Over 150 Spanish and international companies will be participating in the 8th edition of the IE Business School Careers Fair to recruit executive talent for their organizations. The fair will serve as a platform for recruiting companies to give presentations on their strategic development at the IE campus, and to hold interviews with 800 students…Details
IE University and consulting firm Gavin Anderson & Company presented on October 1 the findings of a survey on embassy networks in 18 countries. The information presented in the report was based on bilateral agreements among participating countries and between said countries and the rest of the international community, complete with export figures. The study,…Details
Just some days ago IE Business School inaugurated its Master in Finance the first 100% Finance focused program. This program is along with the Master in Advanced Finance the continuation of the Master in Financial Management. Even though the financial industry is not experiencing its best moment and every minute there can be a new…Details
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