because money past through them and it ended up in the hand of terrorists. and that's the big worry? alan: -- ellen: that is a big worry. they are cutting up these charities. these charities are trying to feed people in syria, the people in war zones. they are trying to do the best they can to ensure this money does not in any way to the terrorists. they are sorted at a standoff at the banks because the banks don't want to get in trouble themselves, yet they need the money, the charities the money so they can provide food and money. like islamicrities relief, christian aid, a bunch of them. carol: you guys are following the paper trail when it comes to the panama papers. tell us about that. ellen: this week we sort of step back and look at the reaction to panama all the disclosures from the panama papers about how various high-profile people have funneled money through panama and have used it to create tax shelters offshore. and the president of panama has been very vocal now saying we are not just a country about sheltering money. we are not all that bad. that is not only do. he is trying to be on a charm offensive to a to the world of panama is not just about sheltering money from taxes. carol: moving on to the policy section. you guys talked about citi and what they are doing with -- cities and what we're doing of panhandling. ellen: a couple in springfield, suedois city because -- because the city passed an ordinance that prevented them from panhandling downtown. they argued it was a violation of their first amendment rights, which is their right to express themselves in downtown springfield. freedom of speech. they won at the federal appeals court level and the supreme court declined to take their case which means the previous ruling stands. it really does protect panhandlers for exercising the right to free speech and asking for money in downtown areas. it prevents municipalities and cities that want to try to clean up their downtowns from putting in rules that stopped free speech. carol: kind of a sensor free speech concerns of the interpretation. we've got to talk about the cover story. larry summers and janet yellen duking it out. ellen: it is more larry summers trying to put forth his theory of secular stagnation. againstt of an argument the way most central bankers, including janet yellen, approach fixing the economy. we spoke with the reporter on this story. >> he believes the economy is likely in a state of secular stagnation. 1930's,back to the alvin hansen, only were in the great depression. he worried the secular parties long-lasting, not purely cyclical. the secular -- stagnation argument lost force after the war spending and then crucially the growth continued after the war ended. secular stagnation kind of fell out as a term. for summers to revive it, which he did in november 2013 right after you is not fit to lead the fed, he has -- every year that is gone by that remains weak he's looking more and more correct. >> he's looking at things like there is not enough demand for stuff, right? that's why you are seeing this subpar growth of this point. >> think of loans like watermelons. >> i will now. >> that's a first. >> the demand for a loan is like anything else, supply and demand. when you have excess savings, people want to make loans with her excess savings but that it nothing to do with the money. they have investment projects they want to go for. if things get really bad, the interest rates is supposed equal supply and demand. that the industry can go below zero. exceptnever get that with much slower growth. what he is pointing out is that central banks are trying to solve that problem by pushing rates below zero, which was long believed to be impossible. >> and negative rates. >> negative rates that we have now are occurring. it's like a unicorn. is this weird thing. he is taking this seriously. >> as a global thing. >> europe, japan. he is saying let's not try to force everything into the vision of the world we developed over the 1970's and 1980's. let's acknowledge something really different is going on here. furthermore, let's think differently about the policies that we need to combat the situation. >> he said of this binary here, summers and yellen. but to be fair congress is another element. he is pushing for congress to do more. >> right, because fiscal policy, when interest rates are the slow and can't really going lower, fiscal policy plays a much bigger role. >> government spending? >> government spending and tax cuts. anything to inject more demand into the economy. if you have more demand, than you get the price go up. the interest rate becomes positive again and you are in a healthy and urban. david: to healthy economists, one cover page. >> we had one fairly simple idea. we cannot ship them, obviously. >> not in the same room. >> we used some found imagery. larry clearly wants the spotlight. janet this idea where yellen originally on the cover and mary comes in and pushes her away. >> in talks to some of the tension one could assume between the two. they had different ideas about where the economy is going. >> to has to be a lot more cautious. what she said could affect markets, of larry can say whatever he wants all the time. he's very critical of the way she does her job. and is very sort of alarmist about the economy. >> and you had a couple of different options you guys played with? >> we started focusing on larry. i think the original line we had was "larry knows everything." we thought to give back to the tension between them was really kind of the sloppy wanted to hit. carol: she is really in charge. she has the job he wanted. next, the oil company doubling down on its home state of texas. startups hoping to make a more efficient human beings by popping one of its bills. how apple plans to overhaul its music streaming business is up ahead on "bloomberg businessweek ." ♪ ♪ david: welcome back to "bloomberg businessweek." this week's feature section, pioneer natural resources says there is no place like home, which in this case is west texas on the largest oil reserve in america. we spoke with reporter -- >> they have in the past two years tapped into an extremely productive new find in an old field, the permian basin in west texas. secondly, they haven't every conservative than other financial matters keeping their debt load, raising equity when necessary, getting ready -- rid of unnecessary assets to make sure they have the cash to keep drilling when they need to, and also to stay out of a lever position that some of their peers find themselves in. david: a bank a lot on horizontal drilling. explain how that works and how difficult that is in with the company has managed to do by drilling horizontally. >> horizontal drilling, along with fracturing, has been around for a long time but only in the last decade have we seen it used extensively in some of the field of north dakota, ohio, pennsylvania, and now increasingly in the last few years in west texas. you drill down and the you drill across. you penetrate these horizontal layers a very dense rock they need to be exploded or fractured to get the oil and gas to flow out. more and more, they are extending these horizontal baors as much as 10,000 feet. they are adding lots of places where they crack the rock to get out more oil and gas. it's really been a learning process and more recently with the permian than the pocket and north dakota where the marsalis in pennsylvania. carol: what if they figure out that other companies haven't? we all spend time talking about all the energy companies that are in trouble right now. a lot of them took on too much debt. that was it so crucial to pioneer's story? if they just understand what was going on more than most or what? likeey said on something 800,000 acres of drilling rights in west texas in this basin. which they accumulated and lots of small purchases over the years going back to the 1980's. it was his idea to buy the stuff. it was pretty unspectacular producing land, but it was good enough for him. he was buying this from the majors, mobile and exxon and other people back then who were departing texas and putting the money and offshore plays and overseas plays. in fact, plaintiff itself did some of that but held on all that texas stuff. pioneer andars, some other companies like concho and diamondback have seen there may be more oil if they can just figure out how to get into it horizontally. run about five years ago sheffield told his urologists let's figure this out -- geologists let's figure this out and even he was surprised how much oil there might be in the basin in these horizontal shales. neutribox jukebox -- says they are pills can be more efficient. >> they have three pills and coffee cubes. one is called "rise," and you are specific this daily. ls are formulated a some what they call pro-science. carol: not exactly under the fda? >> everything is fda approved. its relatively mild. there are some company say they are not selling real nootropics. that the term they came from the 1970's and is related to one compound that is not scheduled by the fda. is not actually allowed to be sold as a supplement. other companies are selling it and it is available. carol: and you have some well-known investors of you break out in the story that have invested in this. you tried them? david: several of them? >> i like drinking coffee. i think of going to stick with coffee. carol: didn't have the promised affect? >> with some of them you have to take them a long time to get the effect. i did not feel very much. "sprint," pill called is for when you have a task that need to finish as past -- fast as possible. that had a strong effect. i took it with a colleague and we were both sitting at our computers and typing wildly. there was also a bit of a crash afterwards. david: the 1% goes to war over a prime first -- prime piece of real estate in hawaii. an hollywood bring back old dylan, wall street. ♪ ♪ david: welcome back. lifestyles of the rich, richer and richest are clashing on a resort on hawaii's gold coast. >> the northwest corner is the gold coast, and that is where they built all the great resorts . starting around 1965 when laurence rockefeller built one. then the class of the field is to qualify. andhey four seasons hotel also residential community which means there are enough -- there is just enough density to support something like four or five great restaurants and five huge great swimming pools. all sorts of other wonderful amenities. carol: and it is expensive? how much? >> if you want to stay at the hotel, it starts at $1000 a night. if you want to buy something there, it's millions of dollars. the nicest places are owned by hedge fund folks and captains of industry. something has happened lately that is made as people feel very small. that is that they have been hit by a policy that is keeping them out of the hotel. david: trouble in paradise? >> they can always go to the hotel but they have to pay. and they can -- it's not just that they have to pay for their guests. thereon accompanied guests. -- there on accompanied guests. i'm only there to each of the year. my body wants to go and stay there for a week. my buddy cannot use any of the hotel's amenities unless he pays $250 a day fee. let's say he is there with his wife and two kids, that's $1000 a day just to be able to walk up and swim in a pool at the four seasons hotel. carol: was that the deal with the people bought in? >> well, no. they did not have to pay for on accompanied guests -- 15 years ago. there was fine print in the home ownership agreement that says the resort can set fees anytime for any reason. it started at $50 and it climbed to $150. as of last august announced $250. than they want up in court. that is where we are at now and that's why "bloomberg businessweek" is writing about it. there is formal dispute between one plaintiff he wanted to become a class action, someone who is owned since 2000 and two things that by setting these they are essentially trying to knock out competition for business for the hotel. david: the structure of the suit is kind of novel. >> if i were a homeowner and upset that every time one of my guests one of the go you something to pay $250 a day, i can file suit and they could say you sign a contract. several different places in the contract you say it's ok for them to set fees. maybe i can work around that if i saw a different kind of case. they filed a non-fair competition case. is not a contract violation case. that the fourg seasons essentially is trying to knock out a competitor for renters. for instance, let's say i have nothing to do with them. if i wanted to stay, i could call up the four seasons and reserve a $1000 a night room which a be crowded. vrbo or real on estate agent and say who among the three under 25 homeowners is renting their house next week? it turns out it's $1600 a night. then i forsake the four seasons hotel and i move on to this private renting scheme. according to the lawsuit, that is what they are trying to do. they are trying to keep you from doing that. david: a preview of money monster, jodie foster's new film starring george clooney and julia roberts. >> the unnatural disaster flick. these are not acts perpetrated by god, but by bankers. "moneymaker" is the latest in the line. >> jodie foster directed the film. >> george clooney phase a guy who is very closely modeled off of jim cramer on cnbc. he's really bombastic and makes a prediction basically that certain stocks are better than savings accounts. andof his best goes wrong he is taken hostage for someone who loses all their money. david: this first started back of the financial crisis. we've had movies made not long after that. "the big short" and a string of movies. >> this is the latest in those and we are starting to get into the phase with a become basically formulas. is become kind of formulaic. we are seeing another one this summer that is being positioned as the first female german wall street movie. -- female-driven wall street movie. david: hillary clinton is hoping silicon valley's titans really are #withher. ♪ show me top new artist. ah, ha ha. show me top male artist. my whole belieber fan group. it's not a competition, but if it was i won. xfinity x1 lets you access the greatest library of billboard music awards moments, simply by using your voice. the billboard music awards, live sunday may 22nd, 8/5 pacific, only on abc. ♪ david: welcome back to "bloomberg businessweek." i'm david gura. how do uganda became the world's marketplace for mercenaries? clinton trying to take a lead in silicon valley. apple trying to restructure his music service. ♪ carol: i'm carol massar. --m here with the editor's you talk about how investors need to lower their expectations. >> especially when they are heading towards retirement. it went back to what very summers was talking about, it does not look like the economy for a while, steam and it means interest rates are likely to stay low. it means people can't count on the kind of returns and income that they were planning on for their retirement. the rule of thumb used to be you could take 4% of your assets and spend them every year. what advises are saying is that maybe overly optimistic. people are working longer and longer and longer. let's talk about the technology section. you write about fingerprint technology and how bad may eventually be a problem for criminals. emily: it could be a big problem for criminals. it has to do with evidence and evidence you get from iphones. an san bernardino killer had iphone. iphone has been refusing to help officials into and give them the code. now you have fingerprinting technology. if you look at the law, it says criminals can be impelled -- compelled to put their finger on the sensor and open her own phone, which could provide evidence in a case against them. carol: to unlock all the information and make it easier for investigators to find out stuff? emily: exactly. section, the futures you talk about uganda and how they are becoming big when it comes to exporting mercenaries. uganda is anew that mercenary nation. it turns out that in uganda, there are many services that help recruit guys to go to places like iraq and other hotspots and handle security, handle other aspects, basically to be rent a soldiers. carol: dave herbert went to uganda. 2005 all kind of began in after the iraq invasion. a lot of people were aware there were contractors working for the government, guys with tattoos and beards and that special forces backgrounds, that the majority of the guys guarding bases and guarding convoys, they were guys from the third world working for very little money. $20 a day, sometimes less. there is a huge demand for bodies. they needed bodies all over the country. there were people coming from fiji and peru. they were being paid well. they needed to find another source for men. ended up being one of the main suppliers to the u.s. effort. >> you said they just needed bodies. the first couple of ways were mostly veterans of the ugandan military. but as hundreds turned to thousands, they needed to dip into nonmilitary people. that became taxi drivers, basically anyone who could learn how to fire an ak-47. [laughter] you actually went there and track down some of the chris -- tracked down some of the recruiters. fighting the recruiters is harder than you think. milton works in a small office ministry, and it is not like these guys that have a big sign that says mercenary, in c. you often have to go through a back alley and a back alley. in fourmes, it will be rooms and a mall or shopping center. even though they are american and british bosses, they are happy to talk to you about how much success they are having. most of the information i got were from people in the offices who started talking. david: and milton is a government employee? >> he is in charge with tracking with this. he is not very forthcoming. is something the government has encouraged, fielding the demand for mercenaries has come a part of the country's economy. >> it definitely has. carol: some interesting ties. >> his half-brother owns a share in one of the larger companies. the government has its fingers in the industry. politics,s week's look at the support hillary clinton is starting to get from silicon valley. here is editor allison hoffman. marc andreessen, one of the leading silicon valley investors and was a fan of mitt romney in 2012, joined the club saying she is with her. i said one of my reporters who used to cover apple and is in washington, to go find out what was going on. what he found was there is now this split. there was a lot of enthusiasm in the valley for bernie sanders. a lot of people were excited about obama in 2008. hillary clinton always have the challenge of how to tap into that excitement, not just for peoples' votes, but for their money. what they are finding is they made have -- they may have a chance with republicans. somebody who is not shy about his libertarian beliefs and how they fit in with their interests, is that a strong vein in silicon valley? a lot of those people were excited about rand paul. the question is, trump is not rand paul. terms ofen flexible in his support. it is fun to go to the convention if you have never been before. it is not clear if people are going to follow. democratic -- a democrat. she said, when you have the big names coming out throwing fundraisers, people further down the train want to go with a bosses. there is going to be a lot of that going on. in california, it is the money that matters. if david: president obama has honed in on that. picked up on the fact there is money to be raised. when you look at the maturation in silicon valley, where are we in that? question.ally is the a lot of these people came up in the industry long after both -- long after clinton was out of office. clintons do not have the long-standing ties. certainly in hollywood they do. but not in silicon valley. in 2008, it was fresh money, fresh faces, so that is why the obama team was able to get in there. they were speaking on starting up programmers. --lary clinton has already hillary clinton has always had a hard time selling to them. those are people who worked with hillary clinton when she was at the state department. i think those people will naturally bring some of their new friends over. david: up next, how tesla is threatening german's crown jewel. plus, why you might want to start letting google do the typing for you. that is straight ahead on "bloomberg businessweek." ♪ ♪ david: welcome back to "bloomberg businessweek." i'm david gura. can also listen to us on the radio on serious radio on channel 19. in this week's companies and industry section, white tesla -- looking at what the big companies have always done, they have always made hatchback, electric cars meant to meet fuel economy. had you get a long battery range out of something? one way is to make it light. they have always done this with regulatory cars. but with tesla, this is what they do for a living. when you are trying to make a profit, they started off with the model s, which is an expensive car. they made them cool as opposed to making them small and quirky. they have made cool cars that happened to run on electricity. >> so many people interested in this model three. what is the possibility that tesla will be able to release them when they said they will? -- are optimistic at go you optimistic? >> it will be tough. they had real manufacturing problems. they had tried for unique features like the doors that open up. it is tough to engineer and manufacture. they have had a tough time getting that up to speed. this is a company that has been selling cars in the tens of thousands. estimates, analysts' they will sell 60,000 cars this year. getting up to 300,000 in a year will be difficult given they have had such a tough time getting a second model off the assembly line with any kind of quality or speed. carol: it will be tough in the garage. in your story, you talk about what porsche is doing and mercedes and bmw. a lot of these are concept vehicles. they are thinking it will be five years before they have something really on par with what tesla is doing. cars will comee out in the next couple of years, but it will not be immediate. the model three was supposed to come out, i think, end of 2017. tesla rarely hits its own deadlines. the model three could come out around some of the european cars hit the market. companies,ropean car they know how to get a car to market on time. they will do that. these cars will probably deliver what they promise because these companies know how to say, hey, we can give you x amount of electric driving range and it will look like this have met is how it is going to come out. the big question for them is, will people by their cars when the tesla is out there with that cool brand that americans see a something different. it has a cold following. cult following. it david: the company is trying to reinvent the used car business. froom is one of the online car marketplaces. they pocked up in recent years to disrupt the used car market. entires taking the process and making it easier. the first thing they have done is gotten rid of the haggling process. it if you ever bought a car, you know that is one of the worst things. a set pricee you exactly what you're going to pay. the second thing, they have a catalog of more than 4000 cars on the website. you can go to them. there are 30 a different branch you can see. you can browse through just like you would on amazon and figure out what you want, and they tell you everything -- they tell you the make, model, year, mileage, and they will also not sell a car that has had accidents. david: where is the test drive and all of this? entirelye buying online, it seems like a key element will be missing. >> they deliver a car to your door. they are two to three days to get to your door and that is a seven day money back guarantee. if you do not like the car, you can return it. they will pick it up, but the ceo says the retention -- the return rate is less than 1%. david: in light of the fact there are only two who facilities that drop off the car at your house, you can still get a pretty good deal going through vroom. how do they keep overhead down? >> they maximize profit by maximizing volume. traditionally, the used car dealerships have a much higher margin already than the new car dealerships. the cars are priced a percent less than the average dealerships. basically, they have these two large facilities that can process all of these cars and can sell at a much higher volume at a much faster pace than the carmax or small individual delicious. david: up next, how apple plans on fixing its streaming music service. ♪ [applause] ♪ david: welcome back to "bloomberg businessweek." i'm david gura. you can listen on the show on the radio. for other ways to listen go to bloomberg.com/radio. apple is going back to the drawing board reinventing its streaming music service. carol massar and i spoke to reporters lucas shaw. frustratedle are that they have these large i.t. in libraries that they cannot seamlessly sync itunes and apple music. one of the first thoughts was, ok, this is apple, why can i go between one or the other? also, apple is supposed to get these things right. i would say the product is -- one of the flaws -- i would say the product is one of the flaws. plus, 12 million users is not enough. most people thought it was going to be a home run. they had several million credit cards on file, why don't they have 20 million subscribers? carol: they came out with itunes and changed the whole way we access music, right? we assumed they would do this well. but they didn't. now they have to rework it. lucas: they don't really deny the problems. they know that there are issues. we had started off writing a story much about a culture clash within apple between the camp that came over from beats. it is not so surprising that would be a clash. extremely acrimonious and lasted for a long time. it became clear that it is not like it was news to apple. you are trying to figure out what the next steps were and how they can make the product better and how we can make it appeal to more users. david: what is so hard about getting this right? --as: one, making paying making people pay for music in the first place. second is competition. -- there arese only so many people who want to pay. they want to make that grew bigger. tidal,e spotify, pandora, rap city, and once people have not heard of. they are offering more or less the same thing, a huge library of songs on-demand. how do you stand out in the market is? one of the reasons why this apple music project has struggled is that it would seem apple would have an advantage on everyone else. coming up on the one-year anniversary coming up on music. they have a conference coming up in june. they are going to lay it all out? lucas: that will be the debut of the new apple music. carol: hopefully improved? lucas: maybe they will bring out some more stars. they had drake who had his album exclusively on apple that went number one. they thought there were going to get all of these exclusives. taken a lotdal have of the artists. beyonce wasas -- exquisitely on tidal. reply aresmart options that could presented if you are using google inbox, they are prewritten replies for e-mails. understanding, when someone e-mails me about a dinner, there is the option to put on the calendar. david: the same technology scanning your females -- your e-mails is suggesting answers are you don't have to read them. -- how prolific are these answers? they mirror the tone of the e-mail that has been sent. it's a business-related e-mail. the replies that are generated 10 to be a bit more on the level of him a yes, that would be good, thank you. but if it is from a friend, it may say, i can't wait! it is trying to have an understanding of the meaning and tone of the e-mail as well as the content. >> you commit to using this for a week. how did it work out? >> for the most part, fine. there were a few instances where i probably would have added more to an e-mail. me and said he is getting the angiogram next week. and i wrote, good luck! my dad probably deserve more than that, but for the purposes of this story, i stuck with it. >> is it a timesaver? did you find it was saving you time not having to write out to your father? >> it did. one of the things that this addresses is the vast volume of e-mails that can be answered , ok, irt of a, yes, no will get back to you. enough, not a personal that's if it is not a personal e-mail, it is good to just send them out. it david: bloomberg businessweek is online and newsstands. we will see you back here next week. ♪ >> coming up on "bloomberg best" the stories that shape the weekend business. oil saudi arabia's new minister to impeachment battles and brazil to the bank of england's latest rate decision. >> interesting. leftere are no big deals here. >> earnings season continues. we will look back at who delivers and who disappointed. >> there is a limit to how big you can get through deals at a certain point. >> remains -- >> and we replay the week's best interviews fth

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