Loans: Plundering struggling small businesses
Predatory lenders have used New York courts and a centuries-old legal maneuver to drain $1.5 billion from businesses around the country, said Zachary Mider and Zeke Faux in Bloomberg Businessweek. “The lenders’ weapon of choice is an arcane legal document called a confession of judgment. Before borrowers get a loan, they have to sign a statement giving up their right to defend themselves” in court. Fine print allows lenders to sue in New York, even for loans made in other states, after missed payments—or payments the lenders claim were missed. The lenders, who charge interest rates as high as 350 percent, then use the courts to drain bank accounts of tens of thousands of dollars.
Bonds: A frightening recession indicator
“Stock market investors are being spooked this week by what’s happening in the bond market,” said Kevin Kelleher in Fortune.com. The return on three-year government bonds last week rose higher than that on five-year bonds. That’s called an “inverted yield curve.” It happens when investors see bad economic news ahead and want to lock in long-term interest rates. “For economists and investors, it’s a loud warning about the economic outlook.” What happened last week is a “partial inversion.” Investors are now watching for a full inversion, with two-year bond yields rising above 10-year. Historically, that has a “scarily accurate track record of predicting recessions.”
Addictions: Old nicotine meets new nicotine
Altria, the maker of Marlboros, is in talks to invest in e-cigarette maker Juul and in a Canadian cannabis company, said Jennifer Maloney in The Wall Street Journal. Altria holds 46 percent of the U.S. market for traditional cigarettes. Its share price has fallen 20 percent as cigarette sales have declined. Some Juul employees are upset that “the startup is entertaining selling a significant stake to the tobacco company.”
Tech: Uber drivers get higher wages in NYC
Uber and Lyft drivers are getting minimum-wage protection for the first time—but just in New York City, said Alison Griswold in Qz.com. This week New York became the first U.S. city to enact a pay floor for ride-hail drivers, who are independent contractors. Starting in January, the drivers will be guaranteed a base of $17.22 an hour for the time they spend working—including the time they spend without passengers. The move could “raise annual wages for 70,000 professional drivers in the city by as much as $9,600.” The new rules come after a string of suicides by New York City’s professional drivers.