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In China’s Hunan Province, using the bathroom often means squatting over a dirty hole in the ground. An estimated 2.5 billion people around the world lack adequate sanitation — more than a third of the global population — and 2 million die each year of diarrheal disease.

To David Auerbach, that is both a human-rights crisis and an entrepreneurial gold mine. He and his business partners hatched a plan for profiting on both ends of a messy problem: Sell pay-per-use toilets to local entrepreneurs, then collect the waste and sell that too, after converting it into fertilizer.

Auerbach spent several years in China teaching English after college, then moved on to stints at the Clinton Foundation and Endeavor, a non-profit that supports entrepreneurs in emerging markets. At MIT’s Sloan School of Management, he teamed up with fellow grad students Ani Vallabhaneni and Lindsay Stradley. Vallabhaneni had worked with a chain of dialysis clinics for low-income patients in the Philippines, and Stradley was a veteran of Teach for America and Google.

On a trip to Kenya, the trio saw locals paying about 5 cents to use an unlined pit latrine. Even more common were “flying toilets” — plastic bags used as a toilet, tied off and then thrown outside. The ground is often covered in them.

When they returned, the three cofounders — all 31 now — wrote the business plan for Sanergy and its brand of Fresh Life toilets. Their vision won the 2011 MIT $100K Entrepreneurship Competition and landed the $100,000 Diamond Prize at the 2011 MassChallenge Startup Competition and Accelerator.

A Fresh Life toilet is 3′ x 5′ and made of prefabricated concrete. The floor has a squat plate and two holes, one for urine and one for solid waste, that lead down to removable waste cartridges. The toilets are sold at cost for $500, which includes installation, painting and daily waste collection. Owners are considered franchisees and have to supply toilet paper, soap and a hand-washing stand.

Right now, Stradley says, there are 150 toilets operating in Nairobi’s crammed Mukuru slum, and the company is selling another five to 10 toilets per week. About a third of Fresh Life operators have already purchased an additional unit.

Bob Orengo, a franchisee in Mukuru, sees about 47 customers a day. At five Kenyan shillings a pop, that’s about U.S. $19 a week.

“It’s a good way to start your own business and be self-employed,” he told CNNMoney through an interpreter.

Another Fresh Life operator in Mukuru, Esther Muniyiva, has about 96 customers a day and makes around $40 a week. The big benefit, she says, is that the area around the toilet is clean: “Some people think the toilet is so clean that they could eat in there too.”

Joshua Boger, the former CEO of Vertex Pharmaceuticals, was one of Sanergy’s judges in the MassChallenge competition. He says one of the company’s biggest challenges now is how fast to scale up.

“You don’t build a fertilizer plant for a million people if you only have 100 customers, so they have to go slow — but not too slow,” he says.

Sanergy collects about 1.5 tons of waste each day and sold its first batch of fertilizer in July — two tons at market price, which generally runs $300 to $600 a metric ton, Stradley says. That’s about twice the global price because, thanks to a local fertilizer shortage. It’s badly needed by Kenya’s huge horticulture industry, one of the largest flower exporters to Europe.

It takes Sanergy four to six months to change raw human waste into fertilizer. The process could be sped up with an investment in infrastructure, and Stradley says the company plans to build a high-tech waste management facility within the next year.

The same waste can be used for both fertilizer and biogas, but the company isn’t operating at a scale yet where it makes sense to generate electricity to sell back to the grid, Stradley says: “We need about a thousand toilets to have enough waste to do that.”

If Sanergy’s plans pan out, that won’t be a problem. Within five years, the company’s founders want to provide toilets to more than half a million Africans, generating 11,000 tons of fertilizer annually and 7.5 million kilowatt-hours of electricity.

Their aim is to be profitable within 18 months and to raise an equity investment round of $2 million in early 2013. But investors might question whether the model is sustainable, says Jenny Aker, an assistant professor of development economics at the Fletcher School at Tufts University whose research focuses on West Africa.

“If sanitation services aren’t commonly used or culturally appropriate, would the community be willing to pay for it?” she asks. If Sanergy expands into rural areas, the impact will probably be much lower than in urban zones , simply because there are fewer potential customers, says Aker.

And there’s the issue of using human waste as fertilizer. It’s fine if it’s just used in the flower industry. “What would people think about using human manure as part of growing their food?” Aker asks. “That’s something to consider long-term.”

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Former U.S. Federal Reserve chairman Alan Greenspan said Friday that a mild recession would be a “small price to pay” for getting the nation’s debt problems under control.

In an interview with CNN’s Ali Velshi, Greenspan said cutting spending on “so-called social benefits” would hurt the economy, but argued that it would cause less damage than raising taxes.

“I think if we have to have a moderate recession to solve this huge fiscal problem that’s in front of us — I think that’s a very small price to pay,” he said. “We’re not going to get out of this thing without pain.”

Greenspan said he was not referring specifically to the automatic spending cuts and tax increases that are set to go into effect January 1, known as the fiscal cliff, but to the “broad crisis with respect to our debt.”

The “inexorable rise” in government spending on social benefits, which occurred under both Democratic and Republican administrations, has corresponded with a decline in household savings, said Greenspan.

The decline in savings has undermined the economy by removing the “root source” of funding for capital expenditures and therefore productivity, he continued. As the economy has slowed, the government has been forced to borrow “foreign savings” to pay for social benefits at home.

“This is obviously an unsustainable situation that we have got to come to grips with sooner rather than later,” he said.

Greenspan acknowledged that cutting spending on benefits would be painful and damage the economy in the short run, but he said there is no other alternative and warned that investors are losing patience.

“I don’t see any way out of this without the brute changes that need to be made, and they are hurtful,” he said. “But if we don’t do it the market is going to do it for us.”

While Greenspan said he opposes increasing taxes, he does support allowing Bush-era tax breaks to expire in exchange for a reduction in government spending.

“If you have to allow a rise in taxes to cut a deal on a major benefit cut, that’s a good deal for me,” said Greenspan.

President Obama is meeting with top congressional leaders Friday to begin the process of negotiating a solution to the fiscal cliff.

The Wall Street Journal said the Obama administration is considering a plan to replace massive spending cuts with a combination of smaller, targeted cuts and tax increases. By postponing the so-called sequester, lawmakers could put off a number of large deficit-reduction decisions until mid-2013.

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Mortgages both helped and hurt Bank of America’s third-quarter results. While the bank cashed in consumer demand for new mortgages and refinancing old ones, its tarnished portfolio of pre-financial crisis mortgage loans continued to cut into profits.

Revenue from the refinancing and origination of home mortgages increased 12% from the second quarter and 18% from a year earlier. Amid a broader plan to cut 30,000 employees over the next several years, Bank of America actually added 3,000 to 4,000 new workers to handle the rising mortgage volume.

On the flip side, Bank of America is still dogged by its Countrywide baggage and other pre-financial crisis loans. The mortgage lending unit failed to turn a profit during the quarter, as the cost of managing the bank’s delinquent and defaulted loans dragged down the unit’s earnings.

But Bank of America still managed to report earnings that topped expectations. The bank earned $340 million, which translated to $0.00 per share, on revenue of $22.5 billion. Analysts expected the bank to generate a net loss of 7 cents per share, on $21.9 billion of revenue.

“Our strategy is taking hold even as we work through a challenging economy and continue to clean up legacy issues,” CEO Brian Moynihan said in a statement.

Moynihan and CFO Bruce Thompson said on an analyst call that as those so-called legacy costs continue to shrink, the bank will move some of its staffers who service delinquent mortgages into divisions that work on new mortgages or refinancing no teletrack payday loans.

Related: Big bank lending remains weak

Bank of America also cashed in on the global corporate refinancing boom. Fees in the investment banking division jumped 17% from the second quarter and 44% from the third quarter of 2011.

Overall, the bank increased both its deposits and its lending from the prior quarter. Deposits grew 2.7%, and lending increased 8%.

Still, the bank remains mired in litigation from the financial crisis. A$1.6 billion litigation expense dragged down profits this quarter. Part of that stemmed from the bank’s recent $2.53 billion settlement of a class action shareholder lawsuit related to Bank of America’s acquisition of Merrill Lynch.

That settlement will help the bank put the bulk of its litigation expenses behind it, executives said on the conference call.

Shares of , Fortune 500) are up 70% this year, after dropping precipitously in 2011. The bank’s stock edged up about 0.6% early Wednesday.

Bank of America is the fifth major bank to report earnings, following , Fortune 500), , Fortune 500), , Fortune 500), and , Fortune 500). All four banks also beat expectations. , Fortune 500) reports Thursday.

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Sprint Nextel’s seven-year nightmare may soon be over. The nation’s third-largest wireless carrier confirmed Thursday that it is in talks with Japanese technology giant Softbank to sell at least part of the company.

, Fortune 500) has struggled to keep up with stronger competitors , Fortune 500) and , Fortune 500) ever since its disastrous 2005 merger with Nextel. The company is up to its eyeballs in debt, undergoing an expensive — and late — transition to 4G-LTE, and losing contracted customers in the wake of its decision to ditch the Nextel brand. With smaller rival T-Mobile entering into an agreement to buy , Fortune 500) earlier this month, Sprint is feeling the heat of stronger competition from all sides.

Forced to go it alone, the company has been working on a major upgrade intended to modernize its network. It’s also toying with backup plans: Sprint’s shares rose last week on a Bloomberg report that said the company was considering making a counter-offer to MetroPCS.

But then, seemingly out of the blue, Softbank arrived dangling a new rescue plan. It’s the kind of white knight with deep pockets that Sprint desperately needs. Softbank had roughly $13 billion in cash at the end of last year. Sprint, by comparison, has $21 billion in debt and just $7 billion in cash and short-term investments.

Shares of Sprint jumped by as much as 19% Thursday on the news.

Japan’s third-largest carrier, led by colorful and outspoken CEO Masayoshi Son (he devised a 300-year plan in 2010, which involved brain-computer symbiosis and machines that know how to love), isn’t shy about dealmaking. It owns a stake in ), had a chunk of ) until last year, and orchestrated a blockbuster deal to buy Vodafone’s Japan unit that gave the company a huge presence in the burgeoning wireless space no fax payday loan. Softbank was the first Japanese wireless company to carry the , Fortune 500) iPhone.

Softbank’s flair and assertiveness could give Sprint a needed jolt. The company lost its brief marketing edge — billing itself as the only nationwide network with unlimited data — when T-Mobile recently reverted to its unlimited data plans as well. Despite a network technology transition that appears to be on schedule and promises cost savings and improved coverage, Sprint’s management has been criticized for lacking the chutzpah to do something bolder. The company seems locked in a losing battle with its two much-larger competitors.

“If Softbank does acquire Sprint Nextel, it is not a forgone conclusion that the company will do well,” said Jeff Kagan, an independent telecommunications analyst. “However, the chances it can do well are there if the company can understand the U.S. marketplace.”

Terms of the deal that is being negotiated were not disclosed, and Softbank declined to comment. A Wall Street Journal report said the deal, worth roughly $13 billion, would give Softbank a controling stake in Sprint.

Regulators would likely cheer the deal, which would ensure that four strong, nationwide wireless competitors remain in the U.S. market. In AT&T’s scuttled $36 billion buyout offer for T-Mobile last year, regulators said they opposed the deal because it would bring the number of national wireless choices down from four to three.

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Gas prices across California have soared to record highs, shooting up 50 cents a gallon in just the last week.

But even as prices are expected to rise slightly before falling, the spike is not likely to spread to other parts of the United States, experts say.

The average price of a gallon of regular gas in California edged up another 0.3 cent Tuesday, according to AAA’s latest reading, setting a record at $4.671.

It stood at around $4.17 on Oct. 1 but has risen every day since then. The biggest increase was a 17-cent spike Friday, followed Saturday by a 13-cent increase.

On Sunday, California environmental regulators, acting on a request from Gov. Jerry Brown, agreed to allow refineries to start making a cheaper, winter blend of gasoline as soon as possible — a move that could solve shortages of the more expensive summer blend that sparked the price spike.

Normally, refineries wouldn’t start making the winter blend until the end of October.

Most of the country makes the transition from the cleaner summer blends of gasoline to the cheaper winter blends on Sept. 15. California, with warmer average temperatures and the nation’s strictest air pollution rules, makes the transition six weeks later.

The cleaner gasoline is used in the summer to mitigate against the smog that accompanies warmer temperatures.

The switchover can often cause shortages of the summer blend and a temporary rise in prices. Refineries and stations don’t want to have an inventory of the more expensive gas when it is time to start selling the cheaper gas.

Refining capacity is also an issue. Tom Kloza, chief analyst at the Oil Price Information Service, which compiles prices for AAA, said a major refinery in Richmond, Calif., owned by , Fortune 500), still hasn’t returned to operation since an August fire.

More recently, California refineries owned by , Fortune 500) and , Fortune 500) were also off line for maintenance, although the Exxon refinery came back Friday, while Gov. Brown said the Tesoro refinery is due back in operation this week.

But Kloza said supplies are so tight that those latest disruptions caused wholesale gas prices to spike by $1.12 a gallon to $4.15 a gallon between Sept. 25 and Oct. 4.

He said the wholesale prices have already started to fall, dropping 47 cents on Friday and 10 cents Monday.

“I don’t want to say the coast is clear but there is a light at the end of the tunnel,” Kloza said. California retail prices are likely to top out at about $4.75 a gallon and then start to decline, he said.

The spike in California comes while gas and oil prices have remained relatively stable in the rest of the country. The national average for a gallon of regular gas has kept to a narrow range of between $3.78 and $3.82 during the last week. It edged 0.3 cent lower Tuesday, remaining around $3.82 a gallon.

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I’m 52 and have had 100% of my savings in stocks since I began investing at age 25. Given my high risk tolerance and the fact that I expect that my pension and Social Security to cover a substantial portion of my expenses in retirement, why should I reduce my investment returns by investing in bonds? — Eric C.

If you’ve been putting your dough exclusively in stocks for the past 27 years, then you know firsthand how lucrative they can be over the long term. Since 1985, the year you began investing, stocks have gained an annualized 11%.

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You no doubt also know how risky stocks can be over shorter periods. You’ve lived through the Crash of 1987 when the Dow Jones Industrial Average plummeted 508 points — nearly 23% — in a single day. And you’ve survived both the bear market of 2000-2002, which saw stock prices fall 49%, and the meltdown of 2007-2009, when stock values dropped almost 57% (a setback from which they still haven’t fully recovered).

I’m sure I also don’t have to tell you that bonds returned far less than stocks over the past 27 years and that their yields are especially low right now, with 10-year Treasury bonds yielding less than 2% and investment grade corporates paying only a half percentage point or so more.

Given your experience with stocks and the state of the bond market these days, I can understand why you equate keeping any of your savings in bonds as nothing more than an invitation to subpar returns.

But I think you need to revise your thinking. Here’s why:

You became an investor near the beginning of one of the greatest bull markets in history. The surge in stock prices that began in 1982 and with few interruptions continued through the end of 1999, showered investors with almost unprecedented rewards. It also included some truly phenomenal stretches, like the 10-year span from 1989 through 1998 when stocks gained a compounded 19% a year, almost double equities’ long-term annualized return since 1926. So I think it’s fair to say that this outsize performance has a lot to do with the way you feel about stocks.

Related: Investing: When to ‘take money off the table’

What’s more, up to now you’ve viewed the risks and rewards of stock investing primarily through the lens of a relatively young person. Which means you’ve been much more likely to shrug off stocks’ periodic setbacks. They’re not as scary when you have decades to rebound from them.

But looking ahead, conditions may be quite different. While stocks are still likely to beat bonds over very long stretches, many analysts believe stocks won’t deliver anywhere near the same size gains they did in the go-go ’80s and ’90s, nor will they outperform bonds by as large a margin instant credit report.

That’s certainly been true for the past 10 years with stocks gaining 7.3% vs. 6.3% for bonds. Some investment advisers, like PIMCO’s William Gross, are even forecasting extremely meager stock returns for the years ahead.

And while you may still think of yourself as quite the risk taker, I think you should allow for at least the possibility that a 50% decline in the value of your savings — and the retirement income it might produce — may be much more upsetting as you get closer to the end of your career than it was when you were starting out. I’m a bit older than you, but I’ve found I’m much more sensitive to stocks’ volatility myself.

As you weigh the issue of risk, you may also want to factor into your thinking recent research that suggests that the severity of downdrafts we’ve seen in stocks in the past may occur more frequently than we previously believed.

At any rate, I recommend that you at least consider scaling back your equity exposure. I’m not talking about a total retreat. Rather, I’m suggesting a stocks-bonds mix that allows for long-term growth, but won’t get hammered as much should the market tank during your home stretch to retirement — say, 70% stocks and 30% bonds. As you age, you would then gradually reduce your stock stake, dialing it back to 50% or so of your holdings by the time you retire and then eventually paring it down to between 20% and 30%.

If you expect that your pension and Social Security will cover most of your basic retirement living expenses, you’ll have more leeway in how much you’ll have to draw from your stock portfolio. That flexibility could allow you to be more aggressive and increase your stock percentage a bit. But I’d be wary of going higher than, say, 75% to 80% stocks today and 55% to 60% at retirement.

Related: Am I on track to retire at 67?

Many investors are particularly wary of making bonds part of their portfolio these days for fear they could suffer losses if interest rates rise. But the potential setbacks in bonds — especially those with short- to intermediate-term maturities — pale in comparison to the hits stocks have taken in the past and could take in the future. So despite any anxiety about interest rates rising, bonds are still a worthwhile way to reduce the overall risk level of a portfolio.

Bottom line: I’m all for maintaining reasonable exposure to stocks in the years leading up to and following retirement. But the key word is reasonable. Obviously, you have to decide what’s appropriate for you. But you’ll be a lot better off if your decision includes a realistic reassessment of your risk tolerance rather than simply going with what worked over the past 27 years.

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Investors around the world cheered a German court ruling that clears the way for Europe’s latest rescue fund.

European stocks rallied, the euro climbed higher, and borrowing costs in Spain and Italy eased to their lowest levels in six months.

Early Wednesday, the German Constitutional Court ruled against a group of conservative politicians who requested an injunction that would bar Germany from ratifying the treaty governing the European Stability Mechanism.

The DAX in Frankfurt surged almost 2%, while the CAC 40 in Paris jumped 1%. London’s FTSE closed down 0.2%.

Wall Street also got a lift from Europe, with all three major U.S. indexes rising 0.2%.

“I think it’s very much a political symbol for support of these bailout policies,” said Clemens Fuest, professor of taxation at Oxford University’s Saïd Business School. “That’s bad news for the taxpayer, but good news for people who hold government bonds. I think the uncertainly about short-term exits [from the European Union] of Greece and other countries like Spain has been reduced.”

The decision helped push down Spanish 10-year bond yields to 5.6%, while the yield on the Italian 10-year bond slid to 5.06%. Borrowing costs for both nations haven’t been this low in months as Spain and Italy have struggled to reduce their deficits.

Last week’s move by the European Central Bank to buy euro-area bonds helped ease investors’ concerns. And the latest news from Germany is adding to that optimism. The euro is at a four-month high against the U.S. dollar, just shy of $1.30.

German magazine Der Spiegel referred to the German court ruling as “a sigh of relief” for Germany and Europe, and “a historically significant signal for the euro rescue.” German Chancellor Angela Merkel echoed the sentiment, calling it “a good day for Europe.”

Asian markets, which were already closed ahead of the German ruling, ended higher. Tokyo’s Nikkei gained 1.7%, while the Hang Seng in Hong Kong was up 0.9%, and the Shanghai Composite added 0.3%.

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The British soccer team Manchester United has filed for an initial public offering that would cement the team’s standing as the world’s most valuable sports franchise.

The IPO would trade at $16 to $20 a share and value the team at $2.6 billion to $3.3 billion. Overall, the IPO would value the team well above the $1.47 billion paid by its owners in a debt-financed takeover battle that concluded in 2005.

Shares are expected to start trading next week on the New York Stock Exchange under the symbol MANU.

Despite the team’s popularity and success, the company was not very profitable last year. The stock would trade at a valuation even pricier than the IPO of Facebook ().

One expert, Francis Gaskins, president IPOdesktop.com, called the IPO price tag "awfully high" considering that the company’s revenue is growing only 6% annually in recent years. He said the valuation is one commonly associated with a fast-growing tech company.

"I wouldn’t buy it," he said.

The values of sports franchises are often inflated by owners willing to overpay for the glory of controlling a team.

The Los Angeles Dodgers, which Forbes estimated was worth $1.4 billion, was recently bought out of bankruptcy for $2.15 billion. ManU is already the world’s most valuable sports team, estimated to be worth $1.9 billion, just ahead of a $1.85 billion estimates for both the New York Yankees and the Dallas Cowboys high quality business cards.

And the few teams that have been publicly traded in the past have not been great investments. The stocks of the Boston Celtics, the Cleveland Indians and the Florida Panthers all performed badly during their brief runs in public markets.

ManU is already taking steps to increase revenue and profits. On Monday it signed a seven-year deal with General Motors (, Fortune 500) to have its players wear the Chevrolet logo on their uniforms for a reported £27 million a year, starting in 2014, up from the £20 million annually that insurer Aon (, Fortune 500) is paying for the current deal.

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The team intends to use much of the proceeds it expects to raise in the IPO to reduce its debt, which are one of the biggest drags on a company’s earnings.

But only about half the shares are being sold by the club; the other half are being sold by the Glazer family, the American owners of the NFL’s Tampa Bay Buccaneers who bought ManU in a debt-financed takeover battle 2005.

ManU’s American owners are very unpopular with many of the team’s fans. That has made the IPO, especially the decision to trade in New York rather than London, extremely unpopular with fans as well. 

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Money managers with more than $800 billion are betting European policy makers can only offer Spain a temporary respite from record borrowing costs.

Yields on Spain

Euro-area services and manufacturing output contracted for a sixth month in July, adding to signs of a deepening economic slump.

A composite index based on a survey of purchasing managers in both industries in the 17-nation euro area was unchanged at 46.4, the same level as in June, London-based Markit Economics said today in an initial estimate. A reading below 50 indicates contraction. In the U.S., manufacturing probably weakened in July, a Bloomberg survey shows ahead of a report due later today.

The euro-area economy may be in a recession, defined as two consecutive quarters of contraction, after the worsening debt turmoil forced Spain and Cyprus to seek international aid last month. The euro yesterday dropped below its lifetime average against the dollar and Moody