“What have we learnt during the economic crisis?”

A dispute devoted to the economic crisis

February 2,  2010

Prof. Javier Santoma

“What have we learnt during the economic crisis?”

Prof. Javiera Santoma from the IESE Business School of the University of Navarre stipulated that not only banks, public offices, accounting authorities and governments but also consumers are responsible for the ongoing economic crisis.  His lecture in Toruń as part of the Navarrian Disputes. The open lecture, entitled: “What have we learnt during the economic crisis?” was delivered in the evening on February 2, 2010 in Collegium Maximum of the Nicolaus Copernicus University. Prof. Sntoma is one of the most highly acclaimed specialists in finance both in Spain and worldwide.
Prof. Santoma emphasized that the most acute economic crisis since the 1930s has not affected all the states and environments to the same extent.  Its seriousness depended, among other factors, on the state’s preparedness to its dynamic development.  Most analysts are of the opinion that: the Lehman Brothers insolvency, repossessions caused by clients’ inability to pay off their credits, financial losses, high unemployment rates, drop in the GDPs, substantial tax debts, need for new regulations and operations in financial markets, lack of access to credits, and warnings issued by rating agencies, were all visible signs of the economic crisis. The following factors contributed to the onset of the crisis: sub-prime credits granted on an unprecedented scale, reliance on marginal distribution channels, control and supervision bodies as well as monetary authorities, a long period of low interest rates, financial policy, individual sense of duty, too long a period of cheap credits and excessive liquidity, growing indebtedness of households, public sector institutions and authorities. The crisis may have also been facilitated by the instability in trade relations between the USA and China as well as high prices of petroleum. According to Prof. Santoma, contrary to popular belief, it was not only the banking sector that has contributed to the meltdown. Bankers, accountants, officials, governments and consumers are equally to blame for its emergence. What seems to be characteristic is that Afro-Americans and Latin Americans have been severely tried by the credit crunch, as many members of these communities have taken bad credits despite questionable creditworthiness.   High risk of expropriation of real estate was a visible element of imperfect and unsound credit products. In Prof. Santoma’s opinion the crisis has taught us that: elaborated financial products are especially difficult to evaluate, new “superpowers” are emerging in the world, we should return to the sources, as current financial theories are not working.  Paradoxically, it was the detection of the crisis’s symptoms that were the most difficult to perceive. It was because no one knew what could have happened and what was about to happen. Moreover, since the beginning of the meltdown both the international community and interstate institutions have undoubtedly gone very far from the theory of „the invisible hand of the market”. Million-dollar bailouts helped to alleviate the situation. Today we know that it is not sufficient to concentrate solely on the functioning of economic and trade institutions. We should rather ponder the question of what it means to be a human being, especially a poor one. This aspect of Prof. Santoma’s views corresponds to “Caritas in veritate”, an encyclical issued by.Pope Benedict XVI.
Worth knowing:
Prof. Javier Santoma collaborates with many universities worldwide, nevertheless, the IESE Business School in Barcelona has always been his parent university and it is there that he hold the function of a professor at the Department of Finance. The IESE is one of the most highly acclaimed universities for economics in the world (for more information go to: www.iese.edu). Prof. Javier Santomá also conducts MBA programs at the IESE. In the course of his career he has cooperated with the following universities: University of Pennsylvania (USA), The Wharton School (USA), Strathmore Business School w Nairobi (Kenya), Nile University in Cairo (Egypt), Lagos Business School Pan-African University (Nigeria), Instituto de Alta Dirección de la Empresa (INALDE) Universidad de la Sabana in Bogotá (Columbia). Since 2002 he has regularly visited Warsaw to conduct advanced programs: International Faculty Program (IFP) and Advanced Management Program. He wrote numerous books, articles and publications devoted to economy and business.

Prof. Santoma’s lecture in Toruń was the fourth meeting with acclaimed professors of the University of Navarre. It was part of the Navarrian Disputes. According to the professor’s wishes this time the lecture was delivered in English and was not interpreted. However, it was accompanied by a presentation in Polish. Prof. Andrzej Tretyn, the Vice-Rector for Research and International Relations of the Nicolaus Copernicus University, as well as Zbigniew Fiderewicz, the Vice President of Toruń, sat among the audience.