ROBERT COLE’S RECESSIONASAURUS (extracts)

It’s happened to us all. One minute you’re in your element, waxing lyrical about the big match over a bag of peanuts down the pub, the next the talk turns to the markets and you’re left clutching at more straws than an octopus playing Kerplunk. Worry no more . . .

Administration: One step from bankruptcy. Bear: a pessimistic investor, often seen crouching in the woods. Billion: a thousand million – nine noughts. Bookrunner: holder of the begging bowl. Bull: an optimistic investor thought by sceptics to talk rubbish. Deflation What happens when things get cheaper. Depression When recessions get really bad, they become depressions. Discount: sometimes a bargain, sometimes a sign of financial desperation. Dove: a believer in soft economic policy. Due diligence: homework. GDP measures economic activity. Gilts: UK government debt. Haircut: financial loss. Hawk: an economist who thinks you should be cruel to be kind when it comes to economic policy. Hyperinflation is to inflation what depression is to recession: the same only much worse. Inflation The fancy name for rising prices. Leverage: debt expressed in proportion to a borrower’s assets. Also known as gearing. Liabilities: debts. Liquidity: a fancy name for money. Money is anything that is used in the exchange of goods and services. Gold bars, IOUs, hire purchase agreements, and mortgage debts, are some examples of “other” sorts of money. Ponzi schemes: alarmingly simple but powerfully deceptive investment frauds. Profit margin: an indicator of profitability rather than just profits. It is calculated by dividing turnover (aka sales or revenues) by profits to get a percentage figure. Preference share: a hybrid financial agreement used by companies to raise money. They are part equity (or share) and part bond (or IOU). Quantitative easing: pumping money into an economy to encourage banks to lend. A recession, say the wags, happens when your neighbour losses his or her job while a depression is when you are also made redundant. The textbooks define a recession as two quarters of negative growth. Rights issue: begging bowl. One of the ways a company can raise new cash. Run on the bank A financial avalanche. Sub-prime: dodgy. Trade deficit: when the value of imports is higher than exports. Trade gap When the total value of exports is more, or less, than imports. Trillion a million million – twelve noughts. Toxic debt: bad debts that may poison other loans that may be OK. Underwriter: a financial institution, or person, that provides a guarantee. Write-off: a loan that won’t be repaid. Not to be confused with write-down, which is a precautionary step.

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