The Corner

Jargon Soup

Just a side note on that Liddy op-ed: It struck me as odd that I understood every word of this sentence:

The most egregious of those began in 1987, when the company strayed from its core insurance competencies to launch a credit-default-swaps portfolio, which eventually became subject to massive collateral calls that created a liquidity crisis for AIG.

If I had read that sentence a year ago, I wouldn’t have known what to make of it. Credit-default-swaps portfolio? Massive collateral calls? Liquidity crisis? It’s weird that these phrases have become a natural part of our everyday discourse. It’s similar to the way I knew nothing about the personal lives of celebrities until I got married and started finding copies of US Weekly around the house, and now I can name all 27 of Angelina Jolie’s children.

I wonder if there’s any way to gauge the public’s familiarity with financial jargon and how much it has grown as a result of this crisis. One way might be to look at the kinds of phrases that make it into mainstream newspaper op-eds on a regular basis. I’d wager that a year ago, someone at the Washington Post would have urged Liddy to dumb it down a bit. Now it’s just assumed that we all understand what a credit-default swap is.

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