Why does the assassination of Archduke Franz Ferdinand — the event that lit the fuse of World War One 100 years ago Saturday — still resonate so powerfully? Virtually nobody believes World War Three will be triggered by recent the military conflicts in Ukraine, Iraq or the China seas, yet many factors today mirror those that led to the catastrophe in Sarajevo on June 28, 1914.
John Maynard Keynes famously said that his highest ambition was to make economic policy as boring as dentistry. In this respect, as in so many others, Federal Reserve Chair Janet Yellen is proving to be a loyal Keynesian.
As the World Cup kicks off in Sao Paolo this week, the home team is the runaway favorite, with a 45 percent chance of winning the tournament, according to Nate Silver on FiveThirtyEight and 48.5 percent probability according to the statistical boffins at Goldman Sachs. But apart from the bookmakers — who stand to lose a fortune if Brazil wins, since they are offering odds of around 3 to 1, instead of the 1 to 1 suggested by Silver’s and Goldman’s calculations — another, more surprising, group is secretly rooting against the favorite: Brazil’s own financial and business community, along with much of the country’s middle class.
Why are interest rates so low? And how long will they stay that way?
Now that the European Central Bank has passed another historic milestone by imposing negative interest rates on a major part of the world economy, there is one explanation of the unprecedented collapse of interest that everyone can agree on. Central banks can set money market interest rates as low or as high as they please just by giving commercial banks whatever amount of excess credit is needed to keep these rates at the chosen level.