AAA, n., obsolete. A rhetorical device used to dupe buyers into purchasing securities backed by shacks dressed as houses, and to secure the highest possible spot in telephone directories. Common usage: AAA Septic Drainage and Mortgage Backed Security Services.
ADVERSE FEEDBACK LOOP, n. See FEEDBACK LOOP.
BAILOUT, n. First known use: Noah. Novel regressive taxation scheme whereby vast sums of capital are transferred from those citizens who didn't participate in the illusory Bacchanalia of the housing bubble to those who did and weren't clever enough to get out in time.
BANK, GOOD, n., archaic. Sober, conservative, risk-averse institutions designed to midwife customers' capital and enable prudent lending to deserving businesses and consumers. See Capra, F., the Bailey Building & Loan Association.
BANK, BAD, n. 1. Everyone else. 2. Especially Goldman Sachs.
BANK FAILURE, n. 1. A process by which towns across America are denuded of their feckless local bankers, paving a way into the market for feckless private-equity investors. 2. An increasingly common Twitter tag that spikes on Friday afternoons. See #bankfail, #wheresmymoney, #runitsthefdic.
BORROWERS, n. For liberals, the unwitting dupes of unscrupulous bankers and lenders whom one shouldn't blame for the crisis. For conservatives, irresponsible graspers with a credit-busting taste for cathedral-ceilinged entryways and 70-inch flat-screen televisions whom one should absolutely blame for the crisis.
CHRYSLER, v.t. To torch all pre-existing contractual obligations. Entered dialect after Truman's seizure of U.S. steel mills. Reference spotted in 1952 editions of obsolete periodical "Steel and Steelmen," under the "News You Can Smelt" section: "We just got Chryslered!"
CREDIT-DEFAULT SWAP, n. loose translation from the original Latin "ubi mel ibi apes," or "where there's honey there are bees." 1. A complex financial instrument vital to the functioning of a modern economy in the way it spreads risk among consenting parties. (Greenspan, A., pre-Sept. 2008.) 2. A complex financial instrument that nearly destroyed modern capitalism (Greenspan, A., post-Sept. 2008).
CREDIT LINE, n. A set amount of borrowed money available only to those who don't need it.
CREDIT-RATING FIRMS, n. Firms that do scant rating of people with scant credit.
DEFICIT, n. For the party in power, at worst a minor irritant and at best a precondition for economic growth. For the minority, the gravest threat to the stability of the Republic.
DEFLATION, n. The state of being when confronting unified theories of the financial crisis with grand names -- The Great Contraction, The End to Moderation, The Bubble Era -- that don't, in fact, explain much more than our continuing inability to agree why we are in such a deep hole.
FEEDBACK LOOP, n. Process by which the significance of an event is amplified by constant repetition. Orig: CNBC. See ADVERSE FEEDBACK LOOP.
GREEN SHOOTS, n. 1. The first signs of spring, often clobbered by summer's heat and autumn's rain. 2. A sign the economy is falling apart more slowly than previously thought. Related: DAISIES, PUSHING UP. See also THINKING, WISHFUL.
LIGHT TOUCH, n., obsolete. Theory of regulation in which financial companies recycle profits to lawmakers as campaign contributions, prompting them to relax the rules until the banks inevitably mess it up, at which point the dominant theory switches to "heavy hand," prompting years of economic contraction and the cycle to repeat.
PPIP, or PUBLIC-PRIVATE INVESTMENT PARTNERSHIP, v.t. Orig: Gladys Knight. To use a form of hypnotism in which merely saying you intend to fix a problem has the effect of making everyone forget about the problem. Usage: "We really peepipped Congress on those AIG bonuses." See ASSETS, TOXIC.
QUANTITATIVE EASING, n. A regulatory approach based on the point in Western movies when the sheriff, having fired all available bullets, in an act of final desperation throws his gun at the bad guys. See also INFLATION, HYPER.
RESET, v.t. A process by which an initial expectation is altered to another expectation, as in mortgage payments, or deficits or personal fulfillment. As in, "I have reset my views of financial regulation."
RISK MANAGEMENT, n. Until recently, the process by which banks make giant bets with other people's money before persuading someone else to take the fall. Currently known as "federal supervision."
SECURED CREDITORS, n. In modern American capitalism, the parties last in line for repayment after a company's failure. The others in line include the government, unions, sundry suppliers, friends of the union, friends of the government, unsecured creditors and people vaguely familiar with the matter.
STIMULUS, n. An indeterminate sum of taxpayer money used to generate violent debate. Previously known as "government spending."
STRESS TEST, n. 1. A measure of arterial blood flow to the head. 2. Alchemic process by which struggling, undercapitalized banks are transformed into paragons of modern finance. (See BANKS, GOOD.) Also known as the "Timothy F. Geithner Seal of Approval," which some bankers insist is good until it isn't anymore. (See BANKS, BAD.)
SUBPRIME, adj. A measure of diminished intellectual capacity and increased financial mendacity.
TANGIBLE COMMON EQUITY, n. unknown origin. Definition unknown; purpose unknown; how it's calculated, unknown; what federal regulators think it means, unknown. Usages: "Macbeth," Shakespeare, W., Act II, Scene (i): "Is this TCE which I see before me...I have thee not, and yet I see thee still."
TARP, n. acronym. 1. A synthetic device designed to cover up an unsightly mess, or to protect perishable goods (firewood, banks) from the ravages of the elements, typically costing somewhere between $12.99 and $700 billion. 2. Prime example of how governments use otherwise anodyne acronyms, abbreviations and sports metaphors to disguise matters of controversy. See also TALF, TLGP, TURF, FHFA, BACKSTOP, WRAP, OFHEO and SPECTRE.
TOO BIG TO FAIL, idiom. Banks, insurance companies, car companies, presidential approval ratings, Fed chairmen seeking second terms, other people who think they should be Fed chairman, the reputations of people who'd be responsible for letting things fail. Antonym: TOO BORING TO SAVE.
TOXIC ASSETS, n. 1. A collection of bad loans and other botched financial bets that caused big losses for banks, prompted a credit crunch and sank the economy (Sept. 2008 to May 2009). 2. Long-term investments that will pay handsomely when the housing market recovers (June 2009 onward).
U-SHAPED RECOVERY, n . An opportunity for economists to incorrectly predict the timing and nature of the recession's end just as successfully as they incorrectly predicted its inception, depth and duration. Variants include V-shaped recovery, L-shaped recovery and :-( shaped recovery.
FINANCIAL DISSERVICE INDUSTRY, correct description of an industry ordinarily called “The Financial Service Industry.”
GOVERNMENT REGULATION, process of attempting to protect investors by outlawing prior successful swindles while failing to curb reckless behavior by the financial disservice industry
TAX-SHELTERED VARIABLE ANNUITY, a high expense insurance product that eventually subjects long-term capital gains from equities to taxation as ordinary income, and that is sold often to holders of IRAs that already have tax shelter.
INVESTOR, a successful speculator
SPECULATOR, an unsuccessful investor
WEALTH MANAGEMENT, the process of marketing services and products that are oriented toward transferring as much as possible of a customer’s wealth to the wealth manager
EFFICIENT MARKET THEORY, the falsified hypothesis that market prices are the product of rational thought by market participants
SHORT-TERM OUTLOOK, focus on what will happen in the markets in the next few days
LONG-TERM OUTLOOK, focus on what will happen in the markets in the next few months
STOCK BROKER, someone who makes his customers exactly that
TECHNICAL ANALYSIS, attempting, to use past market price changes to predict future market prices, with occasional accidental success
FUNDAMENTAL ANALYSIS, research by a stock brokerage firm into the earning power and financial strength of a company in order to render an opinion as to the attractiveness of a company’s shares so that brokers have a good story to talk to customers about
PONZI SCHEME, perpetually successful method of preying on human nature by paying money to a first round of suckers in order to attract more money from a second round of suckers
SOCIAL SECURITY and MEDICARE, two federal government Ponzi schemes which must never be so identified, lest the masses become frightened
ANTI-SOCIAL INSECURITY, proper name for Social Security
MEDICARE, a federal government Ponzi scheme for health care that is even less sustainable than Social Security
NATIONAL DEBT, that part of U.S. Government indebtedness that is advertised as such, while leaving out debts 4x as large for the unfunded liabilities of Social Security and Medicare
Matthew Rose, Frederic G. Marks, Wall Street Journal.
