Everybody turns economic expert in 2008

Thanks to the depth of the economic turmoil and the subsequent interest and impact for one and all, ranging from the policymakers to business chiefs to the common man, it is no surprise that ‘Bailout’ and ‘Credit Crunch’ have been crowned as the ‘words of the year’ for 2008.

This happened when there were competitors like ‘Change’ and ‘Obamamania’ – two words that changed the political and social landscape of the US.

Similarly, MTM or ‘Mark-To-Market’ has moved out of the companies’ balance sheets to the lips of billions of investors, who are no more interested in knowing just what losses have been booked, but also in what is their current notional value and thus could become a reality later.

With the crisis pushing economic news out of the business section to the front pages of newspapers, ‘toxic’ assets are also no longer confused with the assets of companies involved in the business of some deadly acids. Toxic still means poisonous and it is now something that could bring death to banks with inherent risks.

At the same time, short-selling is not about the sale-purchase of small pants, but betting that the value of the shares one wants to purchase would go lower or shorter. Thanks to the crisis and the columns devoted to them in the media, many people had to go digging in 2008 for the meanings of hundreds of the financial jargons and are hoping to be wiser in 2009 and the years to come.

All the top ten economy-related searches on internet search engine major Google in 2008 too had something to do with the economic crisis. These search items were – in order of ranking – financial crisis, depression, bailout, mortgage crisis, wall street, oil, stock market, subprime, credit crisis and housing crisis.

Internet major Yahoo also summarises the economy-related searches on its search engine as “The 700 billion dollar bailout. Foreclosures. The plummeting stock market. As 2008 came to a close, the nation’s economic turmoil battled with the presidential election for the hearts of searchers.”

According to AOL Search, the top ten news searches for the year included ‘bailout’ at the third place after the US Presidential election and Olympics. Besides, unemployment stood at fifth, stock market at sixth, stimulus checks at eighths and high gas prices at the ninth place.

As the top ten ‘financial faux pas’ searches AOL has named – Wachovia, Washington Mutual, Merrill Lynch, AIG, Morgan Stanley, Lehman Brothers, Freddie Mac, Bear Stearns, Fannie Mae and Goldman Sachs.

These have become famous, after their failures or huge losses in the wake of economic crisis, not only in the US, but also across the world including India, where most of them did not have any direct presence.

These jargons also include subprime, derivatives, CDS (Credit Default Swaps), Chapter 11, staycation, fakeaway, hedge funds, leveraging, securitisation, SPIVs (Special purpose investment vehicles), stagflation, decoupling, write- down, unwind, liquidity crunch and many more.

To explain some of them, lenders give subprime loans to borrowers who would not ordinarily qualify for credit if all required standards were applied and therefore such loans carry higher interest rates and additional charges to offset the higher risk than those for the creditworthy borrowers.

At the same time, staycation and fakeaway are new-age words that owe their origination in the current economic crisis – staycation is a time period when one stays at home and relaxes and also takes day-long trips to nearby places on holidays. The term has become popular in the backdrop of job losses, falling incomes and price rise.

Similarly, fakeaway, a home-made meal similar to a takeaway meal from a restaurant, has also become popular.

The financial crisis also propelled many such jargons, including stagflation, Funt, Ninja loans and Jingle Mail, to dictionary expert Susie Dent’s 100 Words of the Year, which has ‘credit crunch’ on the top for 2008.

While stagflation is a term of stagnant economic growth with rising inflation, Funt is a short form for Financial Untouchable and Ninja Loans stands for loan given to people with No Income, No Job, No Assets. Jingle Mail is described as returning the keys to a mortgage firm after occupant of the house is not in a position to pay the loan.

Merriam-Webster dictionary has chosen ‘bailout’ as the top word of the year for 2008. Besides ‘bailout’ at the top, another word, ‘turmoil’ has also been featured on the Top Ten list of the dictionary for this year. There was no financial jargon in 2003’s top ten.

In previous years, there have been words like Facebook, Google, refugee, Tsunami, Blog, Hurricane, Democracy, Matrix, Slug and plagiarism in these lists.

About ‘credit crunch’, Oxford University Press, publisher of Dent’s Words of the Year book, said it is “the word that is on everyone’s lips at the moment.”