IE Global Environmental Leaders Competition

The Master in Global Environmental Change from the IE School of Biology is an innovative program with a unique focus. The Master will prepare students to translate the emerging insights about our changing living environment into understandable information to guide decision-makers in business, governments, and communities. To celebrate this pioneering program, IE School of Biology…

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Pritzker-Hyatt Scholarships for the IE Bachelor in Architecture

The Pritzker-Hyatt scholarships, for the education of professionals in the world of Architecture, are directed toward students of IE University’s Bachelor in Architecture + Business. The IE Foundation and Pritzker-Hyatt have signed an agreement, offering two scholarships to candidates that have successfully completed the admission process, therefore being admitted to the IE School of Architecture,…

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IE Online Programs – more than just distance learning

Why switching your postgraduate plans just because of your recent promotion? Are you “scared” about distance learning or online programs just because they do not provide the same learning as in a full-time programs?  Join the upcoming IE presentation about its online programs and the worldwide recognized blended learning methodology. Prof. Gamaliel Martinez will guide…

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Are we really so ignorant?

IE Focus | By Jose Mari O’Kean, Professor at IE Business School

The economic crisis has taught us an important lesson, namely that increases in wealth have to be based on real business, not on rises in the price of financial assets.We now have different books and reports on the financial crisis and they all have one common denominator: our ignorance of what happened and the difficulty involved in predicting it.

But if we stop and think for a minute, we can perhaps see that we aren’t really so ignorant:

a)We know that the market is what works best, but it has its faults. Several of them led to this crisis, namely the lack of information and the low-level transparency of financial markets, the principal-agent problem in bank management, behaviour among brokers that gave rise to moral risk, and inappropriate choices made by savers regarding financial assets and by banks regarding mortgage borrowers.

b)For better or for worse, states have intervened to correct these faults in economies, but we have no regulators to correct the faults of the global economy.

c)We operate in a global environment and this has made it possible to channel savings from where they were made to where they were needed with relative ease. The appearance of an emerging country such as China, with a savings rate of more than 40% of its revenue and a current-account surplus of 6% of its GDP, has brought an influx of funds available for loans on global financial markets.

d)And the newest facet of this crisis is perhaps that a generalized mega-expansionary monetary policy has been put in place coupled with the controlled inflation of the prices of goods and services, but nobody thought to control the significant increases in price it brought to financial and real assets.

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