DEBT RELIEF /dɛt rɪˈliːf/
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I The selfless act of saving others’ economy or the unavoidable act of saving banks. II The fame of the word bailout came to Europe straight out of the US together with the crisis. 2k8’s overseas narrations clearly describe a fracture between Democrats and Republicans concerning the best way to handle the downfall of major national financial groups involved in the financial blackout. The responsibility for the failure of the financial market’s self-regulations was taken by the democratic side – with the promise of a fair redistribution of money between executioners and victims. Paradoxically, Republicans, namely Senator McCain, suggested an intervention of their favorite hand (see also Adam Smith), which should have punished those who irresponsibly invested their savings and later let the US economy resettle by itself. III The bailout burst into the European mediatic discourse, at first, in the form of loans to the bank system from sovereign state’s central banks and from the ECB. Later, bailout programs switched to billionaire parachutes for European economies from the IMF, the EC and the ECB (see also Troika), in exchange for public budget cuts, tax increases, austerity and neoliberal reforms, in order to put a patch on the bleeding states’ reserves in the aftermath of banks’ rescues. European bailout programs were ratified for Greece, Cyprus, Portugal, Spain and Ireland. By fall 2016, Spain and Ireland are the only two countries that seem on the way of recovering after their bailout programs. Once again, the different outcomes of these rescues illustrate how imprecisely designed is the PIIGS umbrella and how different the socio-economic situation is from country to country. IV Besides the financial meaning, the word bailout evokes three different realms: the one of surrender and abandoning, the one of danger and parachuting and the one of sinking and emptying. As a result, in economic terms the bailout, is a last chance, it is the desperate act of a government or a central bank to save its economy from collapse. When mass media audiences see the word bailout on a news banner, it is the equivalent of an “Eject! Eject!” red button on a pilot’s dashboard, a powerful transfer able to convey in the audience the sense of urgency needed to allocate billions of Euros.
// synonyms: “too big to fail”, mercy, parachuting, deserting, emptying, conditions, BN, TN
// antonyms: bail-in, differentiation, refusal
SUBPRIME MORTGAGES /ˈsʌbˌpraɪm/
I Type of mortgage (i.e.: loan) generally conceded to high-risk borrowers, with larger-than-average risk of defaulting on the loan. Being the interest rate highly volatile, and having borrowers very limited capacity of payment, subprime mortgages have been the main cause of the U.S. (and European) recession in 2007-2008 (see also: housing bubble). Continue reading “SUBPRIME MORTGAGES”
I A thing accepted as true for no clear reason, without proof. Assumption are central in the production of economic models in general. Contrary to what is generally assumed, within the realm of social sciences modeling process, assumption are not only qualitative, but also quantitative. In particular, the role of assumptions is critical in the creation of the so called composite indicators, on which, for example, the OECD evaluates Country performance (see also Ranking, Efficiency). The composite indicators are pivotal in the definition of international and national socio-economic policies. Continue reading “ASSUMPTION”
REAL ECONOMY Noun / riːl ɪˈkɒnəmi /
I Apparently opposed to an ideal platonic world of unreal economy to which all macroeconomic models refer. Unreal economy (see also post-real economy or surreal economy) is a land populated by “trolls and gremlins” (P. Mason, The Guardian, 9/19/16), based on a theoretical equilibrium which is always broken by bad and cunning real people who don’t respect the dogmatic mathematical laws of economists (see also externalities). Continue reading “REAL ECONOMY”
DEFAULT noun /dɪˈfɔːlt,ˈdiːfɔːlt/
I Default is the critical condition in which the debtor is unable to satisfy the legal obligation of a loan. Due to debtor’s insolvency in repaying the debt, the default condition is intended as the final, tragic stage of the debt obligation, being the voluntary actualization of a condition of failure. (The biggest private default in history is Lehman Brothers with over $600,000,000,000 when it filed for bankruptcy in 2008 and the biggest sovereign default is Greece with $138,000,000,000, in March 2012). Continue reading “DEFAULT”
RATING AGENCY /ˈreɪtɪŋ ˈeɪdʒ(ə)nsi/
I A rating agency [also Credit Rating Agency, CRA] is a private company. A rating agency is privately owned, privately run, privately controlled and is privately grading, privately earning, but with an incorruptible social aim. Everyday CRAs give grades to countries and companies. Continue reading “RATING AGENCY”
EXTERNALITY Noun /ɛkstəːˈnalɪti /
I The filling term used to stuff holes in macroeconomic theories. Often related to phrases such as: “third party”; “not my fault”; “didn’t know”; “could not control”; “unpredictable”. II It is often the perfect substitute of the lesser of two evils concept in governmental or economic language [e.g. High unemployment rate is the acceptable externality of Austerity] Continue reading “EXTERNALITY”
SPREAD Singular noun /sprɛd/
I Financial measurement indicating the variation between the quoted rates of two different debt instruments, compared on a return rate basis. The spread, or yield spread, credit spread, also bond spread, generally refers to the quality of a specific investment in terms of insolvency risk, analyzing the imbalance between risk and return through a proportional relation. Continue reading “SPREAD”
DEBT Noun /dɛt/
I The word Debt refers to the either moral, physical or metaphysical obligation within two parts. It partitions the Western capitalist world within borrowers and lenders. Theoretically close to the Hegelian master-slave self-conscious relationship. In ancient times debt was associated with slavery by the rule of law [see also Ancient Rome, Ancient Greece, Solon]. II Within the economic discourse it is commonly used to indicate the public debt of a country. Continue reading “DEBT”