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adaptation is 15.7 hours long! Such a
description is one that only a literature
or cinema studies scholar would fully
understand and, as such, is an appro-
priate analogy to the economic priest-
hood’s use of seemingly impenetrable
jargon to explain financial crises.
6.
Reprofiling
, a polite word for
partial debt default, is also known as
soft restructuring
. It occurs when
the holders of sovereign bonds take a
haircut
, which has absolutely nothing
to do with the length or style of one’s
hair. Rather, it signifies a drop in nom-
inal value of a bond held by an investor
so severe that it is worth just a fraction
of its original value.
7. If the bondholder involved in
Item 6 is unfortunate enough to be
nongovernmental, the haircut is known
as
private-sector involvement
. This
euphemism is intended to soften the
sting of government-bond issuers sock-
ing it to private-bond investors by hav-
ing them take the financial hit “volun-
tarily.”
8. Most banks get around PSI be-
cause they are considered
Too Big To
Fail
, meaning they have an effective
lobbying presence at the legislative or
regulatory body tasked with making
them follow the rules.
Too Big to Bail
is a close cousin to TBTF, except that it
usually applies only to a country. Both
cousins take the attitude of “that PSI
haircut looks much better on you than
it would on me.”
9.
Qualitative easing
(not to be
confused with its distant cousin,
quan-
titative easing
) happens when a cen-
tral bank buys sovereign bonds in the
secondary market because it is re-
stricted from buying them in primary
markets (or terrified of the press fallout
if it did).
10.
Kicking that can down the
road
is a technical policymaking ex-
pression for taking cowardly stopgap
measures instead of pursuing a struc-
tural solution to the economic prob-
lems at hand. (Ever wonder what,
exactly, is down that road? Lots of cans,
surely.) The end product of such kick-
ing is
bupkis
, a technical term in eco-
nomics for a whole lotta nothing or
“beans.” It describes much economic
policymaking everywhere.
11.
Financial repression
is a situ-
ation in which bond issuers deal with
bond buyers in a nasty way by paying
them bupkis (see above) in interest,
sometimes by using depreciated or in-
flated currency. This is also known as
inflating your way out of trouble
.
12. A
perfect storm
is a term for
any concatenation of events that allows
commentators to blame everyone while
blaming no one, thus effectively avoid-
ing any semblance of accountability by
governments, institutions or individuals.
This list of economic wonkisms is by
nomeans exhaustive, of course, for spe-
cialists are constantly inventing new
terms to reflect developments in the
global economy. But for now, anyway,
you can use these to demonstrate your
savvy, whether at a conference or a
cocktail party. Imagine the admiring
glances you will garner when the topic
of another financial crisis leading to
global recession comes up, and you
opine:
“By the Rule of 72, a perfect storm
of global debt overhang will double in
seven years, regardless of whether PSI
forces significant haircuts on bond-
holders —with the exception of TBTF
banks, of course, which will be spared
any financial repression by TBTB
countries who are kicking this can
down the road with their qualitative
easing.”
38
F O R E I G N S E R V I C E J O U R N A L / M A Y 2 0 1 2
Bupkis, a highly technical
term, describes much
economic policymaking.