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Economic glossary for the next decade



January 01, 2010 – Comments (9)

Accounting rules - the principal way of producing corporate earnings (see Earnings).

Arbitrage - the difference between a special price available to a chosen group of financiers and the fair market price.  

Austerity - a policy that must be practiced by foreign governments to be able to purchase US Treasury bonds (see Treasury bonds).  

Bank - an institution that helps investors increase asset prices by producing bubbles through the use of leverage (see Bubble, Leverage). 

Book value - amount of money the company managers can afford to waste in the future years. 

Bubble - a) (when applied to gold, oil, tulips and most other types of assets) an unreasonably high asset price that's due for a major correction; b) (when applied to houses, healthcare, education, or banking stocks) an unreasonably high asset price that's due for a major increase as a result of a government subsidy.  

Capital gain - thing that is likely to happen to the price of a stock after a long period of particularly high inflation (see Inflation).  

Capital loss - the default state of a stock investment; thing that is likely to happen to the stock price unless inflation fails to exceed expectations. 

CEO - real owner of a corporation (as opposed to nominal owners; see shareholder).   

Deflation - a dangerous economic development that dashes one's hopes to get rich at the expense of others. 

Decoupling - a theory which says that no matter what happens at home, there will always be some bubble somewhere (see also Recoupling). 

Democrat - an individual who promotes a two-stage method of giving government money to corporations whereby the government gives first gives money to middle-class consumers, then helps corporations take this money away from them through higher prices (as opposed to a policy favored by Republicans; see Republican). 

Deregulation - the right of a corporation to enjoy unlimited pricing power that has resulted from a previous round of regulation (see Regulation).  

Earnings - a result of re-appraisal of assets owned by the company in connection with new accounting rules (see Accounting rules).  

Economist - a) a man working at an Ivy League school who writes theoretical texts of zero practical value; b) a man working for a government-owned non-governmental organization who advises the government on the best way to transfer wealth from the lower 49% to the upper 51% while maintaining a decent illusion of growth.  

Emerging markets - a way for investors to lose their money outside the US.  

Fiscal responsibility - a) (when applied to foreign countries) a desirable policy aiming to balance the government's books by reducing consumption to zero; b) (when applied to the US) an abstract notion discussed by presidential candidates during election campaigns.  

Fractional reserve banking - a licence to banks to counterfeit currency without facing legal repercussions.    

Fundamental analysis - extrapolating the graph of earnings into the future with no explanation why the earnings should continue (see also Technical Analysis).  

Government - an institution set up to produce corporate profits when no profits can be earned in the ordinary course of business.  

Growth investing - a way to lose money on a well-run company because the supply of greater fools will run out (see also Value investing).  

IMF - a) a fund that facilitates the transfer of money from the US Treasury to US banks, with presidents of recipient countries acting as intermediaries; b) an institution set up to explain why policy options that are never used in the US should be tried in other countries and vice versa. 

Federal reserve - a subsidiary of the Treasury that is used by the government when it wants to give money to its favorite bankers while circumnavigating the standard budget procedure.  

Financial analyst - an individual who is paid a generous salary for his efforts to emulate the accuracy of a random number generator.  

Financial crisis - an accounting phenomenon where Goldman Sachs re-appraises the assets of a competing bank and declares that bank insolvent. 

Goodwill - an accounting convention designed to help insolvent corporations obtain financing from banks (see Bank).  

Inflation - a) (when used by economists working for the academia) a worrying trend that jeopardizes economic growth; b) (when used by economists working for government-owned non-governmental organizations) a welcome trend that government should promote at any cost.  

Investment forum - a place on the Web where lawyers, clerks, physicists, housewives, and taxi drivers help financial analysts make a better fit between their models and the actual price movements. 

Keynesianism - a) (when applied to foreign countries) the most dangerous economic policy that a government can take; b) (when applied to the US) the only practical way of running a modern economy.  

Leverage - a) (when applied to individuals and financial institutions other than Goldman Sachs) a way to earn a higher return on capital in exchange for taking high risks; b) (when applied to Goldman Sachs) a way to earn a high return on capital while avoiding any risk. 

Public corporation - a legal structure designed to protect profits of the CEO from the demands of the company's nominal owners (see CEO).  

Recoupling - an antithesis to decoupling; a disappointing realization by investors that foolish strategies that failed at home are also likely to fail everywhere else (see also Decoupling).   

Recession - an accounting phenomenon where investors look at their assets and get horrified.  

Recovery - an accounting phenomenon where investors re-appraise their assets and tell themselves that they are rich again. 

Regulation - a way for a corporation to increase its pricing power by declaring competition illegal; a necessary prerequisite for de-regulation (see Deregulation).  

Republican - an individual who promotes a single-stage method of giving government money to corporations, whereby corporations receive their money directly from the government (as opposed to a less intuitive policy favored by Democrats; see Democrat). 

Shareholder - nominal owner of a public corporation; a source of funding for the CEOs (see also CEOPublic Corporation).  

Stock market - an economic institution set up to facilitate transfer of resources from productive sectors of the economy to speculative operations having little or zero economic value.    

Technical Analysis - extrapolating a graph of stock prices into the future with no explanation why the price trend should continue.  

Treasury bonds - a) (when applied to foreign countries and to individual investors) a quick and easy way to lose one's savings by making a non-recourse loan to the US government that will not be paid back; b) (when applied to US banks) a quick and easy way for a bank to earn a windfall profit by using arbitrage (see Arbitrage).   

Trickle-down economics - a verbal consolation offered by the rich to the poor when the poor are being asked to tighten their belts. 

Value investing - a way to lose money on a poorly-run company because the company will go bankrupt (see also Growth investing).  

9 Comments – Post Your Own

#1) On January 01, 2010 at 10:22 PM, goalie37 (89.62) wrote:

Very well done.  This must have taken some time.

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#2) On January 02, 2010 at 12:29 AM, bluebare (29.13) wrote:

Outstanding blogpost, Fool. If and when publishing elsewhere, please consider including the following terms in your glossary:

AID - (See IMF). 

Austerity - b) Reference to declining wage rates and purchasing power of working class people, euphemism for slavery (also see Government).

Depression - a) The economic consequence of a state-run Ponzi scheme (See Deflation or Hyperinflation and Ponzi scheme); b) Following widespread hysteria, then anger, the lasting psychological condition that most often afflicts a populace experiencing a).

Hyperinflation - When currency becomes less valuable than toilet paper resulting in mass hyperventilation.

Martyr - The leader of a Third Party movement. 

Multinational corporation - A business that can use its power to influence government policy in more than one nation.

Offshoring - a) Doing business in countries that permit slavery; b) The depositing of U.S. government funds gifted to corporations in offshore bank accounts.

Ponzi scheme - A magic trick that results in the disappearance of vast amounts of currency. 

Recoupling - b) A second spin with a financial asset that treated you well the first time around.

Slavery - When the government's official minimum wage allows an employer to pay a worker less than the government's official definition of the amount of money required to sustain a healthy life. 

Stimulus Package - a) Utilizing the future earnings of your children today to protect them from the future you would otherwise leave them tomorrow; b) a government policy to encourage recoupling.

Third Party - Fictional political movement by those who dissent against the perpetual gifting of government money to corporations.  (See Martyr).

Treasury bonds - c) See Ponzi scheme.

WTF - Whisky Tango Foxtrot, an acronym originating in the U.S. Army whose meaning has not changed since making its way into pop culture primarily via its widespread overuse in internet communications of all kinds.

Happy New Decade!

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#3) On January 02, 2010 at 12:37 AM, Tastylunch (28.66) wrote:

LOL I love it!


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#4) On January 02, 2010 at 1:10 AM, FleaBagger (27.49) wrote:

Neither a political nor a financial post.
by devoish (99.65) January 01, 10:13 PM 2010: The Year Of Walking Away On Your Mortgage
by abitare (99.56) January 01, 10:10 PM Economic glossary for the next decade
by zloj (98.95) January 01, 10:05 PM Freedom 28 Volume 1, Part 1: I made more on CENX cal...
by EV38 (99.86) January 01, 9:04 PM

I guess it stands to reason that the list of most recent blog posts on New Year's Day reads like a Who's Who of highly rated opinionated CAPS players.


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#5) On January 02, 2010 at 1:16 AM, FleaBagger (27.49) wrote:

Sorry about that completely off-topic comment. The post is very good. +1 rec, and I'm going to share it with my friends and family.

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#6) On January 02, 2010 at 1:38 AM, TMFUltraLong (99.42) wrote:

I'm very stingy with my rec's... but this pleases me...


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#7) On January 02, 2010 at 12:52 PM, Option1307 (30.62) wrote:

Ha, awesome!

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#8) On January 02, 2010 at 1:40 PM, 4everlost (28.93) wrote:

I hope you don't mind if I "leverage" your work!  Rec #15.

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#9) On January 02, 2010 at 1:41 PM, AvianFlu (< 20) wrote:

Shades of "The Devil's Dictionary" by Ambrose Bierce.

rec +1

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