The Alternate Finance Crisis Glossary
h/t: Portfolio.com's Market Movers
Credit: Josh Reviews Everything blog.
Some of my favorites:
AAA-rating
1) A guarantee of financial soundness, that the AAA-rated product will almost never fail. See also: New Orleans levees.
2) A BBB-rating after it's been leveraged up fifteen times.
Assets
Things of (alleged) value that sit in the right-hand column of a firm's balance sheet. Contrast with liabilities, which sit in the left-hand column.
Hence the saying "the problem with companies' balance sheets these days: on the left, nothing's right; and on the right, nothing's left".
Commercial paper
The painfully rough one-ply toilet paper that's appearing in more and more workplace bathrooms.
Currency peg
What you wear on your nose when going out to buy Icelandic kroner.
Dividends
A quaint historical relic whereby companies would bribe retail investors to buy the company's stock. Now antiquated because nobody can afford them any more.
Investment bank
At the beginning of 2008, a thriving class of companies with five major firms in the USA. After one spectacular bankruptcy, two mergers, and two deathbed conversions, now considered an almost extinct species.
May possibly rise again, like the rise of mammals after an asteroid wiped out the dinosaurs... but, like the rise of mammals, it'll probably take 65 million years.
Ponzi scheme
An illegal scheme, promising implausibly large returns, whereby the returns to earlier investors are paid out of the money invested by later investors, rather than from profits. See also "social security".
Preference shares
A way for banks to borrow money from the government at 9%, then deposit the money with the Fed and earn 0.5%. The logic behind this has not yet been made clear.
Credit: Josh Reviews Everything blog.
Some of my favorites:
AAA-rating
1) A guarantee of financial soundness, that the AAA-rated product will almost never fail. See also: New Orleans levees.
2) A BBB-rating after it's been leveraged up fifteen times.
Assets
Things of (alleged) value that sit in the right-hand column of a firm's balance sheet. Contrast with liabilities, which sit in the left-hand column.
Hence the saying "the problem with companies' balance sheets these days: on the left, nothing's right; and on the right, nothing's left".
Commercial paper
The painfully rough one-ply toilet paper that's appearing in more and more workplace bathrooms.
Currency peg
What you wear on your nose when going out to buy Icelandic kroner.
Dividends
A quaint historical relic whereby companies would bribe retail investors to buy the company's stock. Now antiquated because nobody can afford them any more.
Investment bank
At the beginning of 2008, a thriving class of companies with five major firms in the USA. After one spectacular bankruptcy, two mergers, and two deathbed conversions, now considered an almost extinct species.
May possibly rise again, like the rise of mammals after an asteroid wiped out the dinosaurs... but, like the rise of mammals, it'll probably take 65 million years.
Ponzi scheme
An illegal scheme, promising implausibly large returns, whereby the returns to earlier investors are paid out of the money invested by later investors, rather than from profits. See also "social security".
Preference shares
A way for banks to borrow money from the government at 9%, then deposit the money with the Fed and earn 0.5%. The logic behind this has not yet been made clear.