John Lanchester: the worst jargon in economics and banking
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Version 0 of 1. Here are my favourite, or least favourite (it can be hard to tell the difference, sometimes), pieces of economic jargon: AusterityAusterity is a real weasel word, because it’s an attempt to make something value-based and abstract out of something which in reality consists simply of spending cuts. What’s especially sneaky is that austerity is, in personal terms, a virtue. It’s good to be austere in respect of one’s own eating and drinking, fitness and finances and personal spending. This has nothing to do with government policies such as the bedroom tax: policies like that lead to specific people suffering specific losses, with nothing abstract about them. Note: the word austerity doesn’t crop up once in the Conservative election manifesto for 2010. Detailed modalities I’ve only just come across the term and it is my current favourite. It was repeatedly used by Mario Draghi, head of the European Central Bank (ECB), when he announced a new programme of asset-backed securities (ABS, which in itself is plenty enough of a mouthful to be getting on with). Draghi said that “detailed modalities” were to come, which is a posh way of saying: “We’ll tell you later how we’re going to do it”. Only, if you say: “We’ll tell you later how we’re going to do it”, instead of: “Detailed modalities are to come”, people might say: “Gee, Mario mate, it sounds a bit like you aren’t quite sure yet what your plan is...” ABS (asset-backed securities) The aforementioned term ABS means asset-backed securities. The ECB are going to buy them from banks in the hope that this frees up money from the banks to lend to the wider economy. ABSs based on mortgages played a big role in the credit crunch; however, the ECB promise that the ones they’re going to buy are a much safer and higher-quality than the ones which caused the credit crunch. Look into my eyes, not around the eyes, look into my eyes… Quantitative Easing This is a term I often think of when people ask whether words in finance and economics are deliberately misleading. I don’t think quantitative easing is deliberately misleading, but I do think it’s suspiciously bland and reassuring. It doesn’t sound like anything big, experimental, scary and strange — which is what many economists think it is. It certainly doesn’t sound like a clever new way of printing money without quite admitting that’s what you’re doing, even though that’s what it amounts to. Instead, quantitative easing sounds like a new brand of laxative. “What do you think of quantitative easing?” “I haven’t tried it, but my grandma always used to recommend a bowl of prunes.” Taper tantrum This might sound like an argument between fashion designers, but it’s actually what happened in the financial markets in summer 2013, when it looked as if the US Federal Reserve was starting to ease off on its policy of quantitative easing, and move towards a rise in interest rates. Since nobody knows what happens in the aftermath of QE, this caused uncertainty, leading to a brief but vivid market freak out. When people worry about the end of QE, they often refer to the taper tantrum. Zirp Zirp means a zero interest rate policy. These were once regarded as a fantastically extreme thing; a desperate measure to be used by governments and central banks as a last resort. Since the credit crunch, they’ve become entirely normal and are more or less the policy in the UK and US and Japan, with the Eurozone (probably) coming next. One of the great unknowns about a Zirp is how you get out of one, so if you ever encounter a book called Exiting Zirp, it is more likely to be a tract about economics than a science fiction novel. What are your favourite (or least favourite, as John says) jargon words in economics and finance? Leave yours in the comments section below. Guardian Live: John Lanchester will be talking about his book How to Speak Money on 24 September. To see the full Guardian Live event listings, click here. |