Analyzing the top news stories across the web

Jan. 16 2015 3:59 PM

As Swiss Franc Soars, Some Foreign-Exchange Brokers Are Facing Bankruptcy

This post originally appeared in Business Insider.

Casualties from Thursday's astonishing boom in the value of the Swiss franc are rolling in Friday morning.


Foreign-exchange brokers who had relied on the stability of the Swiss franc, which until Wednesday was pegged to the euro, were taken by surprise when the Swiss National Bank abolished its controls, and millions of dollars were lost at firms around the world. 

The U.K.-based FX broker Alpari just announced it had entered insolvency. Here's what it said:

The recent move on the Swiss franc caused by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in exceptional volatility and extreme lack of liquidity. This has resulted in the majority of clients sustaining losses which has exceeded their account equity. Where a client cannot cover this loss, it is passed on to us. This has forced Alpari (UK) Limited to confirm today, 16/01/15, that it has entered into insolvency. 

Brokers can go out of business on big moves like this because they give their clients access to leverage. For example, an account holder might have $1,000 with the broker but hold positions worth $10,000 in currency markets. That doesn't matter so long as the holder's losses are covered by the initial amount. But Wednesday, for at least two brokers, that wasn't the case for a lot of those clients.

The New York–based FXCM, one of the world's biggest foreign-exchange brokers, says it may be in breach of rules on capital requirements and that it is owed $225 million by clients who are now in negative equity. FXCM shares are down by an astonishing 90 percent ahead of the U.S. open. 

IG Group, a publicly listed U.K.-based broker said Thursday that its losses would not exceed 30 million pounds ($45.7 million).

This isn't likely to be the last of the fallout from the colossal move, which was almost unheard of among the most widely traded currencies of advanced economies. Here's what Thursday's fluctuation looked like:

swiss franc 2

Courtesy of Insider

As of 11:30 a.m. GMT (6:30 a.m. ET) the franc is looking more settled, down 3.9 percent at 1.016 against the euro.

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Jan. 15 2015 4:15 PM

A Member of Sweden’s Pirate Party Tricked High-Ranking Officials Into Using His Insecure Wi-Fi Network

This post originally appeared in Business Insider.

An activist in Sweden has managed to fool top politicians, military officers, and journalists with a clever Wi-Fi trick in protest of government surveillance, Ars Technica reports.


Gustav Nipe, 26, chairman of the youth wing of the well-known Swedish Pirate Party, is said to have duped people at a security and defence conference into connecting to an insecure network—that he was in control of. Ars Technica says the ploy was in protest of digital surveillance by the state. 

The Local, an English-language paper in the country, writes that around 100 people there logged on to Nipe's Wi-Fi network, cunningly named “Open Guest.” Apparently the users searched for things like “forest hikes” and checked their eBay accounts while they were supposed to be at work. 

The Wi-Fi network wasn't encrypted, and Nipe tells the Local that he was also able to track emails and text messages of the attendees. 

Nipe says that, ironically, the security establishment was at the conference to push through heavier, more invasive data analysis on the public; the leading figures went on to log on to an insecure network and see their personal lives analyzed.

He tells the paper:

It is very embarrassing because the data we collected showed that some people were looking at Skype, eBay and Blocket and stuff like that, or looking for holidays and where you could go and hike the forest. This was during the day when I suppose they were being paid to be at the conference working.

Nipe explains the “scary part” is that insecure networks allow others to gain access to people who may use the same passwords for other sites. He says he could have “got into the government's server or used other information to track people's everyday lives.”

Nipe continues that the data would be stored securely and would be deleted after viewing. The stunt has apparently brought about criticism by some Swedish newspapers. Some have argued Nipe broke Sweden's Personal Data Act.

Jan. 15 2015 3:50 PM

Why the CIA Just Tweeted a Line From Doctor Zhivago in Russian

This post originally appeared in Business Insider.

On Thursday the CIA tweeted a cryptic quote by Russian novelist Boris Pasternak, the author of Doctor Zhivago.


Check it out below:

Translation: “I wrote the novel in order for it to be published and read, and that remains my only desire.”

At first glance this looks like yet another Twitter hack, but there's an incredible story behind this.

The CIA has a history of smuggling subversive books into countries, including the Soviet Union. One of those books was Doctor Zhivago.

After working on the novel on and off over more than 20 years, Pasternak first submitted it for publication in 1956. But the KGB rejected it and characterized it as “malicious libel.”

Pasternak so desperately wanted the book to get out that he gave copies to associates Isaiah Berlin and George Katkov to take to England, Jacqueline de Proyart to take to France, and a young Italian journalist to take to Italy.

The novel ended up spending six months on the top of the New York Times' best-seller list, and it was a huge sensation around the world.

In 1957, less than a month after the book appeared in Italy, a CIA memo “cited an expert's view that it was ‘more important than any other literature which has yet come out of the Soviet Bloc,’ ” reports the New York Review of Books.

But it still wasn't available in the USSR.

So the CIA had a secret plan to get the novel into the country. After many obstacles, it managed to get the novel published en masse and sent copies to be distributed at the Brussels International World Fair. The organization also gave copies to sailors bound for the Soviet Union.

Long story short: It worked.

A CIA memo concluded that “this phase can be considered completed successfully,” according to the New York Review of Books.

Pasternak won the Nobel Prize at the end of 1958 for his work, but he was denounced by the head of the Komsomol as a “pig fouling its own sty.” Pasternak was afraid of being deported, and he rejected the prize.

If you want to read the whole crazy story of the CIA's once-secret involvement, head to the New York Review of Books.

Jan. 14 2015 2:56 PM

This Is Where Most of Disney’s Money Comes From

This post originally appeared in Business Insider.

It's an exciting time for Disney. With a flurry of successful superhero movies, the animated juggernaut Frozen, and new Star Wars movies on the horizon, things are looking up. Meanwhile, the company's stock is up around 500 percent since 2009. But where does Disney's money really come from?


As you'll see in the graphic below, the Walt Disney Studios films actually account for a fairly small percentage of their revenue.

where disneys money comes from_03

Chart by Mike Nudelman/Business Insider

Jan. 13 2015 2:57 PM

This Is Where Apple’s Money Comes From

This post originally appeared in Business Insider.

Where does Apple's money come from? Mostly from iPhones. But the company also gets some money from Macs and iPads. Business Insider's graphics team made this infographic to explain Apple's business.

bi_graphics_applerevenue-4_updated data

Chart by Skye Gould/Business Insider

Jan. 13 2015 12:18 PM

Hate Someone? Send Him or Her Glitter.

This post originally appeared in Business Insider.

On Tuesday morning, Twitter exploded when a link to a website called Ship Your Enemies Glitter started getting passed around. 


We first saw a link to the website posted to Reddit's r/InternetIsBeautiful forum and later on startup discovery website Product Hunt.

Ship Your Enemies Glitter was described by Product Hunt founder Ryan Hoover as “the ultimate troll product.”

Quite literally, the expletive-laden Australian website lets you pay $9.99 to send glitter to your enemies. “Hint: the glitter will be mixed in with the note thus increasing maximum spillage,” the website reads.

The website has since crashed, presumably due to the traffic it received.


Screenshot via Ship Your Enemies Glitter

In addition to including glitter in an envelope for your enemies, the website promises to also include a note explaining why the recipient is receiving the glitter, which is notoriously difficult to clean up.

It doesn't seem to be a joke, though: The form on Ship Your Enemies Glitter's website submitted to a PayPal checkout page. 


Screenshot via Ship Your Enemies Glitter

The website also had a cursing-heavy FAQ page. 


Screenshot via Ship Your Enemies Glitter

It's not immediately clear who is behind the website, and the Product Hunt team isn't sure either. The domain owners' information is masked. 

Jan. 12 2015 3:14 PM

This Is the Reason Why You See “Sale” Signs Everywhere When Walking Into a Store

This post originally appeared in Business Insider.

Think back to the last time a store had an unadvertised sale.


You probably can't.

That's because, according to Mark Ellwood, author of Bargain Fever: How to Shop in a Discounted World, those big red sale signs that you see plastered all over stores are what gets shoppers to buy, not the actual marked-down prices.

Ellwood says these signs are known as "information cues" in the retail world, and we're powerless at resisting them—no matter if there's actually a sale going on.

Ellwood cites an MIT study where customers randomly received one of three catalogs, all featuring the same dress but at different prices ($54, $49, and $44).

In the first round of the study, the $49 dress—the cheapest option—was the best-seller. In the second round, though, an all-caps “for sale” sign was added next to each of the dresses. In this round, each price level sold equally as many dresses.

It wasn't a one-off. The author cites a second (unpublished) MIT study to caution consumers to check prices before grabbing the item with the big red sticker:

In this experiment, 200 different products from 18 different locations of the same convenience store chain were put into three groups. Products in the first group (the control group) were sold in the same way at the same price as always. Products in the second group (the quietly discounted group) were marked down 12 percent, but no sale sign was used. Products in the third group were marked with a red and yellow, all-caps “low price” sticker, but the price remained the same as always. Ellwood says, “The results were telling.”

He writes:

The quietly discounted group sold just over 17% more units than the control. But the group with the LOW PRICE sticker also had increased sales, in this case by 3.4%. That profit uptick cost the store nothing more than the price of printing a few flimsy sheets of paper.
It's a reminder to double check the true discount any time you're nudged by a splashy sign to pick up a supposed special offer in the grocery store.

And it's not just a coincidence that all those information cues are red, either.

According to Ellwood, red is an “eye-catching color”—literally—because it has the longest wavelength, making something that is red appear closer to us than it actually is.

Ellwood also points out that after black and white, red is the next color to appear in a language.

He writes:

The longer the word for a color has been in use ... the greater the number of associations, meanings, and nuances it can acquire. In this way, the color itself gains more impact. In other words, since we've been using the word for red far longer than that for, say, purple, it's embedded more deeply into our psyche. Thanks to both history and physiology, we notice a bright red sale sign more quickly and with greater interest than any other color.

Jan. 9 2015 2:27 PM

Janet Yellen Faces a Challenging Economic Dilemma as Oil Prices Fall

This post originally appeared in Business Insider.

Falling oil prices may be good news for consumers who have seen prices at the pump start falling and the prices of other goods starting to drop as well, but it could prove a headache for Federal Reserve Board Chairwoman Janet Yellen.


That’s because the U.S., which just posted an astonishing 5 percent gain in GDP, is now flirting with deflation.

The Fed is thus facing a bizarre economic dilemma: It has runaway growth and collapsing prices at the same time. The weapons available to Yellen to fight deflation are flimsy. Normally, the Fed would want to lower interest rates. But they are already at zero—there is nowhere left to go. And, of course, house-on-fire economic growth usually calls for higher interest rates, which would only exacerbate the deflation side of the problem.

The Fed most recently faced this problem in the 1980s, when low oil prices spurred runaway growth. The Fed took its eye off the ball at the time, leading to nearly 5 percent inflation by 1990.

Both Brent and West Texas Intermediate crude oil prices have fallen by more than half since June as the U.S. shale oil boom increased the supply of the commodity and signs that emerging-market growth is slowing weighed on demand. The rout was also compounded by the surprising decision by OPEC in November not to cut production in response to falling prices.

Those falls in oil prices are pushing inflation below the Federal Reserve’s 2 percent target, potentially delaying the likelihood of rate hikes despite a buoyant economy.


Goldman Sachs

As Jan Hatzius, chief economist at Goldman Sachs, writes in a recent note: “It is not inconceivable that Fed officials will hike even if core inflation ends up close to 1 percent, as long as they are convinced that the weakness is entirely due to temporary factors such as energy prices and oil. But the hurdle for how convincing other data need to be in this case would increase significantly.”

That is, the Fed may put its 2 percent target aside if the Federal Open Market Committee, or FOMC, decides that prices are being depressed by short-term factors that will eventually stabilize or reverse, pushing inflation back toward target. The International Monetary Fund forecasts 3.1 percent growth in the U.S. over 2015, while the country’s unemployment rate was 5.8 percent in November, around the level that many economists consider the “natural rate” below which wage gains would be expected to start pushing up prices.

This would imply that labor-market indicators would become critical to the FOMC’s analysis of when to raise rates—and in particular wage growth. As Yellen put it in August last year, “since wage movements have historically been sensitive to tightness in the labor market, the recent behavior of both nominal and real wages point to weaker labor market conditions than would be indicated by the current unemployment rate.”

That is, rate hikes may be put on hold until people start seeing the benefits of growth in their take-home pay. Moreover, with global fears over the prospect of deflation gripping much of the developed world, the FOMC body could find itself under pressure to hold off rate hikes while inflation remains below target.

But there are big risks to this strategy. If the dip in inflation due to commodity-price falls helps to mask the underlying strength of the U.S. economy, once they stop falling inflation could come surging back and be much more difficult to control.

Below is a chart showing Barclays’ forecasts for headline inflation. As you can see, after dipping into negative territory, Barclays expects CPI to head above 2 percent by the end of 2015.

If the FOMC holds off for too long and expectations of higher inflation take hold, then it could be much more difficult for the Fed to bring it back to target over the medium term.

Moreover, Yellen has also indicated that sluggish wage growth may not prove a sufficient reason to hold rates down. Sluggish wage growth could reflect “pent-up wage deflation” that could be holding back the pace of gains, labor’s share of income could be structurally lower than it has been in the past (firms are spending a larger proportion of their money on e.g. dividends to shareholders and investment than on employees than in the past), and people who are unemployed finding it more difficult than expected to return to the workforce.

If those warnings prove accurate, prices may start to rise before wage growth picks up substantially, implying that the Fed may need to increase rates earlier.

There have indeed been numerous predictions of runaway inflation over the past few years, all of which have proved painfully wide of the mark. Nevertheless, the balance of risks has been shifting as the U.S. continues to recover from the crisis and close the remaining economic gap it left behind.

The Fed is charged with working out a safe exit strategy from its emergency policies, which many credit with having rescued the country from economic disaster. However, the collapse in oil prices has served only to make this difficult job even harder.

Jan. 8 2015 1:25 PM

This Image Isn’t by Banksy, but It’s Still Going Viral for the Right Reasons

This post originally appeared in Business Insider.

There’s an illustration being shared on Facebook, Instagram, and Twitter that claims to be a tribute created by street artist Banksy in response to the terrorist attack that killed 12 people near the offices of the French satirical magazine Charlie Hebdo in Paris on Wednesday.


While the image does have a touching message, it’s a fake—not created by Banksy.

Here’s the illustration that everyone is sharing:

Mashable is reporting that the image was posted by a “popular ‘Banksy’ account” on Instagram. The Instagram isn’t run by Banksy at all, and is actually a fan page that shares street art created by a variety of different artists—rarely with any attribution.

Banksy has issued a statement to the Independent denying that the illustration is his work. “We can confirm this is not by Banksy,” said a spokesman for the anonymous artist.

Instead, it appears that the illustration was originally posted by graphic designer Lucille Clerc, just with an added Instagram filter.

Here’s Clerc’s original Instagram post:


Break one, thousand will rise #CharlieHebdo #JeSuisCharlie #raiseyourpencil

A photo posted by Lucille Clerc (@lucille_clerc) on

Search on Facebook, Twitter, and Instagram and you’ll see plenty of popular accounts that seem to be official Banksy pages. The problem of fake social media accounts is so widespread that Banksy has even posted on his official website to deny he runs any Facebook or Twitter accounts. He does, however, have one Instagram account, which was used during his recent trip to New York.

Facebook was recently forced to remove the verification checkmark for a Facebook page for a Banksy account with millions of likes after the artist’s PR representative denied that he had anything to do with it.

The Instagram account that the pencil illustration originates from is part of a ring of fake social media profiles. As well as the fake Instagram and Facebook accounts, the administrators behind the Banksy pages also run a YouTube account that re-uploads popular viral videos to capitalize on their popularity.

Another clue that points to the image being fake is its file size. The image uploaded to the fake Banksy social media posts is pixelated and low-resolution. Banksy is an artist who makes a living from exhibiting his work, and wouldn’t want his work to be displayed in a way that made it look bad.

It’s tricky to verify new Banksy work. Because of Banksy’s continued anonymity, and the often confusing similarity to other graffiti artists, many works of art end up mistakenly labeled as created by Banksy. A handful of galleries and companies in the U.K. are, however, experts in his work, meaning that they can verify prints purported to originate from Banksy.

Nevertheless, given Wednesday’s tragic events, the sentiment is strong.

Jan. 7 2015 12:37 PM

Taxi Regulators Suspend Five Out of Six Uber “Bases” in New York City

This post originally appeared in Business Insider.

New York City has temporarily banned some of Uber's brick-and-mortar "bases" there, but it shouldn't affect service, the company says.


Five of the six bases run by the taxi service were suspended by the city's taxi and limousine tribunal after Uber refused to hand over ride records.

The decision was handed down Tuesday.

The Taxi and Limousine Commission (TLC) was requesting that Uber hand over "the date of trip, time of trip, pick up location, and license numbers" over a finite period.

The TLC's authority to request ride information comes from a rule that says "a Licensee must truthfully answer all questions and comply with all communications, directives, and summonses from the Commission or its representatives."

Uber argued unsuccessfully that the TLC's directive was a violation of the Fourth Amendment, which prohibits unreasonable search and seizure.

The TLC says its rule is "necessary to ensure adequate protection and public safety," according to the decision.

An Uber representative told Business Insider that operations would not be affected by the ban.

Here's what Uber had to say about the TLC's decision:

Uber continues to operate legally in New York City, with tens of thousands of partner drivers and hundreds of thousands of riders relying on the Uber platform for economic opportunity and safe, reliable rides. We are continuing a dialogue with the NYC Taxi and Limousine Commission on these issues.