The Foreign Service Journal, May 2012

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.