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The language of economic crisis
By Liz Walter

It barely seems possible that there once was a time when the term credit crunch was unfamiliar to most of us, when banker did not sound like a dirty word, and when toxic was applied to substances like weedkillers rather than to assets, debts and loans. But now we are living with the consequences of financial meltdown and being exposed to a new and often rather exotic financial vocabulary previously known only to insiders, as well as inventing new terms of our own to describe our situation.

For instance, when The Guardian muses that ‘It’s always interesting to see what these people consider to be sufficiently crunchy‘, it is not talking about biscuits, but about whether something is enough of a bargain. In a related sense, the magazine Grazia wonders ‘Ever had the feeling that you might be just a little out of your depth in these newly ‘crunchy‘ times?’.

In his brilliant book Whoops! Why everyone owes everyone and no one can pay, the novelist John Lanchester points out that many – probably most – intelligent, well-educated people have no idea whatsoever of the most basic principles of economics. However, he also makes clear that many commonly used financial mechanisms really are so mathematically complex that very few people – even within the industry – can hope to understand them fully.

Little wonder, then, that when we ordinary folk hear that governments are planning to clamp down on short selling (the practice of selling borrowed securities and buying them back at a lower price), and in particular naked short selling (doing this without arranging security), or that banks are offering their directors cocos (contingent convertible bonds; a type of convertible bond where the stock price must reach a particular level before the investor can make the conversion) instead of cash bonuses, we take note of the picturesque terminology but remain hazy as to its precise meaning.

Some terms are easier to grasp: for example a zombie bank is allowed to keep trading despite being insolvent, and a zombie economy functions only as a result of government intervention and support from other organizations. We can visualize a W recession or double-dip recession, where the economy falters, recovers, then falters again, and understand the concept of separating retail banking from casino banking – the type that involves riskier investments.

On a more informal note, seasoned frugalistas or recessionistas know how to cope with hard times by finding all sorts of bargains. Want cheaper meat? Try cowpooling – buying a whole cow and dividing it between several people. Need new clothes? No need to shop – just go to a swishing party where people exchange good quality clothes they no longer wear. If times are really tough, you could become a freegan and go rummaging in waste containers for usable food, or a Froogle who uses the Internet to exchange goods with like-minded people.

It is easy to become downcast about the economic situation, and platitudes about the important things that money can’t buy are unlikely to help. Better, perhaps to turn to the wise words of Dorothy Parker: ‘If you want to see what God thinks of money, just look at all the people He gave it to.’