How vulnerable are states to outside attacks . And why the socalled techlash has only made facebook stronger. Lets start with our global cover. 10 straight weeks of antigovernment protests in hong kong is raising fears about the one country two systems policy that has prevailed since the british handover. Here is businessweek editor joel webber. Joel so we have been talking about it almost in every issue, since the fury broke forth this summer. The thing that happened this week with the airport and the clashes at the airport area at the airport. We felt like that had become a Tipping Point and all eyes on hong kong at this moment. When we stepped back and thought about what is a perspective that we can bring to the store that has not been brought one of the things that came out of the conversation is where is the thing coming from . 47. Is about 20 when hong kong was handed back to china, one country, two systems being this guiding idea for how the city would be managed, 2047 is the Expiration Date of that. When you think about the stakes of this situation, five years out is not enough time to solve that. 10 years out is not enough time. Wasthesis for this story that the fury that we are watching is ultimately about 2047 and hong kongs countdown to 2047. Jason when you think about the nexus of Business Economic politics, there are other places there are few other places in the world where it happens in such sharp relief as hong kong. Joel this speaks to the dilemma that president xi has. If you use force, the situation can escalate quickly. Patience, a little maybe the students who are a large portion of the protesters might go back to school in september. There is this dilemma between use force or be patient. Is now being dropped is terrorism. Terrorism would be perhaps justification to escalate and have things turn to force sooner rather than later. That obviously all eyes on hong kong. That would become a much, much bigger challenge for the world. Jason for more, lets check in with bloombergs managing editor seeing overseeing all of our government coverage in asia. He joins me from hong kong. Dan, thank you so much for joining me. Give us a sense of what we have seen this week. Dan this week, we saw unprecedented scenes of protesters going into airports and essentially grounding all the flights. In hong kong, this is very unusual. When in thailand in 2008 they shut down the airport. That ended in a coup. That is not going to be the case here. China is firmly in control of the government here and of the territory as a whole. Taking over the airport is a drastic move. The government was fairly tolerant for the first couple days, allowing them to occupy the terminal. If you are flying into hong you would see masses of people coming in. This severely affected the economy and raised the stakes in this conflict. Great you provide such historical perspective, being there on the ground. The story in this week magazine takes us all the way to 2047. Help us understand what may be to come. The 2047 is the date that basic law expires. The basic law is what was put in place when the british handed over hong kong to the chinese in 1997. That was negotiated in the 1980s under margaret thatcher. The two systems would converge and the democratic system would prevail. Right now, we are nearly halfway through that period. That has not happened. We have had significantly, over the past couple years, we have seen that system erode. Future where they are subject to the communist party and they are fighting against it now. Jason we see these pictures. For people in the Business World, and the financial world, this is not the hong kong that they know. This is a place that has been central to the global economy, a home to many expats from around the world. What is at stake for the Global Financial system . Dan a lot is at stake. Hong kong is one of the premier financial hubs in asia. It facilitates a lot of the investment that goes into china and that goes out of china. The chinese use hong kong to raise money, to invest around the world. It is a massive policy for president xi jinping. Did lose hong kong as an International Financial sensor people waryo make of investing in hong kong because of political stability is a significant worry. There is a lot of business. We have seen that expats, people who have been here a long time, are very worried about how this is going to end. Many people think it will end ugly. There is a lot of money moving out of this place. Jason thank you so much. Our other big story this week wall street whiplash. Sell off for stocks and sounding the alarm after the u. S. And the invert. Ield curves it is historically a harbinger for recession. He is apologizing for something we wrote before most of us were born. What is an inverted yield curve . It means that the longterm Interest Rates are lower than the shortterm Interest Rates, which is the reverse of the normal condition. It can be a harbinger of recession. What happened this week we had already had a three month and the 10 year. Now the two and the 10 year inversion, which was considered stronger. Not necessarily tomorrow, but maybe in 18 months or so. That was the big news of the week. It was one of the big factors in why the stock market did badly. Jason this is an economic story. It is a business story. It is a market story, but it is also a political story. Donald trump is getting nervous because if they if a recession hits in 2020, it will be bad for his reelection campaign. After federalff reserve chairman jay powell, saying the fed urgently needs to lower Interest Rates. If he did that, if the fed did that, the inversion would go away. Shortterm rates would come down and we would have more of a normal yield curve. Jason talk to me about the store you have this week. You go all the way back to a business week cover story 40 years ago. Ago, august 19 79, business week a cover story called the death of equities. People are still giving us a hard time about it because equities has done nicely. The article came out at a time when inflation was high. What we were observing was that stocks did not seem to be a good hedge against inflation. What was a good hedge was gold, diamonds, singlefamily homes, and stamps. Jason that was my favorite too. I cannot believe that was a thing. Peter what happened after that is that the article was right for three years because of stocks continue to go down and down. After the chairman of the petrol Federal Reserve managed to squeeze inflation out of the system through two recessions, the conditions were set for the rebound. If you look at the market now, the s p, if you invested in dividends over that period of time, we have 7000 . Not bad for a corpse. Right in the shortterm but very wrong in the long term. Glad that our readers are keeping us honest and we are owning up to it. Peter coy, thank you. As that 2020 election approaches, are the poles prepared for hackers . Plus, baltimore reviving the neglected industrial hub. This is Bloomberg Businessweek. Jason welcome back to Bloomberg Businessweek. I am jason kelly. Join us for Bloomberg Businessweek every day on the radio from 2 00 to 5 00 p. M. Catch up on our daily show. Get that up bloomberg. Com. You can also find us online at businessweek. Com and on our mobile app. At the 2020 election approaches, it is democracy versus the hackers. This weeks solution section exposes how efforts in illinois to protect its Voting System show how vulnerable states are still to outside attacks. We got a little preview when Robert Mueller went before congress to testify. Putting aside Everything Else about that event, he kept hitting on this message, that this is a very serious threat we are confronting. That is what the takeaway was from that report. I think when we get into the details like we do in this story about focusing on illinois, it is emblematic of what is happening across the country. It is a huge problem that is becoming bigger and that is hard to contend with for a number of reasons. Jason illinois got hacked. Weree of two states that clearly singled out in muellers report and that is really owning up to the hacking and trying to say this is what happens to us and we do not want to repeat this. We really want to be prepared. What is happening is there is a concern that the hacking of 2016 was almost like a practice run for what they are going to do in 2020. The number of parties is going to be more. The number of countries that are doing these kinds of moves we are aware now it is not just russia. It is north korea, china. The resources you need to contend with this are tremendous. While a lot of resources have been devoted, it is a fraction of what is necessary. Jason we are talking low double digits percentagewise of what a state like illinois would need. Lets talk about the electoral system. One of the things i was reminded of in this story as well is it is incredibly complicated and it is really decentralized and a lot of ways. It is statebystate. It is localities. You have election boards and secretaries of state that deal with it. You have different positions and he really have to figure out how you are going to persuade since it is not centralized all of those people about the necessity to really invest. The first thing this comes down to is money. A lot of them do not have the money and they are not getting as much as they need from the federal government. When you are saying try to find the money, 30 million more than what you are devoting, they look at it and say well who are we and why would anybody want to hack us . Jason that is exactly right. That was such an important point of this. You have local officials that are essentially saying i know they might go over after voting in chicago or the state of florida. That is the ground zero for a lot of this and you talked to the governor of that state, ron desantis, as well. But a small county in kansas or town in kansas, they are like who cares . But a lot of damage can be done there. It is not just messing with the voting machine. It is getting at databases ahead of time, messing with the roles, with the names of voters. Ways that they have that will just really create a lot of chaos. No confidence in the system ultimately. What you are also doing is a psychological war. Which is going to lead people to say, why should i vote when this is all happening . Jason from illinois, lets go east to maryland, specifically baltimore. A renaissance story may set a template for other American Cities hollowed out by forces of globalization. The 3100om maloney on acre fixerupper. Trades is a story about point atlantic. It used to be one of the biggest steel mills in the world. It employed more than 30,000 people. Then started falling on hard times at beginning of the century like a lot of other steel sites in the u. S. And went through a series of owners. In 2012ly went bankrupt and was bought out by an asset stripper. After spending some time at the site, a couple years, i realized it could be incredible valuable as a logistics center, which is what it is becoming today. Jason you have some big names, wellknown names in the Business World who have been betting big on this. Not the least of which is kevin plank from under armour. It has been one of the biggest champions of the hometown of his company. How does he play into this narrative . Tom under armour opened a facility there very recently. It is 1. 5 million square feet warehouse. That is the size of 23 football fields or Something Like that. Just an enormous ecommerce facility. What was interesting speaking to the guy a trade point atlantic, even though kevin plank is a baltimore booster, he was looking across the east coast for this facility and he just saw that trade point atlantic is unique in a lot of ways. What made it attractive as a steelmaking facility, being right on the water and close to rail and the interstate highways, the same thing that makes it ideal as an ecommerce logistics facility. They can have ships unloading goods right there and then get them straight onto trains, straight onto the highway. 24 hours from about a third of the u. S. Population. Jason still to come, my exclusive interview with don. Addell goodell jason welcome back to Bloomberg Businessweek. I am jason kelly. Listen to us on the radio on sirius xm channel 119, also a. M. 113. 0 in new york. 99. 1 in washington, d. C. And london on dav digital and through the Bloomberg Business app. Now to a businessweek exclusive. He has worked at a private equity firm for three decades. He became ceo in 1998. We are seeing 18 billion in assets. He has seen some things in some times. In todays chaos, hong kong, brexit, volatility in the u. S. I asked him what role pe plays now . Don private equity can be a buffer during these periods. To be fair, private equity firms , virtually all of them, are not hearty and they do not say we are going to buy on a downturn. One of the challenges of private equity to play that buffer role is it is harder now to deploy capital than it has been in a while. I say that because, notwithstanding the chaos, valuations and private equity remainedons have stubbornly high. They have been growing over the last four or five years. You cannot reverse the laws of supply and demand. With all of the money that has know, this, as you dry powder that is available, to respond to a lot of those pressures. If you look at the statistics, i am going to praise it in a way that sounds shocking but it is just mad, if you recognize it, about one in five s p 500 ceos change every year, that means that this is the ceo change in the s p 500 about every four or five days. That is just math. If you are the ceo, you are looking at those numbers and youre looking to the left, the right. You like to have eyes behind you and it is not that you do not trust your board or that people are not going to give you some time, but it is a measure of the environment that it is tough and andtenure is being reduced ceos have a tough job and Public Companies. It is tough everywhere. Leadership is always hard. Now, the scrutiny of social ,edia, activists, shareholders makes it very hard to be a Public Company ceo. Jason for my entire conversation, including what he has learned from hiring and firing literally dozens of ceos over the years, check out our businessweek extra podcast wherever you get your podcasts. We turn now from anxiety to board room changes students and graduates and the lasting burden of student debt. Here is the businessweek explainer from the finance section. Americas 1. 6 on trillion dollars student loan balance and the bottom line is pretty lame grim. A student an analysis found student loan borrowers are paying down 1 of their debt every year. For the average borrower, that is 300 on a typical 30,000 loan. The debt will not be paid off for a sentry at that rate. No wonder it has become a political issue. Progressives bailout because tuition far outpaced tuition and wages. Conservatives blamed the government for promoting outofcontrol borrowing. About 8 million borrowers are in incomebased plans to let them reduce Monthly Payment and can lead to Debt Forgiveness in sus 10 years. That has led to fewer liquid sees. They have lead to slower payments and rising balances. Is ats while unemployment a 50 year low and economic expansion is the longest in history. As times get tougher, the student loan crisis is likely to get worse. Ahead, back to making life difficult for intel. The ftc and facebook, why the techlash is only making the social network stronger. This is Bloomberg Businessweek. From the couldnt be prouders to the wait did we just winners. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. Now you can share it between lines. Mix with unlimited, and switch it up at anytime so you only pay for what you need. Its a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you preorder a new samsung note. Click, call or visit a store today. Jason welcome back to Bloomberg Businessweek. Still ahead, last months 5 billion settlement with the ftc may make facebook even stronger, plus, premium, personalized weed. But first up, technology. American chipmakers found themselves in the crosshairs of the trade war between the u. S. And china. And one is thriving. That one is amd. It has been a rivalry between amd and intel. Amd is in white, up 600 in the last five years. The gains in intel only up 50 or so. You know there is a rivalry between these two, even with the trade war. It is impressive from a market perspective. Jason that outperformance is really something. Amd is thriving thanks to the ceos efforts to exploit intels woes. A little volatile, and as you expect from amd, they have had huge run ups and huge declines. But in general, i spoke to one fund manager who said i dont want a rock star. We have had people who thought they were rock stars and never turned out well. I am much more comfortable with somebody comfortable in their own skin. She is the person who goes in and checks on people. Checks whether the chips will be out on time, rather than the person out there on stage. That appears to have resonated with investors and analysts. Look at the other side of the coin. The intel side. Obviously, that is a company we have talked about. It has had some management challenges and technical challenges as it has tried to continue down the road of shrinking things on Semi Conductors, shrinking down to 10 nanometers. Nobody has ever seen this from intel. Like any company, they have ups and downs, but this appears to be fundamental. This is the thing they have used to beat up everybody. Amd is remarkable because they are a survivor. All manner of companies try to compete with intel, all of them are gone. That is because they ran the best factories on the planet. That was their boast and it was hard to argue. Normally, 18 months, we are on to the next node of processing. That gives not just cheaper c