IE Business School holds the No. 10 position worldwide and No. 5 in Europe in the annual ranking of MBA programs published by The Economist Intelligence Unit (EIU). The EIU ranking positions IE Business School 6th in the world in terms of network potential and points out that IE has alumni clubs in 49 countries.…Details
IE will be in Manila on October 6 for the IE Insight Session from 19:00 onwards. Learn about what one of Europe’s leading business schools has to offer and why studying in Madrid can be such an exciting and life changing experience. For more information, just watch the following slide show. IE Insight Session –…Details
Except for the odd diehard, nobody is denying that we are facing a credit crisis that is affecting the mainstream economy. The question is: Where do we go from here?
In the city of Boston in the 1920s, an Italian immigrant, Roberto Ponzi, convinced hundreds of people that investing in Spanish and Italian stamps with guaranteed profitability levels was a better option than buying traditional products, such as bonds and shares, whose high prices had rendered them less profitable. Of course, the promised levels of profitability came from the revenue generated by those who were the last to buy the stamps, which is why the English term for this type of con trick is “Ponzi scheme”, which made Roberto eternally famous.
Does this sound familiar?
A scenario of economic expansion with controlled inflation, as took place in the 1920s or, more recently, since 2004, eventually leads to a heavy increase in the money supply. This leads to increases in the real prices of assets (fixed assets, stock exchanges, bonds), dampening their implicit profitability. Investors look for alternative products that can give them greater profitability, causing successive “bubbles” in said assets as they attract investments (in 2006, the JP Morgan index for emerging bonds offered profit levels that were only 1.3% higher than the North American bond). Paradoxically, as pointed out by the economist Hyman Minski in the 1970s, trust in the central bank´s success can involve a disproportionate expansion of credit, which, in turn, brings about greater falls in default (since the refinancing of the debt is easy in this kind of environment), giving rise to a vicious circle. The circle is blown to pieces when a significant event (such as the non-payment of the subprime mortgages) leads the market to reconsider its appetite for risk and this reconsideration brings about a fall in credit, which is quickly transferred to the real economy with the threat of a possible recession (which is where we are today).Details
Professors at IE are constantly on the move. Apart from participating in conferences about their fields of research they are conducting seminars or promote IE as a whole. As you see in a way of example, currently 3 of our professors are in 3 different continents: Prof. Dr. Gildo Seisdedos at the Congress of the…Details