March 13th, 2012
07:33 PM GMT
As Eurozone finance ministers sign off on another badly needed bailout for Greece, the second chapter of this never ending story comes to a close. Mind you, that isn't to say the country won't need a third dollop of cash in the future. Most economists I have asked reckon it will.
Greece's crisis has prompted almost as many dubious puns as it has snorts of derision.
So for those of you fed up with being told "Greece is the word" (get it?) or "it’s all Greek to me" (ha ha) fret not!
In fact, there's a whole dictionary of dodgy terms invented for politicians and pundits to couch themselves.
Here are some my personal favorites:
PSI: The abbreviation for the dreaded term Private Sector Involvement has found its way into the vernacular of even the most eloquent eurozone speakers. The term concerns getting Greece's private creditors (banks, hedge funds etc) to share the burden of keeping the country afloat.
In the case of Greece's PSI, rather than stump up cash investors were pushed to surrender their bonds which were soon due for longer dated securities yielding a lower rate of interest, thus giving Greece a reprieve on a huge chunk of its debt.
Eurocrats insist Greece is an exception to the rule and that other bailed out countries like Ireland and Portugal will not force bondholders to wipe off portions of their debt too. Yet more and more economists caution that Portugal may need a 'partial PSI' itself in a year if it can't get the books to balance. What shall we call that? A pseudo-PSI?
Restricted Default: The souring of Greece's finances has provided the ratings agencies with the perfect recipe for a veritable alphabet soup of jargon.
Take for instance an excerpt from Fitch's report justifying its decision to cut Greece to 'restricted default' or 'RD.' "The downgrade to 'RD' reflects Fitch's previous commentary that the exchange would constitute a sovereign default event under the agency's distressed debt exchange (DDE) rating criteria, and follows the downgrade of Greece to 'C' from 'CCC' on 22 February. Greece's Short-term foreign currency IDR remains unchanged at 'C'. The euro area Country Ceiling, which is applicable to all euro area member states, also remains unchanged at 'AAA.'"
Less than a week later - with Greece's debt swap complete - Fitch today bumped the country back up three or four notches to B-.
Fiscal Slippage: Sounds painful doesn't it? An economist threw this one at me this week as were talking about Spain missing its deficit targets. It may be poetic but it's hardly precise.
Then again any economist will remind you economics isn’t an exact science. Expect to hear more references to fiscal slippages - or missing the targets - as the eurozone moves to reinforce the rules whilst falling output makes reaching those targets ever harder.
Are you lost in the jargon? Or is the crisis chatter clear as day? Let us know what you think.
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