Economic glossary for the next decade
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 CEO, Public 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).