Sunday, April 12, 2009

The Peril Of Financial Linguistics

by Janet Crain
This reminds me of when Nancy Pelosi said "Don't think of it as a bailout, think of it as an opportunity to buy in". That is when I knew she had lost all sense of reality.

Tell you what, go to the bank and try to get a loan with legacy securities as collateral.

THE MONEY CULTURE

Apparently, 'legacy' derives from an ancient root meaning 'it wasn't my fault and I should still get a bonus this year.'

By Daniel Gross | NEWSWEEK

Published Mar 28, 2009

From the magazine issue dated Apr 6, 2009

In his timeless 1946 essay " And the English Language," condemned political rhetoric as a tool used "to make lies sound truthful" and "to give an appearance of solidity to pure wind." Were he alive today, Orwell might well be moved to pen a companion piece on the use of financial lingo. Remember those toxic assets? The poorly performing mortgages and collateralized debt obligations festering on the books of banks that made truly execrable lending decisions? In the latest federal bank-rescue plan, they've been transformed into "legacy loans" and "legacy securities" —safe for professional investors to purchase, provided, of course, they get lots of cheap government credit. It's as if some thoughtful person had amassed, through decades of careful husbandry, a valuable collection that's now being left as a blessing for posterity.

The legacy gambit is necessary, in part, because the prior nomenclature used to describe the stuff in question was so corrosive. " 'Toxic' is one of those words that is so negative that it's just hyperbole," says Jesse Sheidlower, editor-at-large of the Oxford English Dictionary. The phrase "toxic assets," used widely in 2008, was either a sign of admirable reality, or an attempt to scare people into action. A middle ground of sorts was reached last fall when then– rolled out the Troubled Asset Relief Program (TARP). Of course, calling some of those mortgage assets troubled was a little like calling Charles Manson a troubled person.

In this new paradigm, a legacy, usually a gift, is a burden. A potential loss is spun as a potential gain. War is peace. See what I mean by Orwellian?

http://www.newsweek.com/id/191397